REG - Bunzl PLC - Final Results
03/03/2025 07:15
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RNS Number : 9567Y Bunzl PLC 03 March 2025
03 March 2025
ANNUAL RESULTS ANNOUNCEMENT
Record acquisition spend, three year capital allocation commitment and 2025
guidance unchanged
Bunzl plc, the specialist international distribution and services Group, today
publishes its annual results for the year ended 31 December 2024.
Growth
Growth as at constant
Financial results 2024 2023 reported exchange*
Revenue £11,776.4m £11,797.1m (0.2)% 3.1%
Adjusted operating profit* £976.1m £944.2m 3.4% 7.2%
Adjusted profit before income tax* £872.9m £853.7m 2.2% 6.2%
Adjusted earnings per share* (†) 194.3p 191.1p 1.7% 5.5%
Dividend for the year(∆) 73.9p 68.3p 8.2%
Statutory results
Operating profit £799.3m £789.1m 1.3%
Profit before income tax £673.6m £698.6m (3.6)%
Basic earnings per share(†) 149.6p 157.1p (4.8)%
Highlights include:
· Revenue increased by 3.1% at constant exchange rates*; with underlying trends
improving in the second half driven by slight volume growth and a small easing
of deflation
· Adjusted operating profit* increased by 7.2% at constant exchange rates*,
reported operating profit increased by 1.3%
· Further expansion of operating margin* from 8.0% to 8.3%
· Adjusted earnings per share* increased by 5.5% at constant exchange rates*,
reported basic earnings per share declined by 4.8%, largely due to the
currency translation driven loss related to the disposal of our business in
Argentina
· Continued strong free cash flow* driven by highly cash generative model; cash
conversion of 93%
· 32(nd) year of consecutive annual dividend growth; total dividend per share
increase of 8.2%. Dividend cover expected to normalise further in 2025
· 13 acquisitions announced in 2024 with record annual committed spend of £883
million; pipeline active; continued optimisation of our portfolio with the
disposal of two small businesses in 2024 and an additional disposal announced
today
· 2025 outlook: maintaining guidance for robust Group revenue growth(≠) and
operating margin* in-line with 2024
· Announced commitment to allocate c.£700 million per annum primarily towards
value-accretive acquisitions and, if required, returns of capital, in each of
the three years ending 31 December 2027
· Completion of initial £250 million share buyback in 2024; further £200
million share buyback for 2025 underway
Commenting on today's results, Frank van Zanten, Chief Executive Officer of
Bunzl, said:
"2024 has been a year of significant strategic progress for Bunzl in which our
dedicated and entrepreneurial teams delivered strong adjusted operating profit
growth, supported by further expansion in our operating margin. 2024 was a
record year for acquisitions with committed spend of £883 million, in
addition to the completion of an initial £250 million share buyback which
reflects the strength of Bunzl's financial position. We have substantial
headroom for continuing to self-fund value-accretive acquisitions alongside
additional returns of capital to shareholders, and our acquisition pipeline
remains active.
Bunzl has delivered significant shareholder value over an extended period,
with 9% compound annual growth of adjusted earnings per share since 2004. In
2024 we extended our track record of annual dividend growth to 32 consecutive
years, reflecting our resilient business model. Our strategy remains
consistent, and I am very confident that Bunzl will continue to create
resilient, sustainable, long-term value for all stakeholders."
* Alternative performance measure (see Note 2)
† After excluding £0.6 million of profit for the year attributable to a
non-controlling interest within our Nisbets business
∆ The Board is recommending a 2024 final dividend of 53.8p per share.
Including the 2024 interim dividend per share of 20.1p the total dividend per
share of 73.9p represents an 8.2% increase compared to the 2023 total dividend
per share.
≠ At constant exchange rates
Strategic progress:
· Further expansion of operating margin, supported by the impact of higher
margin acquisitions and good margin management; own brand revenue penetration
of c.28% compared to c.25% in 2023
· 13 acquisitions announced during 2024, across multiple sectors and
geographies, including our first entry into Finland; record annual committed
spend of £883 million
· Driving operating efficiencies with 19 warehouse consolidations and
relocations, along with accelerating investments into digital solutions and
automation
· Processed 75%(≠) of orders digitally compared to 72% in 2023, further
enhancing customer stickiness and increasing low touch customer ordering
· 71% Trust Index score, a measurement achieved as part of the Great Place to
Work survey; a strong and pleasing result, given employee satisfaction
supports our continual focus on delivering a high level of customer service
Business area highlights:
Revenue (£m) Growth at constant exchange(*) Underlying revenue growth(*) Operating profit* (£m) Growth at constant exchange* Operating margin*
2024 2023
2024 2023 2024 2023
North America 6,568.1 6,973.5 (2.6)% (3.4)% 515.6 528.0 1.0% 7.9% 7.6%
Continental Europe 2,377.1 2,354.9 4.1% (1.7)% 210.8 224.7 (3.1)% 8.9% 9.5%
UK & Ireland 1,625.8 1,365.5 19.3% (4.2)% 135.1 103.4 31.0% 8.3% 7.6%
Rest of the World 1,205.4 1,103.2 17.1% 5.5% 146.2 119.6 32.3% 12.1% 10.8%
· North America: Slight operating profit growth at constant exchange, despite
underlying revenue decline driven by deflation; volume reductions in our US
foodservice redistribution business, as we increased our own brand
penetration; and due to the expected impact from transitioning ownership of
customer specific inventory in our US retail business in the first half.
Overall, business area volumes in the second half grew, although deflation
persisted longer than expected. Strong operating margin increase supported by
good margin management, including meaningful expansion of own brand
penetration
· Continental Europe: Moderate revenue growth at constant exchange rates was
driven by the contributions from acquisitions, with underlying revenue
impacted by deflation. Adjusted operating profit and operating margin declines
reflective of underlying revenue trends, alongside operating cost inflation
and a relatively high cost to serve operating model; the second half was
particularly impacted. These dynamics were a particular headwind for France,
certain businesses in the Netherlands and for Denmark, while Spain delivered
very strong revenue growth, supported by both acquisitions and underlying
revenue growth. Active focus on cost initiatives heading into 2025
· UK & Ireland: Very strong revenue growth driven by acquisitions, with a
decline in underlying revenue driven mainly by deflation and soft volumes.
Strong operating margin increase was driven by the continued focus on good
margin management, with operating margin expansion of our largest cleaning
& hygiene business particularly supportive. The integration of Nisbets, a
scale business with strong own brand portfolio and excellent digital
capabilities, is progressing well. While Nisbets was impacted by market
softness and meaningful one-off supply chain challenges earlier in 2024, the
business ended the year with positive momentum and with synergies identified
for 2025
· Rest of the World: Very strong revenue growth driven by acquisitions and good
underlying revenue growth, driven by strong volume growth in Latin America,
predominantly in safety, and both volume growth and inflation in Asia Pacific,
predominantly in healthcare. Very strong operating margin increase was driven
by the positive contribution from acquisitions and supported by good margin
management
Outlook
We reiterate our guidance for 2025:
· Despite significant uncertainties relating to the wider economic and
geopolitical landscape, the Group expects robust revenue growth in 2025, at
constant exchange rates, driven by announced acquisitions and slight
underlying revenue growth
· Group operating margin* is expected to be maintained in-line with 2024 and to
remain substantially higher compared to pre-pandemic levels, driven by higher
margin acquisitions, as well as a good underlying margin increase
· Other aspects of our full year 2025 guidance, are: (1) the full year effective
tax rate is expected to be around 26.0%; (2) the Group expects net finance
expenses to be around £115 million
* Alternative performance measure (see Note 2)
≠ Excluding acquisitions made in 2024
Enquiries:
Bunzl plc Teneo
Frank van Zanten, Chief Executive Officer Martin Robinson
Richard Howes, Chief Financial Officer Olivia Peters
Sunita Entwisle, Head of Investor Relations and Communications Tel: +44 (0)20 7353 4200
Tel: +44 (0)20 7725 5000
Note: A live webcast of today's presentation to analysts will be available on
www.bunzl.com, commencing at 9.30 am.
CHAIRMAN'S STATEMENT
2024 saw Bunzl achieve another year of excellent progress and delivery against
its compounding growth strategy, with the Group committing a record amount of
spend to acquisitions in the year. Furthermore, the Group extended its track
record of consecutive annual dividend growth to 32 years, and aligned to its
recently launched capital allocation commitment, completed a £250 million
share buyback.
At constant exchange rates, Bunzl has seen adjusted earnings per share
increase by 54% over the last five years, supported by the Group's growth
strategy delivering revenue growth of 30% over this period and operating
margin expansion from 6.9% to 8.3% at constant exchange rates. Over these five
years, Bunzl has committed £2.6 billion to acquisitions, while return on
invested capital has increased from 13.6% to 14.8%, and earnings growth has
remained resilient, highlighting the Group's discipline in successfully
executing its strategy to generate returns for its shareholders. Alongside
this we have returned £1.2 billion to shareholders over this period through
dividends and a share buyback in 2024.
Bunzl's consistently strong performances over recent years has resulted in the
Group's leverage falling and remaining below its adjusted net debt to EBITDA
target of 2.0 to 2.5 times. As a result, in 2024 the Board took the decision
to commit to steadily returning adjusted net debt to EBITDA to within the
target range of 2.0 to 2.5 times by the end of 2027. The Group has committed
to allocate c.£700 million per annum, primarily to invest in value-accretive
acquisitions and, if required, returns of capital, in each of the three
years ending 31 December 2027. In addition, the Board announced a £250
million share buyback that was executed in the second half of 2024 and a
further £200 million share buyback to be completed during 2025, which was
announced on 17 December 2024 and is currently underway with £50 million of
shares purchased to date.
I have great confidence that the entrepreneurialism and agility of our people,
supported by the diversification of our portfolio, and the overall resilient
nature of the Group, will continue to deliver long term growth and shareholder
value.
People and culture
Bunzl's most valuable asset is its people whose entrepreneurial spirit,
agility, and dedication ensure the delivery of exceptional service to our
customers as well as fuelling the innovation and operational excellence that
underpin the Group's ongoing success. Following Bunzl's global pilot of the
external 'Great Place to Work' survey in 2023, the Group again sought
accreditation in 2024 but this time across all businesses, with half of those
surveyed doing so for the first time. Following this, around 76% of operating
companies achieved the certification in 2024. Demonstrating that our people
continue to find Bunzl a fulfilling place to work and trust the company and
its leadership, the Group results saw a 2% increase in its Trust Index score
to 71%. Strong employee engagement is key to our proposition, as it supports
our delivery of a high level of customer service. We also continued to
accelerate our diversity and inclusion agenda to ensure that we have a working
environment which supports individual well-being, growth and career
progression. In 2024, the percentage of women within our senior leadership
team of c.530 (defined as those receiving long term incentives) was 25%. This
compares to 22% in 2023 and 20% in 2022.
Sustainability
I am pleased with the progress Bunzl has made with its sustainability
ambitions over 2024. In 2023 we followed the Science Based Target initiative
('SBTi') Net Zero Standard to develop our transition plan and are pleased that
this was formally approved by the SBTi in 2024. Bunzl's consolidated delivery
model and strategic focus on operational efficiency continues to support the
reduction of Bunzl's direct carbon emissions, which include scope 1 and scope
2 emissions. However, with c.99% of our carbon emissions being scope 3, the
success of our transition plan is therefore reliant on successful engagement
and collaboration with our suppliers, which we made significant progress on in
2024. Furthermore, we continue to innovate on product offerings that support
our customers to move to products better suited to the circular economy. This
included a c.30% increase in our emerging exclusive sustainable own brand
SKUs, under the EcoSystems, Verive, Sustain and Revive brands.
Dividend
The Board is recommending a final dividend of 53.8p, 7.4% higher than the
prior year, resulting in a full year dividend of 73.9p. This represents an
8.2% increase in the total dividend compared to 2023 and is Bunzl's 32(nd)
consecutive year of annual dividend growth. The Group's dividend cover reduced
to just over 2.6 times, with further normalisation of dividend cover expected
in 2025. The Group remains committed to ensuring sustainable dividend growth.
Governance
It was announced on 12 December that Lloyd Pitchford, who joined the Board in
March 2017 and is currently the Chair of the Audit Committee, will be stepping
down from his position at the conclusion of the Company's Annual General
Meeting ('AGM') on 23 April 2025. Lloyd's independent advice and wise counsel
have been greatly appreciated, and he leaves the Board with the Company's
gratitude and best wishes.
On 16 December 2024 Daniela Barone Soares OBE and Julia Wilson were appointed
as non-executive directors of the Group. Daniela's Environmental, Social and
Governance ('ESG') credentials and in-depth knowledge of the role technology
can play in driving change will be a valuable addition to the Board and will
further enhance our ESG capabilities. Furthermore, Daniela brings considerable
international experience, having also previously worked in the USA, Brazil and
Europe. As the Company continues to expand and develop, Julia's extensive
audit and UK regulatory expertise and significant executive-level strategic
and financial leadership experience will be of great value. Julia will succeed
Lloyd as Audit Committee Chair. The proportion of female directors on the
Board is 50%, while female representation on our Executive Committee remains
at 40%.
CHIEF EXECUTIVE OFFICER'S REVIEW
Overview
Bunzl has delivered another year of strong adjusted operating profit growth,
building on its track record of consistent annual earnings growth, and
highlighting the resilience of Bunzl's business model and the success of its
compounding growth strategy, underpinned by the ingenuity and dedication of
its people. Over 2024, our operating margin continued to expand, and we saw a
recovery from a period of organic revenue decline as revenue trends improved
in the second half of the year. Operating margin remains sustainably higher
than the levels achieved historically, having expanded from 6.9% in 2019 to
8.3% at constant exchange rates. This margin expansion has been supported by
both higher margin acquisitions and good margin management initiatives,
including the development of own brand, as well as our continual focus on
operational efficiency and increasing value-added services to customers.
Bunzl has had a record year of allocating capital to acquisitions, with 13
announced in 2024. Over the year, acquisitions included our first geographic
expansion into Finland and Bunzl's acquisition of Nisbets, a leading, high
quality distributor of catering equipment and consumables with a strong own
brand portfolio and excellent digital capabilities. Bunzl continues to focus
on disciplined portfolio management, regularly reviewing its portfolio of
companies, and disposed of two small businesses in 2024 and another in January
2025.
Alongside our sustainability and digital capabilities, the development of
innovative own brand ranges continues to strengthen Bunzl's competitive
advantage, as we create products that drive value and meet specific customer
needs, at compelling prices. Approximately 28% of our revenue in 2024 was
delivered through the sale of own brand products, with our largest business in
North America achieving a particularly strong increase in own brand
penetration over the year. Importantly, and across the Group, we continue to
collaborate with our strategic third party branded supplier partners to
provide unparalleled choice for our customers.
Operating performance
The commentary below is stated at constant exchange rates unless otherwise
highlighted.
Revenue
Revenue increased by 3.1% to £11,776.4 million. Acquisition related revenue
growth, net of disposals, of 5.1% and a 0.4% benefit from an additional
trading day in the year were partially offset by an underlying revenue decline
of 2.4%. Organic revenue decline, which is not adjusted for the impact of the
number of trading days in the year, was 2.0%. The decline in underlying
revenue was mainly driven by deflation across North America, Continental
Europe and UK & Ireland; strategic changes in our US foodservice
redistribution business to increase our own brand penetration, which alongside
price competition resulting from the deflationary environment, led to volume
softness; and the expected impact from transitioning ownership of customer
specific inventory to our customers in our US retail business in the first
half of the year. Underlying revenue in the second half was flat, driven by
Group volumes returning to slight growth and a small easing of deflation
driven by Continental Europe and UK & Ireland, although deflation
persisted in North America longer than expected. Net deflation is expected to
remain a headwind to Group revenue heading into 2025.
Safety, cleaning & hygiene and healthcare - total organic revenue in the
safety, cleaning & hygiene and healthcare businesses saw a 0.4% increase
over the year. Moderate growth in our safety sector was driven by strong
growth in Rest of the World, supported by inflation as well as volume growth,
but partially offset by more mixed trading elsewhere. The cleaning &
hygiene sector saw some volume growth, however, deflation more than offset
this leading to a moderate organic revenue decline. Organic revenue in our
healthcare businesses saw good growth, driven by Rest of the World.
Grocery and other sectors - total organic revenue in the grocery and other
sectors declined by 1.8%, with volume growth, driven by net business wins in
North America, more than offset by deflation.
Foodservice and retail - total organic revenue in foodservice and retail
combined declined by 4.2%. Deflationary pressures contributed a large part of
the decline, in addition to the volume impact of strategic actions taken in
our US foodservice redistribution business and US retail business, as well as
a retail customer loss in the US. Volumes in our US foodservice redistribution
business stabilised during the second half of the year and actions taken in
North America's retail business drove growth in adjusted operating profit for
the sector over the year, alongside a strong increase in return on average
capital employed.
Profit and earnings
Adjusted operating profit for the year was £976.1 million, an increase of
7.2%. Operating margin increased to 8.3% compared to 8.0% in 2023, supported
by both higher margin acquisitions and an underlying margin improvement. Group
gross margin expanded strongly, supported by acquisitions and own brand
development, but was partly offset by a higher operating costs to sales ratio.
Operating cost inflation was moderate, with wage inflation remaining higher
than typical levels in UK & Ireland and Continental Europe, although wage
inflation was at more typical levels in North America. Wage inflation in
Continental Europe and UK & Ireland is expected to normalise in 2025,
although the UK is expected to be impacted by increased National Insurance and
National Living Wage costs. Property cost inflation remains high linked to
lease renewals, but fuel and freight inflation was well managed over the year,
supported by contract retendering in North America. Continental Europe was
particularly impacted by its relatively high cost to serve operating model,
and the business area has an active focus on cost initiatives heading into
2025. Operating cost efficiency programmes, including warehouse consolidations
and relocations, were a partial offset to inflation. Reported operating profit
was £799.3 million, an increase of 5.0% (up 1.3% at actual exchange rates).
The effective tax rate of 25.5% was higher than the 25.0% in the prior year,
reflecting the increase in the UK statutory tax rate from 23.5% for calendar
year 2023 to 25.0% for 2024. The effective tax rate in 2025 is expected to be
around 26.0%.
Adjusted profit for the year was £650.5 million, an increase of 5.5%.
Adjusted earnings per share were 194.3p, an increase of 5.5%, and basic
earnings per share were 149.6p, a decrease of 0.9% (down 4.8% at actual
exchange rates), largely due to the currency translation loss related to the
disposal of our business in Argentina. The impact of the 2024 share buyback on
weighted average shares was limited given the timing of execution was towards
the end of the year. The number of ordinary shares in issue, less the shares
held in trust, on 31 December 2024 was 329.3 million, with the £200 million
share buyback announced for 2025 commencing at the start of January 2025.
Cash and returns
The Group's cash generation continues to be strong, with 93% cash conversion
(operating cash flow as a percentage of lease adjusted operating profit) ahead
of our 90% target.
Compared to 2023, free cash flow decreased by 1.5% at actual exchange rates,
to £633.8 million, due to a decrease in operating cash flow and an increase
in net interest paid excluding interest on lease liabilities, partly offset by
a lower cash outflow relating to tax. The strength of our underlying free cash
flow generation continues to enable our investment in the business,
progressive dividends, self-funded value-accretive acquisitions and other
capital allocation options. Adjusted net debt to EBITDA, which excludes lease
liabilities and includes total deferred and contingent consideration, at 31
December 2024 was 1.8 times and compares to 1.2 times at 31 December 2023.
Returns remained strong with return on average operating capital of 43.2%
(46.1% at 31 December 2023, 36.9% at 31 December 2019), while return on
invested capital was 14.8% (15.5% at 31 December 2023, 13.6% at 31 December
2019).
Strategy: organic growth and operational efficiency
We remain committed to delivering growth through our consistent compounding
strategy which focuses on organic growth, operational efficiency and
acquisitions. Key to this is our continual focus on innovative solutions to
support our customers' businesses. Over the year we have continued increasing
the percentage of own brand products sold to our customers, as these products
enhance our value-added proposition with specifications designed to meet our
customers' needs, and they are offered at compelling prices. Our own brand
penetration is currently c.28%, compared to c.25% in 2023, with this increase
driven by our initiatives in our largest business in North America.
Furthermore, we continue to utilise own brands to support our customers'
sustainability ambitions, with a c.30% increase since 2023 in our emerging
exclusive sustainable own brand SKUs, under the EcoSystems, Verive, Sustain
and Revive brands. The product ranges of these brands are better suited to the
circular economy. Overall, these brands saw a c.45% increase in revenue over
the year, albeit from a small base. The growth of these own brands has
highlighted the strategic importance of being able to provide cost-effective
sustainable solutions that meet legislative and market needs. Overall, the
proportion of Group revenue, excluding revenue from acquisitions made in 2024,
attributable to non-packaging products or packaging made from alternative
materials, both own brand and third party, remained high at 86%.
We have increased the proportion of digital sales, which accounted for 75% of
orders over the year, excluding acquisitions made in 2024, compared to 72% in
2023.
Pursuing operating efficiencies remains an important part of our strategy to
reduce the impact of operating cost inflation. In 2024, we have been able to
partially offset operating cost inflation through further optimisation of our
warehouse footprint with the consolidation of 14 warehouses and the relocation
of an additional 5. Furthermore, the business continues to look for
opportunities to utilise technology to drive efficiency, such as through
investments in warehouse automation. The Group has an ongoing focus on
operating cost efficiencies going into 2025.
Strategy: acquisitions and disposals
2024 was a record year for annual committed acquisition spend, with £883
million committed, surpassing the previous record level of £616 million in
2017. Bunzl's average annual committed spend over the last four years of
c.£550 million compares to an average of c.£340 million for the four year
period ended 31 December 2020 and c.£250 million for the four year period
ended 31 December 2016, highlighting the step change in the level of
acquisition spend Bunzl has committed in recent years.
During 2024, Bunzl announced 13 acquisitions across nine countries and five
market sectors, including our first entry into Finland, which further extends
our business in the Nordics where we already have a strong presence. We also
acquired Nisbets, a leading, high quality distributor of catering equipment
and consumables in the UK & Ireland, Northern Europe and Australasia, with
a strong own brand portfolio and excellent digital capabilities. The
integration of Nisbets is progressing well, although market softness and
meaningful one-off supply chain challenges earlier in 2024 have impacted
financial results, despite improved trading towards the end of the year. With
Nisbets strongly complementing our existing businesses, various synergy
projects will bring financial benefit to a number of our operating companies
in 2025.
Acquisition Completion Description
Pamark Group February 2024 · A leading distributor of cleaning & hygiene, healthcare,
foodservice and safety products to a broad range of customers in Finland
· Bunzl's anchor acquisition into Finland
· Revenue of EUR 56 million in 2023 (c.£49 million)
Nisbets May 2024 · A leading, high quality distributor of catering equipment and
consumables in the UK & Ireland, Northern Europe and Australasia, with a
strong own brand portfolio and excellent digital capabilities
· Revenue of £498 million in 2023
Clean Spot June 2024 · A distributor of cleaning & hygiene products and equipment in
Canada
· Revenue of CAD 7 million in 2023 (c.£4 million)
Sistemas De Embalaje Anper June 2024 · A distributor of industrial packaging to end-users in Spain
· Revenue of EUR 28 million in 2023 (c.£24 million)
Holland Packaging June 2024 · A distributor of bespoke and customised packaging products and
supplies to e-commerce focused companies based in the Netherlands
· Revenue of EUR 16 million in 2023 (c.£14 million)
RCL Implantes July 2024 · A distributor specialising in surgical and medical devices in Brazil
· Revenue of BRL 112 million in 2023 (c.£18 million)
PowerVac July 2024 · A distributor of commercial and industrial cleaning equipment in
Western Australia
· Revenue of AUD 10 million in 2023 (c.£5 million)
Cermerón August 2024 · Regional distributor of cleaning & hygiene products to
foodservice and hospitality customers in Southern Spain
· Revenue of EUR 13 million in 2023 (c.£11 million)
Cubro Group September 2024 · The leading distributor of mobility aids and clinical furniture to
the aged care, community care, and hospital markets in New Zealand
· Revenue of NZD 92 million (c.£44 million) in the year to March 2024
DBM Medical Group September 2024 · A specialist distributor of orthopaedic surgery products in New
Zealand
· Revenue of NZD 16 million (c.£7 million) in the year to June 2024
Arrow County Supplies October 2024 · Distributor of cleaning and hygiene products in the UK, with a strong
own brand portfolio
· Revenue of £24 million in 2023
C&C Group October 2024 · A specialist foodservice business that complements our existing
commercial catering businesses in the UK
· Revenue of £26 million in the year to April 2024
Comodis December 2024 · A leading distributor of cleaning and hygiene products in the
Rhône-Alpes region of France, strengthening our presence in this region
· Revenue of EUR 23 million (c.£20 million) in the year to March 2024
Bunzl regularly reviews its portfolio of companies, and in 2024 completed the
disposal of two businesses with annualised revenue of c.£17 million. In
March, our business in Argentina was sold to its management team, and in July,
the Group sold a German business which supplies incontinence products.
Furthermore, in January 2025 we sold our US R3 Safety business, Bunzl's only
pure wholesale safety business in the US, which generated revenue of c.£50
million in 2024. This decision reflects Bunzl's commitment to ensuring optimal
capital allocation across the Group. Since 2022, Bunzl has disposed of four
businesses with a combined annual revenue in their final year before disposal
of c.£250 million and combined operating margin of low to mid single digit,
well below the Group average.
The strength of the Group's cash conversion and balance sheet continues to
enable the Group to self-fund further acquisitions, largely through cash
generated in the year. Our pipeline remains active, and we see significant
opportunities for continued acquisition growth in our existing markets, as
well as potential to expand into new markets.
Capital allocation and shareholder returns
Our capital allocation priorities remain unchanged and focused on the
following: (1) to invest in the business to support organic growth and
operational efficiencies; (2) to pay a progressive dividend; (3) to self-fund
value-accretive acquisitions; and (4) to distribute excess cash. In the 21
years from 2004 to 2024, inclusive, Bunzl has committed £6.1 billion in
acquisitions to support a growth strategy that has delivered an annual
adjusted earnings per share CAGR between 2004 and 2024 of c.9%, and has
returned £2.7 billion to shareholders through dividends and the 2024 share
buyback.
The strength of Bunzl's performance and high cash generation in recent years
has resulted in low leverage compared to an adjusted net debt to EBITDA target
of 2.0 to 2.5 times. This was despite a step change in the level of
value-accretive acquisition spend in recent years. As a result, in August 2024
the Group committed to measures which are intended to steadily return it to
its target leverage range by the end of 2027. As a highly cash-generative
business, Bunzl is expected to have significant capacity to continue its
proven strategy of completing value-accretive acquisitions, and its
acquisition pipeline remains active within the very large and fragmented
global markets that it operates in. Aligned to Bunzl's disciplined capital
allocation policy, and supported by strong free cash flow generation, Bunzl
has committed to allocate c.£700 million per annum, primarily to invest in
value-accretive acquisitions and, if required, returns of capital, in each of
the three years ending 31 December 2027. If at the end of each year, the total
committed spend on value-accretive acquisitions is below £700 million, the
Group will return the remainder to shareholders through a capital return in
the following year. In addition, and recognising the Group's strong balance
sheet, the Board executed a £250 million share buyback during the second half
of 2024. A further share buyback of £200 million is underway, with £50
million of shares purchased to date, and the remainder to be executed during
2025. Alongside the buyback, Bunzl committed £883 million to value-accretive
acquisitions and as at 31 December 2024 had an adjusted net debt to EBITDA of
1.8 times.
BUSINESS AREA REVIEW
North America
56% of revenue and 51% of adjusted operating profit(*†)
Growth at
2024 2023 constant Underlying
£m £m exchange* growth*
Revenue 6,568.1 6,973.5 (2.6)% (3.4)%
Adjusted operating profit* 515.6 528.0 1.0%
Operating margin* 7.9% 7.6%
* Alternative performance measure (see Note 2)
†Based on adjusted operating profit and before corporate costs (see Note 3)
In North America, revenue declined by 2.6% to £6,568.1 million, with
underlying revenue declining by 3.4%, driven by deflation which impacted our
foodservice and grocery businesses in particular. Volumes were impacted by
reductions in our foodservice redistribution and US retail businesses but grew
overall in the second half of the year supported by a business win. Despite
the revenue decline, adjusted operating profit improved slightly, to £515.6
million with operating margin increasing to 7.9%, up from 7.6% in the prior
year. Margin was supported by ongoing margin management initiatives and
continued strong growth in own brands, particularly in our grocery and
foodservice segments.
Our business which supports the US grocery sector saw volume growth, driven by
net business wins. Favourable margin management and strong growth in own
brands drove modest improvement in operating margin. Our convenience store
sector was impacted meaningfully by volume loss in certain product categories.
Moderately lower volumes in our foodservice redistribution business were
driven by the impact of strategic changes in the business to drive more own
brand penetration, alongside increased price competition resulting from the
deflationary environment. Volumes stabilised during the second half of the
year. Increased own brand penetration supported margin growth, offsetting some
of the impact of the revenue decline.
Our other sub-sectors within foodservice, food processor and agriculture,
delivered slight volume growth combined, with our agriculture sector
recovering from weather driven weakness in the first half of 2023. Margins in
our food processor business benefitted from good margin management.
Revenue from the distribution of cleaning & hygiene products declined
modestly, as price deflation was offset in part by growth in own brand product
categories.
Revenue in our retail supplies business declined due to the annualised impact
of transitioning ownership of customer specific inventory to certain customers
in the first half, as well as a customer loss. However, adjusted operating
profit grew strongly, driven by a favourable mix shift towards higher margin
packaging, sourcing initiatives and well-controlled operating costs.
Overall, volumes across our safety businesses were stable, with good growth in
our PPE business offset by category losses with certain customers in our asset
management business. Inclusive of a small deflation impact, revenue was
slightly lower, although operating margin expanded due to strong margin
management.
Finally, our business in Canada experienced moderate revenue growth, driven by
acquisitions. Underlying revenue declined modestly, driven by price deflation
and legislative-driven impacts in certain categories, and underlying operating
profit grew modestly, primarily as a result of good margin management.
Continental Europe
20% of revenue and 21% of adjusted operating profit(*†)
Growth at constant Underlying
2024 2023 exchange* growth*
£m £m
Revenue 2,377.1 2,354.9 4.1% (1.7)%
Adjusted operating profit* 210.8 224.7 (3.1)%
Operating margin* 8.9% 9.5%
* Alternative performance measure (see Note 2)
†Based on adjusted operating profit and before corporate costs (see Note 3)
Revenue in Continental Europe grew by 4.1% to £2,377.1 million, driven by
acquisitions. Underlying revenue declined by 1.7%, driven by price deflation
which particularly impacted our cleaning & hygiene, grocery and retail
businesses in our largest markets. Adjusted operating profit decreased by 3.1%
to £210.8 million, with a decline in operating margin from 9.5% to 8.9%
reflective of the impact of selling price deflation, as well as operating cost
inflation against a relatively high cost to serve operating model. Operating
cost inflation was driven by higher than typical wage inflation throughout the
year, renewal-linked property inflation and fuel and freight inflation. The
second half of the year was particularly impacted. These dynamics were a
particular headwind for operating profit performance in France, certain
businesses in the Netherlands and in Denmark, although these were partially
offset by increased profit from Spain driven by very strong revenue growth. We
have an active focus on cost initiatives heading into 2025.
In France, volumes in our cleaning & hygiene businesses delivered some
growth with public sector and foodservice customers. Our safety business
revenue declined as some growth with larger customers was not sufficient to
offset weaker demand from smaller accounts. Revenue declined in our
foodservice business as lower revenues from specific domestic and export
customers combined with flat revenue from public sector customers. Overall,
moderate revenue decline alongside operating cost growth significantly
impacted the operating margin across France in 2024. Optimising operating
costs is a key focus for the country, with a new Warehouse Management System
introduced in our cleaning & hygiene businesses and with one of our safety
warehouses consolidated into another. During 2025 we will be carrying out a
large consolidation of our cleaning & hygiene logistics footprint,
including the implementation of a new National Distribution Centre.
Revenue in Spain grew very strongly, driven by acquisitions as well as strong
underlying growth, with strong volume growth in our cleaning & hygiene and
packaging businesses. Growth was driven by new customers and new product
ranges in the packaging business. Our safety businesses saw some growth, but
revenue in our online healthcare businesses was impacted by weaker demand.
In the Netherlands, our healthcare business was stable, whilst volumes in our
grocery and retail businesses were impacted by changing consumer needs.
Revenue in our foodservice business declined moderately, and our safety
businesses declined slightly as a result of a slowdown in construction and
industry sectors. Overall, revenue across the Netherlands benefited from
recent acquisitions.
In Belgium, our cleaning & hygiene businesses achieved some volume growth
in healthcare and public sector channels. In Germany, our foodservice business
delivered good volume growth from new customers, and the back office functions
were merged with our smaller cleaning & hygiene business. Our online
cleaning & hygiene business grew strongly.
In Denmark, revenue in our foodservice business declined meaningfully, driven
by deflation. Revenue in our safety business grew strongly due to increased
activity from customers in the shipping and pharmaceutical sectors. Overall
revenue in the country decreased and profit performance was impacted by strong
operating cost inflation.
In Turkey, volumes declined as we continue to focus on business that can be
profitable in a hyperinflationary environment, while our businesses in
Switzerland delivered good volume growth, supported by good performance with
healthcare customers, although deflation more than offset this.
UK & Ireland
14% of revenue and 13% of adjusted operating profit(*†)
Growth at constant
2024 2023 exchange* Underlying
£m £m growth*
Revenue 1,625.8 1,365.5 19.3% (4.2)%
Adjusted operating profit* 135.1 103.4 31.0%
Operating margin* 8.3% 7.6%
* Alternative performance measure (see Note 2)
†Based on adjusted operating profit and before corporate costs (see Note 3)
In UK & Ireland, revenue increased by 19.3% to £1,625.8 million due to
the impact of acquisitions. This was mainly due to the additional sales from
Nisbets, acquired in late May 2024, which more than offset a decline of 4.2%
in underlying revenue. The underlying business revenue decline reflects both
price deflation, which impacted our cleaning & hygiene, foodservice and
grocery businesses in particular, and softer volumes, particularly in the
safety, retail and foodservice sectors. Despite the challenging sales
environment, the businesses within UK & Ireland generated a significant
increase in operating margin which improved from 7.6% to 8.3%, with adjusted
operating profit increasing by 31.0% to £135.1 million. Operating profit
growth was driven by acquisitions, alongside an improvement in underlying
operating profit, supported by a continued focus on good margin management.
Our cleaning & hygiene and care businesses saw moderate volume growth
overall, supported by additional customer wins and the acquisition of Arrow
County Supplies in October. Our strong sustainability led value proposition to
customers continues to be attractive to both existing and prospective
customers and contributed to significant growth in operating margins in the
year.
The safety businesses experienced a slight increase in revenues in 2024, due
to the full year impact of the 2023 acquisition of EHM and was further
supported by some new contract wins through the course of the year, in the
context of a very challenging year for construction. The business has
continued to invest in new operationally efficient locations to deliver
outstanding levels of service to customers and is well placed to take
advantage of opportunities within housebuilding and other infrastructure
projects in 2025.
Volumes in our grocery business were stable, but volumes in our non-food
retail businesses saw a moderate decline due to our customers experiencing
softer demand from consumers. Our non-food packaging business aimed primarily
at the luxury end of fashion and jewellery has been negatively impacted by
reduced demand from consumers in both Asia and in Europe. We continue to work
with Group companies around the world to provide local fulfilment services
in-house which enhances our added value offer to international customers and
provides growth opportunities. Despite challenging market conditions our
businesses were able to benefit from several product sourcing initiatives.
Our foodservice businesses saw a slight decline in underlying volumes given a
tough trading environment for customers, but the businesses delivered
year-on-year operating profit growth as a result of strong margin management.
Total foodservice revenues benefited from acquisitions, particularly the
acquisition of Nisbets. Over the year, some key customer contract renewals
have continued to demonstrate our strong sustainability offering, including
our ability to provide sustainable and innovative product alternatives.
Nisbets was impacted by market softness and meaningful one-off supply chain
challenges earlier in 2024, but ended the year with positive momentum and with
synergy projects to benefit in 2025.
Revenue in our businesses in Ireland was slightly down, with volume growth,
despite some weakness in the foodservice sector, more than offset by
deflation. The continued investments in our operations, including the
enhancements made to our warehouse management systems, led to significant
warehouse productivity benefits and transport savings. Some notable recent
retail sector wins provide opportunities for growth in 2025.
Rest of the World
10% of revenue and 15% of adjusted operating profit(*†)
Growth at constant
2024 2023 exchange* Underlying growth*
£m £m
Revenue 1,205.4 1,103.2 17.1% 5.5%
Adjusted operating profit* 146.2 119.6 32.3%
Operating margin* 12.1% 10.8%
* Alternative performance measure (see Note 2)
†Based on adjusted operating profit and before corporate costs (see Note 3)
In Rest of the World, revenue increased 17.1% to £1,205.4 million, mainly
driven by acquisitions, with underlying revenue increasing by 5.5% driven by
strong volume growth in Latin America, and both volume and inflation support
in Asia Pacific. Adjusted operating profit grew by 32.3% to £146.2 million
with operating margin increasing from 10.8% to 12.1%, driven by positive
contributions from acquisitions and supported by good margin management.
In Brazil, our safety businesses delivered very strong sales growth, with
strong underlying revenue growth complemented by the benefit from
acquisitions, although operating margins were lower driven by sharp currency
devaluation. Our healthcare businesses delivered strong underlying growth,
with revenue overall substantially higher driven by the acquisition of CT
Group in December 2023 and RCL in July 2024, and with a significantly higher
margin reflective of the inclusion of these businesses, as well as
improvements in both third party brand and own brand segments. Our cleaning
& hygiene businesses had a very strong year as integration of Groupo
Lanlimp, acquired in November 2023, yielded both sales growth and much higher
operating margins. Finally, our foodservice business showed very strong
underlying growth in both sales and operating profit as it benefitted from new
customer wins and gaining share with existing customers.
In Chile, our safety businesses also showed good sales growth, but competition
impacted operating margin. Our foodservice business delivered strong sales and
operating profit growth, as operational improvements implemented at the start
of the year supported good performance. Our Safety business in Mexico
delivered good volume growth, supported by high growth in e-commerce sales,
and benefitted from strong margin management.
Bunzl Australia and New Zealand, our largest business in Asia Pacific, saw
strong revenue and adjusted profit growth, with the benefit of acquisitions
supported by moderate underlying growth, and strong operating margin expansion
driven by margin management. Growth continued to be driven by the healthcare
sector across both aged care and hospitals, with food processor also
performing well, offset somewhat by lower sales in facilities management and
hospitality.
Our MedTech business and specialist healthcare operations in Australia and New
Zealand continued to deliver good sales growth, and further benefitted from
the acquisitions of Cubro Group and DBM Medical Group in September 2024, with
operating margin expansion.
Our Australian safety business had good growth with strong sales growth in its
direct to end user division outpacing slightly weaker demand in the
redistribution business, which sells to distributors.
The emergency services business saw very strong growth, fulfilling several
large government orders across the year. The business also focused on
developing its service offering in both government and the resource sector to
ensure ongoing sales revenue.
FINANCIAL REVIEW
As in previous years this review refers to a number of alternative performance
measures which management uses to assess the performance of the Group. Details
of the Group's alternative performance measures are set out in Note 2.
Currency translation
Currency translation has had an adverse impact on the Group's reported
profits, decreasing the reported profit growth rates by between 3% and 4%.
This adverse exchange impact to profit is primarily due to the strengthening
of sterling against the US dollar, euro, Canadian dollar, Brazilian real and
Australian dollar.
Average exchange rates 2024 2023
US$ 1.28 1.24
Euro 1.18 1.15
Canadian$ 1.75 1.68
Brazilian real 6.89 6.21
Australian$ 1.94 1.87
Closing exchange rates 2024 2023
US$ 1.25 1.27
Euro 1.21 1.15
Canadian$ 1.80 1.68
Brazilian real 7.74 6.19
Australian$ 2.02 1.87
Revenue
Revenue decreased to £11,776.4 million (2023: £11,797.1 million), a decrease
of 0.2% at actual exchange rates. At constant exchange rates revenue increased
3.1% driven by acquisitions net of disposals adding 5.1%, and the additional
trading day in 2024 compared to 2023 adding 0.4%, partly offset by an
underlying decline of 2.4%. The decline in underlying revenue was mainly
driven by deflation across North America, Continental Europe and UK &
Ireland; strategic changes in our US foodservice redistribution business to
increase our own brand penetration, which alongside price competition,
resulting from the deflationary environment, led to volume softness; and the
expected impact from transitioning ownership of customer specific inventory to
our customers in our US retail business in the first half of the year.
Underlying revenue in the second half was flat, driven by Group volumes
returning to slight growth and a small easing of deflation driven by
Continental Europe and UK & Ireland, although deflation persisted in North
America longer than expected. Net deflation is expected to remain a headwind
to Group revenue heading into 2025.
Movement in revenue £m
2023 revenue 11,797.1
Currency translation (376.4)
Trading day 44.9
Underlying decline (271.1)
Excess growth in hyperinflationary economies 1.1
Acquisitions net of disposals 580.8
2024 revenue 11,776.4
Operating profit
Adjusted operating profit was £976.1 million (2023: £944.2 million), an
increase of 7.2% at constant exchange rates and 3.4% at actual exchange rates.
At both constant and actual exchange rates operating margin increased to 8.3%
from 8.0% in 2023. The operating margin of 8.3% was supported by both higher
margin acquisitions and an underlying margin improvement.
Movement in adjusted operating profit £m
2023 adjusted operating profit 944.2
Currency translation (34.0)
Increase in hyperinflation accounting adjustments (4.2)
2024 growth 70.1
2024 adjusted operating profit 976.1
Operating profit was £799.3 million (2023: £789.1 million), an increase of
5.0% at constant exchange rates and 1.3% at actual exchange rates.
Movement in operating profit £m
2023 operating profit 789.1
Currency translation (28.2)
Increase in hyperinflation accounting adjustments (4.1)
Growth in adjusted operating profit 70.1
Non-recurring pension scheme credit 3.2
Increase in amortisation (excluding software) and acquisition related items (30.8)
2024 operating profit 799.3
Amortisation excluding software, which includes amortisation on customer and
supplier relationships, brands and technology, acquisition related items and
the non-recurring pension scheme credit are excluded from the calculation of
adjusted operating profit as they do not relate to the trading performance of
the business. Accordingly, these items are not taken into account by
management when assessing the results of the business and are removed in
calculating adjusted operating profit and other alternative performance
measures by which management assess the performance of the Group.
Net finance expense
The adjusted net finance expense for the year was £103.2 million, an increase
of £15.1 million at constant exchange rates (up £12.7 million at actual
exchange rates), mainly due to increases in lease interest expense, higher
interest rates and a higher average debt during the year. Net finance expense
for the year was £105.4 million including £2.2 million of interest on
unwinding of discounting deferred consideration on acquisitions.
Disposal of businesses
The loss on disposal of businesses of £20.3 million relates to the disposal
of the Group's business in Argentina and a healthcare business in Germany,
which completed on 14 March 2024 and 12 July 2024 respectively. The loss on
disposal reflects the cash consideration received of £4.4 million offset by
the net book value of assets disposed of £6.0 million and recycling of
historical foreign exchange losses of £18.7 million held in the translation
reserve within equity, which have been impacted by the devaluation of the
Argentinian peso due to hyperinflation. There was no material impact from the
disposal of these businesses on the Group's trading performance.
Profit before income tax
Adjusted profit before income tax was £872.9 million (2023: £853.7 million),
up 6.2% at constant exchange rates (up 2.2% at actual exchange rates), due to
the growth in adjusted operating profit partly offset by the increase in
adjusted net finance expense. Profit before income tax was £673.6 million
(2023: £698.6 million), an increase of 0.1% at constant exchange rates (down
3.6% at actual exchange rates) with growth in operating profit offset by the
loss on disposal of businesses and increase in net finance expense.
Taxation
The Group's tax strategy is to comply with tax laws in all countries in which
it operates and to balance its responsibilities for controlling the tax costs
with its responsibilities to pay the appropriate level of tax where it does
business. No companies are established in tax havens or other countries for
tax purposes where the Group does not have an operational presence and the
Group's de-centralised operational structure means that the level of
intragroup trading transactions is very low. The Group does not use intragroup
transfer prices to shift profit into low tax jurisdictions. The Group's tax
strategy has been approved by the Board and tax risks are reviewed by the
Audit Committee. In accordance with UK legislation, the strategy is published
on the Bunzl plc website within the Corporate governance section.
The effective tax rate (being the tax rate on adjusted profit before income
tax) for the year was 25.5% (2023: 25.0%) and the reported tax rate on
statutory profit was 25.6% (2023: 24.7%). The effective tax rate for 2024 is
higher than for 2023 primarily due to the increase in the UK statutory tax
rate from 23.5% for calendar year 2023 to 25.0% for year 2024 and profit mix
moving to higher tax rate countries. The Group's effective tax rate is
expected to increase to be around 26% in 2025 as certain one-off benefits in
2024 are not repeated. Although the Group is subject to the global minimum tax
regime known as Pillar 2 from 2024, this is not expected to cause any
significant increase in the Group's tax liabilities.
Earnings per share
Adjusted profit after tax attributable to the Company's equity holders was
£649.9 million (2023: £640.3 million), up 5.4% and an increase of £33.3
million at constant exchange rates (up 1.5% at actual exchange rates), due to
a £50.8 million increase in adjusted profit before income tax, partly offset
by a £16.9 million increase in the tax on adjusted profit before income tax
at constant exchange rates, and excluding £0.6m profit attributable to
non-controlling interests. Adjusted profit after tax for the year bears a
£9.8 million adverse impact from hyperinflation accounting adjustments (2023:
£11.0 million adverse impact).
Profit after tax attributable to the Company's equity holders decreased to
£500.4 million (2023: £526.2 million), down 1.1% and an decrease of £5.6
million at constant exchange rates (down 4.9% at actual exchange rates), due
to a £5.8 million increase in the tax charge at constant exchange rates,
partly offset by a £0.8 million increase in profit before income tax, and
excluding £0.6m profit attributable to non-controlling interests. Profit
after tax for the year bears an £10.9 million adverse impact from
hyperinflation accounting adjustments (2023: £11.0 million adverse impact).
The weighted average number of shares in issue decreased to 334.4 million from
335.0 million in 2023 due to shares cancelled under the share buyback
programme and share purchases into the employee benefit trust partly offset by
employee share option exercises.
Adjusted earnings per share attributable to the Company's equity holders were
194.3p (2023: 191.1p), an increase of 5.5% at constant exchange rates (up 1.7%
at actual exchange rates). Basic earnings per share attributable to the
Company's equity holders were 149.6p (2023: 157.1p), down 0.9% at constant
exchange rates (down 4.8% at actual exchange rates).
Movement in adjusted earnings per share Pence
2023 adjusted earnings per share 191.1
Currency translation (7.0)
Increase in adjusted profit before income tax 11.5
Movement in hyperinflation accounting adjustments -
Increase in effective tax rate (1.6)
Decrease in weighted average number of shares 0.3
2024 adjusted earnings per share 194.3
Movement in basic earnings per share Pence
2023 basic earnings per share 157.1
Currency translation (6.1)
Increase in adjusted profit before income tax 11.6
Increase in adjusting items (6.5)
Loss on disposal of businesses (6.1)
Increase in hyperinflation accounting adjustments (0.1)
Increase in reported tax rate (0.5)
Decrease in weighted average number of shares 0.2
2024 basic earnings per share 149.6
Dividends
An analysis of dividends per share for the years to which they relate is shown
below:
2024 2023 Growth
Interim dividend (p) 20.1 18.2 10.4%
Final dividend (p) 53.8 50.1 7.4%
Total dividend (p) 73.9 68.3 8.2%
Dividend cover (times) 2.6 2.8
The Company's practice is to pay a progressive dividend, delivering
year-on-year increases. The Board is proposing a 2024 final dividend of 53.8p,
an increase of 7.4% on the amount paid in relation to the 2023 final dividend.
The 2024 total dividend of 73.9p is 8.2% higher than the 2023 total dividend.
Before approving any dividends, the Board considers the level of borrowings of
the Group by reference to the ratio of net debt to EBITDA, the ability of the
Group to continue to generate cash and the amount required to invest in the
business, in particular into future acquisitions. The Group's long term track
record of strong cash generation, coupled with the Group's substantial
borrowing facilities, provides the Company with the financial flexibility to
fund a growing dividend. After the further growth in 2024, Bunzl has sustained
32 years of consecutive annual dividend growth to shareholders.
The risks and constraints to maintaining a growing dividend are principally
those linked to the Group's trading performance and liquidity, as described in
Note 18 (Principal risks and uncertainties). The Group has substantial
distributable reserves within Bunzl plc and there is a robust process of
distributing profits generated by subsidiary undertakings up through the Group
to Bunzl plc. At 31 December 2024 Bunzl plc had sufficient distributable
reserves to cover more than six years of dividends at the levels of those
delivered in 2024, which is expected to be approximately £250 million.
Acquisitions
The Group completed 15 acquisitions during the year ended 31 December 2024, of
which 13 were announced, with a total committed spend of £882.5 million. The
estimated annualised revenue and adjusted operating profit of the acquisitions
completed during the year were £744 million and £72 million, respectively.
A summary of the effect of acquisitions is as follows:
£m
Fair value of net assets acquired 451.3
Less: non-controlling interests (2.7)
Goodwill 357.8
Consideration 806.4
Satisfied by:
cash consideration 675.2
deferred consideration 131.2
806.4
Contingent payments relating to retention of former owners 92.8
Interest relating to discounting of deferred consideration 17.3
Net cash acquired (59.9)
Transaction costs and expenses 25.9
Total committed spend in respect of acquisitions completed in the current year 882.5
The net cash outflow in the year in respect of acquisitions comprised:
£m
Cash consideration 675.2
Net cash acquired (59.9)
Deferred consideration payments 20.9
Net cash outflow on purchase of businesses 636.2
Cash outflow from acquisition related items* 42.0
Total cash outflow in respect of acquisitions 678.2
* Acquisition related items comprise £25.6 million of transaction costs and
expenses paid and £16.4 million of payments relating to retention of former
owners.
Cash flow
A summary of the cash flow for the year is shown below:
2024 2023
£m £m
Cash generated from operations(†) 1,133.4 1,129.5
Payment of lease liabilities (216.7) (188.0)
Net capital expenditure (37.2) (56.2)
Operating cash flow(†) 879.5 885.3
Net interest paid excluding interest on lease liabilities (65.2) (53.2)
Income tax paid (180.5) (188.6)
Free cash flow 633.8 643.5
Dividends paid (228.6) (209.7)
Net payments relating to employee share schemes (14.3) (23.7)
Net cash inflow before acquisitions, disposals and purchase of own shares 390.9 410.1
Purchase of own shares (247.9) -
Acquisitions(◊) (678.2) (374.6)
Disposals 2.9 -
Net cash (outflow)/inflow on net debt excluding lease liabilities (532.3) 35.5
(†) Before acquisition related items.
(◊) Including acquisition related items.
The Group's free cash flow of £633.8 million was £9.7 million lower than in
2023, due to a decrease in operating cash flow of £5.8 million and an
increase in net interest paid excluding interest on lease liabilities of
£12.0 million, partly offset by a £8.1 million lower cash outflow relating
to tax. The Group's free cash flow was used to finance dividend payments of
£228.6 million in respect of 2023 (2023: £209.7 million in respect of 2022),
purchase of own shares of £247.9 million (2023: £nil) and net payments of
£14.3 million (2023: net payments of £23.7 million) relating to employee
share schemes, and partially finance an acquisition cash outflow of £678.2
million (2023: £374.6 million). Purchase of own shares of £247.9 million
comprises the £250 million share buy back as announced in August 2024, stamp
duty of £1.0 million and transaction costs of £0.2 million less outstanding
payments as at 31 December 2024 of £3.3 million. Cash conversion (being the
ratio of operating cash flow as a percentage of lease adjusted operating
profit) was 93% (2023: 96%).
2024 2023
£m £m
Operating cash flow 879.5 885.3
Adjusted operating profit 976.1 944.2
Add back depreciation of right-of-use assets 186.1 166.1
Deduct payment of lease liabilities (216.7) (188.0)
Lease adjusted operating profit 945.5 922.3
Cash conversion 93% 96%
Net debt
2024 2023
£m £m
Net debt excluding lease liabilities (1,611.4) (1,085.5)
Total deferred and contingent consideration - on and off balance sheet (375.4) (258.8)
Adjusted net debt (1,986.8) (1,344.3)
Lease liabilities (754.1) (664.5)
Adjusted net debt including lease liabilities (2,740.9) (2,008.8)
Adjusted net debt to EBITDA 1.8x 1.2x
Adjusted net debt including lease liabilities to EBITDA 2.1x 1.6x
Net debt excluding lease liabilities increased by £525.9 million during the
year to £1,611.4 million (2023: £1,085.5 million), due to a net cash outflow
of £532.3 million and external debt recognised on acquisition of £6.3
million, partly offset by a £10.4 million decrease due to currency
translation and a non-cash decrease in debt of £2.3 million.
Adjusted net debt increased by £642.5 million during the year to £1,986.8
million (2023: £1,344.3 million) due to the £525.9 million increase in net
debt excluding lease liabilities and a £116.6 million increase in total
deferred and contingent consideration.
Balance sheet
Summary balance sheet at 31 December:
2024 2023
£m £m
Intangible assets 3,683.8 3,242.1
Right-of-use assets 697.6 616.3
Property, plant and equipment 213.3 159.4
Working capital 1,210.2 1,158.1
Net assets held for sale 10.0 -
Deferred consideration (258.2) (175.6)
Other net liabilities (420.3) (333.4)
Net pension surplus 19.8 49.4
Net debt excluding lease liabilities (1,611.4) (1,085.5)
Lease liabilities (754.1) (664.5)
Equity 2,790.7 2,966.3
Return on average operating capital 43.2% 46.1%
Return on invested capital 14.8% 15.5%
Return on average operating capital decreased to 43.2% from 46.1% in 2023 due
to higher average capital employed in the underlying businesses. Return on
invested capital decreased to 14.8% compared to 15.5% in 2023 due to the
impact of higher average invested capital from acquisitions.
Intangible assets increased by £441.7 million to £3,683.8 million due to
intangible assets arising on acquisitions in the year of £729.9 million, a
net increase from hyperinflation adjustments of £7.7 million and software
additions of £14.1 million, partly offset by an amortisation charge of
£160.2 million, an impairment charge of £2.3 million, net decrease from
disposal of businesses of £7.5 million, assets transferred to held for sale
of £1.7 million and a decrease from currency translation of £138.3 million.
Right-of-use assets increased by £81.3 million to £697.6 million due to
additional right-of-use assets from new leases during the year of £161.3
million, an increase from remeasurement adjustments of £49.8 million and an
increase from acquisitions of £73.0 million, partly offset by a depreciation
charge of £186.1 million, assets transferred to held for sale of £1.5
million, disposal of businesses of £0.4 million and a decrease from currency
translation of £14.8 million.
Working capital increased from the prior year end by £52.1 million to
£1,210.2 million driven by an increase of £80.5 million from acquisitions
and an underlying increase of £97.1 million as shown in the cash flow
statement, partly offset by £53.3 million accrued for commitments under the
share buyback programme, a decrease of £8.3 million from net assets
transferred to held for sale and a decrease from currency translation of
£64.3 million.
Net assets held for sale comprises assets and liabilities related to a safety
business in North America which was sold in January 2025.
Deferred consideration increased by £82.6 million to £258.2 million due to
£131.2 million of deferred consideration recognised on current year
acquisitions and interest on unwinding of discounting of £2.2 million, partly
offset by deferred consideration and retention payments of £33.3 million, a
credit from adjustments to previously estimated earn outs net of charges
relating to the retention of former owners of £1.3 million and a decrease
from currency translation of £16.2 million. Including expected future
payments which are contingent on the continued retention of former owners of
businesses acquired of £117.2 million, total deferred and contingent
consideration at 31 December 2024 was £375.4 million (2023: £258.8 million).
The Group's net pension surplus of £19.8 million at 31 December 2024 has
decreased by £29.6 million from the net pension surplus of £49.4 million at
31 December 2023, largely due to actuarial losses of £35.1 million driven by
the bulk annuity buy-in of the UK scheme completed in December 2024.
Shareholders' equity decreased by £175.6 million during the year to £2,790.7
million. Own shares purchased for cancellation includes the £250 million
share buyback announced in August 2024, which was completed before 31 December
2024, the £50 million first tranche of the 2025 share buyback programme which
was committed to pre-year end, £1.0 million of stamp duty and £0.2 million
of transaction costs.
Movement in shareholders' equity £m
Shareholders' equity at 31 December 2023 2,966.3
Currency (net of tax) (149.1)
Profit for the year 501.0
Dividends (228.6)
Own shares purchased for cancellation (301.2)
Non-controlling interest on acquisition 2.7
Hyperinflation accounting adjustments 17.1
Actuarial loss on pension schemes (net of tax) (26.9)
Share based payments (net of tax) 19.0
Employee share schemes (net of tax) (9.6)
Shareholders' equity at 31 December 2024 2,790.7
Capital management
The Group's policy is to maintain a strong capital base to maintain investor,
creditor and market confidence and to sustain future development of the
business. The Group funds its operations through a mixture of shareholders'
equity and bank and capital market borrowings. The Group's funding strategy is
to maintain an investment grade credit rating. The Company's current credit
ratings with Standard & Poor's are BBB+ (long term) and A-2 (short term).
All borrowings are managed by a central treasury function and funds raised are
lent onward to operating subsidiaries as required. The overall objective is to
manage the funding to ensure the borrowings have a range of maturities, are
competitively priced and meet the demands of the business over time. There
were no changes to the Group's approach to capital management during the year
and the Group is not subject to any externally imposed capital requirements.
Treasury policies and controls
The Group has a centralised treasury department to control external borrowings
and manage liquidity, interest rate, foreign currency and credit risks.
Treasury policies have been approved by the Board and cover the nature of the
exposure to be hedged, the types of financial instruments that may be employed
and the criteria for investing and borrowing cash. The Group uses derivatives
to manage its foreign currency and interest rate risks arising from underlying
business activities. No transactions of a speculative nature are undertaken.
The treasury department is subject to periodic independent review by the
internal audit department. Underlying policy assumptions and activities are
periodically reviewed by the Board. Controls over exposure changes and
transaction authenticity are in place.
The Group continually monitors net debt and forecast cash flows to ensure that
sufficient facilities are in place to meet the Group's requirements in the
short, medium and long term and, in order to do so, arranges borrowings from a
variety of sources. Additionally, compliance with the Group's biannual debt
covenants is monitored on a monthly basis and formally tested at 30 June and
31 December. The principal financial covenant limits are net debt, calculated
at average exchange rates, to EBITDA of no more than 3.5 times and interest
cover of no less than 3.0 times, based on historical accounting standards.
Sensitivity analyses using various scenarios are applied to forecasts to
assess their impact on covenants and net debt. During the year ended 31
December 2024 all covenants were complied with, with Covenant net debt to
EBITDA of 1.5 times as at 31 December 2024 (31 December 2023: 1.1 times), and
based on current forecasts it is expected that such covenants will continue to
be complied with for the foreseeable future. The US private placement notes
('USPPs') issued in March 2022 contain a clause whereby upon maturity of the
previously issued USPPs, the latest maturity being in 2028, the principal
financial covenants referred to above will no longer apply.
The Group has substantial funding available comprising multi-currency credit
facilities from the Group's banks, USPPs and senior bonds. During 2024, the
Group issued a €500 million bond which matures in 2032 under the terms of
its Euro Medium Term Note (EMTN) programme. The bond issued extends the
maturity profile of the Group's debt portfolio. At 31 December 2024 the
nominal value of senior bonds outstanding was £1,113.2 million (2023: £700.0
million) with maturities ranging from 2025 to 2032. At 31 December 2024 the
nominal value of USPPs outstanding was £798.6 million (2023: £917.5 million)
with maturities ranging from 2025 to 2032. At 31 December 2024 the available
committed bank facilities totalled £933.5 million (2023: £852.6 million) of
which none (2023: none) was drawn down. During 2024, £264.8 million of
existing bank facilities with maturities between 2024 and 2026 were refinanced
by £350.6 million of new or amended bank facilities with maturities between
2026 to 2029.
In July 2024, the Group established a €1 billion euro-commercial paper
programme, under which it can issue short term notes. At 31 December 2024, the
nominal value of commercial paper in issue was £144.6 million (2023: none)
with maturities of up to three months.
The Group expects to make repayments in the 18 month period from the date of
these financial statements to 30 June 2026 of approximately £242.6 million
relating to maturing USPPs. In addition, the current intention is that the
£300 million Senior Bond maturing in 2025 will be refinanced in the capital
markets before maturity.
Going concern
The directors, having reassessed the principal risks and uncertainties,
consider it appropriate to adopt the going concern basis of accounting in the
preparation of the financial statements. In reaching this conclusion, the
directors noted the Group's strong cash performance in the year, the
substantial funding available to the Group as described above and the
resilience of the Group to a range of severe but plausible downside scenarios.
Further details are set out in Note 1.
Consolidated income statement
for the year ended 31 December 2024
2024 2023
Notes £m £m
Revenue 3 11,776.4 11,797.1
Operating profit 3 799.3 789.1
Finance income 4 72.6 60.4
Finance expense 4 (178.0) (150.9)
Disposal of businesses 9 (20.3) -
Profit before income tax 673.6 698.6
Income tax 5 (172.6) (172.4)
Profit for the year 501.0 526.2
Profit is attributable to:
Company's equity holders 500.4 526.2
Non-controlling interests 0.6 -
Profit for the year 501.0 526.2
Earnings per share attributable to the Company's equity holders
Basic 7 149.6p 157.1p
Diluted 7 148.7p 156.0p
Dividend per share 6 73.9p 68.3p
Alternative performance measures(†)
Operating profit 3 799.3 789.1
Adjusted for:
Amortisation excluding software 3 148.3 135.6
Acquisition related items through operating profit 31.7 19.5
Non-recurring pension scheme credit 3 (3.2) -
Adjusted operating profit 976.1 944.2
Finance income 4 72.6 60.4
Adjusted finance expense 4 (175.8) (150.9)
Adjusted profit before income tax 872.9 853.7
Tax on adjusted profit 5 (222.4) (213.4)
Adjusted profit for the year 650.5 640.3
Adjusted profit is attributable to:
Company's equity holders 649.9 640.3
Non-controlling interests 0.6 -
Adjusted profit for the year 650.5 640.3
Adjusted earnings per share attributable to the Company's 7 194.3p 191.1p
equity holders
(†) See Note 2 for further details of the alternative performance measures.
Consolidated statement of comprehensive income
for the year ended 31 December 2024
2024 2023
£m £m
Profit for the year 501.0 526.2
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
Actuarial (loss)/gain on defined benefit pension schemes (35.1) 2.9
Tax on items that will not be reclassified to profit or loss* 8.2 (0.1)
Total items that will not be reclassified to profit or loss (26.9) 2.8
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences on foreign operations (193.3) (126.9)
Reclassification from translation reserve to income statement on disposal 18.7 -
of foreign operations
Gain/(loss) recognised in cash flow hedge reserve* 6.3 (2.3)
Gain taken to equity as a result of effective net investment hedges 20.3 31.4
Tax on items that may be reclassified to profit or loss* (1.7) 0.1
Total items that may be reclassified subsequently to profit or loss (149.7) (97.7)
Other comprehensive expense for the year (176.6) (94.9)
Total comprehensive income 324.4 431.3
Total comprehensive income is attributable to:
Company's equity holders 323.8 431.3
Non-controlling interests 0.6 -
Total comprehensive income 324.4 431.3
* The Group has restated comparatives for the year to 31 December 2023 in the
Consolidated statement of comprehensive income to recognise fair value
movements on cash flow hedges, and the related deferred tax balances that were
previously classified as 'Items that will not subsequently be reclassified to
profit or loss', within 'Items that may subsequently be reclassified to profit
or loss'. This is to reflect the fact that, while considered unlikely, there
are some potential future scenarios that may lead to these items being
reclassified to profit or loss. This restatement is a presentational change.
There is no impact from this change on the Group's Other comprehensive expense
for the year or Total comprehensive income for the year. There is no impact
from this change on the Group's net assets or shareholders' equity, nor any
impact on the Consolidated income statement, Consolidated statement of changes
in equity or the Consolidated cash flow statement.
Consolidated balance sheet
at 31 December 2024
2024 2023
Notes £m £m
Assets
Property, plant and equipment 213.3 159.4
Right-of-use assets 10 697.6 616.3
Intangible assets 11 3,683.8 3,242.1
Defined benefit pension assets 35.8 69.0
Derivative financial assets - 0.1
Deferred tax assets 14.1 14.2
Total non-current assets 4,644.6 4,101.1
Inventories 1,760.9 1,621.1
Trade and other receivables 1,634.1 1,578.5
Income tax receivable 13.0 8.7
Derivative financial assets 28.0 11.7
Cash and cash equivalents 14 1,432.9 1,426.1
Assets classified as held for sale 15.7 -
Total current assets 4,884.6 4,646.1
Total assets 9,529.2 8,747.2
Equity
Share capital 106.4 108.6
Share premium 212.1 205.2
Translation reserve (324.6) (170.2)
Other reserves 24.3 16.7
Retained earnings 2,769.2 2,806.0
Total equity attributable to the Company's equity holders 2,787.4 2,966.3
Non-controlling interests 3.3 -
Total equity 2,790.7 2,966.3
Liabilities
Interest bearing loans and borrowings 14 1,361.7 1,417.1
Defined benefit pension liabilities 16.0 19.6
Other payables 255.4 176.1
Income tax payable - 0.5
Provisions 49.7 75.8
Lease liabilities 13 573.7 512.4
Derivative financial liabilities 82.8 78.7
Deferred tax liabilities 263.3 190.1
Total non-current liabilities 2,602.6 2,470.3
Bank overdrafts 14 987.9 874.2
Interest bearing loans and borrowings 14 619.2 130.0
Trade and other payables 2,206.1 2,071.6
Income tax payable 63.7 47.0
Provisions 57.1 10.0
Lease liabilities 13 180.4 152.1
Derivative financial liabilities 15.8 25.7
Liabilities relating to assets classified as held for sale 5.7 -
Total current liabilities 4,135.9 3,310.6
Total liabilities 6,738.5 5,780.9
Total equity and liabilities 9,529.2 8,747.2
Consolidated statement of changes in equity
for the year ended 31 December 2024
Share Share Translation Other Retained Total attributable to the Company's equity holders Non- Total
capital premium reserve reserves(◊) earnings(†) £m Controlling equity
£m £m £m £m £m Interest £m
£m
At 1 January 2024 108.6 205.2 (170.2) 16.7 2,806.0 2,966.3 - 2,966.3
Profit for the year 500.4 500.4 0.6 501.0
Actuarial losses on defined benefit (35.1) (35.1) - (35.1)
pension schemes
Foreign currency translation (193.3) (193.3) - (193.3)
differences on foreign operations
Reclassification from translation reserve to income statement on disposal of 18.7 18.7 - 18.7
foreign operations
Gain taken to equity as a result of effective net investment hedges 20.3 20.3 - 20.3
Gain recognised in cash flow hedge reserve 6.3 6.3 - 6.3
Income tax (charge)/credit on other (0.1) (1.6) 8.2 6.5 - 6.5
comprehensive income
Total comprehensive income (154.4) 4.7 473.5 323.8 0.6 324.4
2023 interim dividend (61.0) (61.0) - (61.0)
2023 final dividend (167.6) (167.6) - (167.6)
Movement from cash flow hedge reserve 0.6 0.6 - 0.6
to inventory (net of tax)
Hyperinflation accounting adjustments(1) 17.1 17.1 - 17.1
Non-controlling interest acquired - 2.7 2.7
Issue of share capital 0.1 6.9 7.0 - 7.0
Own shares purchased for cancellation (301.2) (301.2) - (301.2)
Own shares cancelled (2.3) 2.3 - - -
Employee trust shares (16.6) (16.6) - (16.6)
Share based payments (net of tax) 19.0 19.0 - 19.0
At 31 December 2024 106.4 212.1 (324.6) 24.3 2,769.2 2,787.4 3.3 2,790.7
Share Share Translation Other Retained Total attributable to the Company's equity holders Non- Total
capital premium reserve reserves(◊) earnings(†) £m Controlling equity
£m £m £m £m £m Interest £m
£m
At 1 January 2023 108.5 199.4 (74.2) 17.7 2,469.5 2,720.9 - 2,720.9
Profit for the year 526.2 526.2 - 526.2
Actuarial gain on defined benefit 2.9 2.9 - 2.9
pension schemes
Foreign currency translation (126.9) (126.9) - (126.9)
differences on foreign operations
Gain taken to equity as a result of effective net investment hedges 31.4 31.4 - 31.4
Loss recognised in cash flow hedge reserve (2.3) (2.3) - (2.3)
Income tax (charge)/credit on other (0.5) 0.6 (0.1) - - -
comprehensive income
Total comprehensive income (96.0) (1.7) 529.0 431.3 - 431.3
2022 interim dividend (57.9) (57.9) - (57.9)
2022 final dividend (151.8) (151.8) - (151.8)
Movement from cash flow hedge reserve 0.7 0.7 - 0.7
to inventory (net of tax)
Hyperinflation accounting adjustments(1) 21.6 21.6 - 21.6
Issue of share capital 0.1 5.8 5.9 - 5.9
Employee trust shares (25.2) (25.2) - (25.2)
Share based payments (net of tax) 20.8 20.8 - 20.8
At 31 December 2023 108.6 205.2 (170.2)) 16.7 2,806.0 2,966.3 - 2,966.3
(1) IAS 29 'Financial Reporting in Hyperinflationary Economies' remains
applicable for the Group's businesses with a functional currency of the
Turkish lira and was applicable for the Group's business with a functional
currency of the Argentinian peso up to the date of disposal (Note 9). The
results of the Group's businesses in Turkey and Argentina have been adjusted
for the effects of inflation in accordance with IAS 29. See Note 1 for further
details.
(◊) Other reserves comprise merger reserve of £2.5m (2023: £2.5m), capital
redemption reserve of £18.4m (2023: £16.1m) and a positive cash flow hedge
reserve of £3.4m (2023: negative £1.9m).
(†) Retained earnings comprise earnings of £2,832.5m (2023: £2,876.9m),
offset by own shares of £63.3m (2023: £70.9m).
Consolidated cash flow statement
for the year ended 31 December 2024
2024 2023
Notes £m £m
Cash flow from operating activities
Profit before income tax 673.6 698.6
Adjusted for:
net finance expense 4 105.4 90.5
amortisation excluding software 148.3 135.6
acquisition related items through operating profit 3 31.7 19.5
non-recurring pension scheme charges (3.2) -
disposal of businesses 9 20.3 -
Adjusted operating profit 976.1 944.2
Adjustments:
depreciation and software amortisation 16 235.8 207.2
other non-cash items 16 18.6 6.5
working capital movement 16 (97.1) (28.4)
Cash generated from operations before acquisition related items 1,133.4 1,129.5
Cash outflow from acquisition related items 8 (42.0) (36.9)
Income tax paid (180.5) (188.6)
Cash inflow from operating activities 910.9 904.0
Cash flow from investing activities
Interest received 61.4 54.4
Purchase of property, plant and equipment and software (54.4) (58.3)
Sale of property, plant and equipment and software 17.2 2.1
Purchase of businesses net of cash acquired 8 (636.2) (337.7)
Disposal of businesses net of cash disposed 9 2.9 -
Cash outflow from investing activities (609.1) (339.5)
Cash flow from financing activities
Interest paid excluding interest on lease liabilities (126.6) (107.6)
Dividends paid (228.6) (209.7)
Increase in borrowings 561.7 -
Repayment of borrowings (132.9) (159.5)
Receipts on settlement of foreign exchange contracts 24.2 21.6
Payment of lease liabilities - principal 13 (178.2) (159.4)
Payment of lease liabilities - interest 13 (38.5) (28.6)
Proceeds from issue of ordinary shares to settle share options 7.0 5.9
Proceeds from exercise of market purchase share options 53.7 46.8
Purchase of own shares (247.9) -
Purchase of employee trust shares (75.0) (76.4)
Cash outflow from financing activities (381.1) (666.9)
Decrease in cash, cash equivalents and overdrafts (79.3) (102.4)
Cash, cash equivalents and overdrafts at start of year 551.9 678.1
Decrease in cash, cash equivalents and overdrafts (79.3) (102.4)
Currency translation (27.6) (23.8)
Cash, cash equivalents and overdrafts at end of year 14 445.0 551.9
Consolidated cash flow statement (continued)
for the year ended 31 December 2024
2024 2023
Alternative performance measures(†) Notes £m £m
Cash generated from operations before acquisition related items 1,133.4 1,129.5
Purchase of property, plant and equipment and software (54.4) (58.3)
Sale of property, plant and equipment and software 17.2 2.1
Payments of lease liabilities 13 (216.7) (188.0)
Operating cash flow 879.5 885.3
Adjusted operating profit 976.1 944.2
Add back depreciation of right-of-use assets 10 186.1 166.1
Deduct payment of lease liabilities 13 (216.7) (188.0)
Lease adjusted operating profit 945.5 922.3
Cash conversion (operating cash flow as a percentage of lease 93%
adjusted operating profit)
96%
Operating cash flow 879.5 885.3
Net interest paid excluding interest on lease liabilities (65.2) (53.2)
Income tax paid (180.5) (188.6)
Free cash flow 633.8 643.5
(†) See Note 2 for further details of the alternative performance measures.
Notes
1. Basis of preparation and accounting policies
a) Basis of accounting
The Group's condensed consolidated financial statements for the year ended 31
December 2024 have been approved by the Board of directors of Bunzl plc, and
derived from the audited Group consolidated financial statements for the year
ended 31 December 2024, prepared in accordance with UK-adopted International
Accounting Standards ('IASs') in conformity with the requirements of the
Companies Act 2006 and the applicable legal requirements of the Companies Act
2006. The audited Group consolidated financial statements also comply fully
with International Financial Reporting Standards ('IFRSs') as issued by the
International Accounting Standards Board ('IASB'). They are prepared under the
historical cost convention with the exception of certain items which are
measured at fair value.
Bunzl plc's 2024 Annual Report will be published in March 2025. The financial
information set out herein does not constitute the Company's statutory
accounts for the year ended 31 December 2024 but is derived from those
accounts and the accompanying directors' report. Statutory accounts for 2024
will be delivered to the Registrar of Companies following the Company's Annual
General Meeting which will be held on 24 April 2025. The auditors have
reported on those accounts; their report was unqualified and did not contain
statements under section 498 sections (2) and (3) of the Companies Act 2006.
The comparative figures for the year ended 31 December 2023 are not the
Company's statutory accounts for the financial year but are derived from those
accounts which have been reported on by the Company's auditors and delivered
to the Registrar of Companies. The report of the auditors was unqualified and
did not contain statements under section 498 sections (2) and (3) of the
Companies Act 2006.
(i) Going Concern
The directors, having reassessed the principal risks and uncertainties,
consider it appropriate to adopt the going concern basis of accounting in the
preparation of the financial statements.
In reaching this conclusion, the directors noted the Group's strong operating
cash flow performance in the year and the substantial funding held by the
Group as described in the Financial review. The directors also considered a
range of different forecast scenarios for the 18 month period from the date of
these financial statements to the end of June 2026 starting with a base case
projection derived from the Group's 2025 Budget excluding any non-committed
spending or changes in funding. The resilience of the Group to a severe but
plausible downside scenario was factored into the directors' considerations.
The severe but plausible downside scenario included a 15% reduction in
adjusted operating profit from the potential for adverse impacts from the
crystallisation of the principal risks to the Group's organic growth and a
reduction in the Group cash conversion to 90% (cash conversion in 2024 was 93%
and 2023 was 96%).
In addition, the Group has carried out a reverse stress test against the base
case to determine the level of performance that would result in a breach of
financial covenants. In order for a breach of covenants to occur during the 18
month period to the end of June 2026 the Group would need to experience a
reduction in EBITDA of over 55% compared with the base case.
In the severe but plausible downside scenario it was found that the Group was
resilient and in particular it remained in compliance with the relevant
financial covenants. The conditions required to create the reverse stress test
scenario were so severe that they were considered to be implausible. The
directors are therefore satisfied that the Group's forecasts, and the severe
but plausible downside scenario applied to them, show that there are no
material uncertainties over going concern, including no anticipated breach of
covenants, and therefore the going concern basis of preparation continues to
be appropriate.
(ii) Impact of Hyperinflation on the financial statements at 31 December
2024
The Group's financial statements include the results and financial position of
its Turkish operations restated to the measuring unit current at the end of
the year, and the results of its Argentinian operation restated to the
measuring unit current for the period up until disposal (Note 9), with
hyperinflationary gains and losses in respect of monetary items being reported
in finance expense. Comparative amounts presented in the financial statements
have not been restated. The inflation rates used by the Group are the official
rates published by the Turkish Statistical Institute and the Argentine
Federation of Professional Councils of Economic Sciences. The movement in the
publicly available official price index for the year ended 31 December 2024
was an increase of 44% (2023: increase of 65%) in Turkey and an increase of
37% for the period up until disposal (2023: increase of 210%) in Argentina.
IAS 29 requires that the income statement is adjusted for inflation in the
year and translated at the year end foreign exchange rates and that
non-monetary assets and liabilities on the balance sheet are inflated to
reflect the change in purchasing power caused by inflation from the date of
initial recognition. For the year ended 31 December 2024, this resulted in an
increase in goodwill of £7.5m (2023: £8.4m) and a net increase in other
intangibles of £0.2m (2023: £0.4m). The impacts on other non-monetary assets
and liabilities were immaterial. The impact to retained earnings during the
year was a gain of £17.1m (2023: gain of £21.6m).
The total impact to the Consolidated income statement during the year was a
charge of £9.8m (2023: £11.0m) to profit after tax from hyperinflation
accounting adjustments, comprising a £9.9m adverse impact (2023: £9.5m
adverse impact) on adjusted profit before tax, increased customer
relationships amortisation of £nil (2023: £0.2m) and a decreased tax charge
of £0.1m (2023: £1.3m increased tax charge).
When applying IAS 29 on an ongoing basis, comparatives in a stable currency
are not restated with the translation effect presented within other
comprehensive income during the year, and the effect of inflating opening
balances to the measuring unit current at the end of the reporting period
presented as a change in equity.
b) Newly adopted accounting policies
There are no new standards or amendments to existing standards that are
effective that have had a material impact on the Group. Based on the Group's
ongoing assessment, the Group does not anticipate any new or revised standards
and interpretations that are effective from 1 January 2025 and beyond to have
a material impact on its consolidated results or financial position.
2. Alternative performance measures
In addition to the various performance measures defined under IFRS, the Group
reports a number of other measures that are designed to assist with the
understanding of the underlying performance of the Group and its businesses.
These measures are not defined under IFRS and, as a result, do not comply with
Generally Accepted Accounting Practice ('GAAP') and are therefore known as
'alternative performance measures'. Accordingly, these measures, which are not
designed to be a substitute for any of the IFRS measures of performance, may
not be directly comparable with other companies' alternative performance
measures. The principal alternative performance measures used within the
consolidated financial statements and the location of the reconciliation to
equivalent IFRS measures are shown and defined in the table below where
applicable:
Organic revenue growth Revenue excluding the incremental impact of acquisitions and disposals
compared to revenue in prior years at constant exchange
Underlying Revenue excluding the incremental impact of acquisitions and disposals
compared to revenue in prior years at constant exchange, adjusted for
revenue growth differences in trading days between years and adjusted to exclude growth in
excess of 26% per annum in hyperinflationary economies (reconciled in the
Financial Review)
Adjusted Operating profit before amortisation excluding software, acquisition related
items through operating profit and non-recurring pension scheme
operating profit charges/credits (reconciled in the following tables and in the Consolidated
income statement)
Operating margin Adjusted operating profit as a percentage of revenue
Adjusted finance expense Finance expense before interest on unwinding of discounting on deferred
consideration
Adjusted profit Profit before income tax, amortisation excluding software, acquisition related
items, non-recurring pension scheme charges/credits and profit or loss on
before income tax disposal of businesses (reconciled in the following tables)
Adjusted profit Profit for the year before amortisation excluding software, acquisition
related items, non-recurring pension scheme charges/credits, profit or loss on
for the year disposal of businesses and the associated tax (reconciled in the following
tables)
Effective tax rate Tax on adjusted profit before income tax as a percentage of adjusted profit
before income tax
Adjusted earnings Adjusted profit for the year attributable to the Company's equity holders
divided by the weighted average number of ordinary shares in issue (reconciled
per share in the following tables and in Note 7)
Adjusted diluted Adjusted profit for the year attributable to the Company's equity holders
divided by the diluted weighted average number of ordinary shares (reconciled
earnings per share in Note 7)
Operating Cash generated from operations before acquisition related items after
deducting purchases of property, plant and equipment and software and adding
cash flow back the proceeds from the sale of property, plant and equipment and software
and deducting the payment of lease liabilities (as shown in the Consolidated
cash flow statement)
Free cash flow Operating cash flow after deducting payments for income tax and net interest
excluding interest on lease liabilities (as shown in the Consolidated cash
flow statement)
Lease adjusted operating profit Adjusted operating profit after adding back the depreciation of right-of-use
assets and deducting the payment of lease liabilities (as shown in the
Consolidated cash flow statement)
Cash conversion Operating cash flow as a percentage of lease adjusted operating profit (as
shown in the Consolidated cash flow statement)
Working capital Inventories and trade and other receivables less trade and other payables,
excluding non‑trading related receivables, non-trading related payables
(including those relating to acquisition payments) and dividends payable
(reconciled in Note 12)
Return on average operating capital The ratio of adjusted operating profit to the average of the month end
operating capital employed (being property, plant and equipment, right-of-use
assets, software, inventories and trade and other receivables less trade and
other payables)
Return on The ratio of adjusted operating profit to the average of the month end
invested capital (being equity after adding back net debt, lease liabilities,
invested capital net defined benefit pension scheme assets/liabilities, cumulative amortisation
excluding software, acquisition related items and amounts written off
goodwill, net of the associated tax)
Dividend cover The ratio of adjusted earnings per share to the total dividend per share
EBITDA Adjusted operating profit on a historical GAAP basis, before depreciation of
property, plant and equipment and software amortisation and after adjustments
as permitted by the Group's debt covenants, principally to exclude share
option charges and to annualise for the effect of acquisitions and disposal of
businesses
Net debt excluding lease liabilities Net debt excluding the carrying value of lease liabilities (reconciled in Note
14)
Covenant net debt to EBITDA Net debt excluding lease liabilities calculated at average exchange rates
divided by EBITDA
Adjusted net debt Net debt excluding lease liabilities and including total deferred and
contingent consideration (as reconciled in the Financial Review)
Adjusted net debt including lease liabilities Net debt including lease liabilities and total deferred and contingent
consideration (as reconciled in the Financial Review)
Adjusted net debt to EBITDA Adjusted net debt calculated at average exchange rates divided by EBITDA
adjusted for contractually agreed earnings targets
Adjusted net debt including lease liabilities to EBITDA Adjusted net debt including lease liabilities calculated at average exchange
rates divided by adjusted operating profit, before depreciation of property,
plant and equipment and right of use assets and software amortisation and
after adjustments to exclude share option charges and to annualise for the
effect of acquisitions and disposal of businesses adjusted for contractually
agreed earnings targets
Constant Growth rates at constant exchange rates are calculated by retranslating the
results for prior years at the average rates for the year ended 31 December
exchange rates 2024 so that they can be compared without the distorting impact of changes
caused by foreign exchange translation. The principal exchange rates used for
2024 and 2023 can be found in the Financial Review.
The definitions of 'Organic revenue growth', 'Adjusted finance expense',
'Covenant net debt to EBITDA', 'Adjusted net Debt', 'Adjusted net debt
including lease liabilities', 'Adjusted net debt to EBITDA' and 'Adjusted net
debt including lease liabilities to EBITDA' have been added to the list of
alternative performance measures in the year. All other alternative
performance measures have been calculated consistently with the methods
applied in the consolidated financial statements for the year ended 31
December 2023. The amendments to the list of alternative performance measures,
and an assessment of the relevance of the existing alternative performance
measures, were agreed with the Audit Committee.
A number of the alternative performance measures listed above exclude the
charge for amortisation excluding software, acquisition related items,
non-recurring pension scheme charges/credits, profit or loss on disposal of
businesses and any associated tax, where relevant.
Acquisition related items through operating profit comprises deferred
consideration payments relating to the retention of former owners of
businesses acquired, transaction costs and expenses, adjustments to previously
estimated earn outs, customer relationships asset impairment charges, goodwill
impairment charges and interest on acquisition related income tax. Total
acquisition related items also includes interest on unwinding of discounting
deferred consideration, which is included in net finance expense. Amortisation
excluding software comprises amortisation of customer and supplier
relationships, brands and technology intangible assets. Acquisition related
items, amortisation (excluding software) and any associated tax are considered
by management to form part of the total spend on acquisitions or are non-cash
items resulting from acquisitions. The non-recurring pension scheme
charges/credit relate to non-recurring charges arising from the Group's
participation in a number of defined benefit pension schemes. In the year
ended 31 December 2024 the non-recurring pension scheme credit relates to a
gain on curtailment of the UK defined benefit pension scheme following the
scheme's closure to further accrual in May 2024. In the year ended 31 December
2023 there were no non-recurring pension scheme charges. Disposal of
businesses relates to the loss on disposal of the Group's business in
Argentina on 14 March 2024 and a healthcare business in Germany on 12 July
2024. None of these items relate to the trading performance of the business.
Accordingly, these items are not taken into account by management when
assessing the results of the business and are removed in calculating the
profitability measures by which management assesses the performance of the
Group. However, it should be noted that they do exclude charges that
nevertheless do impact the Group's cash flow and GAAP financial performance.
Reconciliation of alternative performance measures to IFRS measures
The principal profit related alternative performance measures, being adjusted
operating profit, adjusted profit before income tax, adjusted profit for the
year and adjusted earnings per share, are reconciled to the most directly
reconcilable statutory measures in the tables below:
Year ended 31 December 2024
Adjusting items
Alternative performance measures Amortisation excluding software Acquisition related items Non-recurring pension scheme credit Disposal of businesses Statutory measures
£m £m £m £m £m £m
Adjusted operating profit 976.1 (148.3) (31.7) 3.2 799.3 Operating profit
Finance income 72.6 72.6 Finance income
Adjusted finance expense (175.8) (2.2) (178.0) Finance expense
Disposal of businesses - (20.3) (20.3) Disposal of businesses
Adjusted profit before income tax 872.9 (148.3) (33.9) 3.2 (20.3) 673.6 Profit before income tax
Tax on adjusted profit (222.4) 42.8 7.8 (0.8) - (172.6) Income tax
Adjusted profit for the year 650.5 (105.5) (26.1) 2.4 (20.3) 501.0 Profit for the year
Adjusted earnings per share attributable to the Company's equity holders 194.3p (31.5)p (7.8)p 0.7p (6.1)p 149.6p Basic earnings per share attributable to the Company's equity holders
Year ended 31 December 2023
Adjusting items
Alternative performance measures Amortisation excluding software Acquisition related items Non-recurring pension scheme credit Disposal of businesses Statutory measures
£m £m £m £m £m £m
Adjusted operating profit 944.2 (135.6) (19.5) - 789.1 Operating profit
Finance income 60.4 60.4 Finance income
Adjusted finance expense (150.9) - (150.9) Finance expense
Adjusted profit before 853.7 (135.6) (19.5) - - 698.6 Profit before income tax
income tax
Tax on adjusted profit (213.4) 36.7 4.3 - - (172.4) Income tax
Adjusted profit for the year 640.3 (98.9) (15.2) - - 526.2 Profit for the year
Adjusted earnings per share attributable to the Company's equity holders 191.1p (29.5)p (4.5)p - - 157.1p Basic earnings per share attributable to the Company's equity holders
3. Segment analysis
The Group results are reported as four business areas based on geographical
regions which are reviewed regularly by the Company's chief operating decision
maker, the Board of directors. The principal results reviewed for each
business area are revenue and adjusted operating profit.
Year ended 31 December 2024
North Continental UK & Rest of the
America Europe Ireland World Corporate Total
£m £m £m £m £m £
m
Revenue 6,568.1 2,377.1 1,625.8 1,205.4 11,776.4
Adjusted operating profit/(loss) 515.6 210.8 135.1 146.2 (31.6) 976.1
Amortisation excluding software (55.9) (42.7) (20.7) (29.0) (148.3)
Acquisition related items through operating profit (0.8) (10.4) 5.1 (25.6) (31.7)
Non-recurring pension scheme credit - - - - 3.2 3.2
Operating profit/(loss) 458.9 157.7 119.5 91.6 (28.4) 799.3
Finance income 72.6
Finance expense (178.0)
Disposal of businesses (20.3)
Profit before income tax 673.6
Adjusted profit before income tax 872.9
Income tax (172.6)
Profit for the year 501.0
Operating margin 7.9% 8.9% 8.3% 12.1% 8.3%
Return on average operating capital 47.5% 40.8% 45.4% 38.9% 43.2%
Purchase of property, plant and equipment 14.2 12.6 7.4 6.1 - 40.3
Depreciation of property, plant and equipment 11.3 11.0 9.2 6.2 0.1 37.8
Additions to right-of-use assets 66.4 36.5 38.1 20.3 - 161.3
Depreciation of right-of-use assets 87.7 42.8 35.3 19.7 0.6 186.1
Purchase of software 2.7 6.6 3.4 1.2 0.2 14.1
Software amortisation 4.2 4.1 2.3 0.9 0.4 11.9
Year ended 31 December 2023
North Continental UK & Rest of the
America Europe Ireland World Corporate Total
£m £m £m £m £m £m
Revenue 6,973.5 2,354.9 1,365.5 1,103.2 11,797.1
Adjusted operating profit/(loss) 528.0 224.7 103.4 119.6 (31.5) 944.2
Amortisation excluding software (57.1) (43.7) (11.1) (23.7) (135.6)
Acquisition related items through operating profit (5.5) (0.3) (3.1) (10.6) (19.5)
Operating profit/(loss) 465.4 180.7 89.2 85.3 (31.5) 789.1
Finance income 60.4
Finance expense (150.9)
Profit before income tax 698.6
Adjusted profit before income tax 853.7
Income tax (172.4)
Profit for the year 526.2
Operating margin 7.6% 9.5% 7.6% 10.8% 8.0%
Return on average operating capital 49.6% 45.4% 65.5% 35.5% 46.1%
Purchase of property, plant and equipment 12.3 13.5 8.7 8.1 0.2 42.8
Depreciation of property, plant and equipment 12.0 10.3 4.7 4.6 0.1 31.7
Additions to right-of-use assets 34.0 41.5 42.4 18.8 - 136.7
Depreciation of right-of-use assets 83.4 38.9 24.3 18.8 0.7 166.1
Purchase of software 3.1 8.7 2.4 1.0 0.3 15.5
Software amortisation 3.4 2.7 2.1 0.9 0.3 9.4
2024 2023
Acquisition related items £m £m
Deferred consideration relating to the retention of 45.5
former owners of businesses acquired
37.3
Transaction costs and expenses 25.9 18.1
Adjustments to previously estimated earn outs and minority options (42.0) (35.9)
29.4 19.5
Customer relationships impairment charges (Note 11) 2.3 -
31.7 19.5
4. Finance income/(expense)
2024 2023
£m £m
Interest on cash and cash equivalents 46.7 40.3
Interest income from foreign exchange contracts 19.9 16.0
Net interest income on defined benefit pension schemes in surplus 3.1 3.2
Interest related to income tax 1.8 -
Other finance income 1.1 0.9
Finance income 72.6 60.4
Interest on loans and overdrafts (122.4) (106.7)
Lease interest expense (38.5) (28.6)
Interest expense from foreign exchange contracts (6.1) (1.5)
Net interest expense on defined benefit pension schemes in deficit (0.7) (1.0)
Fair value gain/(loss) on US private placement notes and senior bond in a 3.9 (24.4)
hedge relationship
Fair value (loss)/gain on interest rate swaps in a hedge relationship (4.1) 21.8
Foreign exchange loss on intercompany funding (35.5) (41.1)
Foreign exchange gain on external debt and foreign exchange forward contracts 34.8 40.5
Interest related to income tax (1.4) (0.1)
Monetary loss from hyperinflation accounting(1) (3.6) (7.2)
Other finance expense (2.2) (2.6)
Adjusted finance expense (175.8) (150.9)
Interest on unwinding of discounting on deferred consideration (2.2) -
Finance expense (178.0) (150.9)
Net finance expense (105.4) (90.5)
(1)See Note 1 for further details.
The foreign exchange loss on intercompany funding arises as a result of the
retranslation of foreign currency intercompany loans. This loss on
intercompany funding is substantially matched by the foreign exchange gain on
external debt and foreign exchange forward contracts not in a hedge
relationship which minimises the foreign currency exposure in the income
statement.
5. Income tax
The Group operates in many countries and is subject to different rates of
income tax in those countries. The expected tax rate is calculated as a
weighted average of the tax rates in the tax jurisdictions in which the Group
operates, most of which are equal to or higher than the UK statutory rate for
the year of 25.0% (2023: 23.5%). Although the Group is subject to the global
minimum tax regime known as Pillar 2 from 2024, this is not expected to cause
any significant increase in the Group's tax liabilities. The adjustments to
the tax charge at the weighted average rate to determine the income tax on
profit are as follows:
2024 2023
£m £m
Profit before income tax 673.6 698.6
Weighted average rate 25.1% 25.2%
Tax charge at weighted average rate 168.9 176.0
Effects of:
non-deductible expenditure 9.7 0.5
impact of intercompany finance 1.4 1.2
change in tax rates (0.4) (0.7)
Inflation: tax and accounting impacts 1.3 3.8
prior year adjustments (7.9) (7.0)
other current year items (0.4) (1.4)
Income tax on profit 172.6 172.4
In assessing the underlying performance of the Group, management uses adjusted
profit before income tax. The tax effect of the adjusting items (see Note 2)
is excluded in monitoring the effective tax rate (being the tax rate on
adjusted profit before income tax) which is shown in the table below.
2024 2023
£m £m
Income tax on profit 172.6 172.4
Tax associated with adjusting items 49.8 41.0
Tax on adjusted profit 222.4 213.4
Profit before income tax 673.6 698.6
Adjusting items (Note 2) 199.3 155.1
Adjusted profit before income tax 872.9 853.7
Reported tax rate 25.6% 24.7%
Effective tax rate 25.5% 25.0%
6. Dividends
Total dividends for the years in which they are recognised are:
2024 2023
£m £m
2022 interim 57.9
2022 final 151.8
2023 interim 61.0
2023 final 167.6
Total 228.6 209.7
Total dividends per share for the year to which they relate are:
Per share
2024 2023
Interim 20.1p 18.2p
Final 53.8p 50.1p
Total 73.9p 68.3p
The 2024 interim dividend of 20.1p per share was paid on 3 January 2025 and
comprised £66.7m of cash. The 2024 final dividend of 53.8p per share will be
paid on 2 July 2025 to shareholders on the register at the close of business
on 23 May 2025. The 2024 final dividend will comprise approximately £177m of
cash.
7. Earnings per share
2024 2023
£m £m
Profit for the year attributable to the Company's equity holders 500.4 526.2
Adjusted for:
amortisation excluding software 148.3 135.6
acquisition related items 33.9 19.5
profit on disposal of businesses 20.3 -
non-recurring pension scheme credit (3.2) -
tax credit on adjusting items (49.8) (41.0)
Adjusted profit for the year attributable to the Company's equity holders 649.9 640.3
2024 2023
Basic weighted average number of ordinary shares in issue (million) 334.4 335.0
Dilutive effect of employee share plans (million) 2.1 2.2
Diluted weighted average number of ordinary shares (million) 336.5 337.2
Basic earnings per share attributable to the Company's equity holders 149.6p 157.1p
Adjustment 44.7p 34.0p
Adjusted earnings per share attributable to the Company's equity holders 194.3p 191.1p
Diluted basic earnings per share attributable to the Company's equity holders 148.7p 156.0p
Adjustment 44.4p 33.9p
Adjusted diluted earnings per share attributable to the Company's equity 193.1p 189.9p
holders
8. Acquisitions
2024
Summary details of the businesses acquired during the year ended 31 December
2024 are shown in the table below:
Percentage of share capital acquired Annualised
Acquisition date revenue
Business Sector Country 2024 £m
Pamark Foodservice, Healthcare, Cleaning & Hygiene and Safety Finland 29 February 100% 53.3
Nisbets Foodservice United Kingdom 23 May 80% 474.9
Clean Spot Cleaning & Hygiene Canada 18 June 100% 4.3
Sistemas De Embalaje Anper Other Spain 28 June 100% 24.9
Holland Packaging Retail Netherlands 29 June 75% 15.0
RCL Implantes Healthcare Brazil 03 July 100% 15.6
Powervac Cleaning & Hygiene Australia 31 July 100% 4.5
Cermerón Foodservice Spain 30 August 100% 10.3
Cubro Group Healthcare New Zealand 30 September 72% 45.7
DBM Medical Group Healthcare New Zealand 30 September 75% 8.7
Arrow County Holdings Limited Cleaning & Hygiene United Kingdom 22 October 100% 27.1
C&C Group Foodservice United Kingdom 29 October 100% / 80% 26.7
Comodis Cleaning & Hygiene France 01 December 100% 20.7
Others* 12.5
Acquisitions agreed and completed in the current year 744.2
*Others includes two acquisitions agreed in 2024.
The acquisition of Nisbets is considered to be individually significant due to
its impact on intangible assets. The acquisition is therefore separately
disclosed in the table below. No acquisitions in 2023 were considered to be
individually significant. A summary of the effect of acquisitions in 2024 and
2023 is shown below:
Nisbets Other Total Total
31.12.24 31.12.23
£m £m £m £m
Customer and supplier relationships 124.6 160.0 284.6 229.5
Brands 78.3 5.0 83.3 10.6
Property, plant and equipment and software 62.5 9.2 71.7 16.6
Right-of-use asset 55.7 17.3 73.0 16.2
Inventories 77.0 34.7 111.7 44.7
Trade and other receivables 59.6 71.9 131.5 57.0
Trade and other payables (103.0) (37.4) (140.4) (40.5)
Net cash 43.4 16.5 59.9 19.8
External debt (5.6) (0.7) (6.3) -
Provisions (10.5) (22.3) (32.8) (26.2)
Lease liabilities (55.7) (18.0) (73.7) (16.2)
Income tax payable and deferred tax liabilities (45.8) (65.4) (111.2) (29.6)
Fair value of net assets acquired 280.5 170.8 451.3 281.9
Less non-controlling interests (2.7) - (2.7) -
Goodwill 187.5 170.3 357.8 130.6
Consideration 465.3 341.1 806.4 412.5
Satisfied by:
cash consideration 377.6 297.6 675.2 343.0
deferred consideration 87.7 43.5 131.2 69.5
465.3 341.1 806.4 412.5
Contingent payments relating to the retention of former owners 42.1 50.7 92.8 59.5
Interest relating to discounting of deferred consideration 15.1 2.2 17.3 -
Net cash acquired (43.4) (16.5) (59.9) (19.8)
Transaction costs and expenses 12.4 13.5 25.9 18.1
Total committed spend in respect of acquisitions completed in the current 491.5 391.0 882.5 470.3
period
Spend on acquisitions committed at the prior period end but completed in the - - - (2.8)
current period
Total committed spend in respect of acquisitions agreed in the current period 491.5 391.0 882.5 467.5
The net cash outflow in the year in respect of acquisitions comprised:
Nisbets Other Total Total
£m £m 31.12.24 31.12.23
£m £m
Cash consideration 377.6 297.6 675.2 343.0
Net cash acquired (43.4) (16.5) (59.9) (19.8)
Deferred consideration payments - 20.9 20.9 14.5
Net cash outflow on purchase of businesses 334.2 302.0 636.2 337.7
Transaction costs and expenses paid 11.0 14.6 25.6 18.1
Payments relating to retention of former owners - 16.4 16.4 18.8
Cash outflow from acquisition related items 11.0 31.0 42.0 36.9
Total cash outflow in respect of acquisitions 345.2 333.0 678.2 374.6
Acquisitions completed in the year ended 31 December 2024 contributed £398.3m
(2023: £120.5m) to the Group's revenue, £34.8m (2023: £16.1m) to the
Group's adjusted operating profit and £20.1m (2023: £8.7m) to the Group's
operating profit for the year ended 31 December 2024.
The estimated contributions from acquisitions completed and agreed during the
year to the results of the Group for the year if such acquisitions had been
made at the beginning of the year, are as follows:
2024 2023
£m £m
Revenue 744.2 325.1
Adjusted operating profit 72.0 51.4
Deferred consideration
The table below gives further details of the Group's deferred consideration
liabilities:
2024 2023*
£m £m
Minority options - acquisition of non-controlling interests 158.4 86.5
Earn outs 33.7 36.9
Deferred consideration held at fair value 192.1 123.4
Minority options - retention payments of former owners 50.3 38.2
Other 15.8 14.0
Total deferred consideration 258.2 175.6
Current 43.6 32.3
Non-current 214.6 143.3
Total deferred consideration 258.2 175.6
Expected future payments which are contingent on the continued retention of 117.2 83.2
former owners of businesses acquired not yet recognised on balance sheet
Total deferred and contingent consideration - on and off balance sheet 375.4 258.8
* The Group has restated comparatives for the year to 31 December 2023 to
remove minority options - retention payments of former owners from 'Deferred
consideration held at fair value' as these are accounted for in line with
IAS19 'Employee benefits'.
The maturity profile of total deferred and contingent consideration is set out
in the table below.
2024 2023
£m £m
Within one year 44.2 33.6
After one year but within two years 19.3 31.2
After two years but within five years 301.3 178.0
After five years 10.6 16.0
375.4 258.8
2023
Summary details of the businesses acquired or agreed to be acquired during the
year ended 31 December 2023 are shown in the table below:
Percentage of share capital acquired Annualised
Acquisition date 2023 revenue
Business Sector Country £m
GRC Healthcare Australia 1 January 100% 4.4
Capital Paper Foodservice Canada 31 January 100% 16.0
Arbeitsschutz-Express Safety Germany 3 April 66% 33.1
Dimasa Cleaning & Hygiene Spain 28 April 100% 3.1
Irudek Safety Spain 28 April 75% 16.7
EHM Safety UK 5 June 100% 19.5
La Cartuja Complementos Hostelería Foodservice Spain 30 June 100% 4.4
EcoTools.nl Other Netherlands 31 July 100% 17.8
Leal Equipamentos de Proteção Safety Brazil 1 August 100% 33.1
Packpro Foodservice Canada 10 August 85% 20.1
Groveko Cleaning & Hygiene Netherlands 11 August 93.75% 21.0
Pittman Traffic & Safety Equipment* Safety Ireland 28 August 100% 6.2
Flexpost Safety USA 31 October 100% 3.0
Grupo Lanlimp Cleaning & Hygiene Brazil 1 November 70% 37.8
Melbourne Cleaning Supplies Cleaning & Hygiene Australia 6 November 100% 9.7
Safety First Safety Poland 30 November 65% 24.9
Miracle Sanitation Supply Cleaning & Hygiene Canada 1 December 100% 7.6
CT Group Healthcare Brazil 1 December 100% 47.8
Others** 100% 3.3
Acquisitions completed in the current year 329.5
GRC Healthcare Australia 1 January 100% (4.4)
Acquisitions agreed in the current year 325.1
*The acquisition supports the expansion of our North America based McCue
business and is therefore reported as part of the North America business area.
**Others includes two small acquisitions agreed in 2023.
9. Disposal of businesses
The Group completed the disposal of Vicsa Argentina on 14 March 2024 and a
healthcare business in Germany on 12 July 2024. As a result, the net assets of
the Group decreased by £20.3m representing the loss on disposal of £20.3m.
The loss on disposal reflects the cash consideration received of £4.4m offset
by the net book value of assets disposed of £6.0m and recycling of historical
foreign exchange losses of £18.7m from amounts held in the translation
reserve within equity. There were no disposals completed in the year ended 31
December 2023.
The net cash inflow in the year in respect of disposal of businesses
comprised:
2024
Cash flow from disposal of businesses £m
Cash considered received 4.4
cash and cash equivalents disposed (1.5)
Net cash proceeds 2.9
10. Right-of-use assets
Property Motor Vehicles Equipment Total
2024 £m £m £m £m
Net book value at beginning of year 520.0 68.8 27.5 616.3
Acquisitions (Note 8) 69.8 2.9 0.3 73.0
Disposal of businesses (0.2) (0.1) (0.1) (0.4)
Transferred to assets held for sale (1.5) - - (1.5)
Additions 97.9 44.4 19.0 161.3
Depreciation charge in the year (142.8) (31.6) (11.7) (186.1)
Remeasurement adjustments 47.8 0.8 1.2 49.8
Currency translation (13.3) (1.3) (0.2) (14.8)
Net book value as at 31 December 2024 577.7 83.9 36.0 697.6
Property Motor Vehicles Equipment Total
2023 £m £m £m £m
Net book value at beginning of year 439.6 63.3 26.7 529.6
Acquisitions (Note 8) 15.9 0.3 - 16.2
Additions 87.5 37.1 12.1 136.7
Depreciation charge in the year (125.1) (30.0) (11.0) (166.1)
Remeasurement adjustments 118.6 0.4 0.8 119.8
Currency translation (16.5) (2.3) (1.1) (19.9)
Net book value as at 31 December 2023 520.0 68.8 27.5 616.3
11. Intangible assets
2024
Goodwill Customer and supplier relationships Brands Technology Software Total
£m £m £m £m £m £m
Cost
Beginning of year 2,020.7 2,494.5 48.5 9.3 116.8 4,689.8
Acquisitions (Note 8) 357.8 284.6 83.3 - 4.2 729.9
Disposal of businesses (3.3) (15.4) - - (0.3) (19.0)
Adjustment for hyperinflation accounting(1) 7.5 0.9 - - - 8.4
Additions 14.1 14.1
Disposals (2.1) (2.1)
Transferred to assets held for sale (1.7) - - - - (1.7)
Currency translation (83.2) (111.1) (1.2) (0.5) (2.6) (198.6)
End of year 2,297.8 2,653.5 130.6 8.8 130.1 5,220.8
Accumulated amortisation and impairment
Beginning of year 11.8 1,343.7 7.4 1.8 83.0 1,447.7
Amortisation charge in year 139.4 7.1 1.8 11.9 160.2
Impairment charge in year 2.3 2.3
Disposal of businesses (11.2) (0.3) (11.5)
Adjustment for hyperinflation accounting(1) 0.7 0.7
Disposals (2.1) (2.1)
Currency translation (0.1) (57.2) (0.3) (0.1) (2.6) (60.3)
End of year 11.7 1,417.7 14.2 3.5 89.9 1,537.0
Net book value at 2,286.1 1,235.8 116.4 5.3 40.2 3,683.8
31 December 2024
2023
Goodwill Customer Brands Technology Software Total
relationships
£m £m £m £m £m £m
Cost
Beginning of year 1,944.4 2,349.0 39.7 9.5 107.4 4,450.0
Acquisitions (Note 8) 130.6 229.5 10.6 1.3 372.0
Adjustment for hyperinflation accounting(1) 8.4 1.6 10.0
Additions 15.5 15.5
Disposals (4.6) (4.6)
Currency translation (62.7) (85.6) (1.8) (0.2) (2.8) (153.1)
End of year 2,020.7 2,494.5 48.5 9.3 116.8 4,689.8
Accumulated amortisation and impairment
Beginning of year 12.8 1,258.1 4.8 0.4 80.0 1,356.1
Amortisation charge in year 130.2 4.0 1.4 9.4 145.0
Adjustment for hyperinflation accounting(1) 1.2 1.2
Disposals (4.6) (4.6)
Currency translation 1.0 (45.8) (1.4) (1.8) (50.0)
End of year 11.8 1,343.7 7.4 1.8 83.0 1,447.7
Net book value at 2,008.9 1,150.8 41.1 7.5 33.8 3,242.1
31 December 2023
(1)See Note 1 for further details.
Goodwill, customer relationships, brands and technology intangible assets have
been acquired as part of business combinations. Further details of
acquisitions made in the year are set out in Note 8.
Based on our impairment testing, the Group has recognised an impairment charge
of £2.3m relating to the customer relationships intangible asset of a
foodservice business within the Benelux and Germany cash generating unit.
12. Working capital
2024 2023
£m £m
Inventories 1,760.9 1,621.1
Trade and other receivables 1,634.1 1,578.5
Trade and other payables - current (2,206.1) (2,071.6)
Add back net non-trading related receivables and payables 21.3 30.1
1,210.2 1,158.1
See Note 16 for the cash flow impact of movements in working capital which
exclude the impact from foreign exchange movements, acquisitions and the
disposal of businesses.
13. Lease liabilities
The Group leases certain property, plant, equipment and vehicles under
non-cancellable operating lease agreements. These leases have varying terms
and renewal rights. Details of the Group's right-of-use assets recognised
under these lease agreements are shown in note 10.
2024 2023
Movement in lease liabilities £m £m
Beginning of year 664.5 569.9
Acquisitions (Note 8) 73.7 16.2
Disposal of businesses (Note 9) (0.4) -
Transferred to liabilities held for sale (1.6) -
New leases 161.3 136.7
Interest charge in the year 38.5 28.6
Payment of lease liabilities (216.7) (188.0)
Remeasurement adjustments 50.4 122.1
Currency translation (15.6) (21.0)
End of year 754.1 664.5
Ageing of lease liabilities:
Current lease liabilities 180.4 152.1
Non-current lease liabilities 573.7 512.4
End of year 754.1 664.5
14. Cash, cash equivalents and overdrafts and net debt
2024 2023
£m £m
Cash at bank and in hand 1,369.1 1,377.1
Money market funds 63.8 49.0
Cash and cash equivalents 1,432.9 1,426.1
Bank overdrafts (987.9) (874.2)
Cash, cash equivalents and overdrafts 445.0 551.9
Interest bearing loans and borrowings - current liabilities (619.2) (130.0)
Interest bearing loans and borrowings - non-current liabilities (1,361.7) (1,417.1)
Derivatives managing the interest rate risk and currency profile of the debt (75.5) (90.3)
Net debt excluding lease liabilities (1,611.4) (1,085.5)
Lease liabilities (Note 13) (754.1) (664.5)
Net debt including lease liabilities (2,365.5) (1,750.0)
The cash at bank and in hand and bank overdrafts amounts included in the table
above include the amounts associated with the Group's cash pool. The cash pool
enables the Group to access cash in its subsidiaries to pay down the Group's
borrowings. The Group has the legal right of set-off of balances within the
cash pool which is an enforceable right. The cash at bank and in hand and bank
overdrafts figures net of the amounts in the cash pool are disclosed below for
reference:
2024 2023
£m £m
Cash at bank and in hand net of amounts in the cash pool 406.9 520.8
Money market funds 63.8 49.0
Bank overdrafts net of amounts in the cash pool (25.7) (17.9)
Cash, cash equivalents and overdrafts 445.0 551.9
15. Movement in net debt
Cash, cash equivalents and Interest bearing
loans and
overdrafts borrowings Derivatives Net debt
2024 £m £m £m £m
Beginning of year excluding lease liabilities 551.9 (1,547.1) (90.3) (1,085.5)
Cash flow excluding movements in other components of net debt (405.7) - - (405.7)
Interest paid excluding interest on lease liabilities (126.6) - - (126.6)
Increase in borrowings 561.7 (561.7) - -
Repayment of borrowings (132.9) 132.9 - -
Receipts on settlement of foreign exchange contracts 24.2 - (24.2) -
Net cash outflow (79.3) (428.8) (24.2) (532.3)
Non-cash movement in debt - 6.5 (4.2) 2.3
Loans and borrowings recognised on acquisition - (6.3) - (6.3)
Realised gains on foreign exchange contracts - - 24.2 24.2
Currency translation (27.6) (5.2) 19.0 (13.8)
End of year excluding lease liabilities 445.0 (1,980.9) (75.5) (1,611.4)
Lease liabilities - (754.1) - (754.1)
End of year including lease liabilities 445.0 (2,735.0) (75.5) (2,365.5)
Cash, cash equivalents and Interest bearing
loans and
overdrafts borrowings Derivatives Net debt
2023 £m £m £m £m
Beginning of year excluding lease liabilities 678.1 (1,735.0) (103.2) (1,160.1)
Cash flow excluding movements in other components of net debt 143.1 - - 143.1
Interest paid excluding interest on lease liabilities (107.6) - - (107.6)
Repayment of borrowings (159.5) 159.5 - -
Receipts on settlement of foreign exchange contracts 21.6 - (21.6) -
Net cash inflow/(outflow) (102.4) 159.5 (21.6) 35.5
Non-cash movement in debt - (20.8) 21.5 0.7
Realised gains on foreign exchange contracts - - 21.6 21.6
Currency translation (23.8) 49.2 (8.6) 16.8
End of year excluding lease liabilities 551.9 (1,547.1) (90.3) (1,085.5)
Lease liabilities - (664.5) - (664.5)
End of year including lease liabilities 551.9 (2,211.6) (90.3) (1,750.0)
16. Cash flow from operating activities
The tables below give further details on the adjustments for depreciation and
software amortisation, other non-cash items and the working capital movement
shown in the Consolidated cash flow statement.
Depreciation and software amortisation 2024 2023
£m £m
Depreciation of right-of-use assets 186.1 166.1
Other depreciation and software amortisation 49.7 41.1
235.8 207.2
Other non-cash items 2024 2023
£m £m
Share based payments 17.2 15.4
Provisions 0.6 (13.1)
Retirement benefit obligations 1.1 (3.5)
Hyperinflation accounting adjustments 6.0 2.1
Other (6.3) 5.6
18.6 6.5
Working capital movement 2024 2023
£m £m
(Increase)/decrease in inventories (94.3) 108.1
Decrease/(increase) in trade and other receivables 0.7 (9.9)
Decrease in trade and other payables (3.5) (126.6)
(97.1) (28.4)
17. Related party disclosures
The Group has identified the directors of the Company, their close family
members, the Group's defined benefit pension schemes and its key management as
related parties for the purpose of IAS 24 'Related Party Disclosures'. There
have been no transactions with those related parties during the year ended 31
December 2024 that have materially affected the financial position or
performance of the Group during this period. All transactions with
subsidiaries are eliminated on consolidation.
18. Principal risks and uncertainties
The Group operates in six core market sectors in 32 countries which exposes it
to risks and uncertainties, many of which are not fully within the Group's
control. The risks summarised below represent the principal risks and
uncertainties faced by the Group, being those which are material to the
development, performance, position or future prospects of the Group, and the
steps taken to mitigate such risks. However, these risks do not comprise all
of the risks that the Group may face and accordingly this summary is not
intended to be exhaustive.
In addition, the Group's financial performance is partially dependent on
general global economic conditions, the deterioration of which could have an
adverse effect on the Group's business and results of operations. Although
this is not considered by the Board to be a specific principal risk in its own
right, many of the risks referred to below could themselves be impacted by the
economic environment prevailing in the Group's markets from time to time.
The risks are presented by category of risk (Strategic, Operational and
Financial) and are not presented in order of probability or impact. The
relevant component of the Group's strategy that each risk impacts is also
noted:
A Organic growth
B Acquisition growth
C Operating model improvements
D Sustainability
Following the half-year risk assessment by the Board, Currency Translation is
no longer considered to be a principal risk. The Group's borrowings are
denominated in US dollars, sterling and euros in similar proportions to the
relative contribution of each of these currencies to the Group's EBITDA.
Therefore, although the majority of the Group's revenue and profits are earned
in currencies other than sterling, volatility of the net debt to EBITDA ratio
from foreign exchange movements is reduced. In addition, net debt for the
purposes of covenant calculations in the Group's financing documents is
calculated using average rather than closing exchange rates. Consequently, any
significant movement in exchange rates towards the end of an accounting period
should not materially affect the ratio of net debt to EBITDA. Both these
factors minimise the risk that financial covenants will be breached as a
result of foreign currency fluctuations and hence it was appropriate to no
longer treat Currency Translation as a principal risk.
Monitoring risks
The Board reviews each risk and assesses the gross impact, applying the
hypothetical assumption that there are no mitigating controls in place, the
net impact after mitigating controls and the probability to set the Group's
mitigation priorities. The register of principal risks and uncertainties was
updated following review by the Executive Committee and approval by the Board.
Emerging risks
The Board closely monitors all emerging risks that have the potential to
increase in significance and affect the performance of the Group and its
ability to meet its strategic objectives. This knowledge-sharing and
horizon-scanning seeks to identify potential risks and emerging trends,
looking through various risk lenses and over a future time horizon. In
addition to the principal risks faced by the Group, there are risks which are
more uncertain in nature and difficult to assess or that have the potential to
develop and increase in severity over time.
One such risk is geopolitical instability: with operations in 32 countries,
the increasing complexity of international relations and economics
necessitates that Bunzl regularly reviews and updates its strategy to mitigate
potential impact and uncertainty from geopolitical developments. The effects
of global conflicts; shifting political ideologies, possibly leading to
changes in legislation and regulation; and relations between China and the
West are all monitored through Bunzl's emerging risk process and are
considered during principal risk assessments to drive any coordinated
responses that may be required. Failure to supply and deliver the required
volumes could adversely impact revenue, profit, and customer relationships.
The Board will continue to monitor this risk and the impact on operations and
any other uncertainties that may impact Bunzl's operations.
The directors confirm that they have carried out a robust assessment of the
principal and emerging risks facing the Group, including those that would
threaten its business model, future performance, solvency or liquidity.
Principal risks facing the Group Description of risk and how it might affect the Group's prospects How the risk is managed or mitigated Developments in 2024
Strategic risks
1. Competitive · The Group operates in highly competitive markets and faces price · The Group's geographic and market sector diversification allow it to · The Group's large sales force connected with customers to help them
competition from international, national, regional and local companies in the withstand shifts in demand, while this global scale across many markets also understand the range of products available to meet their needs.
pressures countries and markets in which it operates. enables the Group to provide the broadest possible range of customer specific
solutions to suit their exacting needs. · The Group enhanced its own brand offering, particularly in the US,
Revenue and profits are reduced as the Group loses a customer or lowers prices · Unforeseen changes in the competitive landscape could also occur, such
driving a higher penetration of own brand sales across the Group.
due to competitive pressures as an existing competitor or new market entrant introducing disruptive · The Group maintains high service levels and close contact with its
technologies or changes in routes to market. customers to ensure that their needs are being met satisfactorily. This · The Group continued to invest in technology to streamline customers'
includes continuing to invest in e-commerce and digital platforms to further experience.
· Customers, especially large or growing customers, could exert pressure enhance its service offering to customers.
Risk owner: on the Group's selling prices, thereby reducing its margins, switch to a
· The Group continued to develop its sustainable product assortment,
competitor or ultimately choose to deal directly with suppliers. · The Group maintains strong relationships with a variety of different supported by own brand ranges, and tools to assist customers in meeting their
CEO and Business Area Heads
suppliers, thereby enabling the Group to offer a broad range of products to sustainability goals.
· Any of these competitive pressures could lead to a loss of market share its customers, including own brand products, in a consolidated one-stop-shop
and a reduction in the Group's revenue and profits. offering at competitive prices.
Change to risk level:
No change
Included in viability statement: Yes
A
2. Financial · An unexpected insolvency of either a large customer or a significant · The Group monitors significant developments in relationships with key · In 2024, the Group did not encounter material insolvencies of either a
number of small customers could lead to a sudden reduction in revenue and customers, including credit checks and limits set for each customer. large customer or a significant number of smaller customers. However, this
collapse of either a large customer and/or a significant number of small profits, including the cost of impairing any irrecoverable receivables
remains a significant risk given the potential for global economic downturn.
customers balances, as well as operating margin erosion due to under-used capacity. · Delegation of authority limits mean that there is oversight of all
material customer contracts at business area and local level. · In 2024, provisions relating to the Group's credit exposure from
Revenue and profits are reduced as the Group loses customers · The Group's revenue and profits may be affected as well as receivables customers remained broadly unchanged.
and inventory (if customer specific inventory is held).
Risk owner:
CEO and Business Area Heads
Change to risk level: No change
Included in viability statement: Yes
A
3. Product cost · In the event of a reduction in the cost of products bought by the · The Group uses its considerable experience in sourcing and selling · In 2024, the Group experienced deflation across North America,
Group, due to suppliers passing on lower commodity prices (such as plastic or products to manage prices during periods of deflation in order to minimise Continental Europe and UK & Ireland. There was a small easing of deflation
deflation paper) or other price reductions, lower trade tariffs and/or foreign currency the impact on profits. in the second half of the year, driven by Continental Europe and UK &
fluctuations, coupled with actions of competitors or customers, indexed or
Ireland, although deflation persisted in North America longer than expected.
Revenue and profits are reduced due to the Group's need to pass on cost price cost plus contracts may require the Group to pass on such cost reductions to · Focus on the Group's own brand products, together with the Operating margin in Continental Europe was particularly impacted by product
reductions customers, resulting in a reduction in the Group's revenue and profits. reinforcement of the Group's service and product offering to customers, helps cost deflation, alongside operating cost inflation against a relatively high
to minimise the impact of price deflation. cost to serve operating model.
· Operating profits may also be lower due to the above factors if
operating costs are not reduced commensurate with the reduction in revenue. · The Group continually looks at ways to improve productivity and
Risk owner: implement other efficiency measures to manage and, where possible, reduce its
operating costs.
CEO and Business Area Heads
Change to risk level:
No change
Included in viability statement: Yes
A, C
4. Cost inflation · Significant or unexpected cost increases by suppliers, due to the pass · The Group sources its products from a number of different suppliers · The Group experienced significant product cost inflation in recent
through of higher commodity prices (such as plastic or paper) or other price based in different countries so that it is not dependent on any one source of years. Selling prices to customers were continually evaluated and updated to
Profits are reduced due to the Group's inability to pass on product or increases, higher trade tariffs and/or foreign currency fluctuations, could supply for any particular product, or overly exposed to a particular country ensure that profitability levels were at least maintained. Overall, the Group
operating cost increases adversely impact profits if the Group is unable to pass on such product cost changing trade tariffs, and can purchase products at the most competitive was very successful in passing on product cost inflation.
increases to customers. prices.
· The Group's ongoing focus on own brand product development is an
· Operating profits may also be lower due to the above factors if selling · The majority of the Group's transactions are carried out in the important tool for discussions with customers about price increases.
Risk owner: prices are not increased commensurate with the increases in operating costs. functional currencies of the Group's operations, but for foreign currency
transactions some forward purchasing of foreign currencies is used to reduce · Operating cost inflation was moderate, with wage inflation remaining
CEO and Business Area Heads the impact of short term currency volatility. higher than typical levels in UK & Ireland and Continental Europe,
although wage inflation was at more typical levels in North America. Wage
· The Group will, where possible, pass on price increases from its inflation in Continental Europe and UK & Ireland is expected to normalise
suppliers to its customers. in 2025, although the UK is expected to be impacted by increased National
Change to risk level:
Insurance and National Living Wage costs.
· The Group continually looks at ways to improve productivity and
No change implement other efficiency measures to manage and, where possible, reduce its · Property cost inflation remains high linked to lease renewals, but fuel
operating costs. and freight inflation was well managed over the year, supported by contract
retendering in North America.
Included in viability statement: Yes · Continental Europe was particularly impacted by its relatively high
cost to serve operating model, and the business area has an active focus on
cost initiatives heading into 2025.
A, C · Operating cost efficiency programmes, including warehouse
consolidations and relocations, were a partial offset to inflation.
5. Inability to make further acquisitions · Acquisitions are a key component of the Group's growth strategy and one · The Group maintains a large acquisition database which continues to · The acquisition pipeline is closely monitored with continued research
of the key sources of the Group's competitive advantage, having completed 229 grow with targets identified by managers of current Bunzl businesses, research of any available opportunities for investment.
Profit growth is reduced from the Group's inability to acquire new companies acquisitions since 2004. undertaken by the Group's dedicated and experienced in-house corporate
development team and information received from banking and corporate finance · During 2024, the Group's committed acquisition spend was £883 million
· Insufficient acquisition opportunities, through a lack of availability contacts. and the pipeline remains active.
of suitable companies to acquire or an unwillingness of business owners to
Risk owner: sell their companies to Bunzl, could adversely impact future profit growth. · The Group has a strong track record of successfully making · In August 2024 the Group committed to allocate c.£700 million per
acquisitions. At the same time, the Group maintains a decentralised management annum, primarily to invest in value-accretive acquisitions and, if required,
CEO and Business Area Heads structure which facilitates a strong entrepreneurial culture and encourages returns of capital, in each of the three years ending 31 December 2027. If at
former owners to remain within the Group after acquisition, which in turn the end of each year, the total committed spend is below £700 million, the
encourages other companies to consider selling to Bunzl. Group will return the remainder to shareholders through a capital return in
the following year.
Change to risk level:
No change
Included in viability statement: Yes
B
6. Unsuccessful acquisition · Inadequate pre-acquisition due diligence related to a target company · The Group has established processes and procedures for detailed · The acquisition pipeline is reviewed by Executive Committee, and for
and its market, or an economic decline shortly after an acquisition, could pre-acquisition due diligence related to acquisition targets and the any new significant acquisitions that are proposed, the Board reviews the
Profits are reduced, including by an impairment charge, due to an unsuccessful lead to the Group paying more for a company than its fair value. post-acquisition integration thereof. potential acquisition in detail.
acquisition or acquisition integration
· Furthermore, the loss of key people or customers, exaggerated by · The Group's acquisition strategy is to focus on those businesses which · The CEO and CFO review the performance of all acquisitions with
inadequate post-acquisition integration of the business, could in turn result operate in sectors where it has or can develop competitive advantage and which business area management teams on a quarterly basis.
in underperformance of the acquired company compared to pre-acquisition have good growth opportunities.
Risk owner: expectations which could lead to lower profits as well as a need to record an
· Internal Audit reviews acquisitions on average within 18 months of the
impairment charge against any associated intangible assets. · The Group endeavours to maximise the performance of its acquisitions sale.
CEO and Business Area Heads through the recruitment and retention of high quality and appropriately
incentivised management combined with effective strategic planning, investment · The Board reviews performance of recent acquisitions annually. In 2024,
in resources and infrastructure and regular reviews of performance by both the Board reviewed the principal acquisitions made in 2022 and noted that in
business area and Group management. aggregate they outperformed acquisition case expectations.
Change to risk level:
No change
Included in viability statement: Yes
A, B
7. Sustainability driven market · New legislation introduced outside Europe and the UK in countries where · Bunzl is well positioned to support its customers with the legislative · The majority of the Group's businesses in the retail, foodservice and
Bunzl operates mirrors (and in some cases goes further than) the legislation complexity due to its material agnostic position and network strength allowing grocery sectors now employ material footprint tools that explain how
changes previously introduced in Europe and the UK. The scope of new legislation tends it to deliver the right products across large multi-site customer operations. legislation will impact the products and packaging a customer uses, while
to cover a wider range of products than that previously introduced.
promoting the alternatives we have in our ranges.
Revenue and profits are reduced due to the Group's inability to offer Legislation related to packaging still remains extremely fragmented across · Bunzl's scale and unique position at the centre of the supply chain,
sustainable products in response to changes in legislation, consumer different regions. supported by expert sustainability managers, gives the Group an opportunity to · There has been a degree of price sensitivity in our customer sectors
preferences or the competitive environment
provide customers with advice about alternative products which are recyclable, driven by inflation, and in some cases packaging target dates (e.g. the US
· The introduction of Extended Producer Responsibility 'EPR' is a new compostable, biodegradable or reusable. Plastics Pact) have been delayed due to the lack of consistent legislation and
consideration for the Group and our customers. EPR is being introduced in the
waste management infrastructure. These trends have the potential to slow
UK, EU, Australia, Canada and some US States. EPR is legislation that aims to · EPR will incentivise customers to specify more recyclable products to transition, but the introduction of new legislation with high compliance costs
Risk owner: make all organisations in a value chain responsible for the cost of the avoid high modulation fees. This should further drive transition to (e.g. EPR) will likely cause organisations to accelerate their replacement of
collection, management, and recycling of packaging. It applies modulation fees alternative products that are well suited to the circular economy. non-recyclable / less recyclable products.
CEO and Business Area Heads based on packaging recyclability where non-recyclable materials will incur
extremely high compliance costs. · The Group has access to an extensive supply chain of product and · The Group has continued to strengthen its expert sustainability teams
packaging manufacturers who are innovating the range of products they produce who train customers on incoming legislation, hold customer forums where they
· Some legislation seeking to restrict the use of plastics has been to satisfy the increased focus on sustainability. This means the Group can showcase the latest products and support customers to report effectively
Change to risk level: challenged and overturned in court. However, it can be expected that the offer the broadest possible range of products whether in response to against their goals and participation in industry-leading external schemes
legislation will be reintroduced in some form and as such it is not legislative changes, consumer preference driven changes or a desire to offer such as the New Plastics Economy and B-Corp certification.
No change anticipated that there will be a widespread removal of the legislative market-leading products to the Group's customers.
measures already in place across the Group.
· The Group continued to expand and introduce new ranges of own brand
· The Group has access to the proprietary data on the packaging and products made from alternative materials.
· Consumer sentiment and customer targets are likely to lead to a products our customers need. That coupled with the Group's detailed product
Included in viability statement: Yes reduction in demand for single-use plastic-based products that the Group knowledge and data on customer product usage, ensures that the Group is
sells, while simultaneously increasing demand for renewable, recyclable, or well-positioned to be able to support its customers in shaping and achieving
reusable alternatives. their sustainability strategies.
A, D · The Group's revenue and profits could be reduced if it is unable to
offer packaging and products made from alternative materials that will replace
products that cannot be sold due to legislation, or products where demand is
lower due to changes in consumer preferences, for example a move to more
reusable packaging.
Operational risks
8. Cyber security failure · The frequency, sophistication and impact of cyber-attacks on businesses · Concurrent with the Group's IT investments, the Group is continuing to · The Group continued to improve cyber security and data privacy
are rising at the same time as Bunzl is increasing its connectivity with third improve information security policies and controls to improve its ability to governance, architecture, and controls, along with increasing awareness of
Revenue and profits are reduced as the parties and its digital footprint through acquisition and investment in monitor, prevent, detect and respond to cyber threats. both cyber security and data privacy across the Group.
e-commerce platforms and efficiency enhancing IT systems.
Group is unable to operate and serve its customers' needs due to being
· Cyber security awareness campaigns have been deployed across all · We continue to invest in modern cyber security technologies that
impacted by a cyber-attack · Weak cyber defences, both now and in the future, through a failure to regions to enhance the knowledge of Bunzl personnel and their resilience to address current and emerging threats while improving operational processes and
keep up with increasing cyber risks and insufficient IT disaster recovery phishing attacks. procedures.
planning and testing, could increase the likelihood and severity of a
cyber-attack leading to business disruption, reputational damage and loss of · IT disaster recovery and incident management plans, which would be · The Group focused on improving cyber security controls, acquisition due
Risk owner: customers and/or a fine under applicable data protection legislation. implemented in the event of any such failure, are in place and periodically diligence, and enhancing the security posture of recently acquired companies.
tested. The Group Chief Information Officer and Chief Information Security
CIO Officer coordinate activity in this area.
Change to risk level:
No change
Included in viability statement: Yes
A, C
Financial risks
9. Availability of funding · Insufficient liquidity in financial markets could lead to banks and · The Group arranges a mixture of borrowings from different sources and · The availability of the funding to the Group remains strong. This
institutions being unwilling to lend to the Group, resulting in the Group continually monitors net debt and forecast cash flows to ensure that it will supports our commitment to return to our target leverage range of 2.0-2.5x by
Insufficient liquidity in financial markets leading to insolvency being unable to obtain necessary funds when required to repay maturing be able to meet its financial obligations as they fall due and that sufficient 2027.
borrowings, thereby reducing the cash available to meet its trading facilities are in place to meet the Group's requirements in the short, medium
obligations, make acquisitions and pay dividends. and long term. · During 2024, c.£350 million of bank facilities were refinanced with
maturities between 2026 to 2029, and the Group launched a euro-commercial
Risk owner: paper programme which provides an additional source of short term liquidity.
In addition, the Group issued a debut EUR500 million Eurobond in the capital
CFO markets, diversifying its long term funding sources. Further finance will be
raised in 2025 to refinance c.£470 million of debt maturing during 2025
Change to risk level:
No change
Included in viability statement: Yes
A, C, B
10. Climate change risk · Certain markets and regions are increasingly affected by extreme · Bunzl's supply chain flexibility and lack of fixed manufacturing assets · In 2024, we undertook a comprehensive review and enhancement of our
weather (e.g. suppliers and customers in areas impacted by wildfires and provide operational resilience to the physical impacts of climate change. Our climate risk assessment, encompassing both our operations and supply chain.
Change in temperature and climate conditions that causes business disruption flooding) which could impact our commercial strategy. established business continuity planning has helped to ensure continued After a thorough analysis of climate models from the NGFS, IEA, and IPCC, we
and economic loss for the Group
service to customers in case of weather-related disruptions, such as have again selected the NGFS model for its versatility in evaluating both
· Failing to align with our customers' sustainability ambitions could hurricanes in North America and the Australian wildfires. transition and physical risks. We have adopted three distinct scenarios
lead to reputational damage and loss of sales.
(Orderly (net zero by 2050), Disorderly (delayed transition), and Hot House
· Setting emissions reduction targets to decarbonise our operations and World (current policies)) to represent a range of potential climate
Risk owner: · The Group may face increased indirect costs from carbon intensive those of the supply chain helps to ensure our activities meet or exceed trajectories and their respective impacts on Bunzl. Additionally, we have
products where carbon prices increase and no suitable substitute materials customer expectations. updated our financial impact assessment, which has led us to the conclusion
CEO and Business Area Heads exist.
that there has been no material change to our risk level.
· The ability to pass through any increased costs of products in our
supply chain (for example, due to carbon pricing mechanisms) to our customers.
Change to risk level: · Bunzl assesses and monitors the impact of climate change on GDP at the
global level, including the impact of carbon pricing on total supply chain
No change carbon dioxide emissions, and the trajectory of the reduction of carbon
emissions over time based on data from the Network for Greening the Financial
System 'NGFS'.
Included in viability statement: Yes
A, B, C
19. Forward-looking statements
This announcement contains certain statements about the future outlook for the
Group. Although the Company believes that the expectations are based on
reasonable assumptions, any statements about future outlook may be influenced
by factors that could cause actual outcomes and results to be materially
different.
20. Responsibility statements
This responsibilities statement has been prepared in connection with the
Group's consolidated financial statements, extracts of which are included
within this announcement.
The Annual Report, which includes the financial statements, complies with the
Disclosure Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority in respect of the requirement to produce an annual financial
report.
Each of the directors, whose names and functions are set out in the 2024
Annual Report, confirm that, to the best of their knowledge:
· the Group financial statements, which have been prepared in accordance with
UK-adopted International Accounting Standards and International Financial
Reporting Standards issued by the IASB, give a true and fair view of the
assets, liabilities, financial position and profit of the Group;
· the Company financial statements, which have been prepared in accordance with
United Kingdom Accounting Standards, comprising FRS 101, 'Reduced Disclosure
Framework', give a true and fair view of the assets, liabilities, financial
position and profit of the Company; and
· the Annual Report includes a fair review of the development and performance of
the business and the position of the Group and Company, together with a
description of the principal risks and uncertainties that they face.
On behalf of the Board
Frank van Zanten Richard Howes
Chief Executive Officer Chief Financial Officer
3 March 2025
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