Slide 1: 2014 Half Year Results
2014 Half Year Results August 2014
Slide 2: Agenda
Agenda 1 Philip Rogerson, Chairman: Welcome 2 Brian May, FD: Financial Results 3 Michael Roney, CEO: Business Review 4 Q&A 2014 Half Year Results 1
Slide 3: Highlights
Highlights Consistent £119m spent Excellent set and proven ytd on 12 of results strategy acquisitions Adjusted earnings per Dividend up share* up 10% 14%† * Before intangible amortisation and acquisition related costs † At constant exchange rates 2014 Half Year Results 2
Slide 4: Financial results
Financial results Brian May, FD 2014 Half Year Results 3
Slide 5: Income statement
Growth % Income Constant statement £m June 14 June 13 Reported Exchange Revenue 2,938.7 2,956.6 (1) 7 Operating profit* 197.2 188.8 4 13 Net finance cost (20.6) (21.2) Profit before tax* 176.6 167.6 5 14 Operating margin* (%) 6.7 6.4 Effective tax rate (%) 28.0 27.9 Adjusted earnings per 39.0 37.1 5
Slide 6: Dividend per share (p)
Dividend per share (p) 32.4 CAGR >10% Consistently 21 years of growth strong dividend growth 4.0 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 2014 Half Year Results 5
Slide 7: Balance sheet
Balance £m June 14 Dec 13 June 13 sheet Intangibles 1,469.7 1,456.9 1,457.2 Tangibles 117.0 118.8 123.7 Working capital 523.1 520.3 536.7 Other liabilities (304.4) (261.6) (316.6) Return on average 1,805.4 1,834.4 1,801.0 operating capital 57.8%, up 90bps Pension deficit (59.2) (45.0) (59.6) from De
Slide 8: Cash flow
Cash flow £m June 14 June 13 Operating cash flow* 200.2 193.9 Interest (19.7) (17.1) Tax (47.1) (37.9) Free Cash flow 133.4 138.9 Dividends (32.6) (28.8) Acquisitions (118.7) (150.0) Employee share schemes (34.7) (54.5) Net cash flow (52.6) (94.4) Operating cash flow* to operating profit† 102% 103%
Slide 9: Cash conversion
Cash 110% conversion* 103% 102% 102% 102% 93% 95% 93% 93% 92% 92% 90% High cash conversion funds growing dividend and acquisitions Average cash conversion* 98% 04 05 06 07 08 09 10 11 12 13 H1 14 * Operating cash flow before acquisition related costs to operating profit before intangible amortisatio
Slide 10: Financial summary
Financial Revenue and Revenue Operating Operating summary Operating profit profit* margin* %† 7 13% † 30bps Increases in all business areas Capital ROACE Cash Acquisition management conversion ** spend ytd and Cash flow 90bps 102% £119m June 14 v Dec 13 EPS and Adjusted Dividend Dividend EPS
Slide 11: Business review
Business review Michael Roney, CEO 2014 Half Year Results 10
Slide 12: Business review: Operations review, Strategy, Prospects
Business review 1 Operations review 2 Strategy 3 Prospects 2014 Half Year Results 11
Slide 13: Revenue growth
Revenue growth £m 3,500 4.6% 6.7% 3,000 2.1% 57 127 2,500 2,000 2,939 2,755 1,500 1,000 Revenue HY 13 Organic* Acquisitions Revenue (FX Adjusted) HY 14 * Adjusting for Q1 adverse weather in North America, underlying organic revenue growth c. 2.5% 2014 Half Year Results 12
Slide 14: Broad based growth
Broad £m based 3,100 3,000 61 growth 2,900 82 16 25 2,800 2,700 2,939 2,600 2,755 2,500 2,400 Revenue NA CE UK&I ROW Revenue HY 13 HY 14 (FX Adjusted) £m 220 210 8 4 4 200 7 190 180 207 170 184 160 150 Operating NA CE UK&I ROW Operating profit* HY 13 profit* (FX Adjusted) HY 14 * Before intangible a
Slide 15: Business area analysis
Business area analysis NORTH AMERICA CONTINENTAL EUROPE Well diversified by geography and 54% Revenue 20% Revenue sector 47% Operating profit* 24% Operating profit* UK & IRELAND REST OF WORLD 17% Revenue 9% Revenue 16% Operating profit* 13% Operating profit* * Before intangible amortisation and acqu
Slide 16: Overview
Overview Strong overall performance North America – good organic revenue growth and acquisitions led to improved margins Continental Europe – strong profit growth in tough economic environment UK & Ireland – good organic growth, improved operating margin and return on operating capital of 108%
Slide 17: North America
North Growth % Constant America £m June 14 June 13 Reported Exchange Revenue 1,590.1 1,645.5 (3) 5 Operating profit* 97.4 98.6 (1) 8 Margin* 6.1% 6.0% Return on operating capital 61.2% 60.7% Growth in grocery despite the severe winter weather in Q1 Slight increase in redistribution sales Food
Slide 18: Continental Europe
Continental Growth % Constant Europe £m June 14 June 13 Reported Exchange Revenue 573.3 577.4 (1) 3 Operating profit* 50.1 47.7 5 9 Margin* 8.7% 8.3% Return on operating capital 49.6% 43.4% France ̶ Significant increased profit in cleaning and hygiene due to ongoing cost reduction measures ̶ Stron
Slide 19: UK & Ireland
UK & Ireland Growth % Constant £m June 14 June 13 Reported Exchange Revenue 507.8 483.9 5 5 Operating profit* 33.7 29.7 13 13 Margin* 6.6% 6.1% Return on operating capital 107.5% 92.6% Organic revenue growth at highest level since 2007 Cleaning and safety benefitted from a recovery in the constr
Slide 20: Rest of the World
Rest of the Growth % Constant World £m June 14 June 13 Reported Exchange Revenue 267.5 249.8 7 29 Operating profit* 26.1 22.0 19 45 Margin* 9.8% 8.8% Return on operating capital 45.5% 47.5% Overall strong growth with substantial acquisition impact Latin America ̶ Strong performance in Brazil ̶ R
Slide 21: Consistent and proven strategy
Consistent and proven strategy GDP+ organic Acquisition growth Operating growth Since 2004 we have model efficiencies By outsourcing to Bunzl announced 95 We constantly strive the purchase, acquisitions with total to make our business consolidation and spend of £1.8bn more efficient and delivery of
Slide 22: Acquisition growth 2014 ytd
Business Acquired Country Sector Revenue* Acquisition growth Bäumer January Germany Cleaning & hygiene £10m 2014 ytd Oskar Plast February Czech Grocery £13m Lamedid March Brazil Healthcare £13m Nelson Packaging March NZ Cleaning & hygiene £3m Plast Techs March USA Cleaning & hygiene £14m 12 acquisit
Slide 23: Annualised acquisition revenue
2014 Annualised £m 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ytd acquisition North 115 198 103 15 - - 35 7 410 89 14 America revenue Continental 301 61 7 100 52 - 115 96 23 5 41 Europe UK & - 2 267 110 39 27 - 39 16 32 36 Ireland Rest of the Acquisitions 14 9 9 - 60 - 4 62 69 155 51 World ac
Slide 24: Acquisition growth
2014 Acquisition 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ytd growth Number of 7 7 9 8 7 2 9 10 13 11 12 acquisitions Committed acquisition 302 129 162 197 123 6 126 185 277 295 119 spend (£m) Annualised acquisition 430 270 386 225 151 27 154 204 518 281 142 Average annual revenue acquisiti
Slide 25: Acquisition discipline
Acquisition discipline Say “no” many Very selective more times than about countries “yes” and sectors 95 acquisitions announced since Review Retention of 2004 Thorough due performance vs management diligence investment case and customers with Board is key 2014 Half Year Results 24
Slide 26: Financial track record
Financial Revenue (£bn) Operating profit (£m) track record 04-05 continuing operations only 6.1 Before amortisation and acquisition related costs and corporate costs 433 04-05 continuing operations only 5.4 371 5.1 353 4.8 4.6 323 312 4.2 297 3.6 259 3.3 241 2.9 218 2.4 183 All CAGRs greater than 20
Slide 27: Prospects
Prospects Overall trading for the year anticipated to be in line with expectations Reported results will continue to be adversely affected if current exchange rates prevail Each business area should continue to grow at constant exchange rates with operating margins expected to be at similar le
Slide 28: Appendices
Appendices 2014 Half Year Results 27
Slide 29: Appendix 1: Exchange rates
Appendix 1 June 14 June 13 Average rate Exchange US $ 1.67 1.54 rates Euro 1.22 1.18 Australian $ 1.82 1.52 Canadian $ 1.83 1.57 Brazilian Real 3.83 3.14 Closing rate US $ 1.71 1.52 Euro 1.25 1.17 Australian $ 1.81 1.66 Canadian $ 1.82 1.60 Brazilian Real 3.77 3.35 2014 Half Year Results 28
Slide 30: Appendix 2: Net debt
Six Appendix 2 months to Year to Six months £m June 14 Dec 13 to June 13 Net debt Opening net debt (849.5) (738.1) (738.1) Net cash outflow (52.6) (113.2) (94.4) Currency inflow / (outflow) 22.0 1.8 (40.2) Closing net debt (880.1) (849.5) (872.7) 2014 Half Year Results 29
Slide 31: Appendix 3: Cash flow
Appendix 3 £m June 14 June 13 Operating profit* 197.2 188.8 Cash flow Depreciation 11.7 12.9 Working capital movement 5.5 5.1 Other (2.9) 0.2 Cash flow from operations 211.5 207.0 Net capital expenditure (11.3) (13.1) Operating cash flow** 200.2 193.9 Operating cash flow** to operating profit* 102%
Slide 32: Appendix 4: Revenue by customer
Appendix 4 Healthcare Other Revenue by customer markets 3% 7% c.75% resilient 10% 29% Grocery Safety Foodservice Cleaning & hygiene Foodservice Healthcare 12% Non-food retail 12% 27% Grocery Cleaning & hygiene 2013 FY Revenue 2014 Half Year Results 31
Slide 33: Appendix 5: Historical data
Appendix 5 £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 Historical Operating 169 203 226 243 281 296 307 336 352 414 profit* data 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 acqui
Slide 34: Appendix 6: Geographic expansion timeline
Appendix 6 1997* 2003* 2005* 2008 2013 Geographic 7 countries 12 countries 18 countries 23 countries 27 countries expansion timeline Revenue 2013 2009 2005* North America Continental Europe UK & Ireland Rest of the world * Continuing operations only 2014 Half Year Results 33
Slide 35: Appendix 7: Business model
Appendix 7 Global suppliers Low cost sources Business Source Commodities model Own brands Individual ranges to One-stop-shop for non-food consumables Consolidate Consolidated offer to Deliver Cleaning Non-food Foodservice Grocery Safety Healthcare & hygiene retail 2014 Half Year Results 34
Slide 36: Appendix 8: Value proposition
Appendix 8 Cost to acquire Product cost Value proposition Inventory investment Cash flow Direct labour & overtime Outsourcing Inventory finance cost Cost to adds value for process Expedited orders our customers Inbound freight Purchase order administration Inventory damage & shrinkage Accounts payab
Slide 37: Appendix 9: Key acquisition parameters
Appendix 9 Consolidated Key B2B Goods not for product offering acquisition resale (‘one-stop-shop’) parameters Further market Sectors with Fragmented consolidation and growth customer base synergies Opportunity for Attractive Small % of total “own label” financial returns customer spend products (RO
Slide 38: Appendix 10: Key competitive advantages
Appendix 10 Key Choice of Decentralised customer management competitive sectors model advantages Expertise Alignment of in making management acquisitions incentives Ex-owners Global stay with sourcing Bunzl 2014 Half Year Results 37
Slide 39: Appendix 11: Why invest in Bunzl?
Appendix 11 “ 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
Slide 40: Disclaimer
This document has been prepared by Bunzl plc (the “Company”) solely for use at the presentation Disclaimer of the Company’s results announcement in respect of the six months ended 30 June 2014. For the purposes of this disclaimer, “Presentation” shall mean this document, the oral presentation of the