BUSINESS CASE
BUNZL OVERVIEW Consistent and proven compounding strategy UNIQUE BUSINESS MODEL GLOBAL SOURCING BALANCED BUSINESS PORTFOLIO ORGANIC GROWTH ATTRACTIVE CUSTOMER MARKETS OPERATIONAL FOCUS ACQUISITION STRATEGY & TRACK RECORD OUR PEOPLE STRONG FINANCIAL DISCIPLINE Bunzl plc is a focused and successful international distribution and outsourcing group Headquartered in London and listed on London Stock Exchange - FTSE100 ; Support Services sector 2
BUSINESS MODEL One-stop-shop for non-food consumables SOURCE Global suppliers Low cost sources Commodities Own brands INDIVIDUAL RANGES CONSOLDATE Direct to site Cross dock Warehouse replenishment CONSOLIDATED OFFER DELIVER Foodservice Grocery Cleaning & hygiene Safety Retail Healthcare 3
VALUE PROPOSITION Outsourcing adds value for our customers COST TO ACQUIRE PRODUCT COST 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
SERVICE OFFERING ONE-STOP-SHOP ON-TIME IN-FULL DELIVERY DEDICATED FIELD SALES FORCE ONE ORDER ONE DELIVERY ONE INVOICE RANGE OF DELIVERY OPTIONS INCLUDING OWN FLEET Service offering CUSTOMISED DIGITAL SOLUTIONS CUSTOMISED MANAGEMENT INFORMATION LOCAL AND NATIONAL DISTRIBUTION NETWORK EXPERT KNOWLEDGE AND ADVICE OWN BRAND AND MANUFACTURER BRANDED 5
BUSINESS AREA ANALYSIS Organised by geography Well diversified - 30 countries at different stages of maturity NORTH AMERICA 59% Revenue 53% Operating profit* UK & IRELAND 15% Revenue 15% Operating profit* CONTINENTAL EUROPE 18% Revenue 23% Operating profit* REST OF WORLD 8% Revenue 9% Operating profit* * Adjusted operating profit - before adjusting items (customer relationships amortisation and acquisition related costs) and corporate costs Based on 2016 FY 6
CUSTOMER MARKETS 75% resilient Foodservice Grocery Cleaning & hygiene Healthcare Healthcare Disposable healthcare consumables, including gloves, swabs, gowns, bandages and other healthcare related equipment and cleaning & hygiene products to hospitals, care homes and other facilities serving the healthcare 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 10% 11% 12% 4% 7% Other 26% 30% 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. Safety A complete range of personal protection equipment, including gloves, boots, ear and eye protection and other workwear, to industrial and construction markets 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 Based on 2016 FY Revenue 7
TYPICAL PRODUCTS A broad range of non-food consumable products 6% 8
GLOBAL SOURCING Partner with leading manufacturers PREFERRED SUPPLIERS SOURCING Sourcing via our own Shanghai sourcing office Own brands Commodities Low cost sources Eco-friendly products 9
CONSISTENT AND PROVEN COMPOUNDING STRATEGY High ROIC despite significant acquisition spend PROFITABLE ORGANIC GROWTH OPERATING MODEL IMPROVEMENTS Use competitive advantage to grow market share in a profitable way Daily focus on making our business more efficient ROIC 16.7% ACQUISITION GROWTH Use strong balance sheet and excellent cash flow to consolidate our markets further Based on 2016 FY 10
ORGANIC GROWTH Organic growth typically real GDP + VOLUME SELL MORE TO EXISTING CUSTOMERS EXPAND PRODUCT RANGE 12 WIN NEW CUSTOMERS MARKET LEADING CUSTOMERS GROWING SECTORS TREND TO OUTSOURCING MIX OWN BRAND / IMPORTS MANUFACTURER BRANDS GEOGRAPHIES AND SECTORS PRICE INFLATION / DEFLATION MARKET DYNAMICS FX IMPACT 11
OPERATING MODEL IMPROVEMENTS Small improvements every day everywhere lead to significant progress over time CONSOLIDATING WAREHOUSES Close smaller and less efficient facilities Continually evaluate and upgrade warehousing ERP IMPLEMENTATIONS Warehouse management systems Vehicle routing and safety systems CRM systems DIGITAL CAPABILITIES Investment in e-commerce capabilities Focus on digital marketing Opportunity for efficiency gains SHARING BEST PRACTICE Make use of collective resources, experience and expertise Global collaboration GLOBAL PURCHASING Substantial purchasing synergies with suppliers Benefit from Bunzl Shanghai sourcing facility 12
ACQUISITION GROWTH 136 * acquisitions 2004-2016; total committed spend of 2.5bn Number of acquisitions Committed acquisition spend ( m) Annualised acquisition revenue ( m) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 7 7 9 8 7 2 9 10 13 11 17 22 14 302 129 162 197 123 6 126 185 277 295 211 327 184 430 270 386 225 151 27 154 204 518 281 223 324 201 * Includes two committed acquisitions in 2016 which completed in January 2017 04-05 continuing operations only 13
ACQUISITION PARAMETERS Disciplined approach to acquisitions B2B RESILIENT AND GROWING MARKETS GOODS NOT-FOR-RESALE FRAGMENTED CUSTOMER BASE CONSOLIDATED PRODUCT OFFERING ( ONE- STOP-SHOP ) FURTHER MARKET CONSOLIDATION AND SYNERGIES SMALL % OF TOTAL CUSTOMER SPEND OPPORTUNITY FOR OWN LABEL PRODUCTS ATTRACTIVE FINANCIAL RETURNS (ROIC, ROACE) Anchor New geographies New sectors Bolt-on Existing geographies or sectors Extending product range Consolidating markets Extracting Value Purchasing synergies Warehouse & distribution efficiencies Back office integration Product range extension Sharing best practice Investment in infrastructure, IT & e-commerce 14
GEOGRAPHIC EXPANSION Significant scope for future geographic expansion 1997* 7 COUNTRIES 2012 27 COUNTRIES Revenue 2003* 12 COUNTRIES 2017 30 COUNTRIES 2010 2005* 18 COUNTRIES 2016 2004* North America Continental Europe UK & Ireland Rest of World * Continuing operations only 15
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 Romania Hungary Slovakia Israel Turkey Brazil Chile Colombia Argentina Peru Uruguay Australia New Zealand Hong Kong Singapore No existing presence 16
EXPERIENCED MANAGEMENT >15 yrs service on average within the management team Frank van Zanten Chief Executive Brian May Finance Director Patrick Larmon President and CEO North America Julie Welch 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 Jonathan Taylor Managing Director Latin America Kim Hetherington Managing Director Australasia 17
VALUING OUR PEOPLE Our people are our greatest asset c. 16,000 employees 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 relies on knowledge and expertise in local markets Ensures customer relationships maintained GLOBAL COLLABORATION Sharing of best practice across the Group Facilitating collaboration across sectors via formal and informal forums DEVELOPMENT AND TRAINING OPPORTUNITIES Make use of collective resources, experience and expertise Focus on career development and succession plans Management development programmes at various levels across the Group 18
STRONG FINANCIAL DISCIPLINE HIGH RETURN ON CAPITAL STRONG BALANCE SHEET LOW WORKING CAPITAL AND CAPEX REQUIREMENTS HIGH LEVEL OF CASH CONVERSION GROWING DIVIDEND STREAM UNIFORM FINANCIAL REPORTING SYSTEM RETURN ON OPERATING CAPITAL : 55.9% RETURN ON INVESTED CAPITAL (PRE-TAX): 16.7% 6% NET DEBT / EBITDA: 2.0X AVERAGE WORKING CAPITAL TO SALES AT 10.8% AVERAGE CAPEX OF 25M OVER PAST 3 YEARS OPERATING CASH FLOW TO ADJUSTED OPERATING PROFIT* AVERAGE : 97% 2004-2016 DIVIDEND PER SHARE CAGR > 10% (92-16) 24 YEARS DIVIDEND GROWTH ACROSS ALL GEOGRAPHIES * Before adjusting items (customer relationships amortisation and acquisition related costs) and the associated taxation, where relevant. 04-05 continuing operations only Operating cash flow before acquisition related costs to adjusted operating profit 04-05 continuing operations only All data FY 2016 unless otherwise stated 19
CASH CONVERSION Average cash conversion* 97% 93% 95% 92% 103% 92% 102% 93% 110% 93% 102% 95% 97% 99% TARGET 90% 04 05 06 07 08 09 10 11 12 13 14 15 16 * Operating cash flow before acquisition related costs to adjusted operating profit 04 05 continuing operations only 20
DIVIDEND PER SHARE (p) 24 years 42.0 of consecutive dividend increases CAGR > 10% 4.0 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 21
FINANCIAL TRACK RECORD 2004-2016 Proven compounding strategy REVENUE ( bn) 7.4 ADJUSTED OPERATING PROFIT* ( m) 525 CAGR 2.4 169 10%-11% 04 05 06 07 08 09 10 11 12 13 14 15 16 04 05 06 07 08 09 10 11 12 13 14 15 16 ADJUSTED EPS* (p) DIVIDEND PER SHARE (p) 04-12 restated on adoption of IAS 19 (revised 2011) 106.1 42.0 31.7 13.3 04 05 06 07 08 09 10 11 12 13 14 15 16 04 05 06 07 08 09 10 11 12 13 14 15 16 * Before adjusting items (customer relationships amortisation and acquisition related costs) and the associated taxation, where relevant 04-05 continuing operations only 22
CONTACTS Bunzl plc +44 20 7725 5000 Frank van Zanten Chief Executive Brian May Finance Director investor@bunzl.com www.bunzl.com 23
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 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. 24