RS : 2024 Annual Report and Accounts

FOCUS.

ALIGN.

PRIORITISE.

EXECUTE.

ANNUAL REPORT AND ACCOUNTS 2024

For the year ended 31 March 2024

rsgroup.com

Welcome to our Annual Report

In this report

Strategic report			Governance report
Performance highlights		1	Chair's letter			73
RS Group at a glance		2	Our Board of Directors		74
Value creation		3	Governance at a glance		76
Chair's introduction		4	Board leadership and governance
Our stakeholders		6	framework			77
Our marketplace		8	Board activities during the year	80
Chief Executive Officer's (CEO)		Board evaluation		84
introduction		10	Governance code compliance	86
Business model and strategy	13	Nomination Committee report	88
Strategy in action		14	Audit Committee report		92
Our growth ambitions		17	Directors' Remuneration report	99
Our values		18	Directors' report		116
Key performance indicators	20	Statement of Directors'
Financial review		24	responsibilities		119
Regional review		29	Financial statements
Risks, viability and going concern	32
Independent Auditors' report	120
Environmental, social
		Group accounts		127
and governance (ESG)		40
	Company accounts		173
Regulatory statements		70
	Five year record		178
					Other information
					Shareholder information		179
					Glossary of terms		181
We have included a glossary of terms at the end
of this document to help explain our acronyms
Navigating this interactive document
	Return to		Return to previously	Page	Page
	contents		viewed page		back	forward

For information about your shareholding visit: rsgroup.com/investors/shareholder-information

• Front cover: The Technical Solutions Centre at our regional distribution centre at Fort Worth, US

			STRATEGIC REPORT
Performance highlights
	FINANCIAL			+ Read more on page 24
	Revenue		Like-for-like1 revenue change
	£2,942m	(8)%

GOVERNANCE REPORT	FINANCIAL STATEMENTS	OTHER INFORMATION

ESG GLOBAL GOALS+ Read more on pages 40 to 69

Advancing	61%	90%		ESG RATINGS AND
sustainability				STANDARDS

Change: (1)%		Change: (18) pts
Profit before tax		Adjusted1 profit before tax
£249m		£281m1
Change: (33)%		Like-for-like change: (30)%
Adjusted1 operating profit margin		Return on capital employed1
10.6%	17.4%
Change: (2.9) pts		Change: (13.4) pts
Earnings per share		Adjusted1 earnings per share
38.8p		43.18p
Change: (36)%		Like-for-like change: (34)%
Dividend per share		Adjusted1 free cash flow
22.0p		£151m
Change: +5%		Change: (43)%

	Reduction in Scope 1	of Group electricity
	and 2 emissions since	is from renewable
	2019/20 excluding	sources
	recent acquisitions2,3	2022/23: 91%4
	2022/23: 57%2,3
innovation	796k	31k
Championing
education and
	Young engineers and	lives improved since
	students reached	2019/20 through
	through educational	our support of The
	programmes, products	Washing Machine
	and DesignSpark	Project (TWMP)
	platform since 2020/21	2022/23: 28k
	2022/23: 471k
Empowering	75	34%
our people
	employee	of our senior leaders
	engagement score	are women and 11%
	2022/23: 78	are ethnically diverse

2022/23: 30% women and 11% ethnically diverse

Doing business 45% 52% responsibly

of employees with	of suppliers by spend
carbon reduction	have an EcoVadis
metric in annual	rating to drive ESG
bonus incentive	performance
2022/23: 50%	2022/23: 49%4

S&P: included in

Sustainability Yearbook

Medal rating: Platinum

Climate leadership score: A-

Global top 50 ESG companies

2024 rating: AA

1. See Note 3 on pages 135 to 138 for definitions and reconciliations.

2.	Performance excludes acquisitions completed in 2022/23 and 2023/24.	Index score 2023: 3.6/5
3.	Scope 1 and 2 emissions updated to reflect reporting and emissions factor changes.

4. 2022/23 performance restated to include post-acquisition data from acquisitions completed in 2022/23 and 2023/24.

RS Group plc

Annual Report and Accounts for the year ended 31 March 2024

1

RS Group at a glance

WE ARE RS GROUP

OUR PURPOSE

Making amazing happen for a better world

Our purpose reflects our focus on delivering results for people, planet and profit. Our 2030 ESG action plan - For a Better World

• delivers long-term value for all our stakeholders.
  + Read more on pages 40 - 69

STRATEGIC REPORT	GOVERNANCE REPORT	FINANCIAL STATEMENTS	OTHER INFORMATION

A TRUSTED PARTNER

We are a digitally enabled global distributor of product and service solutions, providing small volumes of our suppliers' products to satisfy our industrial customers' maintenance, repair and operations (MRO) demands.

35	1.1m	c.9,000	>2,500
countries with RS operations	customers	employees	suppliers

Revenue

£2,942m

Change: (1)%

Like-for-like change: (8)%1

2022/23: £2,982m

OUR VISION

First choice for all our stakeholders

We strive to be the best place to work for our people, the go-to partner for customers and suppliers, contributing to the communities around us and delivering long-term, sustainable value for our shareholders.

• Read more on pages 6 - 7

OUR VALUES

How we work

Our values support us to deliver our strategy by guiding daily decisions. They are how we work across our organisation in a consistent way. The values unite us in how we should behave and help us build a culture we are proud of.

• Read more on pages 18 - 19

		EMEA
		Revenue
		£1,795m
		Change: +1%
		Like-for-like change: (5)%1
		2022/23: £1,769m
Region split	61%	+ Read more on page 29
EMEA
Americas	32%
Asia Pacific	7%

Revenue split by products and service solutions

Automation and control (A&C)	42%
Mechanical and fluid power	5%
Electronics	18%
Maintenance	26%
Safety and protection	4%
Single-board computing	1%
Other	4%

• Read more on pages 24 to 31

1. See Note 3 on pages 135 to 138 for definitions and reconciliations

Americas	Asia Pacific
Revenue	Revenue
£934m	£214m
Change: (1)%	Change: (20)%
Like-for-like change: (13)%1	Like-for-like change (15)%1
2022/23: £946m	2022/23: £268m
+ Read more on page 30	+ Read more on page 31

Revenue split by range of industries

Original equipment manufacturing	18%
Commerical and finanical services	11%
Electronics manufacturing	11%
Process manufacturing	17%
Public sector	4%
Transport and defence	7%
Utilities and energy	5%
Other	27%

RS Group plc

Annual Report and Accounts for the year ended 31 March 2024

2

STRATEGIC REPORT

GOVERNANCE REPORT

Value creation

CREATING VALUE FOR

ALL OUR STAKEHOLDERS

1. Well positioned in growth markets

Global leader in a large, industrial MRO market, growing at GDP+ through cycle

2. Differentiated proposition driving market share gain

Digitally enabled, high service distributor of a broad range of technical product and service solutions for industrial customers that demand low volumes of critical products across many categories

3. Significant operating leverage

Creating, utilising and optimising more efficient and flexible physical, digital and process infrastructure

4. Attractive financial characteristics

Strong cash generation supporting ongoing investment and high returns on invested capital

5. Disciplined acquisitions accelerating consolidation

Rigorous investment discipline and clear capital allocation policy driving accelerated value creation

FINANCIAL STATEMENTS	OTHER INFORMATION

THROUGH-CYCLE VALUE

CREATION TARGETS

REVENUE GROWTH

TWICE MARKET

(OF GDP+)

MID-TEEN

ADJUSTED OPERATING PROFIT MARGIN

>70%	>20%
cash conversion rate	return on capital employed

30% ADJUSTED OPERATING PROFIT

CONVERSION

RS Group plc

Annual Report and Accounts for the year ended 31 March 2024

3

Chair's introduction

STRATEGIC REPORT	GOVERNANCE REPORT	FINANCIAL STATEMENTS	OTHER INFORMATION

OUR PEOPLE ARE FUNDAMENTAL TO OUR SUCCESS

Rona Fairhead

Chair

A challenging year but we remain confident about the opportunities ahead.

Last year was a challenging one for RS and the industry in general. The industrial market is cyclical but, by prioritising and pursuing the tremendous opportunities that lie ahead, we are confident in delivering through-cycle growth and significantly improved financial performance over the medium term. The people of RS are fundamental to our success and, again this year, they have been outstanding in terms of their dedication, professionalism and enthusiasm. My sincere thanks go out to each and every one of them.

Strategy

Our strategy remains the same but we have refined it during the year to provide greater focus, more alignment, better prioritisation and improved execution. We remain focused on organic growth, supplemented by value-accretive mergers and acquisitions (M&A).

The Board is fully supportive of the work that the Executive Committee (ExCo) team has undertaken to clarify the strategic actions and KPIs required to help us achieve our strategic goals and create sustainable value.

With our leadership in digital and our vast range of product and service solutions, we are well positioned to capitalise on the significant market opportunity. For more on our market opportunity and strategy please see pages 8 and 13.

Following its acquisition in January 2023, Risoul has outperformed our expectations. In Latin America, we see tremendous opportunities ahead as our team in Americas increases its collaboration

with Risoul.

We were also pleased to welcome the Distrelec team into RS Group following completion of its acquisition in June 2023. Distrelec is a strong fit with RS in EMEA. Its rapid integration, in terms of combined sales, marketing and product management, will accelerate our business across

the region. Our M&A pipeline is strong and we will continue to exercise strategic and financial discipline.

Our culture and values

The Board is clear that culture is fundamental to the success of our business. We have continued to admire and value the special culture that exists across our global operations.

Towards the end of the year, RS created a new set of values to unite the business behind how we should behave and work. Launched at our

2024 Leadership Event, the values help guide our decision making to deliver great outcomes, improve our corporate governance and reinforce our amazing culture - a culture of which we can all be proud.

The Board believes that these values outline what the business needs to do to be successful:

• We are one team
• We deliver brilliantly
• We do the right thing
• We make every day better

A strong Environmental, Social and Governance (ESG) approach is embedded in our culture and strategy and we remain focused on our commitment to raise ESG standards across our business and wider value chain. At RS, we are clear that strong ESG performance is a key part of our success and provides opportunities for business growth. To read about our progress against our 2030 ESG action plan goals please see pages 40 to 61.

During the year, the Group has been included in the S&P Global Sustainability Yearbook 2024, positioned in the top 15% of companies in its industry, reflecting leadership and progress in sustainability. In addition, RS Group was awarded a platinum medal by EcoVadis for the second consecutive year, placing our business in the top 1% of the 100,000+ companies assessed.

The Board has seen real benefits from harnessing the full potential of diverse talents, perspectives and experiences to drive innovation, sound decision making and sustainable success. We were pleased to be recognised by the FTSE 100 Women

RS Group plc

Annual Report and Accounts for the year ended 31 March 2024

4

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

OTHER INFORMATION

Chair's introduction continued

Leaders Review where RS was ranked fourth due to having more than 50% of women on our Board.

• See pages 18 and 19 for more on our values and culture

Our stakeholders

Our vision is to become first choice for all our stakeholders: our people, customers, suppliers, communities, and shareholders. The Board and Company seek to engage actively with them all to understand their needs. We have outlined on pages 6 and 7 our stakeholder engagement and outcomes for the Group during 2023/24.

We fully understand our obligations to our owners

• our shareholders. In addition to other Board members, I have spent a lot of time engaging with shareholders and we truly value that dialogue. In this regard, as well as building
  a strong, sustainable company for our owners, we also recognise the importance of our dividend to them, and the Board is pleased to continue with our progressive dividend policy. More details on our Board engagement with our stakeholders can be found on pages 80 to 83.

Our Board

At the end of his first year at RS Group as Chief Executive Officer (CEO), the Board is delighted with how Simon Pryce has directed the business. He has recognised the challenges, refined the strategy and is positioning the business for improved execution and the growth opportunities ahead. We are confident that the greater clarity and focus will resonate strongly with our stakeholders and drive further value.

We were also thrilled to welcome Kate Ringrose as our Chief Financial Officer (CFO). She joined RS Group from Centrica, a FTSE 100 company, where she spent 18 years, culminating in the role of CFO. Kate has a strong track record of driving exceptional business transformation, operational excellence and strategic growth, and brings a wealth of experience that has already been of significant benefit to the Group.

We are confident that, under Simon's leadership, supported by Kate and our global leaders, RS will be able to accelerate the execution of our strategy and capitalise on the opportunities ahead.

Before I conclude, I would like to turn to the Board. Our Board review has confirmed that we have

a diverse range of relevant experience and expertise, even as we continue to shape our Board for the future. I would like to thank each member of the Board for their excellent counsel, insights and wisdom throughout the year. Once again, they have been tremendous.

Looking ahead

As we continue to navigate the challenging external environment, it is critical that we remain focused on executing our strategy with zeal and passion. We are excited and positive about the opportunities that lie ahead and feel confident that, with the right leadership and people in place, we will generate notable value and strong growth in the medium term.

Culture is a critical driver which energises and motivates our people."

DRIVING VALUE FOR ALL OUR STAKEHOLDERS

Driving value for all our stakeholders underpins our purpose of making amazing happen for a better world and ensures that we do so sustainably and responsibly.

For our people

• Clear people plan (page 53)
• Created new set of values (pages 18 and 19)

For our customers

• Better World product range of c. 30,000 sustainable products (page 48)
• Sustainable MRO solutions to help customers meet their ESG goals (page 49)
• Enhanced Scope 3 emissions reporting (page 47)

For our suppliers

• Regular engagement on supplier ESG action priorities (page 49)
• Support and guidance via our ESG supplier handbook (page 43)

For our communities

• Supporting education and innovation through RS Grass Roots, DesignSpark and OKdo (page 51)
• Improving lives through support of social impact partners and volunteering (pages 51 and 56 respectively)

For our shareholders

• RS sustainable products and solutions are generating long-term revenue (pages 48 and 49)
• Expansion into low-carbon industry segments, such as renewable energy, opening up new market opportunities (page 49)

RS Group plc

Annual Report and Accounts for the year ended 31 March 2024

5

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

Our stakeholders

UNDERSTANDING

THE NEEDS OF ALL

OUR STAKEHOLDERS

It is important for us to engage with all our stakeholders to understand what matters to them, ensuring we are responsive to their needs and adding value. The views of our stakeholders are fundamental to us becoming first choice and driving a long-term sustainable business. We have therefore defined KPIs for each of our stakeholders and will set targets to determine our progress in becoming first choice.

OTHER INFORMATION

OUR PEOPLE

What matters to our people

• High-performance,purpose-led culture
• Diversity and inclusion
• Wellbeing and mental health
• Training and career development
• Personal financial planning and education

How we engage

OUR PEOPLE

CUSTOMERS

SUPPLIERS

COMMUNITIES

SHAREHOLDERS

Why they matter	The value we bring	How we will measure first choice
Our people are fundamental to the success	Creating an inclusive and engaging	- My Voice engagement score
of our business and we continue to invest in	environment where everyone is proud and
our ability to recruit, retain and develop the	excited to come to work as themselves and
best talent.	can perform at their best, develop and thrive.
It is crucial to understand our customers'	Being a trusted problem solver, delivering	- Net promoter score
needs in order to create value, solve problems	excellence through a connected experience
and unlock opportunities.	and a suite of valued product and service
	solutions for industrial MRO customers.
We work in partnership with our suppliers	Being a technically led, service-oriented	- Number of stocked products
to deliver an unrivalled product choice and	supplier partner of choice, bringing an
innovative solutions for our customers.	unrivalled product range and innovative
	solutions to industrial MRO customers.
Across our communities worldwide, we	Supporting our communities to improve	- Reduction in carbon emissions
are implementing educational initiatives to	people's lives, inspiring future generations,
improve lives and inspire the next generation	while creating a more sustainable world.
of engineers.
Our shareholders include institutional	Creating superior economic value through	- Earnings per share
investors and individuals who provide the	delivering reliably for our stakeholders,
capital for our business to grow.	generating consistent and sustainable cash
	returns on invested capital well in excess of
	our cost of capital.

• Encourage employee-led networks and communities
• Regular employee engagement surveys
• Diversity and inclusion training
• Non-ExecutiveDirector initiatives and interactions
• Training programmes and development opportunities for all employees
• Health and wellbeing resources
• Access to personal financial wellbeing tools and regular pension seminars

What we have achieved

• 2024 Leadership Event in March with 193 leaders
• Finalist and listed in the Top 100 Inspiring Places to Work in North America
• Received a 95/100 on the annual Corporate
  Equality Index review for LGBTQIA+
  Inclusive Workplaces
• Won Outstanding Employer award in the 2024 Top Human Resource Management Awards in China
• Programme partner in first ever Executive
  Accelerator programme by Moving Ahead
• 253 people in UK apprenticeship programme
• A Gold member of the Apprentice 5% club for three consecutive years in the UK

Linked to our ESG goals:

RS Group plc

Annual Report and Accounts for the year ended 31 March 2024

6

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

OTHER INFORMATION

Our stakeholders continued

CUSTOMERS

What matters to our customers

• Innovative and sustainable solutions to solve problems and unlock opportunities
• A seamless experience so customers can focus on what they do best
• A partner to build a more sustainable and socially responsible future
• An unrivalled choice of products and services and availability

How we engage

• Dedicated customer service
• Seamless communication
• Trade fairs, forums and presence at customer sites
• Voice of the Customer surveys
• Customer performance reviews

What we have achieved

• Expanded Better World product range to c. 30,000
• Risoul transactional website launched in Mexico
• Expanded technical solution services in Americas
• Enhanced search capabilities on 27 websites through using Google technology and artificial intelligence (AI)
• Enabled greater localisation of digital experiences to connect better with customers
• Improved translation quality with 94% of customers responding that product translations are good
• Drove a cutting-edge,data-driven 'test and learn' approach that significantly boosted customer engagement and satisfaction

Linked to our ESG goals:

SUPPLIERS

What matters to our suppliers

• Data-drivenproduct management
• Knowledge of customer needs and trends
• Ease of doing business
• Offering full range of product and service solutions to our customers
• Positive environmental and social impact, operating to high ethical standards

How we engage

• Dedicated account managers
• Regional and global supplier events
• Supplier scorecards with defined targets
• Voice of Supplier survey every two years
• RS Connect - partnering with suppliers to connect with customers
• Seamless new product introductions
• Regular engagement with suppliers on ESG action plan

What we have achieved

• Stronger partnerships with our suppliers
• Worked with suppliers to extend Better World product range
• Developing a programme to source, store and deliver products closer to the customer
• Attendance at Smart Production Solutions (SPS) conference in Munich, Germany

Linked to our ESG goals:

COMMUNITIES

What matters to our communities

• Providing support to our local communities
• Providing educational initiatives to young people
• Limiting environmental impact in operations

How we engage

• Competitions to encourage innovation
• Delivering SuperSkills Employability Training
• Our exclusive Global Youth Advisory Board (The FAB15)
• Organising and supporting community events and awards
• Supporting academic institutions to deliver high-quality engineering and technology education

What we have achieved

• c. 20,000 students participated in Engineers
  Without Borders activity
• 1,942 students supported via our engineering society partnerships
• 141 hours of Super Skills training delivered
• 1,591 young people attended RS Grass Roots supported events
• 30 teams received £1,000 worth of components and tools through the Formula Student
  Build Fund
• 39 Divya washing machines built for The Washing Machine Project (TWMP) by 110 RS volunteers and sent to India, Kenya and Uganda
• Delivered micro:bit computers to 90% of primary schools in the UK as a key partner in the BBC next gen campaign

Linked to our ESG goals:

SHAREHOLDERS

What matters to our shareholders

• Sustainable growth and superior returns
• Understanding the business and our strategy
• Strong corporate governance
• ESG

How we engage

• Annual General Meeting (AGM)
• Investor roadshows, detailed investor events, meetings and conferences
• Stock exchange announcements, press releases and results briefings
• Ongoing dialogue with analysts and investors

What we have achieved

• Achieved revenue compound annual growth rate of 6% over last five years excluding acquisitions
• Science-basedtargets developed to achieve net zero, validated by the Science Based Target initiative (SBTi)
• Awarded best Annual Report: FTSE 100 organisation by Corporate Reporting Awards 2023
• Awarded Best Company for Sustainability
  Reporting in the industrial sector at the Corporate ESG Awards 2023
• Held meetings with shareholders representing 72% of our top 20 shareholders
• Relaunched the RS Group corporate website

Linked to our ESG goals:

RS Group plc

Annual Report and Accounts for the year ended 31 March 2024

7

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCIAL STATEMENTS

OTHER INFORMATION

Our marketplace

WELL POSITIONED

FOR SUSTAINABLE GROWTH

THE MARKETS WE OPERATE IN

We operate in a large and fragmented industrial market with RS being only one of a few global distributors of industrial MRO product and service solutions. Despite its size, much of the market is still local and many of our competitors are independent businesses and regional firms specialising in a narrow product offering and limited service solutions with less developed digital capabilities.

The markets we address

Automation and control (A&C)

Mechanical and fluid power

Electronics

Maintenance

Safety and protection

Single-board computing

A broad and deep product offering

We have the product range, superior availability and responsive service capabilities that enable us to offer industrial and MRO products globally. Our electronics range concentrates mainly on the sub-categories associated with industrial requirements.

Unnamed major competitors

RS

1

2

3

4

5

6

7

8

Product categories	Automation and control
	Mechanical and fluid power
	Electronics
	Maintenance
	Safety and protection
	Single-board computing

Full product offer  Part range

Solutions to unlock new opportunities

We have solutions that span our customers' asset lifecycle as they manage their design, procurement, inventory and MRO needs.

Specify				Maintain
		Compare
			Install		Improve
		Procure		Partner		Repair

Research

Service solutions

RS Group plc

Annual Report and Accounts for the year ended 31 March 2024

8