Business Case. June 2016

Business Case

About us

Bunzl is a growing and successful Group providing outsourcing

solutions and value added distribution across the

Americas, Europe and Australasia

Business

overview

Products

Sourcing

Footprint

Key facts

Financials

 Business to business distribution  £6.5bn revenue in 2015

 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 (2015 average)

 International diversification: 29 countries, 4 continents

 UK plc headquartered in London

 Listed on LSE; FTSE 100; Support Services sector

 Revenue growth: 9% (CAGR 04-15)

 Adjusted operating profit growth*_{: 9% (CAGR 04-15)}

 Average annual cash conversion† _{of 97% (04-15)}

Benefits to

customers:

Supply

Chain

Customer Global sourcing

& procurement

International warehousing & distribution infrastructure

Consolidation of consumables

Range of delivery options

Supported by integrated

IT and e-commerce systems

Value

proposition

 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 Outsourcing

adds value for our customers

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

Market

environment

Customer base Outsourcing 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 footprints

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

Operating

model efficiencies We constantly strive to make our business more efficient and

environmentally friendly Acquisition growth

Between 2004 and 2015 we have announced 122

acquisitions with total spend of £2.2bn

GDP+ organic growth

Organic revenue growth exceeded relevant GDP for 9 of the last 11 years

Consistent and

proven

strategy

ROIC

17.1

%

Compounding growth model at high ROIC

Key

competitive

advantages

A platform for growth

Unique

business

model

Strong

financial

discipline

Acquisition

strategy &

track record

Operational

focus

People

Global

sourcing

Attractive

customer

markets

Balanced

business

Business

model

One-stop-shop for non-food consumables

Source

Consolidate

Deliver

 Global suppliers

 Low cost sources

 Commodities

 Own brands

Foodservice Grocery Cleaning

& hygiene Retail Safety Healthcare

Individual ranges

to

Consolidated offer

Attractive

customer

markets

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.

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.

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.

Cleaning & hygiene

Cleaning and hygiene materials, including chemicals and hygiene paper, to cleaning and facilities management companies and

industrial and healthcare customers.

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.

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 chains.

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

Typical

Products

A broad range of non-food

consumable products

Balanced

business

portfolio

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

both geography and sector

58% 17%

17%

8% North America

Continental Europe UK & Ireland

Rest of the World

Operational

focus

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

 Investment in e-commerce systems

 Interfacing IT with customers and suppliers  Order systems and vehicle routing

 Continually evaluating and upgrading our warehousing

Sharing best

practice across all business areas

Global

sourcing

+

Own brands Commodities Low cost sources Eco-friendly products

Sourcing Preferred suppliers

Acquisition

strategy

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 returns

Retention 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

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Number of

acquisitions 7 7 9 8 7 2 9 10 13 11 17 22 Committed

acquisition spend (£m)

302 129 162 197 123 6 126 185 277 295 211 327

Annualised acquisition revenue (£m)

430 270 386 225 151 27 154 204 518 281 223 324

Acquisition

growth

04-05 continuing operations only

Average annual acquisition spend over the last four years

2015

Geographic

expansion

timeline

Revenue

2010

North America Continental Europe UK & Ireland Rest of the world 2005*

1997*

7

2003*

12

2015

29

2012

27

2005*

18

Continued geographic

expansion though acquisitions



Flat organisational structure



Clear lines of responsibility



Excellent customer service

Valuing our

people

Clear roles and objectives

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

Experienced

management

Human Resources Paul Hussey General Counsel & Company Secretary Paul Budge Managing Director Continental Europe Andrew Mooney Director of Corporate Development Andrew Tedbury Managing Director UK & Ireland

Rodrigo Mascarenhas Managing Director Latin America Kim Hetherington Managing Director Australasia Frank van Zanten

Strong

financial

discipline

High return on capital

Strong balance sheet

Low working capital requirements

Low capex

High level of cash conversion

Uniform financial reporting system

 Return on operating capital: 55.5%

 Return on invested capital (pre-tax): 17.1% (2015)

 Net debt/EBITDA 2.1x year end 2015

 Average working capital to sales at 11% in 2015

 Average of £24m p.a. over past 3 years

 Operating cash flow† _{to adjusted operating}

profit* average of 97% 2004 - 2015

 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

Consistently high cash conversion funds growing dividend and acquisitions Average cash conversion* of

Cash

conversion

93% 95% _92%

103%

92%

102%

93%

110%

93%

102%

95% 97%

04 05 06 07 08 09 10 11 12 13 14 15

90%

Revenue (£bn)

Financial

track record

2004 - 2015

2.4 2.9 3.3 3.6 4.2 4.6 4.8 5.1 5.4 6.1 6.2 6.5

04 05 06 07 08 09 10 11 12 13 14 15

31.7 38.2 41.1 44.4 51.8 55.4 59.7 67.6 70.6 82.4 86.2 91.0

04 05 06 07 08 09 10 11 12 13 14 15

Adjusted eps (p)

Adjusted operating profit (£m)

Dividend per share (p)

CAGR

04-05 continuing operations only

04-12 restated on adoption of IAS 19 (revised 2011)

169 203 226 243 281 296 307 336 352 414 430 455

04 05 06 07 08 09 10 11 12 13 14 15

Before intangible amortisation and acquisition related costs

04-05 continuing operations only

13.3 15.7 17.0 18.7 20.6 21.6 23.4 26.4 28.2 32.4 35.5 38.0

04 05 06 07 08 09 10 11 12 13 14 15

Business

case

summary

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 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

Contacts

Bunzl plc

+44 20 7725 5000

Frank van Zanten – Chief Executive Brian May – Finance Director

[email protected] www.bunzl.com

Disclaimer

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.