Consistent and proven compounding strategy
OPERATIONAL FOCUS GLOBAL SOURCING ORGANIC GROWTH
STRONG FINANCIAL DISCIPLINE
ACQUISITION STRATEGY & TRACK RECORD
OUR PEOPLE
ATTRACTIVE CUSTOMER MARKETS
UNIQUE, CUSTOMER FOCUSED BUSINESS MODEL
BALANCED BUSINESS PORTFOLIO
BUNZL OVERVIEW
Bunzl plc is a focused and successful international distribution group providing customised solutions to B2B customers in 30 countries and six market sectors
Headquartered in London and listed on the London Stock Exchange - FTSE100 ; Support Services sector
2 APRIL 2018 BUSINESS CASE
a
One-stop-shop for essential everyday items supported by:
3,000 sales specialists and
2,500 locally based customer service specialists
SOU
RCE
CON
SOLD
ATE
DELI
VER
• Global suppliers • Low cost sources • Commodities • Own brands
INDIVIDUAL RANGES
CONSOLIDATED OFFER
Foodservice Grocery Cleaning & hygiene Safety Retail Healthcare
• Direct to site • Cross dock • Warehouse
replenishment
BUSINESS MODEL
3 APRIL 2018 BUSINESS CASE
VALUE PROPOSITION
Outsourcing to Bunzl adds value for our customers
• In-house procurement and self-distribution is costly • Bunzl applies its resources and expertise to reduce or eliminate many of the "hidden" costs of
in-house procurement and self-distribution • The benefits to customers are a lower cost of doing business and reduced working capital and
carbon emissions
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
PRODUCT COST
COST TO PROCESS
COST TO ACQUIRE
4 APRIL 2018 BUSINESS CASE
OWN BRAND
CUSTOMISED SOLUTIONS
BUNZL UNIQUE SERVICE OFFERING
EXPERT KNOWLEDGE AND ADVICE
“QUASI MANUFACTURER”
OWN BRAND
EDI
PRODUCTS STOCKED IN
BUNZL WAREHOUSE
DELIVERY OPTIONS
OWN FLEET
INDIVIDUAL PRODUCT
KNOWLEDGE
CUSTOMISED MANAGEMENT INFORMATION
VALUE ALTERNATIVE OWN BRAND
APP
DEDICATED CALL CENTRES
MANUFACTURER BRANDED
LOCAL AND NATIONAL
DISTRIBUTION NETWORK
ONE ORDER ONE DELIVERY ONE INVOICE
ONE-STOP-SHOP ON-TIME IN-FULL
DELIVERY
DIRECT TO SITE
WAREHOUSE REPLENISHMENT
X DOCK
PRODUCT AVAILABILITY
DELIVERY BEYOND BACK
DOOR
FULL RANGE
STOCKED CUSTOMISED
DELIVERY SLOTS
HEALTH AND SAFETY
REQUIREMENTS
CONSUMPTION VS CUSTOMER
BUDGET
COMPLIANCE BY UNITS TO HEAD
OFFICE
WEBSHOP
NATIONAL FOOTPRINT
MULTIPLE DELIVERY
LOCATIONS
INNOVATION CENTRES
CONTRACT MOBILISATIONS
SHANGHAI SOURCING
OFFICE - QC/QA
DESIGN / INSTALLATION
SERVICES
RANGE RATIONALISATION
DIRECT DEALS WITH MANUFACTURERS
DELIVERED BY BUNZL
BULKY LOW VALUE
PRODUCTS
PRODUCT TRAINING
USAGE
EXCEED BUDGET ALERTS
CUSTOMISED DIGITAL
SOLUTIONS
BENEFIT OF BUNZL SCALE
EXCLUSIVE DISTRIBUTION
INDUSTRY LEADING
SPECIALISED SALES FORCE
MATERIAL CONSOLIDATION
VALUE ADDED SERVICES
ESSENTIAL ITEMS
COMPETITIVELY PRICED PRODUCTS
MARKET INTELLIGENCE
MINIMISE CUSTOMERS’
WORKING CAPITAL
BESPOKE / PRINTED PRODUCT
MANAGEMENT
INNOVATION CENTRES
RIGHT PRODUCT RIGHT PRICE
SUPPLY CHAIN
STUDIES
ECONOMIC DENSITY
ANALYSIS
LOCAL CUSTOMER
SERVICE SPECIALISTS
5 APRIL 2018 BUSINESS CASE
BUSINESS AREA ANALYSIS
Well diversified by geography
* Adjusted operating profit - before adjusting items (customer relationships amortisation and acquisition related items) and corporate costs
UK & IRELAND 14% Revenue 14% Operating profit*
CONTINENTAL EUROPE 19% Revenue 25% Operating profit*
NORTH AMERICA 59% Revenue 52% Operating profit*
REST OF WORLD 8% Revenue 9% Operating profit*
6 APRIL 2018 BUSINESS CASE
3%
29%
27% 12%
12%
10%
7%
Foodservice Non-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
CUSTOMER MARKETS
resilient Foodservice Grocery Cleaning & hygiene Healthcare Well diversified by sector
75%
Cleaning & hygiene Cleaning and hygiene materials, including chemicals and hygiene paper, to cleaning and facilities management companies and industrial and public sector customers
Grocery Goods not for resale (items which are used but not actually sold), including food packaging, films, labels and cleaning and hygiene supplies, to grocery stores and supermarkets
Retail Goods not for resale, including packaging and other store supplies and a full range of cleaning and hygiene products, to retail chains, boutiques, office supply companies, department stores, home improvement chains and related e-commerce sales channels
Other
Safety A complete range of personal protection equipment, including gloves, boots, hard hats, ear and eye protection and other workwear, to industrial and construction markets
Healthcare Healthcare consumables, including gloves, swabs, gowns, bandages and other healthcare related equipment and cleaning and hygiene products to hospitals, care homes and other facilities serving the healthcare sector
Based on 2017 FY Revenue
7 APRIL 2018 BUSINESS CASE
GLOBAL SOURCING
Partner with leading manufacturers Sourcing via our own Shanghai sourcing office
PREFERRED SUPPLIERS SOURCING
Own brands Commodities
Low cost sources Eco-friendly products
9 APRIL 2018 BUSINESS CASE
CONSISTENT AND PROVEN COMPOUNDING STRATEGY
High ROIC despite significant acquisition spend
PROFITABLE ORGANIC GROWTH
Use competitive
advantage to grow market
share in a profitable way
OPERATING MODEL IMPROVEMENTS
Daily focus on making
our business more efficient
ACQUISITION GROWTH
Use strong balance sheet and excellent
cash flow to consolidate
our markets further
ROIC 16.0%
10 APRIL 2018 BUSINESS CASE
12
ORGANIC GROWTH
Organic growth typically real GDP +
SELL MORE TO EXISTING CUSTOMERS
EXPAND PRODUCT RANGE
WIN NEW CUSTOMERS
MARKET LEADING CUSTOMERS
GROWING SECTORS
TREND TO OUTSOURCING
INFLATION / DEFLATION
MARKET DYNAMICS
OWN BRAND / IMPORTS
MANUFACTURER BRANDS
GEOGRAPHIES AND SECTORS
VOLUME
MIX
PRICE
FX IMPACT
11 APRIL 2018 BUSINESS CASE
• Consolidation of warehouse footprint
• Continually evaluate and upgrade facilities including environmental initiatives
OPERATING MODEL IMPROVEMENTS
Small improvements every day everywhere lead to significant progress over time
WAREHOUSING
• Warehouse management systems
• Vehicle routing and safety systems
• CRM systems
ERP IMPLEMENTATIONS
• Investment in e-commerce capabilities
• Focus on digital marketing
• Opportunity for efficiency gains
DIGITAL CAPABILITIES
• Make use of collective resources, experience and expertise
• Global collaboration
SHARING BEST PRACTICE
• Substantial purchasing synergies with suppliers
• Benefit from Bunzl Shanghai facility (sourcing, QA and QC)
GLOBAL PURCHASING
12 APRIL 2018 BUSINESS CASE
ACQUISITION GROWTH
* Includes two committed acquisitions in 2017 which completed in January 2018 04-05 continuing operations only
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*
Number of acquisitions 7 7 9 8 7 2 9 10 13 11 17 22 14 15
Committed acquisition spend (£m)
302 129 162 197 123 6 126 185 277 295 211 327 184 616
Annualised acquisition revenue (£m)
430 270 386 225 151 27 154 204 518 281 223 324 201 621
total committed spend
£3.1bn
acquisitions 2004 - 2017
151 *
13 APRIL 2018 BUSINESS CASE
• Anchor − New geographies − New sectors
• Bolt-on − Existing geographies or sectors − Extending product range − Consolidating markets
Disciplined approach to acquisitions
FURTHER MARKET CONSOLIDATION AND SYNERGIES
RESILIENT AND GROWING MARKETS
FRAGMENTED CUSTOMER BASE
ATTRACTIVE FINANCIAL RETURNS (ROIC, ROACE)
SMALL % OF TOTAL CUSTOMER SPEND
OPPORTUNITY FOR ‘OWN LABEL’ PRODUCTS
CONSOLIDATED PRODUCT OFFERING (‘ONE- STOP-SHOP’)
B2B GOODS NOT-FOR-RESALE
ACQUISITION PARAMETERS
• Extracting Value − Purchasing synergies − Warehouse & distribution
efficiencies − Back office integration − Product range extension − Sharing best practice − Investment in infrastructure, IT
& e-commerce
14 APRIL 2018 BUSINESS CASE
North America Continental Europe UK & Ireland Rest of World
COUNTRIES
COUNTRIES 7 1997*
COUNTRIES 12 2003*
COUNTRIES 18 2005*
COUNTRIES 27 2012
COUNTRIES 30 2017
GEOGRAPHIC EXPANSION
Significant scope for future geographic expansion
Revenue
2004*
2010
2017
* Continuing operations only 15 APRIL 2018 BUSINESS CASE
SIGNIFICANT OPPORTUNITIES TO GROW IN EXISTING COUNTRIES
COUNTRY FOODSERVICE GROCERY C&H SAFETY RETAIL HEALTHCARE
USA ●
Canada ●
Mexico ● ● ●
UK
Ireland
Germany ● ●
France ● ●
Italy ● ● ● ●
Spain ●
Netherlands
Belgium ●
Denmark ● ●
Switzerland
Austria ● ● ● ● ●
Czech Republic ● ● ● ●
COUNTRY FOODSERVICE GROCERY C&H SAFETY RETAIL HEALTHCARE
Hungary ● ●
Romania ● ● ●
Slovakia ● ● ● ●
Israel ● ● ● ● ●
Turkey ● ● ● ●
Brazil ● ●
Chile ● ● ● ●
Colombia ● ● ● ● ●
Argentina ● ● ● ● ●
Peru ● ● ● ● ●
Uruguay ● ● ● ● ●
Australia
New Zealand ●
China / Hong Kong ● ● ● ●
Singapore ● ● ● ● ●
● No existing presence
16 APRIL 2018 BUSINESS CASE
EXPERIENCED MANAGEMENT
service on average within the management team
>15 yrs
17
Brian May Finance Director
Frank van Zanten Chief Executive
Patrick Larmon President and CEO
North America
Julie Welch Director of Group Human Resources
Paul Hussey General Counsel & Company Secretary
Andrew Tedbury Managing Director
UK & Ireland
Andrew Mooney Director of Corporate
Development
Paul Budge Managing Director Continental Europe
Jonathan Taylor Managing Director
Latin America
Kim Hetherington Managing Director
Australasia
APRIL 2018 BUSINESS CASE
• Flat organisational structure
• Clear lines of responsibility
• Excel at customer service
VALUING OUR PEOPLE
Our people are our greatest asset c. 19,000 employees
CLEAR ROLES AND OBJECTIVES
• High retention rate of owners post acquisition
• Business model relies on knowledge and expertise in local markets
• Ensures customer relationships maintained
RETENTION OF FORMER OWNERS
• Sharing of best practice across the Group
• Facilitating collaboration across sectors via formal and informal forums
GLOBAL COLLABORATION
• Make use of collective resources, experience and expertise
• Focus on career development and succession plans
• Management development programmes at various levels across the Group
• Targeted activities to increase the number of women in senior leadership roles
DEVELOPMENT AND TRAINING OPPORTUNITIES
APRIL 2018 BUSINESS CASE 18
STRONG FINANCIAL DISCIPLINE
* Before adjusting items (customer relationships amortisation and acquisition related items) and the associated taxation, where relevant (04-05 continuing operations only) † Operating cash flow before acquisition related items to adjusted operating profit (04-05 continuing operations only) All data FY 2017 unless otherwise stated
6%†
HIGH RETURN ON CAPITAL • RETURN ON OPERATING CAPITAL : 53.1% • RETURN ON INVESTED CAPITAL (PRE-TAX): 16.0%
NET DEBT / EBITDA • TARGET RANGE: 2.0x – 2.5x
LOW WORKING CAPITAL AND CAPEX REQUIREMENTS
• AVERAGE WORKING CAPITAL TO SALES AT 11.2% • AVERAGE CAPEX OF £28M OVER PAST 3 YEARS
HIGH LEVEL OF CASH CONVERSION
• OPERATING CASH FLOW † TO ADJUSTED OPERATING PROFIT* AVERAGE : 97% 2004 -2017
GROWING DIVIDEND • DIVIDEND PER SHARE CAGR > 10% (92-17) • 25 CONSECUTIVE YEARS OF DIVIDEND GROWTH
UNIFORM FINANCIAL REPORTING SYSTEM • ACROSS ALL GEOGRAPHIES
19 APRIL 2018 BUSINESS CASE
93% 95%92%
103%
92%
102%
93%
110%
93%
102%95% 97% 99% 97%
04 05 06 07 08 09 10 11 12 13 14 15 16 17
CASH CONVERSION
Average cash conversion*
97% TARGET 90%
* Operating cash flow before acquisition related items to adjusted operating profit 04 – 05 continuing operations only 20 APRIL 2018 BUSINESS CASE
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
DIVIDEND PER SHARE (p)
of consecutive dividend increases
25 years
4.0
46.0
CAGR
> 10%
21 APRIL 2018 BUSINESS CASE
2.4
8.6
04 05 06 07 08 09 10 11 12 13 14 15 16 17
FINANCIAL TRACK RECORD 2004-2017
Proven compounding growth strategy CAGR
* Before adjusting items (customer relationships amortisation and acquisition related items) and the associated taxation, where relevant 04-05 continuing operations only
REVENUE (£bn) ADJUSTED OPERATING PROFIT* (£m)
ADJUSTED EPS* (p) DIVIDEND PER SHARE (p) 04-12 restated on adoption of IAS 19 (revised 2011)
169
589
04 05 06 07 08 09 10 11 12 13 14 15 16 17
31.7
119.4
04 05 06 07 08 09 10 11 12 13 14 15 16 17
13.3
46.0
04 05 06 07 08 09 10 11 12 13 14 15 16 17
10%-11%
22 APRIL 2018 BUSINESS CASE
CONTACTS
Bunzl plc +44 20 7725 5000
Frank van Zanten – Chief Executive Brian May – Finance Director
[email protected] www.bunzl.com
23 APRIL 2018 BUSINESS CASE
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 (“Bunzl”) 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. All statements other than statements of historical fact are, or may be deemed to be, 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 to whom under Article 49 of the Order financial promotions may be made as an exception to the general prohibition under Article 21 of the Order; or (iii) to persons outside of the United Kingdom but in the European Economic Area (“EEA”) who are “qualified investors” within the meaning of Article 2(1)(e) of EU Directive 2003/71/EC, as modified by EU Directive 2010/73/EU, in each case as implemented in the relevant jurisdiction (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. If you are not resident in an EEA member state or you are viewing this presentation in a country that is not an EEA member state, information displayed in this presentation contains material that may be interpreted by the relevant authorities in the country from which you are viewing the presentation as a financial promotion or an offer to purchase securities. Accordingly, the information in this presentation is only intended to be viewed by persons who fall outside the scope of any law that seeks to regulate financial promotions in your country of residence or in the country in which this presentation is being viewed.
DISCLAIMER
24 APRIL 2018 BUSINESS CASE