Bunzl Plc · LSE:BNZL

Bunzl — Investor Day (September 2014)

76 slides from Bunzl's investor day presentation, Sep 18, 2014

1. Slide 1: Investor Day 2014

   Investor Day 2014 18 September 2014

2. Slide 2: Agenda

   Agenda 1 Michael Roney, CEO Bunzl plc 2 Paul Budge, MD UK & Ireland 3 Frank van Zanten, MD Continental Europe 4 Juan-Pedro Barrios Uriarte, MD Juba Spain 5 Pat Larmon, President and CEO North America 6 Beth Dahlke, Vice President Sales FoodHandler 7 Rodrigo Mascarenhas, MD Latin America 8 Steven Sud

3. Slide 3: Key messages of the day

   Key messages Organic growth through development of customer of the day relationships Experience in making and integrating acquisitions successfully Businesses acquired bring additional innovation and expertise to Bunzl Former owners stay and flourish with Bunzl Investor Day 2014 – Introduction 3

4. Slide 4: Key competitive advantages

   Key competitive advantages Choice of Decentralised customer management sectors model Global market leadership position Expertise Alignment of in making management acquisitions incentives Ex-owners Global stay with sourcing Bunzl capabilities Investor Day 2014 – Introduction 4

5. Slide 5: Acquisition growth

   Acquisition growth 2014 2011 2012 2013 ytd Number of acquisitions 10 13 11 12 Committed acquisition spend (£m) 185 277 295 119 Average annual acquisition spend over the past three Committed acquisition spend excl. earn-outs (£m) 161 267 285 118 years Annualised historical acquisition revenue (£m) 20

6. Slide 6: Future acquisition potential

   Future Growth in existing countries acquisition potential  Significant opportunities to expand into other Bunzl sectors Significant in existing countries opportunities for growth and  Particularly in China, Germany, Spain, France, Italy, Chile development and Colombia Entry into new countries Aust

7. Slide 7: 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

8. Slide 8: Developing business organically

   Developing business organically Paul Budge Managing Director Bunzl UK & Ireland

9. Slide 9: Key messages

   Key messages Flexibility to adapt in challenging economic conditions with margins improving as growth returns Organic growth through development of customer relationships Meeting customers’ needs through a broad and effective service offering Optimisation of cross-selling opportunities to existing c

10. Slide 10: UK & Ireland recent history

    UK & Ireland Revenue† (£m) Operating profit* (£m) recent 1,018 73 history 990 989 992 69 72 65 955 62 940 60 60 913 Significantly improved 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 performance with operating margin for 2014 expected Operating margin* Return on average ope

11. Slide 11: Actions to improve operational efficiency

    Actions to  Reduced headcount in UK & Ireland by over 600 between improve 2008 and 2012, excluding vending business operational Headcount efficiency 15% headcount reduction Decisive measures 2008 2009 2010 2011 2012 taken  Emphasis on working capital management, concentrating on the key areas of s

12. Slide 12: Drivers of sales growth

    Drivers of sales Existing customers New customers growth  Relationship  Competitors  Confidence  Supplier consolidation  Expansion within  Previously in-house organisation  Acquisitions Developing relationships with existing customers provides the Market sectors Range of products greatest opp

13. Slide 13: Our service offering

    Our service offering Chosen Category Drivers of cost management Own label suppliers Customers and Product choice Competitive Products and Bunzl specification alternative The right products support and price at the right price at the right time Cleaning Non-food Foodservice Grocery Safety Healthcare

14. Slide 14: Who is Mitie?

    Who is Mitie?  One of the UK’s leading integrated facility management providers  FTSE 250 listed company A broad offering of  Buildings and facilities services to help – Cleaning, landscaping, pest control and waste their customers be more efficient – Social housing maintenance and painting – Tec

15. Slide 15: Mitie: A growing customer

    Mitie: A growing Outsourcing trend customer £m 20.0  Single services 18.0  Bundled services  Integrated FM 16.0 Growth expected 14.0 to continue 12.0 10.0 8.0 6.0 4.0 2.0 0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Mitie’s spend with Bunzl Investor Day 2014 – UK & Ireland 15

16. Slide 16: Bunzl's relationship with Mitie

    Bunzl’s  Started in 2002 relationship with Mitie  Initially supporting contract cleaning – As Mitie has grown the business has developed and continued to drive efficiency Bunzl aims to optimise cross-  Growth into catering and front of house selling opportunities across its various  Introduction

17. Slide 17: What Mitie needs from Bunzl

    What Mitie needs from Dedicated Listening – Bunzl account understanding management customer needs Ability to Trust Strong handle cultural fit complexity Rapid and Simple often large- solutions and scale contract processes mobilisations Investor Day 2014 – UK & Ireland 17

18. Slide 18: Bunzl's services to Mitie

    Bunzl’s Cleaning & hygiene supplies to Mitie services to  Bunzl Cleaning & Hygiene Supplies provides a broad range of Mitie products to suit specific needs of individual client contracts – 2,500 SKUs  75,000 direct deliveries annually to over 8,000 delivery points Time and cost Catering supplies t

19. Slide 19: Video: Bunzl and Mitie relationship

    Video: Bunzl and Mitie relationship Scott Jameson Head of Procurement Mitie

20. Slide 20: Customer development

    Customer development  Bunzl provides customers with peace of mind  As confidence builds, our relationships grow Customer  Relationships increase sales over time relationships grow over time – Growth with customers who are themselves growing – Compliance to an approved range – Extension into other

21. Slide 21: Post acquisition integration

    Post acquisition integration Frank van Zanten Managing Director Bunzl Continental Europe

22. Slide 22: Frank van Zanten

    Frank van  Until 1994: MD Hopa Disposables, a family Zanten business in Amsterdam  1994: Bunzl acquired Hopa – first step into Continental Europe  Transitioned to MD Bunzl Horeca Europe & Australia  For the past nine years: MD Bunzl Continental Europe Investor Day 2014 – Continental Europe 22

23. Slide 23: Key messages

    Key messages Experience in making and integrating acquisitions successfully Entry into new countries and subsequent expansion by anchor and bolt-on acquisitions respectively Enhanced competitive advantage by optimising synergies through best practice and purchasing scale Bunzl provides an attractive

24. Slide 24: Bunzl Continental Europe revenue growth

    Bunzl Continental Europe revenue growth 1,328 1,359 1,227 1,096 CAGR of 1,037 1,019 12% 899 801 715 453 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Revenue (€m) Investor Day 2014 – Continental Europe 24

25. Slide 25: Bunzl Continental Europe geographical markets

    Bunzl 2013 revenue by country Continental Europe geographical markets Other* 18% France Significant growth Germany potential in both 37% new and existing 5% countries Denmark 10% 30% Benelux *Spain, Switzerland, Central & Eastern Europe 2014 Investor Day - Continental Europe 25

26. Slide 26: Acquisition process

    Acquisition process Finding the right targets 95 global acquisitions Building announced since relationships 2004 Deal execution …what next? Investor Day 2014 – Continental Europe 26

27. Slide 27: Types of acquisition

    Types of acquisition  Two types of businesses are acquired: Anchor or Bolt-on There are two types of acquisition: “Anchor” or “Bolt-on” New country/sector Existing country/sector  Detailed pre-acquisition integration plan  Assumptions from acquisition business case built into the plan  Key to su

28. Slide 28: Anchor acquisition in Switzerland

    Anchor acquisition Weita Group Active in Business Key acquired in numerous shows good in 2010 sectors profitability management retained Switzerland Entry into Swiss market in 2010 followed by bolt- on acquisition in 2012 Bunzl FD Communication Purchasing Bunzl policies appointed to staff and synergi

29. Slide 29: Bolt-on acquisitions in Spain

    Bolt-on 2007 – Entry in Spain acquisitions in Spain  Iberlim – Entry into hygiene market (anchor acquisition)  Based near Barcelona 2008 & 2011 – Expansion  Hicosa – In Barcelona. Acquired 2008  Appointed Bunzl MD and FD  Sudecol – In Barcelona. Acquired 2008  King – In Madrid, Valencia and Ba

30. Slide 30: Integration in Spain

    Integration in Spain Initially run as separate businesses Implemented IT system in Iberlim, Hicosa and Sudecol Moved Iberlim, Hicosa and Sudecol into a new 6,500m² warehouse Subsequently moved King Catalonia into the same warehouse Merger to create one hygiene business in Q1 2015 Investor Day 2014 –

31. Slide 31: Synergies

    Synergies Purchasing Cost synergies synergies Own brand Best and import practice synergies synergies  Bunzl’s scale worldwide gives purchasing advantages over local competitors  Cost synergies relating to transport costs/carriers based on higher volume  Investment in high quality financial manage

32. Slide 32: Bunzl Shanghai

    Bunzl Shanghai Global sourcing QA/QC Logistics 35,000 containers being shipped from Asia each year  Centralised database of products and prices  Responsibility for sourcing specifications in local countries  Added value, converting our global size into benefits  Additional reason for targets to

33. Slide 33: Success factors

    Success factors Disciplined process People/customers Integration strategy  Selective  Retain  Experience of approach to both management and integrations which countries and former owners lead to synergies sectors  Decentralised  Improve operating  Evaluate many approach platform targets and 

34. Slide 34: Why sell to Bunzl?

    Why sell to Bunzl? Juan-Pedro Barrios Uriarte Managing Director Juba Spain

35. Slide 35: Juba

    Juba  Founded in 1954 by Juan-Pedro’s father to sell workwear gloves  Became leader in the sale of leather workwear gloves. Revenue of c.€3m in 1992  Business passed on to four siblings, including Juan-Pedro A family business  Acquired by Bunzl in May 2010 with revenue of c.€22m in 2009  Annual

36. Slide 36: Why sell? Why sell to Bunzl?

    Why sell? Why sell the company?  Consolidating market  Markets becoming more global – size matters  Possibility for family members to spread their assets (not all of “our eggs in the Juba basket”) Why sell to Bunzl?  Bunzl made an approach and requested an introductory meeting  Bunzl seen as a

37. Slide 37: Experience with Bunzl so far

    Experience  Excellent financial and commercial controls that with Bunzl result in better business decisions so far  More focus on working capital  Budgets and strategic plans are now prepared Decentralised model allows local management  Larger scale leads to better purchasing terms to focus on t

38. Slide 38: Why innovation is important to our future success

    Why innovation is important to our future success Patrick Larmon President and CEO Bunzl North America

39. Slide 39: Key messages

    Key messages Significant opportunities for further organic and acquisition growth Businesses acquired bring additional innovation and expertise to Bunzl Replicate innovative solutions across a range of customers and increase market share Post-acquisition synergies lead to improved competitive positi

40. Slide 40: Bunzl North America today

    Bunzl North  Headquarters in St. Louis, Missouri America  2013 revenue over US$5.3 billion today  Workforce of over 4,500  Standardized North American operating and IT platform Leading supplier to the North American market 2014 Investor Day - North America 40

41. Slide 41: Bunzl North America customer markets

    Bunzl North 2013 revenue by sector America customer markets C-store Other Significant opportunities for 6% 4% growth across 27% Non-food 13% existing sectors Redistribution retail 14% Processor 36% Grocery 2014 Investor Day - North America 41

42. Slide 42: Innovation through key acquisitions

    Innovation  CDW Merchants through key acquisitions – Revenue: US$19.8m since 2012 – Visual décor sales experts and custom dot com packaging solutions  Destiny Packaging – Revenue: US$52.0m – Customized flexible packaging for produce growers  McCordick Glove & Safety – Revenue: US$54.1m – Solution

43. Slide 43: Innovation through key acquisitions

    Innovation  SAS Safety through key acquisitions – Revenue: US$48.2m – Safety-based imported premium brands since 2012 for the industrial and automotive markets (e.g. BreatheMateTM)  Schwarz Supply Source – Revenue: US$363.0m – Leading packaging supplier to non-food retail sector – Innovative store

44. Slide 44: Schwarz Supply Source

    Schwarz Supply Source  Specialized provider of retail distribution and logistics programs to leading retail companies and niche/specialty retailers  Key customers include Walmart, The Limited, Gap, J.Crew Innovation Adds unique value through innovation and  Consolidation and logistics services fo

45. Slide 45: A leading retailer's challenge

    A leading  In 2008, a leading retailer shifted focus from building new stores retailer’s to completing remodels challenge  It lacked systems and processes in fixture distribution  350 suppliers were shipping direct “Time is money”  “Time is money” – deadlines were missed (opportunity cost = loss

46. Slide 46: The solution

    The solution  Schwarz created a series of value-added consolidation and logistics services – Inventory high velocity store fixtures – Merging of inventory and cross dock items – Departmental sorting, staging and delivery – at the unit level – Increased supply chain visibility through real time repo

47. Slide 47: Fixture consolidation

    Fixture  Service greatly needed by chains in multiple sectors consolidation  Supermarkets, drug stores, c-stores and other non-food retailers Expandable  Existing suppliers provide very basic services solution  Market need for reverse logistics solutions Universal shift in retail from  Demand f

48. Slide 48: FoodHandler Brand developers

    FoodHandler Brand developers  Leading developer and supplier of high quality disposable products including gloves, bags, apparel and other related products under the FoodHandler®, JobSelect® and FoodTouch® brands Providing Innovation innovative,  Providing value through hygiene/food safety leaders

49. Slide 49: FoodTouch antimicrobial paper

    FoodTouch® What does FoodTouch do? antimicrobial  Keeps food’s natural color paper  Protects food’s texture  Reduces odours What is FoodTouch made of? Patented,  Three components proprietary – White kraft paper technology that – Polyethylene (plastic) extends the life of food by two to – Silver

50. Slide 50: FoodHandler Hybrid technology gloves

    FoodHandler EPIC®  Launched in 2012 Hybrid  Sits between vinyl and technology polyethylene glove categories gloves  Bunzl patent granted in 2013 Innovation improves performance and drives down costs JobSelect® Cast Poly Hybrid  Launched in 2013  Better value and performance against current cast

51. Slide 51: oneSAFE single glove dispensing system

    oneSAFETM  Reduces the risk of cross contamination by 96% single glove  Improves food safety compliance with easier access to more dispensing glove cases in high-traffic, highly visible areas system  Reduces in-use glove waste by 15-25% and improves speed of donning by 50%  Promotes green practi

52. Slide 52: Why Bunzl is important to our future success

    FoodHandler Why Bunzl is important to our future success Beth Dahlke Vice President Sales FoodHandler, North America

53. Slide 53: Advantages of selling to Bunzl

    Advantages of selling to Bunzl Needs  Expand presence in North America and global markets  Enhanced sourcing and Quality Assurance/Control  More efficient logistics model  Enhanced investment in product development and innovation Solution  Long-term partner that understands the foodservice segm

54. Slide 54: Customer retention

    Customer  Focused communication strategy retention  Leadership and cross-functional team involvement  Creative sales and marketing efforts geared toward growth and enhanced penetration High level of customer retention post- acquisition Investor Day 2014 – North America 54

55. Slide 55: Management retention

    Management  Key management remain in the business retention  Increase in job security and confidence  Opportunity for advancement and career growth  Enhanced training and development Investor Day 2014 – North America 55

56. Slide 56: Post-acquisition synergies

    Post- Global sourcing  Reducing costs by leveraging volume, sourcing relationships acquisition  Ensuring product quality with on-site QA/QC synergies Warehousing  65% of inventory is now within Bunzl facilities  Closed Reno, Nevada warehouse and moved inventory to Reducing costs Bunzl US West Co

57. Slide 57: Next steps

    Next steps  Expand customer base through Bunzl/R3 Redistribution  Expand into Canada using Bunzl/R3 Redistribution network  Use Bunzl relationships to sell into other market segments Grocery Food processing Cross-selling opportunities lead to market share growth Investor Day 2014 – North America

58. Slide 58: Building a new business area

    Building a new business area Rodrigo Mascarenhas Managing Director Bunzl Latin America

59. Slide 59: Key messages

    Key messages Ability to find the right targets in the right markets at the right time Excellent track record in establishing a strong platform for future growth Former owners stay and flourish with Bunzl Improvement in performance through adoption of Bunzl’s financial discipline and controls Investo

60. Slide 60: Geographic selection model

    Geographic Regions Countries New Market Expansion Model Sectors Businesses selection model • Latin America • Brazil • Safety • Asia Pacific • Chile • Cleaning & hygiene • Colombia • Healthcare • Peru • Mexico • Argentina Evaluation criteria Evaluation criteria Evaluation criteria Evaluation criteria

61. Slide 61: Market maturity and momentum

    Market Market development maturity and momentum Immature Mature Distribution Manufacturing Retail Distribution evolves as markets mature Bunzl entry Stage 1 Stage 2 Stage 3 • Mostly local products • Growing demand for • Local manufacturing • Transaction costs low imports moving offshore • Demand for

62. Slide 62: Fine tuning the selection

    Fine tuning the  Almost always family businesses selection  Information not easily available and/or not public  Market leaders, profitable  Not looking for turnarounds or the cheapest possible asset  In many situations target company not for sale Investor Day 2014 – Latin America 62

63. Slide 63: New business area

    New business 2008 to 2010 – Brazil market entry area  Protcap – Entry into safety sector  AM Supply – Expansion in safety sector COLOMBIA BRAZIL First entry into BRAZIL Latin America by PERU anchor acquisition in Brazil safety sector in 2008 CHILE 2011 – Expansion in Brazil  Ideal – Entry into cl

64. Slide 64: New business area

    MEXICO New 2012 – Expansion outside Brazil business  Vicsa – Entry into safety sector in Chile, area Colombia, Peru, Argentina and Mexico and expansion in Brazil COLOMBIA 2013 – Consolidation BRAZIL  Labor – Entry into healthcare sector in 12 PERU BRAZIL Brazil  Espomega – Major expansion in safe

65. Slide 65: Track record & execution

    Track record Revenue & execution Lamedid Tecno Boga Labor JPLUS Espomega ProEpta De Santis Ideal Vicsa Danny AM Supply Latin America Prot-Cap annualised revenue now £234m with 2008 2010 2011 2012 2013 2014 CAGR of Safety 30% Cleaning & hygiene Foodservice Healthcare Retail Investor Day 2014 – Latin

66. Slide 66: Platform for future growth

    Platform for future growth  All businesses growing with strong operating margins  Disciplined acquisition model combined with Continued sustainable organic growth expansion both organically and by acquisition  Retained former owners as key executives Investor Day 2014 – Latin America 66

67. Slide 67: Reasons for selling to Bunzl

    Reasons for selling to Bunzl Steven Sudre Commercial Director Danny, Brazil

68. Slide 68: Danny history

    Danny history 1988  Danny founded in Brazil to sell safety products 1997  Decision to introduce own brand A family company with a clear strategy to grow in  Decision to provide complete solution for safety the safety sector products and services 2004  Set the objective to have the fastest shipme

69. Slide 69: Danny background

    Danny background Safety specialist Hand and eye protection Innovation Product development is key Brands 90% own brand 10% co-brand Sales 76% to distributors 24% to end users National coverage Sales and technical support Investor Day 2014 – Latin America 69

70. Slide 70: Products, segments and services

    Products, Products segments  Industrial gloves and eye protection and Segments services  Distributors, retailers, DIY stores  End users - car assemblers, mining, oil & gas, metal, construction and food industry customers Leader in safety Services sector for gloves in Brazil  Mesh glove repairs 

71. Slide 71: Selling to Bunzl

    Selling to Bunzl Bunzl Approachable Clear Direct Family worries Is it the right company to sell to? Emotional decision involving the whole Is it the right time? family Hard to believe “nothing will change” Decision to sell Succession Too big to be managed by family Financial security Investor Day 20

72. Slide 72: Sustained sales growth

    Sustained Annual revenue sales growth CAGR 13% Danny has generated strong results for many years 2011 2012 2013 2014F Investor Day 2014 – Latin America 72

73. Slide 73: Financial performance

    Financial 2013 versus 2012 financial results performance 31% 2013 performance resulted from local WORKING CAPITAL management’s Reduction actions combined with Bunzl’s financial discipline PBIT 13% Growth Investor Day 2014 – Latin America 73

74. Slide 74: Bunzl's impact on the business

    Bunzl’s Most visible impact is cash generation impact on the business Business still responsible for operational results Focus on margin and PBIT Freedom to operate independently whilst being accountable Working capital improvement Budgeting Financial support Training for executives Investor Day 201

75. Slide 75: Panel discussion

    Panel discussion

76. Slide 76: Disclaimer

    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

Bunzl — Investor Day (September 2014) on 6ix