Bunzl plc · LSE:BNZL
Bunzl — FY2013 Earnings Presentation
47 slides from Bunzl's earnings presentation, February 2014
Slide 1: Annual Results 2013
WE SOURCE WE CONSOLIDATE WE DELIVER ANNUAL RESULTS 2013 February 2014
Slide 2: Agenda
AGENDA PHILIP ROGERSON, CHAIRMAN: WELCOME BRIAN MAY, FD: FINANCIAL RESULTS MICHAEL RONEY, CEO: BUSINESS REVIEW Q&A 1
Slide 3: Highlights
HIGHLIGHTS Excellent set Consistent and £295m spent on of results proven strategy 11 acquisitions Adjusted Dividend earnings per up 15% share up 15%* * At constant exchange rates, before intangible amortisation and acquisition related costs and disposal of business 2013 Annual Results 2
Slide 4: Brian May, FD: Financial Results
BRIAN MAY, FD: FINANCIAL RESULTS 2013 Annual Results 3
Slide 5: Income Statement
INCOME STATEMENT Growth % Constant £m 2013 2012† Reported Exchange Revenue 6,097.7 5,359.2 14 12 Operating profit* 414.4 352.4 18 16 Net finance cost (42.2) (34.0) Profit before tax** 372.2 318.4 17 16 Operating margin* (%) 6.8 6.6 Effective tax rate (%) 27.9 27.7 Adjusted earnings per share** (p) 8
Slide 6: Dividend Per Share (p)
DIVIDEND PER SHARE (P) 32.4 CAGR >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 Consistently strong dividend growth 2013 Annual Results 5
Slide 7: Balance Sheet
BALANCE SHEET Intangibles £m 2013 2012† Addition of £208.5m from Intangibles 1,456.9 1,340.6 acquisitions, partially offset by Tangibles 118.8 111.1 amortisation and foreign exchange Working capital Working capital 520.3 493.8 Increase from acquisitions Other liabilities (261.6) (246.4) Underl
Slide 8: Cash Flow
CASH FLOW £m 2013 2012 Operating cash flow* 421.1 328.9 Interest (39.0) (30.6) Tax (80.3) (63.6) Free cash flow 301.8 234.7 Dividends (91.8) (85.7) Acquisitions (279.9) (254.7) Employee share schemes (43.3) (3.7) Net cash flow (113.2) (109.4) Operating cash flow to operating profit† 102% 93% * See A
Slide 9: Cash Conversion
CASH CONVERSION* 110% 103% 102% 102% 93% 95% 92% 92% 93% 93% 90% 04 05 06 07 08 09 10 11 12 13 Average cash conversion* 98% * Operating cash flow before acquisition related costs to operating profit before intangible amortisation and acquisition related costs 04-05 continuing operations only 2013 An
Slide 10: Financial Summary
FINANCIAL SUMMARY Revenue and Revenue Operating Operating profit* margin* Operating profit 12% † 16% † 20bps Capital management ROACE of Cash Acquisition conversion♦ spend and Cash flow 56.9% 102% £280m 4 0 bps EPS and Dividend Adjusted Dividend EPS** per share 15%† 15% † At constant exchan
Slide 11: Uses of Cash 2004-2013
USES OF CASH 2004 - 2013 Dividends CAGR >10% p.a. Stable dividend cover – c.2.5x £656m Acquisition >80 acquisitions spend Self funded £1.7bn Strong cash flow = Growing dividend + Acquisitions 2013 Annual Results 10
Slide 12: Total Shareholder Return
TOTAL SHAREHOLDER RETURN Share price (p) 450 TSR 442 £14.50 400 350 16% p.a. £4.53 FTSE 100 – 8% p.a. 300 250 Dividend growth 200 217 32.4p >10% CAGR 150 13.3p 100 Bunzl TSR FTSE 100 TSR 2013 Annual Results 11
Slide 13: Michael Roney, CEO: Business Review
MICHAEL RONEY, CEO: BUSINESS REVIEW 2013 Annual Results 12
Slide 14: Business Review
BUSINESS REVIEW 1. OPERATIONS REVIEW 2. STRATEGY 3. PROSPECTS 2013 Annual Results 13
Slide 15: Revenue Growth Bridge
REVENUE GROWTH BRIDGE £m 6,500 10.3% 12.3% 6,000 2.0% 5,500 562 107 5,000 4,500 6,098 5,429 4,000 3,500 3,000 Revenue Organic Acquisitions Revenue 2012 2013 (FX Adjusted) 2013 Annual Results 14
Slide 16: Operating Profit Growth
OPERATING PROFIT* GROWTH £m 450 12.9% 16.2% 400 3.3% 350 45 12 300 414 357 250 200 Operating profit* Organic Acquisitions Operating profit* 2012 2013 (FX Adjusted) * Before intangible amortisation and acquisition related costs 2013 Annual Results 15
Slide 17: Broad Based Growth
BROAD BASED GROWTH £m 6,200 168 27 24 6,000 450 5,800 5,600 6,098 5,400 5,200 5,429 5,000 Revenue 2012 NA CE UK&I ROW Revenue (FX Adjusted) 2013 440 20 6 6 420 26 400 380 433 360 340 375 320 Operating profit* NA CE UK&I ROW Operating profit* 2012 2013 (FX Adjusted) * Before intangible amortisation a
Slide 18: 2013 Revenue by Customer Markets
2013 REVENUE BY CUSTOMER MARKETS Other 3% Healthcare 7% Safety 10% Foodservice 29% Non-Food Retail 12% Cleaning & Hygiene 12% Grocery 27% c.75% resilient – Grocery, Foodservice, C&H, Healthcare 2013 Annual Results 17
Slide 19: Business Area Analysis
BUSINESS AREA ANALYSIS Diversified by geography NORTH AMERICA CONTINENTAL EUROPE UK & IRELAND REST OF WORLD 55% Revenue 19% Revenue 17% Revenue 9% Revenue 49% Operating profit* 22% Operating profit* 17% Operating profit* 12% Operating profit* * Before intangible amortisation and acquisition related
Slide 20: Overview
OVERVIEW Excellent overall performance North America – strong growth led by acquisitions Continental Europe – good progress in a tough economic environment UK & Ireland – operating margin* returns to 7.0% - first time since 2008 Rest of the World – 65%† growth in operating profit* * Before i
Slide 21: North America
NORTH AMERICA Growth % Constant £m 2013 2012 Reported Exchange Revenue 3,401.7 2,905.8 17 15 Operating profit* 213.6 184.6 16 14 Margin* 6.3% 6.4% Return on operating capital 61.2% 64.4% Good organic revenue growth Impact from six 2012 acquisitions and three 2013 acquisitions Steady growth in
Slide 22: Continental Europe
CONTINENTAL EUROPE Growth % Constant £m 2013 2012 Reported Exchange Revenue 1,151.5 1,079.4 7 2 Operating profit* 97.0 87.5 11 6 Margin* 8.4% 8.1% Return on operating capital 47.5% 42.4% Revenue and profit growth against background of challenging economies France ̶ Increased profit in Hygiene fr
Slide 23: UK & Ireland
UK & IRELAND Growth % Constant £m 2013 2012 Reported Exchange Revenue 1,018.5 992.1 3 2 Operating profit* 71.6 65.2 10 10 Margin* 7.0% 6.6% Return on operating capital 98.8% 86.5% Good progress in all market sectors Operating margin returns to 7.0% Growth in cleaning and hygiene, safety and re
Slide 24: Rest of the World
REST OF THE WORLD Growth % Constant £m 2013 2012 Reported Exchange Revenue 526.0 381.9 38 47 Operating profit* 51.2 33.2 54 65 Margin* 9.7% 8.7% Return on operating capital 47.1% 54.5% Australasia ̶ Focus on efficiencies in weak economic environment ̶ Entry into safety market with Jeminex acquisit
Slide 25: Proven Strategy
PROVEN STRATEGY Acquisition Acquisition growth Growth Since 2004 we have announced more than 80 acquisitions, spending a total of £1.7bn at EBIT multiples of between 6-8x GDP+ organic growth Customers are able to outsource GDP+ to Bunzl the purchasing, ROIC Organic Growth consolidation and delivery
Slide 26: Key Competitive Advantages
KEY COMPETITIVE ADVANTAGES Decentralised Choice of management customer sectors model Expertise in Alignment of making Key management acquisitions Competitive incentives Advantages Ex-owners stay Global sourcing with Bunzl 2013 Annual Results 25
Slide 27: Acquisition Activity
ACQUISITION ACTIVITY External sources Bunzl Bunzl subsidiaries central team Pool of opportunities 500+ c.50 Initial discussions Further discussions c.30 2013 c.20 Active engagement Completed 11 2013 Annual Results 26
Slide 28: Acquisition Growth - 2013
ACQUISITION GROWTH – 2013 Business Acquired Country Sector Revenue* McNeil Surgical January Australia Healthcare £10m Labor Import March Brazil Healthcare £15m MDA March UK Non-food retail £23m BIS (Jeminex) April Australia Safety £98m TFS July UK Non-food retail £9m Espomega August Mexico Safety £2
Slide 29: Acquisition Revenue - Track Record
ACQUISITION REVENUE – TRACK RECORD £m 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 North America 115 198 103 15 - - 35 7 410 89 Continental Europe 301 61 7 100 52 - 115 96 23 5 UK & Ireland - 2 267 110 39 27 - 39 16 32 Rest of the World 14 9 9 - 60 - 4 62 69 155 Group 430 270 386 225 151 27 154
Slide 30: Acquisition Growth - Track Record
ACQUISITION GROWTH – TRACK RECORD 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Number of 7 7 9 8 7 2 9 10 13 11 acquisitions Committed acquisition 302 129 162 197 123 6 126 185 277 295 spend (£m) Annualised acquisition 430 270 386 225 151 27 154 204 518 281 revenue (£m) 04-05 continuing operati
Slide 31: Why Invest in Bunzl?
WHY INVEST IN BUNZL? “ …. because Bunzl is the leader in the market with consistently good growth, stable operating margins, a very high return on operating capital and it turns on average more than 90% of the operating profit into cash which can be reinvested at a rate well “ in excess of the cost
Slide 32: Financial Track Record
FINANCIAL TRACK RECORD Revenue (£bn) Operating profit (£m) 433 6.1 Before amortisation and acquisition 04-05 continuing operations only 5.4 related and corporate costs 371 5.1 04-05 continuing operations only 353 4.8 4.6 323 312 4.2 297 3.6 259 3.3 241 2.9 218 2.4 183 2004 2005 2006 2007 2008 2009 2
Slide 33: Prospects
PROSPECTS Good performance expected for 2014 Overall Potential negative translation impact Good growth from organic revenue and 2013 North America acquisitions Continued growth despite sluggish economic Continental Europe environment Sales growth with margin stability UK & Ireland Signif
Slide 34: Appendices
APPENDICES 2013 Annual Results 33
Slide 35: Appendix 1 - Exchange Rates
APPENDIX 1 – EXCHANGE RATES 2013 2012 Average rate US $ 1.56 1.59 Euro 1.18 1.23 Australian $ 1.62 1.53 Canadian $ 1.61 1.58 Brazilian Real 3.38 3.10 Closing rate US $ 1.66 1.63 Euro 1.20 1.23 Australian $ 1.85 1.57 Canadian $ 1.76 1.62 Brazilian Real 3.91 3.33 2013 Annual Results 34
Slide 36: Appendix 2 - Impact of Changes to IAS 19
APPENDIX 2 – IMPACT OF CHANGES TO IAS 19 Profit* Tax on* Profit after* Adjusted £m before tax* profit* tax* eps* (p) 2012 before restatement 323.9 (89.7) 234.2 71.8 Restatement (5.5) 1.5 (4.0) (1.2) 2012 after restatement 318.4 (88.2) 230.2 70.6 * Before intangible amortisation and acquisition relat
Slide 37: Appendix 3 - Net Debt
APPENDIX 3 – NET DEBT £m 2013)) 2012)) Opening net debt (738.1) (652.9) Net cash outflow (113.2) (109.4) Currency inflow 1.8 24.2 Closing net debt (849.5) (738.1) 2013 Annual Results 36
Slide 38: Appendix 4 - Financing
APPENDIX 4 - FINANCING Committed facilities maturity profile (£m) Funding headroom 223 £614 m 218 246 65 35 40 Bank facilities – undrawn 40 105 20 100 67 59 66 45 Bank facilities – drawn 30 32 32 40 31 US dollar and sterling bonds 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2013 Annual Re
Slide 39: Appendix 5 - Cash Flow
APPENDIX 5 – CASH FLOW £m 2013 2012 Operating profit* 414.4 352.4 Depreciation 25.9 23.0 Working capital movement 16.8 (22.4) Other (10.7) (3.9) Cash flow from operations 446.4 349.1 Net capital expenditure (25.3) (20.2) Operating cash flow** 421.1 328.9 Operating cash flow** to operating profit* 10
Slide 40: Appendix 6 - Historical Data
APPENDIX 6 – HISTORICAL DATA £m 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Revenue 2,439 2,924 3,333 3,582 4,177 4,649 4,830 5,109 5,359 6,098 Operating 169 203 226 243 281 296 307 336 352 414 profit* Margin* (%) 6.9 7.0 6.8 6.8 6.7 6.4 6.4 6.6 6.6 6.8 * Before intangible amortisation and acq
Slide 41: Appendix - Value Proposition
APPENDIX 7 – VALUE PROPOSITION In-house procurement and self COST TO distribution is costly PRODUCT COST ACQUIRE INVENTORY INVESTMENT Bunzl applies its resources and expertise to reduce or eliminate INVENTORY INVESTMENT many of the “hidden” costs of in- CASH FLOW house procurement and self DIREC
Slide 42: Appendix 8 - Business Model
APPENDIX 8 - BUSINESS MODEL One-stop-shop for non-food consumables Suppliers Bunzl Customers • FOODSERVICE • GROCERY • CLEANING & HYGIENE • NON-FOOD RETAIL Individual Consolidated • SAFETY ranges offer • HEALTHCARE Global suppliers International warehousing Low cost sources & distribution infr
Slide 43: Appendix - Key Acquisition Parameters
APPENDIX 9 – KEY ACQUISITION PARAMETERS Consolidated Goods not for B2B product offering resale (“one-stop-shop”) Further market Sectors with Fragmented consolidation and growth customer base synergies Opportunity for Attractive financial Small % of total “own label” returns customer spend products (
Slide 44: Appendix - Geographic Expansion Timeline
APPENDIX 10 - GEOGRAPHIC EXPANSION TIMELINE 1997* 2003* 2005* 2008 2013 7 countries 12 countries 18 countries 23 countries 27 countries 2013 Revenue 2009 2005* North America Continental Europe UK & Ireland Rest of the world * Continuing operations only 2013 Annual Results 43
Slide 45: Appendix - Acquisition Growth Latin America
APPENDIX 11 – ACQUISITION GROWTH LATIN AMERICA MEXICO 2008 to 2010 – Brazil market entry Protcap – Entry into safety market COLOMBIA AM Supply – Expansion in safety market 2011 – Expansion in Brazil Ideal – Entry into cleaning and hygiene BRAZIL market PERU BRAZIL Danny – Expansion in safety
Slide 46: Appendix - Acquisition Growth Latin America
APPENDIX 12 – ACQUISITION GROWTH LATIN AMERICA Labor Espomega Revenue ProEpta De Santis Vicsa Ideal Danny AM Supply Prot-Cap 2008 2010 2011 2012 2013 Safety Cleaning & Hygiene Foodservice Healthcare Retail 2013 Annual Results 45
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 2013. For the purposes of this disclaimer, “Presentation” shall mean this document, the oral presentation of the s