Business Case. June 2016

Transcription

1 Business Case June 2016

2 About us Bunzl is a growing and successful Group providing outsourcing solutions and value added distribution across the Americas, Europe and Australasia Source Consolidate Deliver 1

3 Business overview Sales channel Business to business distribution 6.5bn revenue in 2015 Products Wide range of non-food consumable products Sourcing Footprint Key facts From leading brand manufacturers Own brands and unbranded products Sourcing centre in Shanghai no own manufacturing c.15,000 employees (2015 average) International diversification: 29 countries, 4 continents UK plc headquartered in London Listed on LSE; FTSE 100; Support Services sector Financials Revenue growth: 9% (CAGR 04-15) Adjusted operating profit growth * : 9% (CAGR 04-15) Average annual cash conversion of 97% (04-15) * Before intangible amortisation and acquisition related costs Operating cash flow before acquisition related costs to adjusted operating profit continuing operations only 2

4 Benefits to customers: Supply Chain Global sourcing & procurement Supported by integrated IT and e-commerce systems International warehousing & distribution infrastructure Consolidation of consumables Range of delivery options Customer 3

5 Value proposition Cost to acquire Product cost Outsourcing 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 payable admin Storage space Capital employed 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 4

6 Market environment Multiple growth drivers Growing market sectors Exposed to growing sectors including Foodservice away from home Cleaning & hygiene away from home Healthcare demographics Safety increased legislation Fragmented competitors None do what we do, on our scale and across our markets Bunzl s national footprints provides competitive advantage Outsourcing trend Customers and manufacturers focusing on their core business Customer base Strong customer base Working with national and international leaders Aligned with customer growth 5

7 Consistent and proven strategy Compounding growth model at high ROIC GDP+ organic growth Organic revenue growth exceeded relevant GDP for 9 of the last 11 years Acquisition growth Between 2004 and 2015 we have announced 122 acquisitions with total spend of 2.2bn Operating model efficiencies We constantly strive to make our business more efficient and environmentally friendly ROIC 17.1% 6

8 Key competitive advantages A platform for growth Unique business model Attractive customer markets Balanced business portfolio Operational focus Global sourcing Acquisition strategy & track record People Strong financial discipline 7

9 Business model Source Global suppliers Low cost sources Commodities Own brands One-stop-shop for non-food consumables Consolidate Individual ranges to Consolidated offer to Deliver Foodservice Grocery Cleaning & hygiene Retail Safety Healthcare 8

10 Attractive customer markets Healthcare Disposable healthcare consumables, including gloves, swabs, gowns and bandages and other healthcare related equipment to hospitals, care homes and other facilities serving the healthcare sector. Other A variety of product ranges supplied to other end user markets such as government and education establishments. c.75% resilient Grocery Foodservice Cleaning & hygiene Healthcare Safety A complete range of personal protection equipment, including hard hats, gloves, boots, ear and eye protection and other workwear, to industrial and construction markets. 11% 12% 7% 4% 28% 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. Retail Goods 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. 12% 26% 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, supermarkets and retail Cleaning & hygiene chains. Cleaning and hygiene materials, including chemicals and hygiene paper, to cleaning and facilities management companies and industrial and healthcare customers FY Revenue 9

11 Typical Products A broad range of non-food consumable products 10

12 Balanced business portfolio Diversified by both geography and sector Geographic balance 8% North America 17% Continental Europe 17% 58% 2015 FY Revenue Regional diversification UK & Ireland Rest of the World Our markets are at different stages of maturity National footprints International brands and local products Customer markets balance Six market sectors with numerous sub-sectors Products and markets specialist distributors Direct to customer or through a sub-distributor 11

13 Operational focus Decentralised operating structure Hands-on management with clear customer focus Full P&L and working capital responsibility Aligned incentive measurement with profit and ROCE Sharing best practice across all business areas Investing Majority of capex spend on IT systems and warehouse facilities Robust IT and systems strategy e.g. warehouse management Investment in e-commerce systems Interfacing IT with customers and suppliers Order systems and vehicle routing Continually evaluating and upgrading our warehousing 12

14 Global sourcing Preferred suppliers Sourcing + Own brands Commodities Low cost sources Eco-friendly products 13

15 Acquisition strategy Retention of managers and customers is key Key acquisition parameters 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 returns Acquisition types 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, IT & e-commerce 14

16 Acquisition growth Average annual acquisition spend over the last four years 278m Number of acquisitions Committed acquisition spend ( m) Annualised acquisition revenue ( m) continuing operations only 15

17 Geographic expansion timeline 1997* 7 countries 2003* 12 countries 2005* 18 countries countries countries Continued geographic expansion though acquisitions Revenue * North America Continental Europe UK & Ireland Rest of the world * Continuing operations only 16

18 Valuing our people Clear roles and objectives Flat organisational structure Clear lines of responsibility Excellent customer service Retention of former owners High retention rate of owners post acquisition Business model is capital light and relies on knowledge and expertise in local markets Ensures customer relationships are maintained Development and training opportunities Personal responsibility to grow within roles Focus on internal appointments and promotions Formal training programmes 17

19 Experienced management Experienced executive directors and management team Frank van Zanten Chief Executive Brian May Finance Director Patrick Larmon President and CEO North America Celia Baxter Director of Group Human Resources Paul Hussey General Counsel & Company Secretary Andrew Mooney Director of Corporate Development Paul Budge Managing Director Continental Europe Andrew Tedbury Managing Director UK & Ireland Rodrigo Mascarenhas Managing Director Latin America Kim Hetherington Managing Director Australasia 18

20 Strong financial discipline High return on capital Strong balance sheet Return on operating capital: 55.5% Return on invested capital (pre-tax): 17.1% (2015) Net debt/ebitda 2.1x year end 2015 Low working capital requirements Average working capital to sales at 11% in 2015 Low capex Average of 24m p.a. over past 3 years High level of cash conversion Operating cash flow to adjusted operating profit* average of 97% Uniform financial reporting system Across all geographies Growing dividend stream Dividend per share CAGR of 10% since 2004 Before acquisition related costs *Before intangible amortisation and acquisition related costs 19

21 Cash conversion 93% 95% 92% 103% 92% 102% 93% 110% 93% 102% 95% 97% 90% Consistently high cash conversion funds growing dividend and acquisitions Average cash conversion* of 97% * Operating cash flow before acquisition related costs to adjusted operating profit continuing operations only 20

22 Financial track record %-10% CAGR Revenue ( bn) continuing operations only Adjusted eps (p) Adjusted operating profit ( m) Before intangible amortisation and acquisition related costs continuing operations only Dividend per share (p) restated on adoption of IAS 19 (revised 2011)

23 Business case summary Attractive business model Clear strategy for growth Strong business model Attractive markets Entering new markets/product groups Expansion/penetration of established markets Strong operational focus Clear value added for customers and suppliers Recurring revenues Big in the middle Resilient and growing markets Multiple growth drivers Fragmented markets 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 conversion Cash reinvested at high return on capital Strong and growing dividend stream 22

24 Contacts Bunzl plc Frank van Zanten Chief Executive Brian May Finance Director 23

25 Disclaimer 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 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. 24