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About us
Bunzl is a growingand successful Group providing outsourcing solutions and value added distribution across the Americas, Europe and Australasia
Business Case May 2015 1
Source Consolidate Deliver
Business overview
2
Sales channel
Products
Sourcing
Footprint
Key facts
Financials
Business to business distribution
£6.2bn revenue in 2014
Wide range of non-food consumable products
From leading brand manufacturers
Own brands and unbranded products
Sourcing centre in Shanghai – no own manufacturing
c.15,000 employees (2014 year end)
International diversification: 28 countries, 4 continents
UK plc headquartered in London
Listed on LSE; FTSE 100; Support Services sector
Revenue growth: 10% (CAGR 04-14)
Adjusted operating profit growth*: 10% (CAGR 04-14)
Average annual cash conversion† of 97% (04-14)* Before intangible amortisation and acquisition related costs† Operating cash flow before acquisition related costs to operating profit before intangible amortisation and acquisition related costs
2004-2005 continuing operations only
Business Case May 2015
Benefits to customers:Supply Chain
Supported byan integratedIT platform
Customer
Global sourcing& procurement
International warehousing& distribution infrastructure
3
Consolidationof consumables
Range of delivery options
Business Case May 2015
Value proposition
In-house procurement andself distribution is costly
Bunzl applies its resourcesand expertise to reduce or eliminate many of the “hidden” costs of in-house procurement and self distribution
The benefits to customers area lower cost of doing business and reduced working capital and carbon emissions
Outsourcingadds value forour customers
4
Product cost
Inventory investment
Cash flow
Direct labour & overtime
Inventory finance cost
Expedited orders
Inbound freight
Purchase order administration
Inventory damage & shrinkage
Accounts payable admin
Storage space
Capital employed
Cost to acquire
Cost to process
Business Case May 2015
Market environment
5
Growing market sectors Fragmented competitors
Customer baseOutsourcing trend
Exposed to growing sectors including
– Foodservice – away from home
– Cleaning & hygiene – away from home
– Healthcare – demographics
– Safety – increased legislation
None do what we do, on our scale and across our markets
Bunzl’s national footprint provides competitive advantage
Strong customer base
Working with national and international leaders
Aligned with customer growth
Customers and manufacturers focusing on their core business
Multiple growth drivers
Business Case May 2015
Operatingmodel efficiencies
We constantly striveto make our business more efficient and environmentally friendly
Acquisition growth
Since 2004 we have announced 100 acquisitions with total spend of £1.9bn
Organic growth
By outsourcing to Bunzl the purchase, consolidation and delivery of a broad range of products our customers achieve efficiencies and savings
Consistent and proven strategy
ROIC
17.6%
6
High ROICdespite significant acquisition spend
Business Case May 2015
Key competitive advantages
7
A platform for growth
Unique
business
model
Strong
financial
discipline
Acquisition
strategy &
track record
Operational
focus
Experienced
management
Global
sourcing
Attractive
customer
markets
Balanced
business
portfolio
Business Case May 2015
Business model
One-stop-shopfor non-food consumables
8
Source
Consolidate
Deliver
Global suppliers
Low cost sources
Commodities
Own brands
Foodservice GroceryCleaning& hygiene
Retail Safety Healthcare
Individual ranges
to
Consolidated offer
to
Business Case May 2015
Attractive customer markets
28%
26%13%
12%
11%
7%3%
HealthcareDisposable healthcare consumables, including gloves, swabs, gowns and bandages and other healthcare related equipment to hospitals, care homes and other facilities serving the healthcare sector.
SafetyA complete range of personal protection equipment, including hard hats, gloves, boots, ear and eye protection and other workwear, to industrial and construction markets.
RetailGoods not for resale, including packaging and other store supplies and a full range of cleaning and hygiene products, to department stores, boutiques, office supply companies, retail chains and home improvement chains.
Cleaning & hygieneCleaning and hygiene materials, including chemicals and hygiene paper, to cleaning and facilities management companies and industrial and healthcare customers.
FoodserviceNon-food consumables, including food packaging, disposable tableware,guest amenities, catering equipment, cleaning products and safety items, to hotels, restaurants, contract caterers, food processors and the leisure sector.
GroceryGoods not for resale (items which are used but not actually sold), including food packaging, films, labels and cleaning and hygiene supplies, to grocery stores, supermarkets and retail chains.
OtherA variety of product ranges supplied to other end user markets such as government and education establishments.
9Business Case May 2015
c.75% resilient Grocery FoodserviceCleaning & hygiene Healthcare
2014 FY Revenue
Balanced business portfolio
11
Geographic balance
Our markets are at different stages of maturity
National footprints
International brands and local products
Regional diversification
Customer markets balance
Six market sectors with numerous sub-sectors
Products and markets – specialist distributors
Direct to customer or through a sub-distributor
Diversified by geography and sector
55%
19%
17%
9% North America
Continental Europe
UK & Ireland
Rest of the World
Business Case May 2015
2014 FY Revenue
Operational focus
12
Hands on management with clear customer focus
Full P&L and working capital responsibility
Aligned incentive measurement with profit and ROCE
Decentralised operating structure
Investing
Majority of capex spend on IT systems and warehouse facilities
Robust IT and systems strategy e.g. warehouse management
Order systems and vehicle routing
Continually evaluating and upgrading our warehousing
Sharing best practice across all business areas
Business Case May 2015
Global sourcing
13
+Own brands
Commodities
Low cost sources
Eco-friendly products
SourcingPreferred suppliers
Business Case May 2015
Acquisition strategy
14
Key acquisition parameters
Acquisition types
Business to business
Consolidated “not-for-resale” product offering
Resilient and growing markets
Fragmented customer base
Scope for further consolidation and synergies
Small % of total customer spend
Opportunity for “own label” products
Attractive financial returnsRetention of managers and customers is key
Anchor
– New geographies
– New markets
Bolt-on – existing geography and market
– Extending product range
– Consolidating markets
Extracting value
Purchasing synergies
Warehouse & distribution efficiencies
Back office integration
Customer overlays
Product range extensions
Sharing best practice
Investment in infrastructure
Business Case May 2015
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Number of
acquisitions7 7 9 8 7 2 9 10 13 11 17
Committed
acquisition
spend (£m)
302 129 162 197 123 6 126 185 277 295 211
Annualised
acquisition
revenue (£m)
430 270 386 225 151 27 154 204 518 281 223
Acquisition growth
15
04-05 continuing operations only
Average annual acquisition spend over the last 3 years
£261m
Business Case May 2015
2014
Geographic expansion timeline
16
1997*
7 countries
2003*
12 countries
2015
28 countries
2008
23 countries
2005*
18 countries
Revenue
2010
North America Continental Europe UK & Ireland Rest of the world
2005*
* Continuing operations only
Business Case May 2015
Experienced management
17
Experienced executive directors and management team
Brian May
Finance Director
Michael Roney
Chief ExecutivePatrick Larmon
President and
CEO North
America
Celia Baxter
Director of Group
Human
Resources
Paul Hussey
General Counsel
& Company
Secretary
Paul Budge
Managing
Director UK &
Ireland
Andrew Mooney
Director of
Corporate
Development
Frank van Zanten
Managing
Director
Continental
Europe
Rodrigo
Mascarenhas
Managing
Director Latin
America
Kim Hetherington
Managing
Director
Australasia
Business Case May 2015
Strong financial discipline
18
High return on capital
Strong balance sheet
Low working capital requirements
Low capex
High free cash flow yield
Uniform financial reporting system
Return on operating capital: 57.7% Return on invested capital (pre-tax): 17.6%
(2014)
Net debt/EBITDA 1.9x year end 2014
Average working capital to sales at 10% in 2014
Average of £23m p.a. over past 3 years
Operating cash flow† to adjusted operating profit* average of 97% 2004 - 2014
Across all geographies
†Before acquisition related costs
*Before intangible amortisation and acquisition related costs
Growing dividend stream
Dividend per share CAGR of 10% since 2004
Business Case May 2015
Cash conversion*
19
93% 95%92%
103%
92%
102%
93%
110%
93%
102%
95%
04 05 06 07 08 09 10 11 12 13 14
* Operating cash flow before acquisition related costs to adjusted operating profit
04 - 05 continuing operations only
90%
Average cash conversion* of
funds growing dividend and acquisitions
97%
Business Case May 2015
Revenue (£bn)Financial track record 2004 - 2014
20
2.4
2.9
3.33.6
4.2
4.64.8
5.15.4
6.1 6.2
04 05 06 07 08 09 10 11 12 13 14
31.7
38.241.1
44.4
51.855.4
59.7
67.670.6
82.486.2
04 05 06 07 08 09 10 11 12 13 14
Adjusted eps (p)
Adjusted operating profit (£m)
Dividend per share (p)
All CAGRs greater than
04-05 continuing operations only
04-12 restated on adoption
of IAS 19 (revised 2011)
169
203226
243
281296
307
336352
414430
04 05 06 07 08 09 10 11 12 13 14
Before intangible amortisation and
acquisition related costs
04-05 continuing operations only
13.3
15.717.0
18.720.6
21.623.4
26.428.2
32.4
35.5
04 05 06 07 08 09 10 11 12 13 14
10%
Business Case May 2015
Business case summary
21
Clear strategy for growth
Entering new markets/product groups Expansion/penetration of established
markets Strong operational focus
Attractive business model
Strong business model
Clear value added for customers and suppliers
Recurring revenues “Big in the middle”
Attractive markets
Resilient and growing markets Multiple growth drivers Fragmented with opportunity to
consolidate
Balanced portfolio
Product diversification Geographical presence Independence from customers and
suppliers
Robust financial performance
Consistent revenue and earnings growth High cash generation Cash reinvested at high return on capital Strong and growing dividend stream
Business Case May 2015
Contacts
22
Bunzl plc+44 20 7725 5000
Michael Roney – Chief ExecutiveBrian May – Finance Director
Business Case May 2015
Disclaimer
23
No representation or warranty (express or implied) of any nature can be given, nor is any
responsibility or liability of any kind accepted, by Bunzl plc with respect to the completeness or
accuracy of the content of or omissions from this presentation.
This presentation is for information purposes only and does not constitute and shall not be deemed
to constitute an offer document or an offer in respect of securities or an invitation to purchase or
subscribe for any securities in any jurisdiction. Persons in a jurisdiction other than the United
Kingdom should ensure that they inform themselves about and observe any relevant securities laws
in that jurisdiction in respect of this presentation.
The presentation does not constitute an offer of securities for sale in the United States. None of the
securities described in the presentation have been registered under the U.S. Securities Act of 1933.
Such securities may not be offered or sold in the United States except pursuant to an exemption
from such registration.
This presentation contains forward-looking statements. They are subject to risks and uncertainties
that might cause actual results and outcomes to differ materially from the expectations expressed in
them. You are cautioned not to place undue reliance on such forward-looking statements which
speak only as of the date hereof. Bunzl undertakes no obligation to revise or update any such
forward-looking statements.
Where this presentation is being communicated as a financial promotion it will only be made to and
directed at: (i) those persons who have professional experience in matters relating to investments
falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005 (the “Order”); (ii) those persons falling within Article 49 of the Order; or (iii) to persons
outside of the United Kingdom only where permitted by applicable law (all such persons together
being referred to as “relevant persons”) and must not be acted on or relied on by persons who are
not relevant persons.
Business Case May 2015