MAKE MORE POSSIBLE 21 May 2019 2019 Full-year Results SAFE - - PowerPoint PPT Presentation

2019 Full-year Results

ELECTROCOMPONENTS Full-year results for the year ended 31 March 2019

21 May 2019

MAKE MORE POSSIBLE

2019 Full-year Results

SAFE HARBOUR

This presentation contains certain statements, statistics and projections that are or may be forward-looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans and objectives for the management of future operations of Electrocomponents plc and its subsidiaries is not warranted or guaranteed. These statements typically contain words such as "intends", "expects", "anticipates", "estimates" and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Although Electrocomponents plc believes that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors, which may be beyond the control of Electrocomponents plc, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking

• statements. Other than as required by applicable law or the

applicable rules of any exchange on which our securities may be listed, Electrocomponents plc has no intention or obligation to update forward-looking statements contained herein.

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Front cover The image on the front cover represents Hyperloop, a futuristic transport system. RS Components is a major sponsor of the University of Edinburgh’s team, HYPED, in the 2019 SpaceX Hyperloop Pod Competition to revolutionise terrestrial transportation.

2019 Full-year Results

OVERVIEW Above market, sustainable growth and strong execution

8.3% like-for-like(1) revenue growth, continuing to drive share gains in large, fragmented market Adjusted(2)

• perating profit

margin rose to 11.7% aided by higher gross margin and cost control 20.8% like-for-like(1) growth in adjusted profit before tax and 26.8% growth in adjusted earnings per share Further improvement in customer experience – Group NPS(3) up 5.1% IESA acquisition performing well – strong double-digit revenue growth and accretive to Group margin Continuing to generate attractive return on capital employed of 27.7%

(1) Like-for-like change excludes the impact of acquisitions and the effects of changes in exchange rates on translation of overseas

• perating results, with 2018 converted at 2019 average exchange rates. Revenue is also adjusted to eliminate the impact of

trading days year on year. (2) Adjusted excludes amortisation of intangible assets arising on acquisition of businesses, substantial reorganisation costs, asset write-downs, one-off pension credits or costs, significant tax rate changes and associated income tax. (3) Rolling 12-month Net Promoter Score – a measure of customer satisfaction. 3

2019 Full-year Results

AGENDA 1 2 3

CURRENT TRADING & OUTLOOK FINANCIAL RESULTS

4

REGIONAL PERFORMANCE HOW WE CAN CONTINUE TO DISRUPT AND ACCELERATE

David Egan CFO Lindsley Ruth CEO

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2019 Full-year Results 2019 Full-year Results

FINANCIAL RESULTS

1

Significant progress

2019 Full-year Results

Significant growth in profit and earnings per share

FINANCIAL HIGHLIGHTS

Strong revenue growth Improving profitability EPS and dividend growth

28.4 37.0 2018 2019 Like-for-like change

Adjusted(2) EPS (p)

13.25 14.80 2018 2019 Change

Full-year dividend per share (p)(3)

10.4 11.7 2018 2019 Like-for-like change

(1) Like-for-like change excludes the impact of acquisitions and the effects of changes in exchange rates on translation of overseas operating results, with 2018 converted at 2019 average exchange rates. Revenue is also adjusted to eliminate the impact of trading days year on year. (2) Adjusted excludes amortisation of intangible assets arising on acquisition of businesses, substantial reorganisation costs, asset write-downs, one-off pension credits or costs, significant tax rate changes and associated income tax. (3) Proposed full-year dividend to be approved at the AGM.

> > >

44.0 44.5 2018 2019 Like-for-like change

Gross margin (%)

26.8% 0.2 pts 1.1pts

11.6 8.9 8.3 RS Pro Digital Group

Like-for-like(1) revenue growth (%)

177.1 220.3 2018 2019 Like-for-like change

Adjusted(2) operating profit (£m)

20.8%

6

11.7%

(1) (1) (1) (1)

Adjusted(2) operating profit margin (%)

2019 Full-year Results

 0.5 percentage point improvement to 44.5% – 0.4 percentage point accretion from acquisitions – 0.1 percentage points dilution from translational foreign exchange – 0.2 percentage point like-for-like improvement  Like-for-like improvement driven by our own actions to: – Grow higher-margin products, strong growth at RS PRO – Improve discount discipline – good progress at Allied – Enhance pricing – dynamic pricing tool rolled out in EMEA

Progress Going forward

DRIVING OPERATIONAL EXCELLENCE – GROSS MARGIN

> >

Long term our aim remains to drive stable and where possible improved gross margin to support the delivery of our target of mid-teen adjusted operating profit margin:  Improving product mix: – New product introductions at RS PRO – Driving faster growth in single-board computing via OKdo could provide offset  Controls and process – discipline on discounting  Dynamic pricing tool to be rolled out in APAC, the Americas  Smarter purchasing – global sourcing initiatives

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Continued focus on driving profitability

2019 Full-year Results

 We are focused on driving towards a best-in-class mid-teen adjusted operating profit margin  Revenue growth, higher gross margin and improvement in adjusted operating profit conversion ratio to 26.3% (2018: 23.6%) drove a 1.3 percentage point improvement in adjusted operating profit margin to 11.7% (2018: 10.4%)

DRIVING OPERATIONAL EXCELLENCE – OPERATING PROFIT MARGIN

Revenue growth and gross margin improvement – Market growth and

market share gains, plus improving product mix

Disciplined investment – During 2019 adjusted operating costs

grew at 5.7% on a like-for-like basis. 60% of the increase related to inflation and volume increases. The majority of the balance was driven by increased investment in digital, talent and innovation

• ffset by the £4 million PIP 2 savings Adjusted operating costs as a

percentage of revenue fell to 32.8% (2018: 33.6%)

Operating profit margin

0.2% (0.6)% (0.3)% (0.1)% 2.4% 10.4% 11.7%

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0.2% (0.7)% 0.2%

6% 7% 8% 9% 10% 11% 12% 13% 14%

FY18 Acquisitions Revenue Growth Gross Margin Inflation Digital People PIP 2 Other FY19

Adjusted operating profit margin

2019 Full-year Results

SUMMARY INCOME STATEMENT

£m 2019 2018

Reported Adjustments Adjusted(1) Reported Adjustments Adjusted(1) Revenue 1,884.4

• 1,884.4

1,705.3

• 1,705.3

Operating profit 201.0 19.3 220.3 172.6 4.5 177.1 Net finance costs (6.1)

• (6.1)

(4.0)

• (4.0)

Share of profit of JV 0.3

• 0.3
• Profit before tax

195.2 19.3 214.5 168.6 4.5 173.1 Income tax expense (47.1) (3.6) (50.7) (19.0) (28.8) (47.8) Profit for the period 148.1 15.7 163.8 149.6 (24.3) 125.3 Earnings per share (p) 33.4 3.6 37.0 33.9 (5.5) 28.4

(1) Adjusted excludes amortisation of intangible assets arising on acquisition of businesses, substantial reorganisation costs, asset write-downs,

• ne-off pension credits or costs, significant tax rate changes and associated income tax.

Highlights

 Revenue saw a benefit from currency (£1.3 million) and extra trading days (£8.4 million)  Net finance costs increased to £6.1 million (2018: £4.0 million)  Adjusted PBT excludes:

– £13.1 million primarily labour-related restructuring costs – £4.4 million amortisation of intangible assets arising

• n acquisitions

– £1.8 million one-off pension costs

 2019 adjusted effective tax rate of 24% (2018: 28%)

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2019 Full-year Results

CASH FLOW

Highlights

£m 2019 2018

EBITDA 232.9 198.4 Add back impairments and (profit) / loss on disposal of non-current assets 2.3 1.7 Movement in working capital (64.8) (38.5) Movement in provisions 5.9 1.9 Other 7.9 5.4 Cash generated from operations 184.2 168.9 Net interest paid (6.1) (4.2) Income tax paid (50.8) (37.8) Net cash from operating activities 127.3 126.9 Net capital expenditure (50.8) (24.2) Free cash flow 76.5 102.7 Add back cash effect of adjustments(2) 8.0 2.4 Adjusted free cash flow 84.5 105.1

(1) Adjusted operating cash flow conversion is adjusted free cash flow before income tax and net interest paid as a percentage of adjusted

• perating profit.

(2) Adjusted excludes the impact of substantial reorganisation cash flows.

 Cash generated from operations increased to £184.2 million (2018: £168.9 million)  Working capital as a percentage of sales increased by 2.0 percentage points to 22.2%

– 0.8 percentage points of increase related to acquisitions – Balance relates to investment in additional inventory

 2019 capex was 1.8 times depreciation (2018: 1.0 times)  Adjusted operating cash flow conversion(1) 64.2% (2018: 83.1%)  Net debt increased to £122.4 million (2018: £65.0 million). Net debt to adjusted EBITDA of 0.5x (2018: 0.3x)  Additional short-term investment of around £26 million in fast-moving inventory in H2 to ensure we can maintain customer service during the UK’s exit from the EU

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2019 Full-year Results 2019 Full-year Results

REGIONAL PERFORMANCE

2

We are focused on growing market share

2019 Full-year Results

REGIONAL PERFORMANCE – EMEA

£m 2019 2018 Like-for-like(1) change Northern Europe revenue 529.5 454.3 9.7% Southern Europe revenue 367.7 344.8 6.1% Central Europe revenue 265.1 238.8 10.3% Emerging markets revenue 47.7 45.6 5.0% EMEA revenue 1,210.0 1,083.5 8.5% EMEA operating profit 193.5 161.0 16.2% EMEA operating profit margin 16.0% 14.9% 0.9 pts  8.5% like-for-like revenue growth

– Over two-thirds of growth market share gains – All sub-regions showing growth

 Leadership and talent

– New country leaders in Italy, Spain and Austria – Continued investment in talent

 Driving new customer growth

– Brand awareness and digital marketing driving customer count

 Growing our share of customer wallet

– Improvement of 5.5% in NPS – Strong growth in value-added solutions in Northern Europe – Sales effectiveness training across region

 16.2% like-for-like operating profit growth and further improvement in operating profit margin to 16.0%

12 (1) Like-for-like adjusted for currency and to exclude the impact of acquisitions; revenue also adjusted for trading days.

Highlights Significant market share gains driving growth

2019 Full-year Results

REGIONAL PERFORMANCE – Americas

£m 2019 2018 Like-for-like(1) change Revenue 483.6 440.8 8.6% Operating profit 62.1 51.4 19.4% Operating profit margin 12.8% 11.7% 1.1 pts  8.6% like-for-like revenue growth

– Half market / half share gain – Moderation in market growth in H2

 Adding new customers

– Increased brand awareness and digital marketing

 Selling more to existing customers

– Improved customer experience, NPS up 2.3% – Range expansion – 25,000 new stocked products, 7,000 new RS PRO products online – Focus on sales force effectiveness

 Gross margin improvement

– Discount discipline – RS PRO growth

 19.4% like-for-like growth in operating profit, further improvement in operating profit margin to 12.8%

Highlights

13 (1) Like-for-like adjusted for currency; revenue also adjusted for trading days.

Strong growth, gross margin improvement and tight cost control

2019 Full-year Results

REGIONAL PERFORMANCE – Asia Pacific

£m 2019 2018 Like-for-like(1) change Revenue 190.8 181.0 6.2% Operating profit / (loss) 3.0 (0.9) Operating profit / (loss) margin 1.6% (0.5)% 2.4 pts

Highlights

 6.2% like-for-like revenue growth

– Market share gains: Australia / New Zealand, South East Asia – Digital performance issues impacting growth in China / Japan

 We have fixed many of the basics

– Customer experience NPS up 12.3% – Improved efficiency - migrating activities into our shared business centre of expertise in Foshan

 We need to build our capabilities to be successful in China and Japan

– Building leadership and capabilities - appointed new leader for Greater China May 2019 – Working to improve local online experience – Building local offer

 Region now profitable – we will continue to drive greater scale and are focused on improving our local offer

14 (1) Like-for-like adjusted for currency; revenue also adjusted for trading days.

Profitable, building capabilities to drive faster growth

2019 Full-year Results 2019 Full-year Results

HOW WE CAN CONTINUE TO DISRUPT AND ACCELERATE

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2019 Full-year Results

A SIGNIFICANT MARKET OPPORTUNITY

Our market is large and highly

• fragmented. We

have significant scope to grow market share

• rganically and via

acquisition

$155bn

Global A&C (4) market

Source: Business Wire

c.$608bn

Global MRO (1) market

Source: W.W. Grainger

>$140bn

US MRO (1) market

Source: Fastenal

$343bn

Semiconductor and IP&E (6) market

Source: Avnet

c.£300bn

Global Electronic component market

Source: DiscoverIE

c.£400bn

Global MRO (1), HSE (2) market

Source: Electrocomponents

 Large & highly fragmented  Our customers are looking for fewer partners: – Digital partner – One-stop shop – Value-added solutions  Our competition – Largely offline – Small and regional – Single product / niche focus $880bn

US MRO (1) & OEM (5) market

Source: WESCO

c.$1 trillion

US B2B (3) e-commerce market

Source: Forrester Research

(1) MRO is Maintenance, Repair and Operations. (2) HSE is High Service Electronics. (3) B2B is Business-to-Business. (4) A&C is Automation and Control. (5) OEM is an Original Equipment Manufacturer. (6) IPE is Interconnect, Passive and Electromechanical. 16

Our market today Top 50 players represent around 30% of the global market

2019 Full-year Results

WHAT WE HAVE DONE SO FAR

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 Focused back on the customer  Significantly accelerated digital investment to around 4% of revenue per annum  Further enhanced our offer  Transformed leadership  Stabilised gross margin  Improved efficiency and begun to build lean and scalable model

Market share gain and margin improvement

 RS NPS(1), a measure of customer satisfaction, has risen 34% since September 2015  70,000 more visitors to our site each day than in 2017, digital revenue growth of 9% in 2019 vs 6% in 2015  RS PRO, value-added solutions, OKdo, RS Electronics  New leaders for all three of our regions and six

• ut of eight of our sub-regions

 Three consecutive years of gross margin improvement  11pts improvement in adjusted operating profit conversion over last 4 years

What?

1 2 3 4 5 1 2 3 4 5

2015-2019 like-for-like revenue CAGR(2) of 7% and adjusted operating profit CAGR(2) of 27% Outcome

(1) NPS is defined as the rolling three-month RS Net Promoter Score. (2) CAGR is defined as the compound annual growth rate.

6 6

Key benefits?

2019 Full-year Results

SUCCESSFULLY DRIVING MARKET SHARE

Strong revenue growth across board

>

6.2 8.6 8.5 Asia Pacific Americas EMEA

Like-for-like revenue growth %

Estimated market growth Estimated market share gains

Increasing average order value across existing and new customers

>

…and growing our customer count via digital and more effective marketing Average order value (AOV) – we are selling more to our customer base…

Average order value (AOV) B2B customer numbers

When we are first choice, our research shows customers spend 25% more with us

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Customers Average order value

£160 £170 £180 £190 £200 500,000 550,000 600,000 650,000 700,000 Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb FY2016 FY2017 FY2018 FY2019

Digital marketing step-up

2019 Full-year Results

50,000 100,000 150,000 200,000 5 10 15 20 Manufacturing GDP Number of customers

WE HAVE SIGNIFICANT SCOPE TO ADD MORE CUSTOMERS

(1) Source: Oxford Economics. 2018 manufacturing output, US$, at 2010 prices.

UK Germany Japan US China

(1)

Multiple of UK manufacturing GDP Customers

19

Even in our largest market, the UK, our market share remains <5%

 We have >170k customers in the UK today and that number continues to grow  Our customer count in the UK is – > 2x that of the US – > 2.5x that of Germany – > 8x that of China  Manufacturing GDP shows the market opportunity in these territories is a multiple of that of the UK

2019 Full-year Results

AND TO SELL MORE TO CUSTOMERS BY GOING BROADER & DEEPER

20

The prize is large – we have significant scope to grow customer numbers and sell more to existing customers

 Our customers are short of time and are looking to consolidate their supplier base  Our suppliers are looking for a partner who can show more of their range  Deeper range – show more of our suppliers range either on a stocked or non-stocked basis  Broader range – expand into new categories which our customers buy today from our competition

Becoming first choice We can sell more to our customer base

(1) BLE is Board-level electronics. (2) IA &C is Industrial automation & control. (3) IIT is Industrial interconnect and test. (4) TCFM is Tools, consumables and facilities maintenance.

1 2 3 4 5 6 7 Semiconductors Passives Connectors Electrical / Enclosures Controls Mechanical Fluid Power Sensors & Switches Cable Test & Measure Electromechanical Interconnect PPE Hand tools Power tools Janitorial Consumables Private label Using Europe as an example BLE IA&C IIT TCFM Competitors BLE Industrial Limited range Part range Full range

2019 Full-year Results

WHAT WE ARE DOING

21

We are focused on where we can go over the next five years Benefits

 Digital leadership

 Ease of use  ‘Faster than real-time’  Personalised

 Transformation of our technology

 Scalable  Product and content excellence  Data and insight

 Best-in-class supply chain

 Scalable and automated  Customer centric

 Unrivalled choice

 Broader and deeper range  Stocked and non-stocked

 Value-added solutions

 Design  Procurement and inventory management  Maintenance

1 2 3 4

Sustainable market share gains > 2x market growth Progress towards mid-teen adjusted

• perating profit margin

Returns broadly consistent with Group ROCE

 Digital leadership (around 4% of revenue per annum) 

• c. £20 million investment in

– Unrivalled choice – broader & deeper range focused on product and content excellence – Transformation of our technology 

• c. £60 million investment to

– Expand & automate supply chain – German distribution centre expansion  Value-added solutions across the globe – minimal investment required

Continued investment in Increased capital expenditure

Actions and investment

5

Differentiating to disrupt

Continued rollout of

2019 Full-year Results

DIGITAL LEADERSHIP

22

 Brand awareness: we are building our brands to drive more traffic to our sites  Digital marketing: we are also investing in pay per click and search engine

• ptimisation

 Mobile: we are investing to drive a best-in-class mobile experience  Website speed: we will continue to work to make our sites faster and easier to use  Search: we are making it easier for our customers to find the products they need  Data and personalisation: we will use our data to personalise a customer’s online journey – showing relevant products, bundles and solutions

Growing our customer count and improving average order size

 Faster traffic growth

What? Key benefits? How we can continue to disrupt and accelerate

1

 Best-in-class online experience – driving improved conversion  Growth in average order value

3 2

2019 Full-year Results

TRANSFORMATION OF OUR TECHNOLOGY

We are investing to future proof and simplify

• ur technology estate with focus in the

following areas  User experience – agile teams working on search, mobile, website speed, personalisation  Product and content management solution  Supply chain – DC management systems  Data and technology infrastructure – upgrades and replacement of legacy systems

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To support growth and drive improved returns

 Future proofing our technology  Scalability  Simplification – allowing us to make change quicker and more efficiently  Flexibility  Medium-term efficiencies

What? Key benefits? How we can continue to disrupt and accelerate

2019 Full-year Results

BEST-IN-CLASS SUPPLY CHAIN

 Americas DC expansion on track for completion in summer 2020 – > 2x capacity – Highly automated  Initiating two-year c. £60 million project to expand German DC – > 2x capacity – Highly automated – Will become replenishment hub for EMEA  Lean continuous improvement  Transport optimisation

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To support growth and drive improved returns

 Scalability: ensuring we have the right capacity in the right place to support our five-year growth plan  Improved customer service  New capabilities: in areas such as electronics, value-added solutions  Increased automation: Auto-pack, automated storage and retrieval improving DC efficiency  Savings: We expect savings in areas such as freight and labour as a by-product of our initiatives in this area

What? Key benefits? How we can continue to disrupt and accelerate

2019 Full-year Results

UNRIVALLED CHOICE

 We are building capabilities and infrastructure to significantly scale our range of products and solutions  Giving the Group scope to double our stocked range and significantly expand

• ur non-stocked range to offer broader

choice to customers

25

Higher share of customer spend

 Ability to sell our customers more  Improved data and content capabilities – Enhance customer experience – Data driven decision making  Faster, automated product introduction  More efficient management of inventory and risk

What? How?

 Build a scalable product data architecture – product information management and document management solution for EMEA / APAC  DC expansion

Key benefits? How we can continue to disrupt and accelerate

2019 Full-year Results

VALUE-ADDED SOLUTIONS

26

 We are focused on making our customers’ lives easier  We are enhancing our range of solutions across design, procurement, inventory management and maintenance phases

• f our customers’ journey through the

product lifecycle  We are expanding our current solutions across the globe as well as looking for further opportunities to introduce new solutions to customers

What?

Design

How we can continue to disrupt and accelerate

Procurement Inventory management Maintenance Our brands Our solutions

 eProcurement  Purchasing manager  Calibration  Condition-monitoring  Predictive maintenance / IIoT(1)  Store management  Vending solutions  ScanStock  Design tools  OKdo design, prototyping and cloud services

(1) IIoT is Industrial Internet of Things.

2019 Full-year Results 2019 Full-year Results

CURRENT TRADING AND OUTLOOK

4

Well positioned to show good progress in current financial year

2019 Full-year Results

AN ENCOURAGING START TO 2020

 April like-for-like revenue trends moderated to low single-digit growth, impacted by holidays. However, May has started encouragingly with Group like-for-like revenue growth closer to the trends seen during Q4 2019  EMEA (64% of revenue) continues to see strong growth and market share gains, more than offsetting softness in the Americas (26% of revenue). Asia Pacific (10% of revenue) is seeing similar trends to Q4  We are tightly managing our operating costs, while investing to drive longer-term growth  We remain confident of delivering another year of good progress

28

We have continued to see like-for-like revenue growth in the first seven weeks of the first half. We remain confident of delivering another year

• f good progress.

2019 Full-year Results

IN A NUTSHELL

29

1

UNIQUELY POSITIONED IN ATTRACTIVE MARKET

• Global player in large fragmented marketplace

‒ Market valued at c. ￡400 billion ‒ Market growing at GDP + ‒ Top 50 players account for c. 30% of the global market

• Uniquely positioned to take market share

‒ One of few global players ‒ Leader in digital ‒ Providing one-stop shop for customers

2

DRIVING MARKET SHARE GAINS

We aim to grow at two times the market, driving share gains by:

• Growing customer count

‒ Become first choice; grow promoter base ‒ Drive more traffic to websites ‒ Increase online conversion by improving experience

• Selling more to existing customers

‒ First choice customers spend 25% more ‒ Scale range and add new product verticals ‒ Rollout value-added solutions proposition ‒ Sell the full offer; improve sales effectiveness

3

BUILDING A LEAN AND SCALABLE MODEL

• We have made good progress to date

‒ Stabilised and improved gross margin ‒ Adjusted operating profit margin increase of 5.0 percentage points since 2015

• In the future we aim to drive scalability and lower
• ur cost to serve by:

‒ Simplifying technology estate ‒ Increasing the use of automation in supply chain ‒ Rolling out global shared services and automation

• Long-term aspiration is to achieve a mid-teen

adjusted operating profit margin

4

STRONG CASH AND ATTRACTIVE RETURNS

• High cash conversion
• Reinvest cash to build scale and drive faster

growth

• Progressive dividend policy
• Accelerate strategy via disciplined value-accretive

acquisitions to: ‒ Drive market share gains ‒ Add new product verticals ‒ Accelerate value-added solutions offer

• c. £400bn

market opportunity

2x

market growth rate

Mid-teen

adjusted operating profit margin target

> 80%*

adjusted operating cash flow conversion

* Our aim post-investment in strategic initiatives in 2020 and 2021.

2019 Full-year Results 2019 Full-year Results

Q&A

5

Thank you for your continued interest in Electrocomponents

2019 Full-year Results 2019 Full-year Results

APPENDIX

6

2019 Full-year Results

BASIS OF PREPARATION

Unless otherwise stated:

 Figures have been prepared using International Financial Reporting Standards as adopted by the European Union  Adjusted measures of profitability and cash flow exclude amortisation of intangible assets arising on acquisition of businesses, substantial reorganisation costs, asset write-downs, one-off pension credits

• r costs, significant tax rate changes and associated income tax

 Like-for-like change excludes the impact of acquisitions and the effects of changes in exchange rates on translation of overseas operating results, with 2018 converted at 2019 average exchange

• rates. Revenue is also adjusted to eliminate the impact of trading days year on year

 Changes in profit, cash flow, debt and share-related measures such as earnings per share are, unless otherwise stated, at reported exchange rates  Sign conventions: % changes in revenue and costs are positive if improving profit and negative if reducing profit  A net charge of £19.3 million (2018: £4.5 million) was reported for items excluded from adjusted profit before tax

32

2019 Full-year Results

GUIDANCE POINTS

Trading days

 Expect around £7 million positive impact on revenue from additional trading days in the year to March 2020

Other guidance points

 Capex – c. £80 million in both 2020 and 2021 – capital expenditure to depreciation

• f around 2.7x in both years

 Inventory turn: similar to 2019  2020 effective tax rate: similar to 2019  Cash tax: In 2020 we will see around £11 million impact from timing of UK tax payments  Remain committed to a progressive dividend policy. In the normal course the interim dividend will be equivalent to 40%

• f prior year full-year dividend

Foreign exchange Foreign exchange rates (average for the period)

2019 rates 2018 rates 2019 rates* Euro 1.13 1.13 1.14 USD 1.31 1.33 1.28

* 2019 adjusted profit before tax converted at 2020 forecast average rates, using 17 May 2019 closing rates extrapolated for rest of year. 33

 Currency movements decreased 2019 adjusted profit before tax by £0.1 million  If May rates persist we would expect around a £0.4 million benefit to adjusted profit before tax in the full year *

2019 Full-year Results

PERFORMANCE HAS BEEN GOOD BUT WE HAVE ROOM TO IMPROVE

34

 Over the last four years performance has been good but we still have room for improvement  We have made a good step forward on customer experience and financial performance  We have outperformed our market by digitally acquiring new customers and driving a higher share of wallet with existing customers  We need to pick up the pace of change if want to drive scale and become the disruptor in our market place

(1) Adjusted excludes amortisation of intangible assets arising on acquisition of businesses, substantial reorganisation costs, asset write-downs,

• ne-off pension credits or costs, significant tax rate changes and associated income tax.

(2) ROCE is adjusted operating profit for 12 months expressed a percentage of net assets excluding net debt and retirement benefit obligations.

5.2 7.4 9.1 11.9 13.0 15.4 17.2 19.8 H1 16 H2 16 H1 17 H2 17 H1 18 H2 18 H1 19 H2 19

Adjusted earnings per share (p)

33.8 48.2 57.7 75.5 81.2 95.9 104.0 116.3 H1 16 H2 16 H1 17 H2 17 H1 18 H2 18 H1 19 H2 19

Adjusted operating profit (£m)

13.4% 14.5% 17.6% 22.0% 25.2% 28.6% 26.4% 27.7% H1 16 FY16 H1 17 FY17 H1 18 FY18 H1 19 FY19

Return on Capital Employed (ROCE)

We are focused on where we can go over the next five years

2019 Full-year Results

GROUP FINANCIAL HIGHLIGHTS

(£m) H1 2018 H1 2017

Adjusted cash generated from operations 45.5 82.1 Net interest paid (2.5) (2.6) Income tax paid (16.2) (9.2) Adjusted net cash inflow from operating activities 26.8 70.3 Net capital expenditure (9.4) (8.4) Adjusted(1) free cash flow 17.4 61.9 Outflow related to restructuring (0.7) (3.0) Free cash flow post restructuring 16.7 58.9 Net debt (124.5) (140.9) 2019 2018 Change Like-for- like change Revenue (£m) 1,884.4 1,705.3 10.5% 8.3% Gross profit (£m) 838.6 749.8 11.8% 9.2% Adjusted operating profit (£m) 220.3 177.1 24.4% 20.8% Adjusted PBT (£m) 214.5 173.1 23.9% 20.8% Adjusted EPS (p) 37.0 28.4 30.3% 26.8% Adjusted free cash flow (£m) 84.5 105.1 (19.6)% Net debt (£m) 122.4 65.0 Like-for-like revenue growth (%) 8.3 12.8 Gross margin (%) 44.5 44.0 0.5 pts 0.2 pts Adjusted operating profit margin (%) 11.7 10.4 1.3 pts 1.1 pts Adjusted operating profit conversion (%) 26.3 23.6 2.7 pts 2.5 pts Adjusted operating cash flow conversion (%) 64.2 83.1 Net debt to adjusted EBITDA (x) 0.5 0.3 Return on capital employed (%) 27.7 28.6

35

2019 Full-year Results

KEY PERFORMANCE INDICATORS

KPI changes

 We have changed our Net Promoter Score from RS to Group  We have changed Group Lost Time Accident frequency to All Accidents

Driving an improved performance for customers, suppliers and shareholders

2019 2018 Change Like-for-like revenue growth (%) 8.3 12.8 Group Net Promoter Score 54.0 51.4 5.1% Adjusted operating profit conversion (%) 26.3 23.6 2.7 pts Adjusted operating profit margin (%) 11.7 10.4 1.3 pts Adjusted EPS (p) 37.0 28.4 30.3% Return on capital employed (%) 27.7 28.6 Adjusted operating cash flow conversion (%) 64.2 83.1 All Accidents 56 59

36

2019 Full-year Results

 Like-for-like adjusted operating cost growth of 5.7%, less than revenue growth of 8.3%. Adjusted operating cost as percentage

• f revenue fell to 32.8% (2018: 33.6%)

 Improvement in adjusted operating profit conversion to 26.3% (2018: 23.6%)

ADJUSTED OPERATING COSTS

Adjusted operating cost (£m)

Cost discipline

Inflation – 2.3% inflationary rises in

wages

Volume-related costs – During 2019 we

saw higher variable costs driven by revenue growth

Disciplined investment – We continue to

invest in digital and talent to support future revenue growth

Like-for-like change

37

2.3% 1.0% (0.7)% 0.9% 0.1%

550 560 570 580 590 600 610 620 630

FY18 Acquisition Inflation Volume Digital People Other PIP Saving FY19

2.1%

2019 Full-year Results

£m 2019 2018

Net debt at 1 April (65.0) (112.9) Adjusted free cash flow(1) 84.5 105.1 Acquisition of businesses (34.6)

• Cash and cash equivalents acquired with businesses

1.3

• Loans and finance leases acquired with businesses

(42.1)

• Cash effect of adjustments(1)

(8.0) (2.4) Equity dividends paid (58.9) (55.4) New shares issued 2.6 1.7 Purchase of own shares by Employee Benefit Trust (2.3) (3.5) Translation differences 0.1 2.4 Net debt at 31 March (122.4) (65.0)

NET DEBT MOVEMENTS

Strong balance sheet

 Net debt rose to £122.4 million, with the increase largely due to the acquisition of IESA and associated loans  In May 2018 the Group arranged a new flexible two-year loan, which is now £75 million  Net debt: EBITDA 0.5x (2018: 0.3x)

Pension

 Combined deficit £83.6 million (March 2018: £72.4 million)

(1) Adjusted excludes the impact of substantial reorganisation costs. 38

2019 Full-year Results

IMPACT OF FOREIGN EXCHANGE

Translation Exposure

 Reported profit sensitivity to a one cent movement in: – Euro: £1.4 million – USD: £0.5 million

Transaction Exposure

 Group treasury maintains 3-7 month hedging to smooth impact of currency movements  Key exposures: net buyer of US dollars, net seller of euros and other currencies  Gross margin impacted over time from weakening in sterling versus: – USD: negative impact – Euro and other currencies: positive impact

39

1.00 1.10 1.20 1.30 1.40 1.50

Euro and USD movements to Sterling

€ to £ $ to £