Preliminary results for year ended 31 March 2016

19 May 2016

Agenda Overview of results

Lindsley Ruth

Financial highlights

David Egan

Business overview

Lindsley Ruth

Performance Improvement Plan

Lindsley Ruth

Current trading and outlook

Lindsley Ruth

2

Overview 2016: a year of significant progress with some key highlights  Good progress on Performance Improvement Plan (PIP) – Customer experience, accountability and simplification

     

New international leadership team UK returned to growth with four consecutive months of growth from December Double-digit growth in Central and Southern Europe Accelerating growth of RS Pro with 5.6% H2 growth 6.1% growth in digital in full year Firm action on costs led to significant step up in H2 profitability

A major step forward but still significant potential for improved performance 3

Financial results David Egan

4

Financial highlights  2.8% revenue growth  Stabilised gross margins in H2  Higher than targeted savings of £7 million delivered in H2  14.2% underlying headline operating profits growth in H2  19.7% growth in headline free cash flow – supported by improved stock turn of 2.7x (2015: 2.5x)  Robust balance sheet with Net Debt: EBITDA of 1.5x (interest cover 19.2x)  Dividend maintained

5

Group overview Underlying(1) change H1

H2

FY

H1

H2

FY

Sales (£m)

626.5

664.6

1,291.1

3.7%

1.9%

2.8%

Gross margin (%)

43.3%

43.7%

43.5%

(1.2)pts

(0.5)pts

(0.8)pts

Headline operating profit (£m)

33.8

48.2

82.0

(14.6)%

14.2%

0.2%

Headline operating profit margin (%)

5.4%

7.3%

6.4%

(1.1)pts

0.7pts

(0.1)pts

(1) Underlying measures, unless otherwise stated, are adjusted for currency movements. Sales are also adjusted for trading days. (2) Headline measures of profitability and cash flow are defined as the relevant reported profit/cash flow measure before reorganisation costs/cash flows, asset write-downs and pension credits.

    

Overall, revenue growth of 2.8% with some anticipated disruption from restructuring in H2 Stabilisation in gross margin in H2 – pricing initiatives, more discount discipline Cost actions led to H2 operating margins up 0.7% points on an underlying basis to 7.3% 14.2% underlying growth in operating profits during H2 ROCE of 15.7% (2015: 16.4%)

Year of two halves – with significant improvement in H2 6

Stabilise the gross margin 2016 progress 1. Reported 1.1% point full-year gross margin decline, with stabilisation in margin in H2

Results Quarterly GM% decline year on year Q1

Q2

Q3

Q4

0.0%

2. Two thirds of full-year decline driven by FX, balance mix of product and price

-0.3%

3. Acceleration in RS Pro growth aiding mix

-1.0%

4. Pricing initiatives and increased discounting discipline supported H2 stabilisation

Next steps

-0.5% -0.8%

-1.3% -1.5% -1.8% -2.0%

1. Improve mix – Drive RS Pro growth – Prune low margin tail 2. Control discounts – Controls and process – Incentivisation link 3. Purchasing initiatives – Smarter purchasing – Incentivisation link – Development of global franchises for semis

Good progress in H2 7

Operate for less 2016 progress 1. £7 million of cost savings delivered in H2

Results

Next steps

Operating cost movement Change (1)

1.1%

0.8%

1.0%

(1.6)%

1.3%

2. Operating profit conversion ratio rose to 16.6% in H2 (H2 2015: 15.2%)

1. On track to deliver at least £25 million of annualised cost savings by 2018 – £15 million in 2017 – £3 million in 2018 2. Relentless focus on operating more efficiently

3. Refocused workforce with 10% gross reduction

3. Review of our supply chain continues 4. Our aim is to drive a culture of continuous improvement

4. Reinvestment in focus areas, RS Pro, electronics and digital 2015

Fx

Inflation Volume Other Savings 2016

(1) Other includes IT and one-off costs including the French rate repayment

On track to deliver at least £25 million of savings by 2018 8

Summary income statement 2016 (£m)

2015

Reported

Adjustments

Headline results

Reported

Adjustments

Headline results

1,291.1

-

1,291.1

1,266.2

-

1,266.2

82.0

-

82.0

85.2

-

85.2

(41.9)

41.9

-

16.0

(16.0)

-

Operating profit

40.1

41.9

82.0

101.2

-

85.2

Interest

(5.2)

-

(5.2)

(5.1)

-

(5.1)

Profit before tax

34.9

41.9

76.8

96.1

(16.0)

80.1

Income tax costs – ordinary activities

(21.4)

-

(21.4)

(22.1)

-

(22.1)

Income tax costs – exceptional items

8.4

(8.4)

-

(3.7)

3.7

-

Profit for the year

21.9

33.5

55.4

70.3

12.3

58.0

Earnings per share (p)

5.0

-

12.6

16.0

-

13.0

Revenue Operating profit before exceptional items Exceptional items

 £41.9 million exceptional includes:

 2017 guidance

– £23 million labour restructuring charge

– No significant change in headline tax rate of 28%

– £3.9 million cost of exiting facilities – £15 million write-downs, including £11.2 million website write-down

– We expect the cash tax rate and profit and loss tax rate to converge

9

Cash flow 2016

2015

Headline operating profit

82.0

85.2

Depreciation and amortisation

29.6

30.5

Loss on assets and other non-cash movements

3.2

1.5

Movement in working capital

2.1

(0.7)

Adjusted cash generated from operations

116.9

116.5

Net interest paid

(5.2)

(5.1)

Income tax paid

(20.2)

(21.6)

91.5

89.8

(28.9)

(37.5)

62.6

52.3

(16.0)

(3.3)

Free cash flow post restructuring

46.6

49.0

Net debt

165.1

152.6

(£m)

Adjusted net cash inflow from operating activities Net capital expenditure Headline free cash flow Outflow related to restructuring

 2016 highlights – – – –

Headline free cash flow +19.7% Operating cash flow conversion (3) 107% (93%) Stock turn 2.7x (2015: 2.5x) Net Debt: EBITDA 1.5x (2015: 1.3x)

 2017 guidance – Capex guidance: 1x depreciation – Stock turn stable at 2.7x – Cash restructuring outflow expected to be largely offset by proceeds from Singapore warehouse sale

(1) Underlying measures, unless otherwise stated, are adjusted for currency movements. Sales are also adjusted for trading days. (2) Headline measures of profitability and cash flow are defined as the relevant reported profit/cash flow measure before reorganisation costs/cash flows, asset write-downs and pension credits. (3) Headline operating cash flow conversion is defined as headline free cash flow, pre taxation and interest as a percentage of operating profits.

10

Impact of foreign exchange Translation  We are sensitive to FX rates on the translation of overseas profits  Reported profit sensitivity to a 1 cent movement in: – Euro: £0.6 million – USD: £0.2 million  If current rates persist we will see a tailwind from foreign exchange in 2017

Euro and USD movements to sterling 1.70 1.60 1.50 1.40 1.30

Transaction exposure

1.20

 Group treasury maintains 3-6 month hedging to smooth impact of currency movements  Key exposures: euros and US dollar  Net buyer of US dollars, net seller of euros  As such, gross margin impacted over time from weakening in sterling versus – Euro: positive impact – USD: negative impact Our US dollar exposure is c. 2x greater than Euro exposure

1.10

€ to £

Feb-16

Dec-15

Oct-15

Aug-15

Jun-15

Apr-15

Feb-15

Dec-14

Oct-14

Aug-14

Jun-14

Apr-14

1.00

£ to $

11

Key focus areas  Efficiency – delivering the targeted savings and identifying further ways we can simplify  Continuing efforts to stabilise gross margin  Maximising cash flow with a particular focus on working capital  Driving growth – both organic and inorganic via bolt-on acquisitions  There is a major opportunity to deliver higher returns and increased cash flow

Focused on driving improvement 12

Business overview Lindsley Ruth

13

Northern Europe (30% of sales) Underlying(1) change H1

H2

FY

H1

H2

FY

Sales (£m)

187.1

197.1

384.2

0.2%

2.6%

1.4%

Operating profit (£m)

31.2

37.1

68.3

(12.6)%

19.7%

2.4%

16.7%

18.8%

17.8%

(2.4)%pts

2.8%pts

0.3%pts

Operating profit margin (%)

(1) Underlying growth, unless otherwise stated, is adjusted for currency. Underlying sales growth is also adjusted for trading days.

 Northern European hub consists of the UK, Ireland and Scandinavia  Overall 1.4% revenue growth, with growth accelerating to 2.6% in H2  All three markets in growth but UK turnaround has been the key driver behind H2 improvement  Operating profits up 2.4% in 2016 on an underlying basis, with a 19.7% improvement in profitability in H2 driven by higher gross margins and tight cost control

14

Southern Europe (19% of sales) Underlying(1) change

Sales (£m) Operating profit (£m) Operating profit margin (%)

H1

H2

FY

H1

H2

FY

114.3

136.1

250.4

12.8%

11.1%

11.8%

9.5

13.5

23.0

(5.9)%

4.7%

0.0%

8.3%

9.9%

9.2%

(1.6)%pts

(0.8)%pts

(1.1)%pts

(1) Underlying growth, unless otherwise stated, is adjusted for currency. Underlying sales growth is also adjusted for trading days.

 Southern European hub consists of France, Italy, Spain and Portugal  Double-digit revenue growth throughout 2016 driven by strong performance in France and Spain

 Market share gains driven by focus on high revenue potential accounts  Cost initiatives offset by a FX related gross margin reduction and higher supply chain costs (includes £1.5 million one-off repayment of French rates incurred in H1)  Operating profit flat on an underlying basis, with 4.7% growth in H2

15

Central Europe (13% of sales) Underlying(1) change H1

H2

FY

H1

H2

FY

Sales (£m)

82.6

90.8

173.4

13.1%

6.3%

9.5%

Operating profit (£m)

3.5

2.8

6.3

(5.4)%

16.7%

3.3%

4.2%

3.1%

3.6%

(0.8)%pts

0.2%pts

(0.3)%pts

Operating profit margin (%)

(1) Underlying growth, unless otherwise stated, is adjusted for currency. Underlying sales growth is also adjusted for trading days.

 Central European hub includes Germany, Austria, Benelux, Switzerland and Eastern Europe  Double-digit revenue growth driven by good growth in Germany and standout performances from Benelux and Eastern Europe  Significant action on costs, with c. 8% headcount reduction in the region  Operating margins down 0.3% points on an underlying basis, with cost initiatives offset by the negative impact of FX on gross margins  Operating profits up 3.3% year on year on an underlying basis, with 16.7% year-on-year growth in H2

16

Asia Pacific (13% of sales) Underlying(1) change

Sales (£m) Operating profit (£m) Operating profit margin (%)

H1

H2

FY

H1

H2

FY

82.6

80.5

163.1

(0.9)%

(3.9)%

(2.4)%

(13.2)

(8.7)

(21.9)

5.0%

0.0%

3.1%

(16.0)%

(10.8)%

(13.4)%

0.5%pts

(0.3)%pts

0.1%pts

(1) Underlying growth, unless otherwise stated, is adjusted for currency. Underlying sales growth is also adjusted for trading days.

 Asia Pacific hub includes Australia, New Zealand, China, Japan, SEA and emerging markets operations  Revenues declined 2.4% as we saw the anticipated impact of restructuring  Current returns in Asia Pacific are not acceptable; significant action to rightsize cost base to level from which we can drive improved returns  As expected, restructuring impacted H2 revenue performance in markets most affected i.e. Singapore, China, Japan, whilst Australia and smaller SEA markets continued to see growth  Cost actions more than offset a reduction in gross margin driven by weaker yen; as a result operating losses reduced 3.1% year on year on an underlying basis

17

North America (25% of sales) Underlying(1) change H1

H2

FY

H1

H2

FY

Sales (£m)

159.9

160.1

320.0

0.1%

(4.8)%

(2.4)%

Operating profit (£m)

17.9

18.4

36.3

(9.6)%

(14.8)%

(12.3)%

11.2%

11.5%

11.3%

(0.9)%pts

(2.0)%pts

(1.5)%pts

Operating profit margin (%)

(1) Underlying growth, unless otherwise stated, is adjusted for currency. Underlying sales growth is also adjusted for trading days.

 North America consists of our Allied business  Revenues declined 2.4% due to weak oil and gas markets, lower US manufacturing output  Gross margins remained stable  Action to rightsize costs in September: c.5% workforce reduction and reduced discretionary spend; £2.5m of savings delivered in 2016  Operating profits fell 12.3% on an underlying basis in the full year

18

Performance Improvement Plan Lindsley Ruth

19

The market opportunity is large…

Industrial >£250bn

Customer types

Characteristics

 Maintenance engineers  Machine and panel builders  Buyers

 Highly fragmented  GDP type growth  ECM global market share 60k search improvements, four-year conversion high 2. >5m product data pieces cleansed, easier selection

2. Action plan established to drive improved customer experience

3. >120k products reshot with high-resolution images

3. Voice picking – Nuneaton & Bad Hersfeld – significant reduction in errors

4. Site speed improved >30%

Global

20-Mar

13-Mar

06-Mar

28-Feb

21-Feb

14-Feb

07-Feb

31-Jan

24-Jan

17-Jan

10-Jan

03-Jan

27-Dec

20-Dec

13-Dec

5. More local stocking in Asia

06-Dec

4. Proactive communication 5. RS online growth at a three-year high

Linear (Global)

(1) NES (Net Ease Score)

Focused on improving customer experience 23

Accountable, responsive organisation UK sales growth rate 6.0%

46.0%

4.0% 2.0%

-2.0% -4.0%

43.3%

0.0%

-6.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY14 FY14 FY14 FY14 FY15 FY15 FY15 FY15 FY16 FY16 FY16 FY16

Reinvigorate RS Pro

Return UK to growth

    

 New leadership and P&L accountability  Four consecutive months of growth from December to March  Relaunch of RS Pro  Corporate accounts back to growth  Simplify go-to-market approach

New leadership and P&L accountability Revenue growth of 3.8% in 2016, 5.6% in H2 Increase to 12.5% of Group revenues Introduced in North America in July 2015 Launch of one global brand in February: RS Pro

A significant opportunity for growth

24

Operate for less – Asia Pacific Rebase

Fix and grow

 20% reduction in workforce  Consolidated regional management function in Hong Kong  Strengthened leadership team  Substantial restructuring, closure of: – Singapore office and warehouse – Three offices in China – Three trade counters in Australia

 Established low-cost back office shared service centre in Philippines and China  Move to primarily web-only model in Japan

 Improve customer service – Superior online experience – Increase service reliability

 Service reliability – More local fulfilment – Range review

 Customer acquisition – China: Industrial Parks – Growth markets

Driving improved returns 25

Looking forward

26

Current trading and outlook (1)

Sales growth H1 2016

H2 2016

Apr/May 2016(2)

Northern Europe

0.2%

2.6%

3.5%

Southern Europe

12.8%

11.1%

8.2%

Central Europe

13.1%

6.3%

3.7%

Asia Pacific(3)

(0.9)%

(3.9)%

6.8%

Americas

0.1%

(4.8)%

(1.8)%

Group

3.7%

1.9%

3.5 %

 Overall a similar revenue picture to H2 2016  Europe saw good revenue growth – Continued recovery in Northern Europe – Slight moderation in growth in Southern and Central Europe due to tougher comparatives

 No significant change in North American market  Asia Pacific remains volatile and we would be cautious about extrapolating the six-week trend as the period benefited from: – Strong emerging market growth (weak comparator and Pi launch) – A focused promotion across Asia Pacific region during April

(1) Underlying sales growth, adjusted for currency and trading days (2) Seven weeks to 13 May 2016 (3) Asia Pacific hub includes emerging markets which benefitted from weak trading comparatives during the period

Well positioned to make progress in 2017 27

Summary  Performance Improvement Plan on track  We will transform the customer experience with our organisation – First step, getting basics right – Second step, driving differentiation into our offering

 We will drive accountability – To develop a high-performance culture

 We will continue to simplify and operate for less – On track for at least £25 million of annualised savings by March 2018 – Work continues to identify further savings

 We will drive innovation  We will reinvest both organically and via bolt-on acquisitions to accelerate growth

The opportunity is significant and we will deliver 28

Appendix

29

Basis of preparation Unless otherwise stated:  Figures have been prepared using International Financial Reporting Standards  Changes in sales are adjusted for currency movements and for the number of trading days (‘underlying sales growth/decline’)

 Changes in profit, cash flow, debt and share related measures such as earnings per share are, unless otherwise stated, at reported exchange rates  Key performance measures such as return on sales use headline profit figures  Sign conventions: % changes in sales and costs are disclosed as positive if improving profit and negative if reducing profit  A net charge of £41.9m (H1: £11.4m) was reported for items excluded from headline profit before tax. 2015 net income of £16.0m was reported for items excluded from headline profit before tax.  We have restated our balance sheets for FY15 and FY14 following a change in accounting policy relating to the grossing up treatment of our multi-currency cash pools.

 We have represented our segmental results, in line with the restructuring of the Group this year into 5 operational hubs and central costs.

30

Group financial highlights Reported

Change (%)

2016

2015

Reported

Constant

1,291.1

1,266.2

2.0%

2.8%

561.5

564.7

(0.6)%

1.2%

Operating costs (£m)

(479.5)

(479.5)

0.0%

(1.3)%

Operating profit (£m)

82.0

85.2

(3.8)%

0.2%

Headline PBT (£m)

76.8

80.1

(4.1)%

0.0%

Headline EPS (p)

12.6

13.2

(4.5)%

0.0%

Headline free cash flow (£m)

62.6

52.3

(165.1)

(152.6)

Underlying Sales growth (%)

2.8

3.5

Gross margin (%)

43.5

44.6

(1.1)pts

(0.8)pts

Operating profit margin (%)

6.4

6.7

(0.3)pts

(0.1)pts

Gross profit conversion (%)

14.6

15.1

Operating cash flow conversion (%)

107.3

92.7

Net debt/EBITDA (x)

1.5

1.3

Return on capital employed (%)

15.7

16.4

Sales (£m) Gross profit (£m)

Net debt (£m)

31

Measuring our success: KPIs 2016

2015

H2 2016

H2 2015

Underlying revenue growth (%)

2.8

3.5

1.9

4.1

RS Net Promoter Score

41.0

-

-

-

Headline operating profit as % of gross profit (%)

14.6

15.1

16.6

15.2

Headline operating profit margin (%)

6.4

6.7

7.3

6.7

Headline operating cash flow conversion (%)

107.3

92.7

132.6

92.0

Return on capital employed (%)

15.7

16.4

-

-

Group Lost Time Accident Frequency (1)

0.15

0.29

-

-

(1) Number of Lost Time Accidents per 200,000 hours worked

32

Segmental analysis Sales (£m) Reported

Headline operating profit (£m)

Change (%)

Reported

Change (%)

Operating margin (%) Reported

Change (%pts)

2016

2015

Reported

Underlying

2016

2015

Reported

Underlying

2016

2015

Reported

Underlying

Northern Europe

384.2

383.4

0.2%

1.4%

68.3

68.0

0.4%

2.4%

17.8%

17.7%

0.1%

0.3%

Southern Europe

250.4

239.0

4.8%

11.8%

23.0

25.5

(9.8)%

0.0%

9.2%

10.7%

(1.5)%

(1.1)%

Central Europe

173.4

169.2

2.5%

9.5%

6.3

7.4

(14.9)%

3.3%

3.6%

4.4%

(0.8)%

(0.3)%

Asia Pacific

163.1

171.9

(5.1)%

(2.4)%

(21.9)

(21.6)

1.4%

(3.1)%

(13.4)%

(12.6)%

(0.8)%

0.1%

North America

320.0

302.7

5.7%

(2.4)%

36.3

38.7

(6.2)%

(12.3)%

11.3%

12.8%

(1.5)%

(1.5)%

(30.0)

(32.8)

(8.5)%

(8.8)%

82.0

85.2

(3.8)%

0.2%

6.4%

6.7%

(0.3)%

(0.1)%

Central costs Group

1,291.1

1,266.2

2.0%

2.8%

33

Restructuring charges and pension credits Reported (£m)

2016

2015

Labour restructuring charge

(23.0)

(4.4)

Cost of exiting facilities

(3.9)

-

Website write-down

(11.2)

-

Other write-downs

(3.8)

-

Total exceptional charge

(41.9)

(4.4)

-

20.4

(41.9)

16.0

Exceptional income Total net exceptional charge

34

Net debt movements (£m)

2016

2015

(152.6)

(143.6)

62.6

52.3

Restructuring outflow

(16.0)

(3.3)

Equity dividends paid

(51.6)

(51.6)

1.7

0.4

Own shares acquired

(2.3)

(0.6)

Translation differences

(6.9)

(6.2)

Net debt at 31 March

(165.1)

(152.6)

Net debt at 1 April Headline free cash flow

New shares issued

(1)

Restated due to revised accounting treatment on vendor rebates

Strong balance sheet

Pension

 EBITA to interest cover 19.2x (covenant 3x )

 Combined deficit £43.3 million (2015: £60.4 million)

 Net debt to EBITDA of 1.5x (covenant 3.25x)

35

Guidance points for 2017  Capital expenditure: 1 x depreciation

Foreign exchange rates

 Stock turn: flat at 2.7x

 Effective tax rate: no significant changes from current year’s headline rate of 28%  Cash tax rate: to converge with profit and loss rate over time

2016 reported rates

2016 year end rates

17 May rates

Sterling: euro

1.37

1.26

1.28

Sterling: USD

1.51

1.44

1.45

 Cash restructuring outflow expected to be offset by proceeds from Singapore warehouse sale

36

Net Promoter Score (NPS) Net Promoter Score (NPS)

Apr 15

May 15

Jun 15

Jul 15

Global (Excl Allied)

Aug 15

Sep 15 UK

Oct 15

Nov 15

Dec 15

Continental Europe

Jan 16

Feb 16

Mar 16

APAC

37

Fix the basic customer experience – 2017 focus areas Ease

Range and availability

Service reliability

 Further improvements to online experience  Increase choice on packaging options  Improve quotation capability  Introduce product traceability across relevant product categories

 New KPIs to improve stock availability in top sellers and most searched for items  Clear labelling of available stock and transparency of despatch date across all products  Realign range in Asia Pacific with more locally sourced inventory

 Parcel tracking in all markets; better customer information on delivery  Introduce forward and scheduled ordering

Delivering tactical changes that drive an improved experience 38