Slide 1: 2017 Full Year Results
2017 FULL YEAR RESULTS FEBRUARY 2018
Slide 2: Introduction: Frank van Zanten, Chief Executive
INTRODUCTION: FRANK VAN ZANTEN CHIEF EXECUTIVE 2017 FULL YEAR RESULTS FEBRUARY 2018
Slide 3: Highlights
HIGHLIGHTS STRONG PICK UP IN ORGANIC RECORD COMMITTED GROWTH TO 4.3% ACQUISITION SPEND OF £616m ADJUSTED EARNINGS PER SHARE* DIVIDEND PER SHARE UP 10% UP 13% AT ACTUAL EXCHANGE; 7% AT CONSTANT EXCHANGE 25 YEARS CONSECUTIVE GROWTH * Before adjusting items (customer relationships amortisation and acqu
Slide 4: Financial Results: Brian May, Finance Director
FINANCIAL RESULTS: BRIAN MAY FINANCE DIRECTOR 2017 FULL YEAR RESULTS FEBRUARY 2018 4
Slide 5: Revenue Growth
REVENUE GROWTH Organic growth 9.6% 4.3% £m 9,000 8,000 5.3% 7.3% 4.3% 7,000 Highest level since 6,000 2006 8,581 5,000 7,826 4,000 3,000 2,000 Revenue 2016* Organic growth Acquisitions Revenue 2017 * At constant exchange rates 2017 FULL YEAR RESULTS FEBRUARY 2018 5
Slide 6: Income Statement
INCOME STATEMENT GROWTH CONSTANT £m 2017 2016 REPORTED EXCHANGE Revenue 8,580.9 7,429.1 16% 10% Adjusted operating profit* 589.3 525.0 12% 6% Operating margin* 6.9% 7.1% Adjusting items◊ (133.3) (115.3) Operating profit 456.0 409.7 Net finance expense (46.7) (46.8) Adjusted profit before income tax*
Slide 7: Income Statement (Continued)
INCOME STATEMENT (CONTINUED) GROWTH CONSTANT £m 2017 2016 REPORTED EXCHANGE Reported tax rate 24.1% 26.7% Profit for the year 310.5 265.9 Basic earnings per share 94.2p 80.7p Effective tax rate 27.5% 26.9% Adjusted profit for the year* 393.4 349.6 13% 7% Adjusted earnings per share* 119.4p 106.1p 13
Slide 8: Dividend per Share: 25 Years
DIVIDEND PER SHARE (p) 25 years 46.0 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 17 2017 FULL YEAR RESULTS FEBRUARY 2018 8
Slide 9: Balance Sheet
BALANCE SHEET Return on average INTANGIBLES £m DEC 17 DEC 16 Increase from acquisitions of operating capital Intangibles 2,351.7 1,947.6 £557m partly offset by 53.1% Tangibles Working capital 125.2 871.9 123.3 819.0 amortisation and exchange WORKING CAPITAL Increase primarily from Other net liabilit
Slide 10: Cash Flow
CASH FLOW Free cash flow £m 2017 2016 16% Operating cash flow* Net interest 569.7 (44.5) 521.9 (43.2) Tax (113.1) (123.2) Free cash flow 412.1 355.5 Dividends (138.2) (125.4) Acquisitions (588.5) (176.6) Employee share schemes (19.4) (37.5) Net cash flow (334.0) 16.0 Cash conversion◊ % 97% 99% * B
Slide 11: Cash Conversion
CASH CONVERSION 110% Average cash 103% 102% 102% conversion* 97% 99% 97% 93% 95% 93% 93% 95% 92% 92% 97% TARGET 90% 04 05 06 07 08 09 10 11 12 13 14 15 16 17 * Operating cash flow before acquisition related items to adjusted operating profit – see Appendix 2 and Appendix 5 04 – 05 continuing operati
Slide 12: Uses of Free Cash Flow 2004–2017
USES OF FREE CASH FLOW 2004 – 2017 Consistently strong free cash flow supports long term DIVIDENDS 6%† CAGR >10% DIVIDEND PER SHARE growth £1.1bn STABLE DIVIDEND COVER c. 2.5x◊ 14%† ACQUISITIONS 151* ACQUISITIONS SINCE 2004 £3.0bn SELF-FUNDED * Includes two acquisitions which were committed in 2017
Slide 13: Financial Summary
FINANCIAL SUMMARY REVENUE ORGANIC ADJUSTED REVENUE OPERATING GROWTH PROFIT* 10% ◊ 4.3% ◊ Highest in 11 years 6%◊ FREE CASH CASH COMMITTED FLOW CONVERSION** ACQUISITION SPEND 16% 97% £616m Record level ADJUSTED DIVIDEND ROACE EPS* PER SHARE 7%◊ 10% 25 years of growth 53.1% ◊ At constant exchange rate
Slide 14: Business Review: Frank van Zanten, Chief Executive
BUSINESS REVIEW: FRANK VAN ZANTEN CHIEF EXECUTIVE • Operations review • Prospects • Strategy 2017 FULL YEAR RESULTS FEBRUARY 2018
Slide 15: Revenue by Customer Markets
REVENUE BY CUSTOMER MARKETS 75% resilient Other Healthcare Foodservice Grocery 7% 3% Foodservice 29% Cleaning & hygiene Retail 10% Healthcare 12% 12% 27% Cleaning & hygiene Grocery Safety 2017 FULL YEAR RESULTS FEBRUARY 2018 15
Slide 16: Business Area Analysis
BUSINESS AREA ANALYSIS Well diversified by geography and sector NORTH AMERICA CONTINENTAL EUROPE 59% Revenue 19% Revenue 52% Operating profit* 25% Operating profit* UK & IRELAND REST OF WORLD 14% Revenue 8% Revenue 14% Operating profit* 9% Operating profit* * Adjusted operating profit - before adjus
Slide 17: Highlights
HIGHLIGHTS • North America – Improved organic revenue growth from significant additional grocery business, albeit at lower margins • Continental Europe – Strong increases in revenue and operating profit with operating margin up 10 basis points to 9.4% • UK & Ireland – Return to organic revenue growt
Slide 18: North America
NORTH AMERICA GROWTH CONSTANT £m 2017 2016 REPORTED EXCHANGE Revenue 5,061.1 4,362.1 16% 10% Adjusted operating profit* 318.3 289.6 10% 4% Operating margin* 6.3% 6.6% Return on operating capital 53.6% 57.8% • Revenue growth driven by strong organic growth and impact of acquisitions • Substantial rev
Slide 19: Continental Europe
CONTINENTAL EUROPE GROWTH CONSTANT £m 2017 2016 REPORTED EXCHANGE Revenue 1,610.4 1,355.1 19% 12% Adjusted operating profit* 151.1 126.6 19% 13% Operating margin* 9.4% 9.3% Return on operating capital 57.5% 58.8% • Strong increases in revenue and profit with improved operating margin • Significant a
Slide 20: UK & Ireland
UK & IRELAND GROWTH CONSTANT £m 2017 2016 REPORTED EXCHANGE Revenue 1,190.8 1,087.8 9% 9% Adjusted operating profit* 88.5 83.7 6% 5% Operating margin* 7.4% 7.7% Return on operating capital 90.0% 104.9% • Strong revenue growth with operating margin impacted by higher import prices from weaker sterlin
Slide 21: Rest of the World
REST OF THE WORLD GROWTH CONSTANT £m 2017 2016 REPORTED EXCHANGE Revenue 718.6 624.1 15% 5% Adjusted operating profit* 53.9 46.6 16% 5% Operating margin* 7.5% 7.5% Return on operating capital 32.4% 30.2% • Latin America − Overall good performance, including improvement in Brazil − Entry into foodser
Slide 22: Prospects
PROSPECTS Group – continued growth from strong competitive position, diversified and resilient businesses and ability to consolidate fragmented markets further North America – revenue to increase with strong organic growth continuing in Q1, returning to more normal levels thereafter, together with t
Slide 23: 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 16.0% more efficient ACQUISITION Use strong bal
Slide 24: Financial Track Record 2004-2017
FINANCIAL TRACK RECORD 2004-2017 Proven compounding REVENUE (£bn) ADJUSTED OPERATING PROFIT* (£m) growth strategy 8.6 589 CAGR 10%-11% 2.4 169 04 05 06 07 08 09 10 11 12 13 14 15 16 17 04 05 06 07 08 09 10 11 12 13 14 15 16 17 ADJUSTED EPS* (p) DIVIDEND PER SHARE (p) 04-12 restated on adoption 46.0
Slide 25: Acquisition Growth £616m
ACQUISITION GROWTH Record level of acquisition spend 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* £616m Number of 7 7 9 8 7 2 9 10 13 11 17 22 14 15 acquisitions Committed acquisition 302 129 162 197 123 6 126 185 277 295 211 327 184 616 spend (£m) Annualised acquisition 43
Slide 26: Acquisition Growth 2017 £621m
ACQUISITION GROWTH 2017 £621m EXISTING MARKETS Business Country Sector Revenue Acquired Packaging Film Sales USA Foodservice £5m January revenue acquired ML Kishigo USA Safety £26m March DDS USA Retail £242m May AMFAS Canada Safety £6m May Western Safety Canada Safety £4m May Tecnopacking Spain Food
Slide 27: Acquisition Snapshot
ACQUISITION SNAPSHOT Two larger DDS acquisitions in • Completed in May existing markets • Based in Minneapolis, USA with revenue of £242m with synergies • Supplies a wide range of packaging, consumables and operating store supplies to the retail sector, primarily in North America • Complements exist
Slide 28: Bunzl: Market Leading Specialist Distributor
BUNZL: MARKET LEADING SPECIALIST DISTRIBUTOR SPECIALIST COMPETITORS IN OUR FIELD OTHER COMPETITORS • FOOD DISTRIBUTORS SPECIALISTS IN • OFFICE SUPPLIES OTHER DISTRIBUTORS NATIONAL CATEGORIES • INDUSTRIAL DISTRIBUTORS DISTRIBUTORS REGIONAL DISTRIBUTORS GROCERY • GROCERY CUSTOMERS’ CUSTOMERS OWN SUPPL
Slide 29: Competitive Positioning
COMPETITIVE POSITIONING SPECIALIST IN OUR CATEGORIES Bunzl offers customised high service solutions SPECIALIST across focused DISTRIBUTORS market sectors ONE SIZE FITS ALL CUSTOMISED SOLUTIONS SPECIALIST GROCERY DISTRIBUTORS IN GENERALISTS CUSTOMERS’ OTHER CASH AND CARRY ONLINE SELLERS OWN SUPPLY CA
Slide 30: Bunzl Unique Service Offering
BUNZL UNIQUE SERVICE OFFERING BESPOKE / DESIGN / PRINTED PRODUCT INSTALLATION MINIMISE MANAGEMENT SERVICES FULL CUSTOMERS’ RANGE WORKING STOCKED CAPITAL PRODUCT CUSTOMISED TRAINING BULKY LOW DELIVERY SLOTS PRODUCT INNOVATION VALUE ESSENTIAL CENTRES AVAILABILITY PRODUCTS ITEMS CONTRACT DELIVERY MOBIL
Slide 31: Bunzl Customers
BUNZL CUSTOMERS 95% Typical customers • Larger, representing 95% of revenue of revenue generated • B2B by larger, service intensive customers • Often multi-site with average annual spend of Typical customer requirements £180,000 • Innovative, customised solutions • One-stop-shop: broad range of item
Slide 32: Appendices
APPENDICES 2017 FULL YEAR RESULTS FEBRUARY 2018
Slide 33: Exchange Rates
APPENDIX 1 EXCHANGE RATES 2017 2016 Average rate US$ 1.29 1.36 Euro 1.14 1.22 Canadian$ 1.67 1.80 Brazilian real 4.11 4.74 Australian$ 1.68 1.82 Closing rate US$ 1.35 1.24 Euro 1.13 1.17 Canadian$ 1.69 1.66 Brazilian real 4.49 4.01 Australian$ 1.73 1.71 2017 FULL YEAR RESULTS FEBRUARY 2018 33
Slide 34: Income Statement Alternative Performance Measures
APPENDIX 2 INCOME STATEMENT ALTERNATIVE PERFORMANCE MEASURES £m 2017 2016 Operating profit 456.0 409.7 Adjusting items* 133.3 115.3 Adjusted operating profit 589.3 525.0 Operating margin 6.9% 7.1% Net finance cost (46.7) (46.8) Adjusted profit before income tax 542.6 478.2 Tax on adjusted profit (14
Slide 35: Adjusting Items
APPENDIX 3 ADJUSTING ITEMS £m 2017 2016 Customer relationships amortisation (96.6) (81.3) Deferred consideration payments (28.5) (29.6) Transaction costs and expenses (12.1) (6.8) Earn-out adjustments 3.9 2.4 Total adjusting items (133.3) (115.3) 2017 FULL YEAR RESULTS FEBRUARY 2018 35
Slide 36: Net Debt
APPENDIX 4 NET DEBT £m 2017 2016 Opening net debt (1,228.6) (1,107.2) Net cash (outflow) / inflow (334.0) 16.0 Exchange 39.0 (137.4) Closing net debt (1,523.6) (1,228.6) 2017 FULL YEAR RESULTS FEBRUARY 2018 36
Slide 37: Cash Flow and Cash Conversion
APPENDIX 5 CASH FLOW AND CASH CONVERSION £m 2017 2016 Operating profit 456.0 409.7 Adjusting items 133.3 115.3 Adjusted operating profit* 589.3 525.0 Adjusted for: Non-cash items 28.9 28.0 Working capital movement (15.6) (6.3) Cash flow from operations◊ 602.6 546.7 Net capital expenditure (32.9) (24
Slide 38: Annualised Acquisition Revenue
APPENDIX 6 ANNUALISED ACQUISITION REVENUE £m 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* North America 115 198 103 15 - - 35 7 410 89 84 153 38 283 Continental Europe 301 61 7 100 52 - 115 96 23 5 46 98 87 219 UK & Ireland - 2 267 110 39 27 - 39 16 32 40 - 76 49 Rest of th
Slide 39: Significant Opportunities to Grow in Existing Countries
APPENDIX 7 SIGNIFICANT OPPORTUNITIES TO GROW IN EXISTING COUNTRIES COUNTRY FOODSERVICE GROCERY C&H SAFETY RETAIL HEALTHCARE COUNTRY FOODSERVICE GROCERY C&H SAFETY RETAIL HEALTHCARE USA ● Hungary ● ● Canada ● Romania ● ● ● Mexico ● ● ● Slovakia ● ● ● ● UK Israel ● ● ● ● ● Ireland Turkey ● ● ● ● Germa
Slide 40: Historical Data
APPENDIX 8 HISTORICAL DATA £m 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 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 8,581 Adjusted operating 169 203 226 243 281 296 307 336 352 414 430 455 525 589 profit* Operating margin* 6.9 7.0
Slide 41: Business Model
APPENDIX 9 BUSINESS MODEL One-stop-shop • Global suppliers for non-food • Low cost sources • Commodities consumables SOURCE • Own brands INDIVIDUAL RANGES • Direct to site • Cross dock CONSOLDATE a • Warehouse replenishment CONSOLIDATED OFFER DELIVER Foodservice Grocery Cleaning & hygiene Safety Ret
Slide 42: 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 43: Integrated Digital Solutions
APPENDIX 11 INTEGRATED DIGITAL SOLUTIONS Continued • c. 50% of customer orders received electronically investment in digital following extensive investment in EDI and web offerings to improve technologies both customer • State-of-the-art e-Commerce tools implemented experience and across all geograp
Slide 44: 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 FOR
Slide 45: Acquisition Discipline
APPENDIX 13 ACQUISITION DISCIPLINE 151* acquisitions SAY “NO” MANY TIMES VERY SELECTIVE ABOUT 2004 – 2017 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 BUSINESS AREA
Slide 46: Alternative Performance Measures
APPENDIX 14 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 47: 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 2017. For the purposes of this disclaimer, “Presentation” shall mean this document, the oral presentation of the s