Slide 1: 2018 Full Year Results February 2019
2018 FULL YEAR RESULTS FEBRUARY 2019
Slide 2: Introduction: Frank van Zanten, Chief Executive
INTRODUCTION: FRANK VAN ZANTEN CHIEF EXECUTIVE 2018 FULL YEAR RESULTS FEBRUARY 2019 2
Slide 3: Highlights
HIGHLIGHTS STRONG ORGANIC GROWTH ACQUISITION SPEND OF £183m AT 4.3% ADJUSTED EARNINGS PER SHARE* DIVIDEND PER SHARE UP 9% UP 12%◊ 26 YEARS CONSECUTIVE GROWTH * Alternative performance measure – see Appendix 2 ◊ At constant exchange rates 2018 FULL YEAR RESULTS FEBRUARY 2019 3
Slide 4: Financial Results: Brian May, Finance Director
FINANCIAL RESULTS: BRIAN MAY FINANCE DIRECTOR 2018 FULL YEAR RESULTS FEBRUARY 2019
Slide 5: Revenue Growth
REVENUE GROWTH Organic growth 8.7% 4.3% with all business areas at 4% or more 5.3% 4.3% (0.9)% * At constant exchange rates 2018 FULL YEAR RESULTS FEBRUARY 2019 5
Slide 6: Income Statement
INCOME STATEMENT GROWTH CONSTANT £m 2018 2017 REPORTED EXCHANGE Revenue 9,079.4 8,580.9 6% 9% Adjusted operating profit* 614.0 589.3 4% 7% Operating margin* 6.8% 6.9% Adjusting items (147.8) (133.3) Operating profit 466.2 456.0 Net finance expense (55.0) (46.7) Disposal of businesses 13.6 - Profit b
Slide 7: Income Statement (continued)
INCOME STATEMENT (CONTINUED) GROWTH CONSTANT £m 2018 2017 REPORTED EXCHANGE Effective tax rate 23.1% 27.5% Adjusted profit for the year* 429.9 393.4 9% 13% Adjusted earnings per share* 129.6p 119.4p 9% 12% Dividend per share 50.2p 46.0p 9% Reported tax rate 23.1% 24.1% Profit for the year 326.5 310.
Slide 8: Dividend per Share
DIVIDEND PER SHARE (p) 26 years 50.2 of consecutive CAGR dividend increases >10% 4.0 2018 FULL YEAR RESULTS FEBRUARY 2019 8
Slide 9: Balance Sheet
BALANCE SHEET Net debt : EBITDA at INTANGIBLES £m DEC 18 DEC 17 Increase from acquisitions of low end of target Intangibles 2,382.5 2,351.7 £131m and exchange, partly range provides offset by amortisation and Tangibles 122.4 125.2 substantial funding business disposals Working capital 948.3 871.9 ca
Slide 10: Lease Accounting (IFRS 16)
LEASE ACCOUNTING (IFRS 16) No change in BALANCE SHEET INCOME STATEMENT economic effect of how we finance fixed assets RIGHT OF USE ADJUSTED ASSET OPERATING PROFIT* No impact on c. £430-£450m c. £20m cashflow LEASE LIABILITY FINANCE EXPENSE No impact on existing c. £480-£500m c. £20m banking covenant
Slide 11: Cash Flow
CASH FLOW Cash conversion* £m 2018 2017 94% Operating cash flow* Net interest 578.5 (49.1) 569.7 (44.5) Tax (113.2) (113.1) Free cash flow 416.2 412.1 Dividends (152.2) (138.2) Acquisitions◊ (184.2) (588.5) Disposal of businesses 55.1 - Employee share schemes 50.0 (19.4) Net cash inflow/(outflow) 18
Slide 12: Cash Conversion
CASH CONVERSION Average cash conversion* 97% TARGET 90% * Alternative performance measure – see Appendix 2 2018 FULL YEAR RESULTS FEBRUARY 2019 12
Slide 13: Uses of Free Cash Flow 2004 – 2018
USES OF FREE CASH FLOW 2004 – 2018 Consistently strong free cash flow supports long term DIVIDENDS 6%† CAGR >10% DIVIDEND PER SHARE growth £1.3bn STABLE DIVIDEND COVER c. 2.5x◊ 14%† ACQUISITIONS 157* ACQUISITIONS SINCE 2004 £3.2bn SELF-FUNDED ◊ Based on adjusted earnings per share * Includes the acq
Slide 14: Financial Summary
FINANCIAL SUMMARY REVENUE ORGANIC ADJUSTED REVENUE OPERATING GROWTH PROFIT* 9%◊ 4.3% 7%◊ CASH COMMITTED NET DEBT : CONVERSION* ACQUISITION EBITDA* SPEND 94% £183m 2.0X At low end of target range ADJUSTED DIVIDEND ROACE * EPS* PER SHARE 12%◊ 9% 26 years of growth 50.7% ◊ ◊ At constant exchange rates
Slide 15: Business Review: Frank van Zanten, Chief Executive
BUSINESS REVIEW: FRANK VAN ZANTEN CHIEF EXECUTIVE • Operations review • Prospects • Strategy 2018 FULL YEAR RESULTS FEBRUARY 2019
Slide 16: Revenue by Customer Markets
REVENUE BY CUSTOMER MARKETS 74% resilient Other Healthcare Foodservice Grocery 7% 3% Foodservice 29% Cleaning & hygiene Retail 11% Healthcare 12% 12% 26% Cleaning & hygiene Grocery Safety 2018 FULL YEAR RESULTS FEBRUARY 2019 16
Slide 17: Business Area Analysis
BUSINESS AREA ANALYSIS Well diversified across: 31 Countries NORTH AMERICA CONTINENTAL EUROPE 58% Revenue 20% Revenue 6 Sectors 50% Operating profit* 28% Operating profit* UK & IRELAND REST OF WORLD >85% of 14% Revenue 13% Operating profit* 8% Revenue 9% Operating profit* revenue generated outside t
Slide 18: North America
NORTH AMERICA GROWTH CONSTANT £m 2018 2017 REPORTED EXCHANGE Revenue 5,277.8 5,061.1 4% 8% Adjusted operating profit* 317.1 318.3 0% 3% Operating margin* 6.0% 6.3% Return on operating capital* 48.4% 53.6% • Revenue increase driven by strong organic growth and impact of acquisitions • Reduction in ma
Slide 19: Continental Europe
CONTINENTAL EUROPE GROWTH CONSTANT £m 2018 2017 REPORTED EXCHANGE Revenue 1,797.5 1,610.4 12% 12% Adjusted operating profit* 176.8 151.1 17% 18% Operating margin* 9.8% 9.4% Return on operating capital* 60.4% 57.5% • Substantial increases in revenue and profit with operating margin up • Significant g
Slide 20: UK & Ireland
UK & IRELAND GROWTH CONSTANT £m 2018 2017 REPORTED EXCHANGE Revenue 1,263.6 1,190.8 6% 6% Adjusted operating profit* 86.8 88.5 (2)% (2)% Operating margin* 6.9% 7.4% Return on operating capital* 87.8% 90.0% • Strong revenue growth but operating margin impacted by challenging market conditions • Tradi
Slide 21: Rest of the World
REST OF THE WORLD GROWTH CONSTANT £m 2018 2017 REPORTED EXCHANGE Revenue 740.5 718.6 3% 12% Adjusted operating profit* 56.4 53.9 5% 15% Operating margin* 7.6% 7.5% Return on operating capital* 31.9% 32.4% • Strong overall sales and profit growth with operating margin up • Strong performance in Latin
Slide 22: Prospects
PROSPECTS Group – against a backdrop of mixed macroeconomic and market conditions, continued growth expected from strong competitive position, diversified and resilient businesses and ability to consolidate fragmented markets further North America – revenue should increase from the combination of or
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 ROIC OPERATING MODEL Daily focus on making IMPROVEMENTS our business more efficient 15.0% ACQUISITION Use strong bal
Slide 24: Bunzl Unique Service Offering
BUNZL UNIQUE SERVICE OFFERING DESIGN / BESPOKE / INSTALLATION FULL RANGE MINIMISE PRINTED PRODUCT CUSTOMERS’ CUSTOMISED SERVICES STOCKED DELIVERY SLOTS MANAGEMENT WORKING CAPITAL PRODUCT BULKY LOW INNOVATION ESSENTIAL PRODUCT TRAINING VALUE CENTRES ITEMS AVAILABILITY PRODUCTS CONTRACT MOBILISATIONS
Slide 25: Sustainable Product Solutions
SUSTAINABLE PRODUCT SOLUTIONS Proactively SINGLE USE PLASTICS working with customers, • Essential food and beverage suppliers and packaging for practical, safe and hygienic transit other stakeholders to • Actively promoting sustainable promote and alternatives support a sustainable • Unique position
Slide 26: Sustainable Product Solutions – Case Studies
SUSTAINABLE PRODUCT SOLUTIONS – CASE STUDIES PRODUCT SUBSTITUTION TRUSTED PARTNER • Rapid change in customer demand for drinking • Contract catering customer of Bunzl straws in UK: • Customer’s client site serving 2,500+ meals per day, using 500+ Bunzl products ➢ Volume of plastic straws fell signif
Slide 27: Asia Sourcing
ASIA SOURCING Competitive ASIA SOURCING CENTRE advantage • Benefit of Bunzl scale through Asia • Manage suppliers across 14 countries Sourcing and • Responsibly sourced products from accredited QA/QC Centre suppliers • Purchasing benefits • QA/QC and audit functions COLLABORATION • Forum for all Bun
Slide 28: Acquisition Growth
ACQUISITION GROWTH 157* acquisitions 2004 - 2018 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* Number of 7 7 9 8 7 2 9 10 13 11 17 22 14 15 6 Total spend of acquisitions £3.3bn Committed acquisition 302 129 162 197 123 6 126 185 277 295 211 327 184 616 183 spend (£m) An
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 ● Hungary ● ● Canada ● Romania ● ● ● Mexico ● ● ● Slovakia ● ● ● ● UK Israel ● ● ● ● ● Ireland Turkey ● ● ● ● Germany ● ● Braz
Slide 30: North America Expansion 2004 - 2018
NORTH AMERICA EXPANSION 2004 - 2018 Significant Revenue growth in our largest and most 2018 North America mature market £5.3bn 3 countries >3 % average 2004 Rest of Group £3.8bn annual organic Rest of Group 28 countries 58% growth £1.0bn 53% 9 countries North America 58% £1.4bn 3 countries 42 acquis
Slide 31: Financial Track Record 2004 - 2018
FINANCIAL TRACK RECORD 2004 - 2018 Proven compounding REVENUE (£bn) ADJUSTED OPERATING PROFIT* (£m) 9.1 growth strategy 614 CAGR 2.4 169 c. 10% 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 ADJUSTED EPS* (p) DIVIDEND PER SHARE (p) 04-12 restated on adoptio
Slide 32: Appendices
APPENDICES 2018 FULL YEAR RESULTS FEBRUARY 2019
Slide 33: Exchange Rates
APPENDIX 1 EXCHANGE RATES 2018 2017 Average rate US$ 1.33 1.29 Euro 1.13 1.14 Canadian$ 1.73 1.67 Brazilian real 4.87 4.11 Australian$ 1.79 1.68 Closing rate US$ 1.27 1.35 Euro 1.11 1.13 Canadian$ 1.74 1.69 Brazilian real 4.94 4.49 Australian$ 1.81 1.73 2018 FULL YEAR RESULTS FEBRUARY 2019 33
Slide 34: Alternative Performance Measures
APPENDIX 2 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. The principal alternative performance measures used in this presentation are
Slide 35: Adjusted Operating Profit
APPENDIX 3 ADJUSTED OPERATING PROFIT ALTERNATIVE PERFORMANCE MEASURES £m 2018 2017 Operating profit 466.2 456.0 Adjusted for: Customer relationships amortisation 111.1 96.6 Acquisition related items 33.4 36.7 GMP equalisation charge 3.3 - Adjusted operating profit 614.0 589.3 Operating margin 6.8% 6
Slide 36: Adjusted Profit Before Income Tax
APPENDIX 4 ADJUSTED PROFIT BEFORE INCOME TAX ALTERNATIVE PERFORMANCE MEASURES £m 2018 2017 Profit before income tax 424.8 409.3 Adjusted for: Customer relationships amortisation 111.1 96.6 Acquisition related items 33.4 36.7 GMP equalisation charge 3.3 - Disposal of businesses (13.6) - Adjusted prof
Slide 37: Adjusted Profit for the Year
APPENDIX 5 ADJUSTED PROFIT FOR THE YEAR ALTERNATIVE PERFORMANCE MEASURES £m 2018 2017 Profit for the year 326.5 310.5 Adjusted for: Customer relationships amortisation 111.1 96.6 Acquisition related items 33.4 36.7 GMP equalisation charge 3.3 - Disposal of businesses (13.6) - Tax on adjusting items
Slide 38: Net Debt
APPENDIX 6 NET DEBT £m 2018 2017 Opening net debt (1,523.6) (1,228.6) Net cash inflow/(outflow) 184.9 (334.0) Exchange (47.8) 39.0 Closing net debt (1,386.5) (1,523.6) 2018 FULL YEAR RESULTS FEBRUARY 2019 38
Slide 39: Cash Flow and Cash Conversion
APPENDIX 7 CASH FLOW AND CASH CONVERSION £m 2018 2017 Adjusted operating profit * 614.0 589.3 Adjusted for: Non-cash items 31.8 28.9 Working capital movement (38.7) (15.6) Cash flow from operations◊ 607.1 602.6 Net capital expenditure (28.6) (32.9) Operating cash flow◊ 578.5 569.7 Cash conversion* 9
Slide 40: Annualised Acquisition Revenue
APPENDIX 8 ANNUALISED ACQUISITION REVENUE £m 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* North America 115 198 103 15 - - 35 7 410 89 84 153 38 283 72 Continental 301 61 7 100 52 - 115 96 23 5 46 98 87 219 34 Europe UK & Ireland - 2 267 110 39 27 - 39 16 32 40 - 76 49
Slide 41: Acquisition Growth 2018
APPENDIX 9 ACQUISITION GROWTH 2018 £148m BUSINESS Revco ACQUIRED January COUNTRY USA SECTOR Safety REVENUE* £28.6m revenue acquired QS March Netherlands Cleaning & hygiene £4.9m Monte Package March USA Foodservice £43.4m Company Enor July Norway Foodservice £25.7m CM Supply December Denmark Foodserv
Slide 42: Historical Data
APPENDIX 10 HISTORICAL DATA £m 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 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 9,079 Adjusted 169 203 226 243 281 296 307 336 352 414 430 455 525 589 614 operating profit* Operating
Slide 43: Business Model
APPENDIX 11 BUSINESS MODEL One-stop-shop • Global suppliers for non-food • Low cost sources • Commodities SOURCE consumables • Own brands INDIVIDUAL RANGES • Direct to site CONSOLDATE • Cross dock a • Warehouse replenishment CONSOLIDATED OFFER DELIVER Foodservice Grocery Cleaning & hygiene Safety Re
Slide 44: Value Proposition
APPENDIX 12 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 45: Market Leading Specialist Distributor
APPENDIX 13 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
Slide 46: Competitive Positioning
APPENDIX 14 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 O
Slide 47: Bunzl Customers
APPENDIX 15 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
Slide 48: Acquisition Parameters
APPENDIX 16 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 49: Acquisition Discipline
APPENDIX 17 ACQUISITION DISCIPLINE 157* acquisitions SAY “NO” MANY TIMES VERY SELECTIVE ABOUT 2004 – 2018 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 50: 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 2018. For the purposes of this disclaimer, “Presentation” shall mean this document, the oral presentation of the s