Slide 1: 2016 Annual Results
2016 ANNUAL RESULTS FEBRUARY 2017
Slide 2: Introduction: Frank van Zanten, Chief Executive
INTRODUCTION: FRANK VAN ZANTEN CHIEF EXECUTIVE 2016 ANNUAL RESULTS FEBRUARY 2017
Slide 3: Highlights
HIGHLIGHTS CONSISTENT AND PROVEN GOOD SET OF RESULTS £184m COMMITTED ACQUISITION STRATEGY SPEND ON 14 ACQUISITIONS ADJUSTED EARNINGS PER SHARE* CASH CONVERSION 99%** DIVIDEND PER SHARE UP 11% UP 6%† 24 YEARS CONSECUTIVE GROWTH * Before adjusting items (customer relationships amortisation and acquisi
Slide 4: Financial Results: Brian May, Finance Director
FINANCIAL RESULTS: BRIAN MAY FINANCE DIRECTOR 2016 ANNUAL RESULTS FEBRUARY 2017 4
Slide 5: Income Statement
INCOME STATEMENT GROWTH CONSTANT £m 2016 2015 REPORTED EXCHANGE Revenue 7,429.1 6,489.7 14% 4% Adjusted operating profit* 525.0 455.0 15% 5% Operating margin* 7.1% 7.0% Adjusting items† (115.3) (88.5) Operating profit 409.7 366.5 Net finance expense (46.8) (43.8) Adjusted profit before tax* 478.2 41
Slide 6: Foreign Exchange Impact
FOREIGN EXCHANGE IMPACT 2016 translation US$ : £ impact +c. 10% €:£ 2016 ANNUAL RESULTS FEBRUARY 2017 6
Slide 7: Income Statement (Continued)
INCOME STATEMENT (CONTINUED) GROWTH CONSTANT £m 2016 2015 REPORTED EXCHANGE Effective tax rate 26.9% 27.5% Adjusted profit for the year* 349.6 298.1 17% 7% Adjusted earnings per share* 106.1p 91.0p 17% 6% Dividend per share 42.0p 38.0p 11% Reported tax rate 26.7% 27.9% Profit for the period 265.9 23
Slide 8: Dividend per share: 24 years of consecutive increases
DIVIDEND PER SHARE (p) 42.0 24 years of consecutive CAGR dividend increases > 10% 4.0 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 2016 ANNUAL RESULTS FEBRUARY 2017 8
Slide 9: Balance Sheet
BALANCE SHEET INTANGIBLES Return on average £m DEC 16 DEC 15† Increase from exchange operating capital Intangibles 1,947.6 1,646.1 impact of £249.9m and 55.9% acquisitions of £131.3m Tangibles 123.3 112.6 partly offset by amortisation Working capital 819.0 655.0 WORKING CAPITAL 40 bp Other liabili
Slide 10: Cash Flow
CASH FLOW Free cash flow £m 2016 2015 15% Operating cash flow* Interest 521.9 (43.2) 442.6 (39.9) Tax (123.2) (92.5) Free cash flow 355.5 310.2 Dividends (125.4) (116.1) Acquisitions (176.6) (371.2) Employee share schemes (37.5) (29.5) Net cash flow 16.0 (206.6) Cash conversion %† 99% 97% * Before
Slide 11: Cash Conversion
CASH CONVERSION 110% Average cash 103% 102% 102% conversion* 93% 95% 93% 93% 95% 97% 99% 92% 92% 97% TARGET 90% 04 05 06 07 08 09 10 11 12 13 14 15 16 * Operating cash flow before acquisition related costs to adjusted operating profit – see Appendix 2 and Appendix 5 04 – 05 continuing operations onl
Slide 12: Uses of Free Cash Flow 2004-2016
USES OF FREE CASH FLOW 2004 - 2016 Consistently strong free cash flow supports long term DIVIDENDS 6%† CAGR >10% DIVIDEND PER SHARE growth £1.0bn STABLE DIVIDEND COVER c. 2.5x† 14%† ACQUISITIONS 136* ACQUISITIONS SINCE 2004 £2.4bn SELF FUNDED * Includes two committed acquisitions in 2016 which compl
Slide 13: Financial Summary
FINANCIAL SUMMARY REVENUE ADJUSTED OPERATING OPERATING PROFIT PROFIT* MARGIN* 4%† 5%† 10bp† FREE CASH CASH ROACE FLOW CONVERSION** 15% 99% 55.9% 40bp ADJUSTED DIVIDEND EPS* PER SHARE 6%† 17% actual exchange rates 11% 24 years of growth † At constant exchange rates * Before adjusting items (customer
Slide 14: Business Review: Frank van Zanten, Chief Executive
BUSINESS REVIEW: FRANK VAN ZANTEN CHIEF EXECUTIVE • Operations review • Prospects • Strategy 2016 ANNUAL RESULTS FEBRUARY 2017
Slide 15: Revenue Growth
REVENUE GROWTH Improvement in organic growth in £m 8,000 Q4 2016 to c. 1.5% 3.9% 4.2% 0.3% 7,000 4.2% 6,000 5,000 4,000 7,131 7,429 3,000 2,000 1,000 Revenue Organic growth Acquisitions Revenue 2015 * 2016 * At constant exchange rates 2016 ANNUAL RESULTS FEBRUARY 2017 15
Slide 16: Revenue by Customer Markets
REVENUE BY CUSTOMER MARKETS 75% resilient Other Foodservice Healthcare Grocery 4% Cleaning & hygiene 7% Foodservice 30% Healthcare Retail 10% 11% 12% 26% Safety Grocery Cleaning & Hygiene 2016 ANNUAL RESULTS FEBRUARY 2017 16
Slide 17: Business Area Analysis
BUSINESS AREA ANALYSIS Well diversified by geography and sector NORTH AMERICA CONTINENTAL EUROPE 59% Revenue 18% Revenue 53% Operating profit* 23% Operating profit* UK & IRELAND REST OF WORLD 15% Revenue 8% Revenue 15% Operating profit* 9% Operating profit* * Adjusted operating profit - before adjus
Slide 18: 2016 Overview
2016 OVERVIEW Good overall North America - improved organic growth as year progressed from performance additional business won and abatement of price declines on plastic products Continental Europe - strong revenue and profit growth with operating margin up 20bp to 9.3% UK & Ireland – operating marg
Slide 19: North America
NORTH AMERICA GROWTH CONSTANT £m 2016 2015† REPORTED EXCHANGE Revenue 4,362.1 3,784.2 15% 3% Adjusted operating profit* 289.6 249.0 16% 4% Operating margin* 6.6% 6.6% Return on operating capital 57.8% 57.5% • Revenue increase from acquisitions and improved organic growth • Growth in grocery from con
Slide 20: Continental Europe
CONTINENTAL EUROPE GROWTH CONSTANT £m 2016 2015† REPORTED EXCHANGE Revenue 1,355.1 1,088.6 24% 10% Adjusted operating profit* 126.6 99.5 27% 13% Operating margin* 9.3% 9.1% Return on operating capital 58.8% 55.9% • Significant increase in revenue and profit, principally driven by acquisitions with o
Slide 21: UK & Ireland
UK & IRELAND GROWTH CONSTANT £m 2016 2015 REPORTED EXCHANGE Revenue 1,087.8 1,102.4 (1)% (2)% Adjusted operating profit* 83.7 84.9 (1)% (2)% Operating margin* 7.7% 7.7% Return on operating capital 104.9% 99.8% • Margin maintained despite lower revenue • Improved profitability in safety in sluggish m
Slide 22: Rest of the World
REST OF THE WORLD GROWTH CONSTANT £m 2016 2015 REPORTED EXCHANGE Revenue 624.1 514.5 21% 11% Adjusted operating profit* 46.6 42.1 11% 4% Operating margin* 7.5% 8.2% Return on operating capital 30.2% 31.3% • Margins remained under pressure due to macroeconomic conditions and currency weakness • Signi
Slide 23: Prospects
PROSPECTS Group – continued growth due to strong competitive position, diversified and resilient businesses and ability to consolidate fragmented markets If exchange rates remain at current levels there will be a positive effect on reported results in 2017, particularly in the first half North Ameri
Slide 24: Consistent and Proven Compounding Strategy
CONSISTENT AND PROVEN COMPOUNDING STRATEGY High ROIC PROFITABLE Use competitive despite ORGANIC advantage to significant GROWTH grow market share in a profitable way acquisition spend OPERATING MODEL ROIC Daily focus on making IMPROVEMENTS our business 16.7% more efficient ACQUISITION Use strong bal
Slide 25: Organic Growth
ORGANIC GROWTH SELL MORE TO EXISTING CUSTOMERS EXPAND PRODUCT RANGE WIN NEW CUSTOMERS VOLUME MARKET LEADING CUSTOMERS GROWING SECTORS TREND TO OUTSOURCING OWN BRAND / IMPORTS MIX MANUFACTURER BRANDS GEOGRAPHIES AND SECTORS INFLATION / DEFLATION PRICE MARKET DYNAMICS 2016 ANNUAL RESULTS FEBRUARY 2017
Slide 26: Operating Model Improvements
OPERATING MODEL IMPROVEMENTS Small CONSOLIDATING WAREHOUSES SHARING BEST PRACTICE improvements • Close smaller and less efficient facilities • Make use of collective resources, every day experience and expertise • Continually evaluate and upgrade everywhere lead warehousing • Global collaboration to
Slide 27: Acquisition Growth
ACQUISITION GROWTH 136* acquisitions 2004 - 2016; 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* total committed Number of 7 7 9 8 7 2 9 10 13 11 17 22 14 spend of £2.5bn acquisitions Committed acquisition 302 129 162 197 123 6 126 185 277 295 211 327 184 spend (£m) Annualised acq
Slide 28: Geographic Expansion
GEOGRAPHIC EXPANSION Significant scope 1997* 2003* 2005* for future 7 12 18 geographic COUNTRIES COUNTRIES COUNTRIES expansion 2012 2017 27 30 COUNTRIES COUNTRIES 2016 Revenue 2010 2004* North America Continental Europe UK & Ireland Rest of World * Continuing operations only 2016 ANNUAL RESULTS FEBR
Slide 29: Significant Opportunities to Grow in Existing Countries
SIGNIFICANT OPPORTUNITIES TO GROW IN EXISTING COUNTRIES COUNTRY FOODSERVICE GROCERY C&H SAFETY RETAIL HEALTHCARE COUNTRY FOODSERVICE GROCERY C&H SAFETY RETAIL HEALTHCARE USA ● Romania ● ● ● Canada ● Hungary ● ● Mexico ● ● ● Slovakia ● ● ● ● UK Israel ● ● ● ● ● Ireland Turkey ● ● ● ● Germany ● ● Braz
Slide 30: Geographic Expansion
GEOGRAPHIC EXPANSION Significant scope EXISTING MARKET EXAMPLES POTENTIAL MARKET EXAMPLES for future 2016 GDP scaled GDP scaled geographic Country revenues revenues * Country revenues* expansion France Poland * £420m £1,000m £175m Germany Sweden £90m £1,300m £180m Brazil Coastal China £145m £425m £?
Slide 31: Geographic and Sector Expansion
GEOGRAPHIC AND SECTOR EXPANSION E-commerce sector Expansion into new sectors and Woodway, acquired in December 2016, specialises in packaging markets for the retail e-commerce sector The e-commerce sector is a rapidly growing part of the overall UK retail packaging market. C. 20% of all retail sales
Slide 32: Financial Track Record 2004-2016
FINANCIAL TRACK RECORD 2004-2016 Proven compounding REVENUE (£bn) ADJUSTED OPERATING PROFIT* (£m) 7.4 strategy 525 CAGR 2.4 169 10%-11% 04 05 06 07 08 09 10 11 12 13 14 15 16 04 05 06 07 08 09 10 11 12 13 14 15 16 ADJUSTED EPS* (p) DIVIDEND PER SHARE (p) 04-12 restated on adoption 42.0 of IAS 19 (re
Slide 33: Appendices
APPENDICES 2016 ANNUAL RESULTS FEBRUARY 2017
Slide 34: Exchange Rates
APPENDIX 1 EXCHANGE RATES 2016 2015 Average rate US$ 1.36 1.53 Euro 1.22 1.38 Canadian$ 1.80 1.95 Brazilian real 4.74 5.10 Australian$ 1.82 2.03 Closing rate US$ 1.24 1.47 Euro 1.17 1.36 Canadian$ 1.66 2.05 Brazilian real 4.01 5.90 Australian$ 1.71 2.03 2016 ANNUAL RESULTS FEBRUARY 2017 34
Slide 35: Income Statement Alternative Performance Measures
APPENDIX 2 INCOME STATEMENT ALTERNATIVE PERFORMANCE MEASURES £m 2016 2015 Operating profit 409.7 366.5 Adjusting items* 115.3 88.5 Adjusted operating profit 525.0 455.0 Operating margin 7.1% 7.0% Net finance cost (46.8) (43.8) Adjusted profit before income tax 478.2 411.2 Tax on adjusted profit (128
Slide 36: Adjusting Items
APPENDIX 3 ADJUSTING ITEMS £m 2016 2015 Customer relationships amortisation (81.3) (66.8) Deferred consideration payments (29.6) (24.3) Transaction costs and expense (6.8) (7.9) Earn-out adjustments 2.4 10.5 Total adjusting items (115.3) (88.5) 2016 ANNUAL RESULTS FEBRUARY 2017 36
Slide 37: Net Debt
APPENDIX 4 NET DEBT £m 2016 2015 Opening net debt (1,107.2) (877.4) Net cash inflow / (outflow) 16.0 (206.6) Exchange (137.4) (23.2) Closing net debt (1,228.6) (1,107.2) 2016 ANNUAL RESULTS FEBRUARY 2017 37
Slide 38: Cash Flow and Cash Conversion
APPENDIX 5 CASH FLOW AND CASH CONVERSION £m 2016 2015 Operating profit 409.7 366.5 Adjusting items 115.3 88.5 Adjusted operating profit* 525.0 455.0 Adjusted for non-cash items 28.0 19.8 Working capital movement (6.3) (9.8) Cash flow from operations† 546.7 465.0 Net capital expenditure (24.8) (22.4)
Slide 39: Acquisition Growth 2016
APPENDIX 6 ACQUISITION GROWTH 2016 £184m BUSINESS Earthwise Bag ACQUIRED February COUNTRY USA SECTOR Grocery REVENUE* £13.2m Bursa Pazari March Turkey Foodservice £32.3m committed spend Inkozell & Mo Ha Ge May Germany Healthcare £19.3m with promising Classic Bag May United Kingdom Retail £7.4m pipel
Slide 40: Historical Data
APPENDIX 7 HISTORICAL DATA £m 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Revenue 2,439 2,924 3,333 3,582 4,177 4,649 4,830 5,109 5,359 6,098 6,157 6,490 7,429 Adjusted operating 169 203 226 243 281 296 307 336 352 414 430 455 525 profit* Operating margin* 6.9 7.0 6.8 6.8 6.7 6.
Slide 41: What Makes Bunzl Different and Unique?
APPENDIX 8 WHAT MAKES BUNZL DIFFERENT AND UNIQUE? ABILITY TO INVEST IN ERP / DIGITAL AND Global market INFRASTRUCTURE leadership DECENTRALISED GLOBAL position MANAGEMENT SOURCING MODEL Competitive NATIONAL AND INTERNATIONAL advantage EX-OWNERS STAY WITH BUNZL FOOTPRINT EXPERTISE IN BEST PRACTICE MAK
Slide 42: Business Model
APPENDIX 9 BUSINESS MODEL One-stop-shop • Global suppliers for non-food • Low cost sources • Commodities consumables SOURCE • Own brands INDIVIDUAL RANGES CONSOLDATE CONSOLIDATED OFFER DELIVER Foodservice Grocery Cleaning & hygiene Safety Retail Healthcare 2016 ANNUAL RESULTS FEBRUARY 2017 42
Slide 43: Value Proposition
APPENDIX 10 VALUE PROPOSITION Outsourcing COST TO ACQUIRE PRODUCT COST adds value for our customers COST TO PROCESS INVENTORY INVESTMENT CASH FLOW DIRECT LABOUR & OVERTIME INVENTORY FINANCE COST EXPEDITED ORDERS INBOUND FREIGHT PURCHASE ORDER ADMINISTRATION INVENTORY DAMAGE & SHRINKAGE ACCOUNTS PAYA
Slide 44: Service Offering
APPENDIX 11 SERVICE OFFERING ONE-STOP-SHOP ON-TIME IN-FULL DELIVERY DEDICATED FIELD ONE ORDER SALES FORCE ONE DELIVERY ONE INVOICE RANGE OF Service CUSTOMISED offering DELIVERY DIGITAL OPTIONS SOLUTIONS CUSTOMISED LOCAL AND OWN BRAND AND MANAGEMENT NATIONAL NATIONAL INFORMATION DISTRIBUTION BRANDED
Slide 45: Acquisition Parameters
APPENDIX 12 ACQUISITION PARAMETERS Disciplined B2B GOODS CONSOLIDATED NOT-FOR-RESALE PRODUCT approach to OFFERING (‘ONE- acquisitions STOP-SHOP’) RESILIENT FRAGMENTED FURTHER MARKET AND GROWING CUSTOMER CONSOLIDATION MARKETS BASE AND SYNERGIES SMALL % OF TOTAL OPPORTUNITY ATTRACTIVE CUSTOMER SPEND F
Slide 46: Acquisition Discipline
APPENDIX 13 ACQUISITION DISCIPLINE 136* acquisitions SAY “NO” MANY TIMES VERY SELECTIVE ABOUT 2004 - 2016 MORE THAN “YES” COUNTRIES AND SECTORS RETENTION OF REVIEW PERFORMANCE THOROUGH DUE MANAGEMENT AND VS INVESTMENT CASE DILIGENCE CUSTOMERS IS KEY WITH BOARD TARGETS ARE IDENTIFIED BY IN-HOUSE CORP
Slide 47: Annualised Acquisition Revenue
APPENDIX 14 ANNUALISED ACQUISITION REVENUE £m 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* North America 115 198 103 15 - - 35 7 410 89 84 153 38 Continental Europe 301 61 7 100 52 - 115 96 23 5 46 98 87 UK & Ireland - 2 267 110 39 27 - 39 16 32 40 - 76 Rest of the World 14 9 9
Slide 48: Alternative Performance Measures
APPENDIX 15 ALTERNATIVE PERFORMANCE MEASURES This presentation includes various performance measures defined under International Financial Reporting Standards (‘IFRS’) as well as a number of alternative performance measures (known as non-GAAP measures). The principal alternative performance measures
Slide 49: Disclaimer
DISCLAIMER This document has been prepared by Bunzl plc (the ‘Company’) solely for use at the presentation of the Company’s results announcement in respect of the year ended 31 December 2016. For the purposes of this disclaimer, “Presentation” shall mean this document, the oral presentation of the s