2019 FULL YEAR RESULTS FEBRUARY 2020
INTRODUCTION FRANK VAN ZANTEN CEO 2
HIGHLIGHTS – RESILIENT PERFORMANCE MIXED MACROECONOMIC AND RESILIENT PERFORMANCE MARKET CONDITIONS OPERATING MARGIN* UP FROM ORGANIC REVENUE 6.7% TO 6.8% ◊ BROADLY STABLE CONTINUED STRONG 4 ACQUISITIONS IN RECENT MONTHS CASH CONVERSION* 101% (ANNUALISED REVENUE c.£300m) FREE CASHFLOW UP 10% PROMISING PIPELINE FOR 2020 * Alternative performance measure – see Appendix 2 ◊ At constant exchange rates and on an IAS 17 basis 3 2019 FULL YEAR RESULTS FEBRUARY 2020
FINANCIAL RESULTS: RICHARD HOWES CFO 4
REVENUE GROWTH Revenue ue g growth * h * 1.0% 1.0% £m 10,000 1.4% Org rganic re revenue 9,000 grow owth* of of 0. 0.3% 3% (0.2)% (0.2)% 8,000 excluding p pri rice 7,000 changes a at largest 6,000 gr groce cery cu customer 9,327 9,234 9,212 5,000 4,000 3,000 2,000 Revenue 2018* Disposals Rebased 2018 Organic revenue Acquisitions Revenue 2019 * At 2019 constant exchange rates 5 2019 FULL YEAR RESULTS FEBRUARY 2020
LEASE ACCOUNTING (IFRS 16) No change i in INCOME STATEMENT BALANCE SHEET approa oach t to o lease or or buy d decision ADJUSTED RIGHT-OF-USE No o impact on on OPERATING ASSETS PROFIT* cash f ca flow £22.4m £432.9m NET FINANCE LEASE LIABILITIES No i impact on e exi xisting EXPENSE debt c covenants £23.3m £480.0m ROACE %* ADJUSTED PROFIT No o impact on on BEFORE INCOME financing h headroom TAX* 11.5% £0.9m ADJUSTED ROIC %* EARNINGS PER SHARE* 1.0% 0.2p 12% points * Alternative performance measure – see Appendix 2 6 2019 FULL YEAR RESULTS FEBRUARY 2020
INCOME STATEMENT IAS 17 GROWTH ◊ 2019 2019 2018 CONSTANT £m IFRS 16 IAS 17 ◊ IAS 17 REPORTED EXCHANGE Revenue 9,326.7 9,326.7 9,079.4 2.7% 1.0% Adjusted operating profit* 653.3 630.9 614.0 2.8% 1.5% Operating margin* ∆ 7.0% 6.8% 6.8% Adjusting items** (124.9) (124.9) (147.8) Operating profit 528.4 506.0 466.2 Net finance expense (75.1) (51.8) (55.0) Profit on disposal of businesses - - 13.6 Profit before income tax 453.3 454.2 424.8 Adjusted profit before income tax* 578.2 579.1 559.0 3.6% 2.4% ◊ Following the adoption of IFRS 16 ‘Leases’ with effect from 1 January 2019, the results for the year ended 31 December 2019 are not directly comparable with those reported under IAS 17 ‘Leases’ in the prior year. As a result, in order to provide meaningful comparatives, the Company has also presented the results for the year ended 31 December 2019 under IAS 17. The growth rates shown are stated on an IAS 17 basis. * Alternative performance measure – see Appendix 2 ∆ Operating margin at constant exchange rates and on an IAS 17 basis increased from 6.7% in 2018 to 6.8% in 2019 ** See Appendix 3 7 2019 FULL YEAR RESULTS FEBRUARY 2020
INCOME STATEMENT (CONTINUED) IAS 17 GROWTH ◊ 2019 2019 2018 CONSTANT £m IAS 17 ◊ IFRS 16 IAS 17 REPORTED EXCHANGE Effective tax rate* 23.8% 23.8% 23.1% Adjusted profit for the year* 440.6 441.3 429.9 2.7% 1.5% Weighted average number of shares (m) 333.3 333.3 331.7 Adjusted earnings per share* 132.2p 132.4p 129.6p 2.2% 1.0% Dividend per share 51.3p 51.3p 50.2p 2.2% Reported tax rate 23.0% 23.0% 23.1% Profit for the period 349.2 349.9 326.5 Basic earnings per share 104.8p 105.0p 98.4p ◊ Following the adoption of IFRS 16 ‘Leases’ with effect from 1 January 2019, the results for the year ended 31 December 2019 are not directly comparable with those reported under IAS 17 ‘Leases’ in the prior year. As a result, in order to provide meaningful comparatives, the Company has also presented the results for the year ended 31 December 2019 under IAS 17. The growth rates shown are stated on an IAS 17 basis. * Alternative performance measure – see Appendix 2 8 2019 FULL YEAR RESULTS FEBRUARY 2020
DIVIDEND PER SHARE (p) 27 years 51.3 of of c con onsecutive dividend i increases CA 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 17 18 19 9 2019 FULL YEAR RESULTS FEBRUARY 2020
BALANCE SHEET DEC 2019 DEC 2018 £m IFRS 16 IAS 17 Intangibles 2,290.9 2,382.5 Net d t debt : t : EBITDA** Right-of-use assets 432.9 - Tangibles 118.3 122.4 1.9x Working capital 943.4 948.3 Other net liabilities (278.2) (333.7) Substantial c capacity 3,507.3 3,119.5 for s fo self-fund nded d Net pension deficit (36.0) (38.5) acquisitions Net debt excluding (1,247.0) (1,386.5) lease liabilities* Lease liabilities (480.0) - Equity 1,744.3 1,694.5 DEC 2019 DEC 2018 1.9x 2.0x Net debt : EBITDA** Return on average 48.4% 50.7% operating capital ◊ * See Appendix 6 ** At average exchange rates and on an IAS 17 basis, in accordance with Group’s external banking covenants, which are unaffected by the adoption of IFRS 16 ◊ Alternative performance measure (see Appendix 2) and on an IAS 17 basis 10 FEBRUARY 2020 2019 FULL YEAR RESULTS
CASH FLOW 2019 2018 Cash c con onversion on* £m IFRS 16 IAS 17 Operating cash flow* ∆ 633.7 578.5 101% Net interest excluding interest on lease liabilities (51.2) (49.1) Tax (125.6) (113.2) Free cash flow 456.9 416.2 Free c cash flow u up Dividends (167.3) (152.2) 10% Acquisitions ◊ (162.8) (184.2) Disposal of businesses - 55.1 Employee share schemes (27.7) 50.0 Net cash inflow 99.1 184.9 Cash conversion * (operating cash flow as a % of 101% 94% lease adjusted operating profit) * Alternative performance measure – see Appendix 2 ∆ See Appendix 7 ◊ Including acquisition related items 11 FEBRUARY 2020 2019 FULL YEAR RESULTS
CASH CONVERSION 110% Average ca cash 103% 102% 102% 101% con onversion on* 99% 97% 97% 94% 95% 95% 93% 93% 93% 92% 92% 97% TARGET 90% 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 * Alternative performance measure – see Appendix 2 12 2019 FULL YEAR RESULTS FEBRUARY 2020
CAPITAL ALLOCATION SINCE 2004 Consistently s strong fr free c cash fl flow 6 % † ACQUISITIONS ◊ 163 ACQUISITIONS ◊ su supports se ts self-funded long term rm g growth a and SELF-FUNDED £3.4bn dividends 14 % † DIVIDENDS STRONG LONG TERM GROWTH IN DIVIDENDS £1.5bn STABLE DIVIDEND COVER c. 2.5x * ◊ Including 3 acquisitions completed or announced to date in 2020 * Based on adjusted earnings per share 13 FEBRUARY 2020 2019 FULL YEAR RESULTS
FINANCIAL SUMMARY REVENUE ADJUSTED OPERATING MARGIN * OPERATING PROFIT * 1.0 % ◊ 1.5 % ◊ 6.8 % ◊ CASH FREE CASH FLOW NET DEBT : CONVERSION * EBITDA * 101 % 1.9 X 10 % ADJUSTED DIVIDEND ROACE * EPS * PER SHARE 1.0 % ◊ 2.2 % 48.4 % ◊ ◊ At constant exchange rates * Alternative performance measure and, where applicable, on an IAS 17 basis – see Appendix 2 14 2019 FULL YEAR RESULTS FEBRUARY 2020
BUSINESS REVIEW: FRANK VAN ZANTEN CEO • Operatio ions r revie iew • Pro rospects • Strate tegy 15
BUSINESS AREA ANALYSIS Well d diversified across: ss: 31 CONTINENTAL EUROPE NORTH AMERICA 20% Revenue 59% Revenue count ntries 27% Operating profit* 51% Operating profit* 6 UK & IRELAND REST OF WORLD sectors rs 13% Revenue 8% Revenue 13% Operating profit* 9% Operating profit* * Adjusted operating profit (alternative performance measure, see Appendix 2) on an IAS 17 basis before corporate costs 16 2019 FULL YEAR RESULTS FEBRUARY 2020
NORTH AMERICA IAS 17 GROWTH 2019 2019 2018 CONSTANT £m IFRS 16 IAS 17 IAS 17 REPORTED EXCHANGE Revenue 5,473.2 5,473.2 5,277.8 3.7% (0.1%) Adjusted operating profit* 343.6 331.0 317.1 4.4% 0.6% Operating margin* 6.3% 6.0% 6.0% Return on operating capital* 36.1% 45.5% 48.4% • Organic revenue marginally down principally due to lower sales to largest grocery customer driven by price and product specification changes • Cost savings generated by reorganisation of grocery and redistribution • Resilient operating margin, unchanged at 6.0% • Retail held up well despite tough trading conditions • Good overall growth in safety, convenience store, processor and agriculture • Acquisition of Liberty Glove & Safety in February 2019 and Joshen Paper & Packaging in January 2020 * Alternative performance measure – see Appendix 2 2019 FULL YEAR RESULTS FEBRUARY 2020 17
CONTINENTAL EUROPE IAS 17 GROWTH 2019 2019 2018 CONSTANT £m IFRS 16 IAS 17 IAS 17 REPORTED EXCHANGE Revenue 1,829.8 1,829.8 1,797.5 1.8% 3.0% Adjusted operating profit* 182.1 178.8 176.8 1.1% 2.6% Operating margin* 10.0% 9.8% 9.8% Return on operating capital* 45.0% 60.1% 60.4% • Good organic revenue growth • Operating margin unchanged at 9.8% • Overall stable performance in France • Good performances in the Netherlands, Spain and Turkey • Substantial warehouse consolidations in the Netherlands successfully implemented • Recent acquisitions integrated well and continue to trade ahead of expectations * Alternative performance measure – see Appendix 2 18 2019 FULL YEAR RESULTS FEBRUARY 2020
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