RS : Results for the year ended 31 March 2023

Results for the year ended 31 March 2023

STRONG PERFORMANCE

SIMON PRYCE, CHIEF EXECUTIVE OFFICER, COMMENTED: "RS delivered a strong performance in 2022/23 despite a more challenging macroeconomic backdrop in the second half. This reflected our on-going operational excellence initiatives, geographical, industry and product mix, inventory availability and strong pricing. Together with the efforts of our people this resulted in good financial results. We also acquired domnick hunter and Risoul and, after year end, agreed to acquire Distrelec.

After 30 days in the role, I am excited about the opportunity I see for RS going forward. We have a solid business, a sound strategy and great people. We are transitioning to an omni-channel operator in a large and fragmented market. We are supplier and increasingly customer focused, who see the value we bring as we move from being a product distributor to a solutions provider. We continue to invest in operational improvement, customer experience and digital and technical capabilities, and are extending our relevant product offer and value-added service solutions.

While we are mindful of near-term external challenges, we remain comfortable with current consensus profit expectations for 2023/24 and have the tools, proposition, financial capacity and roadmap to deliver significant outperformance over time and capitalise on further strategic opportunities to accelerate growth and value creation."

Highlights	2023	2022	Change	Like-for-like1 change
Revenue	£2,982.3m	£2,553.7m	17%	10%
Adjusted2 operating profit	£402.2m	£320.4m	26%	18%
Adjusted2 operating profit margin	13.5%	12.5%	1.0 pts	0.9 pts
Adjusted2 profit before tax	£390.7m	£313.8m	25%	17%
Adjusted2 earnings per share	63.6p	51.3p	24%	16%
Operating profit	£383.0m	£308.8m	24%	17%
Profit before tax	£371.5m	£302.2m	23%	16%
Earnings per share	60.4p	48.9p	24%	16%
Full-year dividend	20.9p	18.0p	16%
Adjusted free cash flow3	£263.6m	£162.9m	62%
Cash generated from operations	£413.0m	£267.1m	55%
Net debt3	£113.0m	£42.1m
Net debt to adjusted2 EBITDA	0.2x	0.1x

Strong financial performance driven by availability, inflation and improved adjusted operating profit conversion

• Revenue growth of 17% includes 10% like-for-like, 2% acquisition contribution and 5% currency benefit
• Industrial products, 76% of Group revenue, grew like-for-like revenue by 16% with electronics products, 23% participation, growing 1%
• Adjusted operating costs grew 18%, 13% like-for-like, reflecting inflation, ongoing strategic investment of c. £20 million and c. £10 million of ad hoc payments to support our people during more difficult times
• Adjusted² operating profit margin grew 1.0 pts to 13.5%, with adjusted operating profit conversion³ of 29.7%
• Final dividend increased to 13.7p; full-year dividend of 20.9p

Ongoing investment in operational and strategic improvements

• Enhanced product and content management work to develop our proposition
• Freight and distribution optimisation work as our model becomes more local, regionalised and sustainable
• Detailed customer analysis to understand our customers better and improve our service offer

Good financial management and cash generation supporting organic and inorganic investment

• Adjusted free cash flow of £264 million despite inventory investment
• Net debt of £113 million includes £234 million for acquisitions, with net debt to adjusted EBITDA of 0.2x (0.9x proforma post Distrelec)
• Return on capital employed remains strong at 30.8%, due to profitability and maintained financial discipline
• Acquired domnick hunter and Risoul and announced agreement to buy Distrelec post year end⁴

Current trading and outlook

We continue to outperform in the industrial market, especially in EMEA, although trading over the first seven weeks of 2023/24 reflects a slowing in industrial growth, as indicated by PMI data, and continued weakness and aggressive competition in electronics. Despite this more uncertain economic environment and the strong comparator period last year, we are comfortable with current consensus profit expectations⁵ for 2023/24, albeit with performance more weighted to the second half.

¹ Like-for-like change excludes the impact of acquisitions and the effects of changes in exchange rates on translation of overseas operating results, with 2021/22 converted at 2022/23 average exchange rates. Revenue is also adjusted to eliminate the impact of trading days year on year. Acquisitions are only included once they have been owned for a year, at which point they start to be included in both the current and comparative periods for the same number of months (see Note 10 for reconciliations).

² Adjusted excludes amortisation and impairment of intangible assets arising on acquisition of businesses, acquisition-related items, substantial reorganisation costs, substantial asset write-downs, one-off pension credits or costs, significant tax rate changes and associated income tax (see Note 10 for reconciliations).

³ See Note 10 for definition and reconciliation.

⁴ Acquisition of Distrelec B.V. subject to regulatory clearances and we anticipate it will be completed by the end of July 2023.

⁵ Consensus for the year ending 31 March 2024 is revenue of £3,116 million, adjusted operating profit of £390 million and adjusted profit before tax of £379 million. Source: rsgroup.com/investors/analyst-coverage.

Enquiries:

Jane Titchener	Interim Chief Financial Officer	020 7239 8400
Lucy Sharma	VP Investor Relations	020 7239 8427
Martin Robinson / Olivia Peters	Teneo	020 7353 4200

There will be an analyst presentation today at 9am (UK time) at Numis, 45 Gresham Street, London EC2V 7BF. We will also provide a video webcast, which can be accessed live and later as a recording on the RS Group website at www.rsgroup.com.

Webcast link: www.investis-live.com/rsgroup/64634a5a4170900d00559b9e/ewpp
It is advisable to pre-register early to avoid any delays in joining the conference call.

Participant dial-in numbers
United Kingdom (Local): 020 3936 2999
All other locations: [phone]
Participant access code: 159746

Presentation timing
Date: Tuesday, 23 May 2023
Time: 9am UK time
Venue: Numis, 45 Gresham Street, London EC2V 7BF

Notes to editors:

RS Group plc provides product and service solutions that help our customers design, build, maintain, repair and operate industrial equipment and operations, safely and sustainably. We stock more than 750,000 industrial and electronic products, sourced from over 2,500 leading suppliers, and provide a wide range of product and service solutions to 1.1 million customers.

We support customers across the product lifecycle, whether via innovation and technical support at the design phase, improving time to market and productivity at the build phase, or reducing purchasing costs and optimising inventory in the maintenance, repair and operation phase. We offer our customers tailored product and service propositions that are essential for the successful operation of their businesses and help them save time and money.

RS Group plc is listed on the London Stock Exchange with stock ticker RS1 and in the year ended 31 March 2023 reported revenue of £2,982 million.

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