ONE BRAND.

ONE TEAM.

ONE CULTURE

ONE CULTURE..

ANNUAL REPORT AND ACCOUNTS 2023

For the year ended 31 March 2023

rsgroup.com

We provide the product and service solutions

that help our customers design, build, maintain,

repair and operate industrial equipment and

operations, safely and sustainably.

For information about your shareholding visit:

rsgroup.com/investors/shareholder-information

Strategic report

Performance highlights 1

Our purpose, vision and strategy 2

Our business at a glance 3

Chair’s introduction 4

Our stakeholders 6

Our marketplace 10

One RS 12

Business model 13

Chief Executive Officer’s (CEO) introduction 14

Business review 15

Our people 18

Strategy in action 20

Our growth ambitions 26

Key performance indicators 28

Financial review 32

Regional review 37

Risks, viability and going concern 40

Environmental, social and governance (ESG) 48

Non-financial and sustainability

information statement 79

Governance report 82

Governance overview 83

Chair’s letter 84

Our Board of Directors 86

Board leadership and governance framework 88

Board activities during the year 91

Board evaluation 96

Nomination Committee report 100

Audit Committee report 104

Directors’ Remuneration report 112

Directors’ report 133

Statement of Directors’ responsibilities 136

Financial statements

Independent Auditors’ report 137

Group accounts 144

Company accounts 187

Five year record 192

Other information

Shareholder information 193

Glossary of terms 196

In this report

Printed by Park Communications on FSC

certified paper. This document is printed on paper from

sustainable sources. This publication has been manufactured using 100% offshore wind electricity

sourced from UK wind and 99% of any waste associated with this production will be recycled and

the remaining 1% used to generate energy. It is both recyclable and biodegradable. The FSC

label on this product ensures responsible use of the world’s forest resources.

Front cover:

Demonstration of our

calibration service solutions

This page:

Testing the quality of

products in the RS PRO lab

We have included a glossary of terms at the end of this document to help explain our acronyms

2,982

2,554

22/2321/22

372

302

22/2321/22

13.5

12.5

22/2321/22

60.4

48.9

22/2321/22

20.9

18.0

22/2321/22

391

314

22/2321/22

30.8

28.7

22/2321/22

63.6

51.3

22/2321/22

264

163

22/2321/22

Performance highlights

FINANCIAL NON-FINANCIAL

Advancing

sustainability

58%

reduction in Scope 1

and 2 emissions

since 2019/20

2021/22: 50%

92%

of Group electricity is

from renewable

sources

2021/22: 88%

Championing

education and

innovation

1.3m

members, students

and start-ups

engaged through

DesignSpark

28k

lives improved

since 2019/20

through our support

of The Washing

Machine Project (TWMP)

2021/22: 1,260

Empowering

our people

employee

engagement score

2021/22: 75

30%

of our senior

leaders are women

and 11% are

ethnically diverse

2021/22: 32%

Doing business

responsibly

25%

of suppliers by spend

have set science-based

targets (SBTs)

with the Science Based

Targets initiative (SBTi)

2021/22: 19%

50%

of suppliers by spend

have an EcoVadis

membership

to drive ESG

performance

2021/22: 40%

Like-for-like

revenue

growth

10%

Change: (16) pts

Revenue

£2,982m

Change: +17%

Adjusted

profit

before tax

£391m

Like-for-like

change: +17%

Profit before tax

£372m

Change: +23%

Return on capital

employed

30.8%

Change: +2.1 pts

Adjusted

operating

profit margin

13.5%

Change: +1.0 pts

Adjusted

earnings

per share

63.6p

Like-for-like

change: +16%

Earnings per share

60.4p

Change: +24%

Adjusted

free cash flow

£264m

Change: +62%

Dividend per share

20.9p

Change: +16%

ESG RATINGS AND

STANDARDS

Medal rating: Platinum

Climate leadership score: A-

Global top 50 ESG companies

2022 rating: AA

Index score 2022: 3.7/5

1. See Note 3 on pages 151 to 154 for definitions and reconciliations.

Read more on pages 32 to 39

Countries with RS operations

Advancing

sustainability

Championing

education and

innovation

Empowering

our people

Doing business

responsibly

EMEA 59%

Americas 32%

Asia Pacific 9%

Region split

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

3RS Group plc Annual Report and Accounts for the year ended 31 March 2023 3

Our success is underpinned by

our purpose-led strategy which

continues to resonate with

customers and suppliers alike.

Looking back at 2022/23, the performance of RS

has been strong despite the political and economic

uncertainty and global inflationary pressures

following the COVID-19 pandemic. We have

performed well, not only financially, but in all

aspects of making amazing happen for a better

world. Our people continue to be our greatest

asset and I sincerely thank each and every one of

them for their relentless hard work, expertise,

commitment and energy. They are the very core

of our success.

Culture and purpose

Culture is a critical driver which energises and

motivates our people. We believe culture is

fundamental to the success of any leading

organisation and ours is increasingly purpose

driven. This culture is reflected in the value-added

services to our customers, our support for our

suppliers, the collaboration and compassion

shown to colleagues and the work that our people

do to serve our broader communities. It is

embedded in our organisation and its impact is

highlighted throughout this year’s Annual Report

and Accounts. Our Board is confident about the

value it brings and has experienced it first hand

during Board visits to our distribution centres (DCs)

and offices across the globe. On my recent visit to

our newly acquired business in Mexico, Risoul y Cia,

S.A. de C.V. (Risoul), it was fantastic to see how their

culture is closely aligned to RS’s, allowing the two

teams to work well together and integrate quickly

and naturally. More details on the Board’s visits in

the year are provided on page 88 of the

Governance Report.

Our Group’s purpose of making amazing happen

for a better world brings ESG to life, driving value

for all our stakeholders. ESG is embedded into the

business and included as part of our employee

incentive scheme, ensuring how we perform is

linked and measured against our 2030 ESG action

plan – For a Better World. Our positive ESG

performance continues to be recognised

externally, with improved ratings awarded by MSCI,

as well as our entry to the Dow Jones Sustainability

Indices (DJSI) Europe. Pages 48 to 78 provide full

details on the progress made against our four

global goals of the ESG action plan. Further, we

have undertaken an ESG double materiality

assessment (see page 9) which involved engaging

with representatives from each of our stakeholders

for their views on key ESG issues material to our

business, ensuring our strategy and decisions

continue to be relevant and forward looking. This

has helped us to align ever more closely with the

work we are doing under Task Force on

Climate-related Financial Disclosures (TCFD).

Strategy

Our success is underpinned by our purpose-led

strategy which continues to resonate with

customers and suppliers alike. We are creating

further value through improving our customers’

experience by leveraging our data insight and

executional capabilities, enhancing our service

solutions offer and broadening our product range.

This is driven by our strong team of dedicated,

skilled and passionate people.

AN EXCITING

YEAR OF

GROWTH

Rona Fairhead

Chair

Chair’s introduction

RS Group plc4 Annual Report and Accounts for the year ended 31 March 2023

MAKING AMAZING HAPPEN FOR ALL OUR STAKEHOLDERS

Our vision is to become first choice for all our

stakeholders. The Board is excited about the

experience that Simon brings in enabling

businesses to focus on strategic actions, grow

organically and inorganically and leverage a strong

asset base to create value. Please see Simon’s

early thoughts on what differentiates RS and the

opportunities we have, set out in his introduction

on page 14.

Our stakeholders

Our stakeholders lie at the heart of all our

considerations. As a Board and Company, we

engage with all our stakeholders on a meaningful

basis to understand better their needs and

requirements. More importantly, it ensures our

decisions bring long-term sustainable value, thus

helping us achieve our vision of becoming first

choice for all our stakeholders. Set out on

pages 6 to 9, we have detailed our stakeholder

engagement and outcomes for the Group over

the last year.

On a Board level, 2022/23 has been a year of

very active engagement including employee

engagement sessions in Beauvais, France, Fort

Worth, US, and Corby, UK; meeting key suppliers

on our Board visit to the DC in Fort Worth, US;

and engaging with our institutional shareholders

on remuneration and governance matters.

More details on our Board engagement with our

stakeholders during the year is set out on pages

91 to 95. And, of course, we are keenly aware of

the importance of our owners, our shareholders.

In addition to driving forward our value through

executing our strategy, the Board recognises the

importance of our dividend and we are pleased

to continue with our progressive dividend policy.

The increase in the dividend reflects the Board’s

confidence in the future prospects of the Group

and its strong balance sheet.

Board changes

In December 2022, Lindsley Ruth stepped down

as Chief Executive Officer (CEO) after serving over

seven years with the Company. The Board and

I would like to extend our gratitude to Lindsley,

who led the turnaround of an underperforming

business and, working with a wider team, created

a strong vision and purpose as part of the Group

strategy. On behalf of the Board and everyone

at RS Group, I wish Lindsley every future success.

The Board is delighted to welcome Simon Pryce

to the role of CEO, which he began in April 2023.

Simon has been a Non-Executive Director for

RS Group for six years and has been highly

engaged in the development of the Group’s

strategy. Simon brings with him a wealth of CEO

experience in high-performing, purpose-led,

international businesses and a strong track record

of driving results and generating value through

organic and inorganic growth strategies. More

details on Simon’s appointment process are set

out on page 101 of the Governance report.

Although Simon has been CEO for a very brief

period, we are impressed by the speed at which

he has understood the challenges while identifying

the clear growth opportunities.

We would also like to acknowledge David Egan,

who stepped down from the Board on 3 May 2023,

for the instrumental role he played as Chief

Financial Officer (CFO) and, more recently, as

Acting CEO. Since joining RS in 2016, David has

done a fantastic job driving the transformation

of the Company and its performance. On behalf

of the Board, I thank him for his years of service

and wish him the very best for the future.

Jane Titchener, VP Corporate Development, has

taken over the CFO role in the interim until a

permanent replacement CFO is appointed.

We are confident that, under the leadership of

Simon, supported by Jane and our global leaders,

RS will be able to execute and accelerate our

strategy and seize hold of the significant

opportunities we continue to see.

RS has an excellent Board, whom I would like to

thank for their insights, wisdom and good counsel

over the year. We continue to review our Board

membership to ensure we have a diverse range

of relevant expertise and experience. In June 2022,

we welcomed Navneet Kapoor as a Non-Executive

Director to the Board. Navneet brings with him

a wealth of international experience as well as

transformation in digital fields and changes from

product-driven to service-driven businesses. His

input has been invaluable.

Looking forward

Despite the more difficult external

macroenvironment, it is important that we

remain focused on executing our strategy

brilliantly. This cannot be achieved without

the high-performance, purpose-led culture we

have as an organisation which we will continue

to nurture and develop further for the future.

We are positive about the opportunities we see

ahead of us and have the levers to pull if needed

to navigate us through the uncertainties and

continue to drive outperformance. I am confident

that we have the right leadership and people in

place to generate significant value and look

forward to another year of progress.

Culture is a critical

driver which energises

and motivates

our people.”

Customer

For our people

– Prioritised purpose-led culture (pages 18, 19 and 21)

– Improved employee engagement (page 6)

Customer

For our customers

– Launched Better World product range and ESG solutions function to help

customers reach their ESG goals (page 56)

– Supported customers with sustainability solutions (page 16)

– Enhanced Scope 3 emissions reporting (page 55)

For our suppliers

– Held ESG events to share best practice and collaborate (page 57)

– Launched ESG supplier handbook (page 57)

– Raising ESG standards across the supply chain (page 71)

Shareholders

Community

For our communities

– Created a pipeline of talent for industry through Grass Roots, DesignSpark

and OKdo (see page 59)

– Improved lives through TWMP (page 61)

Globe

Shareholders

For our shareholders

– Benefited from ESG double materiality (page 9)

– Sustainability-linked loan facility refinanced and extended to five years

(page 35 and 36)

– Quantitative modelling of climate-related opportunities and risks (page 72 to 74)

Our 2030 ESG action plan

encompasses all of our

stakeholders and ensures

that we are delivering for

each of them sustainably

and responsibly.

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

5RS Group plc Annual Report and Accounts for the year ended 31 March 2023 5

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, ensure we are responsive to their needs and add

value. The views of our stakeholders are fundamental to us becoming

first choice and driving a long-term sustainable business. While most of

our stakeholder engagement takes place on an operational level, our

Board also considers our stakeholders actively and the long-term impact

our decision making has on them when setting and approving strategic

decisions (see pages 91 to 95). We have also conducted an ESG double

materiality assessment (see page 9).

Read our Section 172 statement on page 81

Why they matter The value we bring

Our people are fundamental to the success

of our business and we continue to invest

in our ability to engage, retain and develop

the best talent.

We nurture talent and are building a

high-performance, purpose-led culture

that excites and empowers our people.

It is crucial to understand our customers’

needs in order to create value, solve

problems and unlock opportunities.

We provide product and service

solutions and responsive customer

service enabling our customers to achieve

their goals sustainably.

We work in partnership with our suppliers

to deliver an unrivalled product choice and

innovative solutions for our customers.

We provide global market reach and

customer insight to expand revenue

and develop new products while raising

supply chain standards.

Across our communities worldwide, we

are implementing educational initiatives

to improve lives and inspire the next

generation of engineers.

We support engineers and foster

sustainable innovation to inspire a more

inclusive, diverse and sustainable world.

Our shareholders include institutional

investors and individuals who provide

the capital for our business to grow.

We generate long-term, sustainable

returns with a strong ESG approach.

What matters to our people

– High-performance, purpose-led culture

– Diversity and inclusion

– Wellbeing and mental health

– Training and career development

– Financial planning and education

How we engage

– Encourage employee-led networks and communities

– Regular employee engagement surveys

– Diversity and inclusion training

– Non-Executive Director initiatives and interactions

– Training programmes for all employees

– Health and wellbeing resources

– Access to financial wellbeing tools and regular

pension seminars

What we have achieved

– Upward trend in employee engagement score to 78

– 267 people in our apprenticeship programmes

– Placed in the 2022 Top 50 Inspiring Workplaces in

North America by Inspiring Workplaces

– Additional uplift payments to support cost of living crisis

– Asia Pacific centre of expertise (CoE) won the Outstanding

Employer in 2023 Top Human Resource Management Awards

Customer

OUR PEOPLE

Linked to our ESG goal:

I am grateful that RS has empowered me to develop

my career. RS has supported me in my higher

education while also providing training programmes,

secondments and mentoring opportunities. The

impact of these opportunities has been profound:

I have acquired new skills, broadened my horizons

and played a bigger part in our Group’s success as a

result. I started in the Nuneaton DC and I have been

able to progress to the Innovation team. It is amazing

that there are so many stories like mine in the

organisation, which makes me proud to work for RS.”

Becoming first choice

We are empowering our people with the skills and knowledge that drive our outperformance.

KRIS KATNY

INNOVATION OPERATIONS DIRECTOR

Customer

OUR PEOPLE

Customer

CUSTOMERS

SUPPLIERS

Shareholders

Community

COMMUNITIES

Globe

Shareholders

SHAREHOLDERS

– High-performance, purpose-led

culture

– Grass Roots education programme

supporting future engineers

and innovators

– DesignSpark engineering and

innovation community

– Diverse and extensive physical,

financial and occupational benefits

– Transparent, accountable and

inclusive environment

– Employee networks that create

greater awareness of the

communities in which we operate

– Global listening strategy through

engagement pulse surveys

– Mental health training and Target

Zero accidents programme

– RS YAY! Award sharing our success

– Dynamic and digital learning

pathways for all employees

via My Academy

– Future Shapers talent programme

– Amazing Leaders: peer-to-peer

learning, developing behaviours

and capability for future success

– Targeted leadership programmes

to support female and ethnically-

diverse talent

Empowering

our people

Engage

– Culture

– Grass Roots

– DesignSpark

– Reward and benefits

Retain

– Inclusive environment

– Supporting communities

– Listening to employees

– Health, safety and wellbeing

Develop

– MyAcademy

– Future Shapers

programme

– Amazing Leaders

– Diverse talent

RS Group plcAnnual Report and Accounts for the year ended 31 March 20236

What matters to our customers

– Innovative and sustainable solutions to solve

problems and unlock opportunities

– A seamless omni-channel approach so customers

can concentrate 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

– Omni-channel communication

– Trade fairs, forums and presence at customer sites

– Voice of the Customer survey

– Customer performance reviews

What we have achieved

– Strengthened customer relationships

– Responsive and flexible proposition

– Launched RS Think Hub website to help our engineering

customers find the products they need more easily

– Launched Better World products and ESG solutions

function to help our customers make sustainable choices

– Won Distributor of the Year at the 2022 Excellence Awards

Customer

CUSTOMERS SUPPLIERS

Linked to our ESG goals: Linked to our ESG goals:

Sharing and collaborating with our customers are

fundamental to our success as a go-to partner. At

RS Integrated Supply, we host regular forums with

our key customers to dive deeper into the issues

our customers face today. At our forum in June 2022,

we exchanged our learnings and best practice from

our 2030 ESG action plan and global goals with our

customers. The outcome of the forum resulted in a

deeper understanding of our customers’ needs and

also a roadmap to how we can support our customers

better and become first choice.”

Through our EMEA Supplier Event hosted in February

2023, we engaged with over 400 key suppliers to

emphasise the importance of prioritising ESG and

sustainability action in their direct business and value

chain. This included asks to develop more sustainable

product and service solutions, drive carbon reduction

and set SBTs. By focusing on these areas, our

suppliers will increase their ESG impact, strengthen

their business and generate significant customer

value. We also introduced a new ESG supplier

handbook to help our supplier’s embed strong

ESG principles and drive positive action.”

Becoming first choice

We are delivering a technology-enabled experience with a human touch.

Becoming first choice

We are supporting our suppliers to promote their high-quality range of products.

What matters to our suppliers

– Data-driven product management

– Knowledge of customer needs and trends

– Ease of doing business

– Offering full product ranges, services and

solutions to our customers

– Positive environmental and social impact

and 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 introduction

What we have achieved

– Stronger partnerships with our suppliers

– Developing a programme to source, store and deliver

products closer to the customer

– Increase in stocked offer by c. 7%

– Attendance at electronica conference in Munich, Germany

– Supplier conference hosted in Frankfurt, Germany

DEBBIE BOWRING

PRESIDENT, RS INTEGRATED SUPPLY

ANDREA BARRETT

VICE PRESIDENT OF SOCIAL

RESPONSIBILITY AND SUSTAINABILITY

>1,500

sales, customer

and technical

team members

330k

live chats

per annum

>12m

web visits

per month

2.1m

technical

document

downloads

per month

multiple

high-touch

channels to

serve customers

OUR

OMNI-CHANNEL

OFFER

>2,500

suppliers

>750k

stocked products

Access

Showcasing our

suppliers’ products on

our websites in 28

different languages

Platform

Launched RS Think

Hub, a digital platform

connecting engineers

and suppliers

Innovation

Virtual solutions lab to

showcase our

suppliers’ products

Knowledge

Strong sales force with

technical knowledge

and expertise

Distribution

Providing small

volumes of our

suppliers’ products to

1.1 million

RS customers

For a Better

World

Providing suppliers

with insight to our

customers’

sustainability needs

Doing business

responsibly

Advancing

sustainability

Advancing

sustainability

Doing business

responsibly

Championing education

and innovation

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

7RS Group plc Annual Report and Accounts for the year ended 31 March 2023 7

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 Meetings

– 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

– Progressive dividend policy

– Held 241 meetings with investors

– Improved ESG ratings awarded by MSCI

– Qualified as a constituent of the DJSI Europe

– Won the Institute of Chartered Accountants in England

and Wales (ICAEW) Corporate Development Award 2023

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

– New collaboration with SmartSTEMs to create 1,500

small wind turbines

– Won Educational Support Award at the Elektra Awards 2022

– 30 Divya washing machines built by RS volunteers for

TWMP delivered to a primary school in Uganda

– 150 RS PRO student kits delivered to first-year electronics

engineering students at the University of Sheffield

– 89 women and girls from Girlcode, South Africa

participated in online SuperSkills sessions hosted

by RS in South Africa

Globe

Shareholders

SHAREHOLDERS

Shareholders

Community

COMMUNITIES

Linked to our ESG goals:Linked to our ESG goals:

Engagement at RS is a two-way process. As

a business, we engage proactively with our

shareholders throughout the year. It is important

that their understanding of the business is enhanced

by not only meeting executive management but

having access to the breadth and depth of senior

leaders like myself. During my meetings with our

shareholders, I provided deeper insight into our

business in areas such as our own brand, RS PRO,

and price optimisation tools, in turn it provides

me with invaluable insight to our shareholders’

needs and expectations.”

The FAB15 is an exclusive opportunity offered by

Grass Roots annually to 15 students and young

professionals to gain experience on a global advisory

board of a FTSE 100 UK company. As a member of the

FAB15 cohort in 2021, I can say first hand that it is a

real collaboration between young people and RS

Group. While RS are able to support the FAB15 as

future innovators and engineers with their content

and learning skills, they are also helping RS, by finding

sustainable solutions to some of the organisational

challenges we face.”

Becoming first choice

We are supporting our communities through eight key initiatives

JERRY ABRAHAM

PRESIDENT, RS PRO & PRICING

ELVIS TINAGO

EDUCATION COMMUNITY ENGINEER

Empowering

our people

Empowering

our people

Doing business

responsibly

Championing education

and innovation

Recognising talented young

people in the engineering

world and inspiring

future generations

Higher education

electronics

Providing the products,

resources and opportunities to

higher education

Engineering platform to

connect, share and build

young engineer and

student profiles

REflect

Encouraging greater

numbers of ethnically diverse

youths into engineering

and technology

FAB15

Opportunity for students and

young professionals to gain

experience on global advisory

board for a FTSE 100 company

Superskills

Supporting engineering

students and young people to

help bridge the gap between

university and the workplace

Empowering women

and children by alleviating

the burden of

handwashing clothes

Young innovators

Empowering young innovators

and supporting a variety of

student projects around

the world

Wifi

Leaf

Head

Shareholders

Community

Becoming first choice

We maintain open and regular dialogue with our investors to help their understanding of the business

Advancing

sustainability

Our stakeholders continued

177

Investor firms met

members of senior

management met

with investors

Remuneration policy

engagement

Full year results

roadshow

Engagement on

executive

management

changes

North American

investor roadshow

Engagement on

executive management

changes

Half year results

roadshow

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Jul

Jun

May

April

Number of investor meetings

RS Group plcAnnual Report and Accounts for the year ended 31 March 20238

OUR ESG DOUBLE MATERIALITY ASSESSMENT

Advancing sustainability

Championing education

and innovation

Empowering our people

Doing business

responsibly

Opportunity

Risk

Low - LowLow MediumMedium HighHigh High +High +

Business Impact (inside-out)Financial Impact (outside-in)

Governance, ethics and compliance

Cyber security / information loss

Digitisation and innovation

Our people and creating a purpose-led culture

Diversity, inclusion and equal opportunities

Health, safety and wellbeing

Education and talent pipeline development

Partnerships & collaborations

Community engagement

Macroeconomic environment

Market shifts & changes in customer demands / competitor activity

Climate change and reducing carbon emissions

Resource scarcity and promoting a circular economy

Sustainable and circular products and services and packaging

Customer engagement and experience

Sustainable logistics

Emerging regulations and carbon pricing

Responsible supply chain

ENGAGEMENT IN ACTION

To ensure our 2030 ESG action plan remains

focused on the most material ESG issues facing

our business and stakeholders, in 2022/23 we

completed our first ESG double materiality

exercise to gain a full and current picture of

our ESG impacts, risks and opportunities.

We evaluated 18 topics categorised under each

of our four global ESG goals and measured the

impact that RS can have on the external world

(business impact) and the financial risk and

opportunities that the external world can have

on RS (financial impact).

To obtain the list of key ESG material areas, we

engaged with over 100 stakeholders across our

people, customers, suppliers, communities and

shareholders to help us prioritise key topics.

The exercise was overseen by the ESG Committee

and included input from leadership teams across

the Group.

To measure business impact, we ranked the

Group’s impact outwards on society and the

environment, using the scale of ‘Low -’ to ‘High +’.

For financial impact, each ESG issue was rated as a

risk and opportunity with a rating from either

‘Low -’ to ‘High +’ impact on adjusted operating

profit over five years.

From an environmental perspective, the analysis

shows that offering product and service solutions

that promote a circular economy as well as

sustainable packaging is one of our most material

ESG areas. This is an area where we can make a big

difference by engaging with our suppliers to offer

more sustainable products to customers and by

increasing the recycled content and recyclability of

our packaging (see page 54). From a social

perspective, our people and creating a purpose-

led culture have the most material ESG impact. The

work we are doing across the business to deliver

our purpose-led culture, improve employee

engagement and champion diversity and inclusion

(see pages 62 to 67) are all examples of how we are

delivering against this material ESG area.

Over time, we will evolve our ESG double

materiality approach and align this with the work

we are doing under TCFD to provide further

granularity and a more sophisticated modelling

method for our financial risks and opportunities.

OBTAINING

STAKEHOLDER

INPUT AND INSIGHT

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

9RS Group plc Annual Report and Accounts for the year ended 31 March 2023 9

Compare

Procure

Install

Specify

Research

Protect

Partner

Maintain

Repair

THE MARKETS WE OPERATE IN

We estimate our DTAM of the global MRO and safety and protection market is >£470 billion reflecting

the broad range of product offering. The market typically grows at gross domestic product (GDP).

Our DTAM opportunity

Our marketplace

WELL POSITIONED

FOR SUSTAINABLE GROWTH

We operate in a large and fragmented industrial market with RS being only

one of a few global distributors of MRO products 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.

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

Industrial products Automation and control

Fluid power

Mechanical

Tools

Safety and protection

Electronics products Semiconductors and passives

Electromechanical and interconnect

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.

Source: Texas A&M University and RS Group market research.

Our revenue split by product

and service solutions

Automation and control

39%

Mechanical and fluid power

Electronics

23%

Maintenance

24%

Safety and protection

Single-board computing

Other

Our revenue split by product

and service solutions

Automation and control 39%

Mechanical and fluid power 5%

Electronics 23%

Maintenance 24%

Safety and protection 4%

Single-board computing 1%

Other 4%

– Technical support

– Prototyping services

– Virtual technical solutions

centre

– DesignSpark

– RS Think Hub

– RS eProcurement

– RS Purchasing Manager™

– RS ConnectPoint

– RS Product Plus

– RS Integrated Supply

– RS ScanStock

– RS VendStock

– RS Plus™

– Stores management

– Kitting

– Customised orders

– Calibration

– Lubrication

– Condition monitoring

– Safety solutions

– ESG solutions

– RS Industria

Design Procurement Inventory MRO

<1%

share of DTAM

£2bn

£31bn

£12bn

£292bn

£97bn

£36bn

RS Group plcAnnual Report and Accounts for the year ended 31 March 202310

TRENDS THAT ARE

SHAPING OUR MARKET

The world is evolving constantly and shaping the markets we operate in.

We see five key trends that we must consider when developing our

strategy and proposition. We must continue to be agile to react to the

ever‑changing market demands and future proof our business, while

focused on our long‑term vision.

Our B2B customers are expecting a

personalised, seamless experience

mirroring the B2B online experience.

Our suppliers want a partner that

understands their products and that

they can work with to bring their

products to market successfully.

Our strategic response

– Digitally enabling a more globally aligned

and data-driven solutions offering that

builds on our core strengths, while helping

us move up the value chain with both

customers and suppliers

– Investing in our digital capabilities to

onboard new products and, for our

customers, to purchase products with ease

– Operating as one global unified brand so

that we are easy to explain and understand

– Continue to invest in our supply chain

networks and DC infrastructure to increase

capacity and local sourcing capabilities

Ease of doing

business

Providing

solutions

One‑stop

shop

Consolidation Increased focus

on sustainability

Offering solutions is a key

differentiator for any organisation and

our customers are increasingly

expecting solutions to solve their

immediate problems and predict

problems before they happen.

Our strategic response

– Shifting our global focus towards MRO to

exploit fully our digital channels, increasing

our inventory holding and leveraging our

global presence

– Developing digitally-led solutions offering

– RS Industria

provides continuous insight

into the operational health and sustainability

of industrial assets and equipment

– RS Integrated Supply providing ESG

efficiencies as customers consolidate their

procurement needs

Our customers are seeking to simplify

their supplier base, leverage spend

and realise greater value. Receiving

products and services from one

provider saves time and generates

cost efficiencies.

Our strategic response

– Bringing together our innovation ecosystem

of DesignSpark, OKdo and RS Think Hub,

enabling us to move more quickly with new

innovations and deliver greater value to our

supplier network

– Working to support the convergence of

industrial and electronics applications, with

ESG as an underpin. This has meant that

within our electronics offer we are becoming

more focused on our industrial customers

and their need to solve their problems with

electronics

– Improving and investing in our processes

and applications to accelerate new product

introductions

The market is consolidating at pace

increasing two fold over the last ten

years, driven by globalisation and

digitalisation. This will accelerate scale

and lead to improved efficiencies.

Our strategic response

– Ensuring we maintain a strong balance

sheet to provide the support to drive

consolidation

– Clear and disciplined criteria set to focus on

potential acquisitions which will provide

solution capability expansion, new or

adjacent product range extensions,

geographic opportunities and operational

excellence

– Strengthening our corporate development

and integration teams to support a pipeline

of potential acquisitions and integration

– Acquisitions of two businesses during

2022/23 with a further announced in

April 2023

ESG has fast become a priority for all

our stakeholders and increasingly we

have seen greater focus on more

sustainable products, distribution and

service solutions, responsible supply

chain practices and inclusive culture.

Our strategic response

– Robust 2030 ESG action plan with four

global goals to achieve by 2030

– Established ESG solutions function to

develop a differentiated suite of ESG-related

product and service solutions

– Launched a more sustainable product

range, Better World products, in the UK and

Republic of Ireland

– Supplier ESG conferences to drive action

and solutions for customers

– Participated in a business partnership

programme with Offshore Wind Growth

Partnership

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

1111RS Group plc Annual Report and Accounts for the year ended 31 March 2023

One RS

ONE BRAND. ONE TEAM.

ONE CULTURE.

In 2022/23, we transformed our portfolio of separate

brands to a unified and globally integrated RS brand.

Our one brand approach brings together our

industrial and MRO product and service solutions

offer which is easier to explain, easier to understand

and easier to interact with.

The move ensures that it is as easy as possible for our customers to

access the full range of our product solutions to meet their industrial

needs, including our own brand, RS PRO. Our service solutions help our

customers reduce the costs of their supply chain, provide digital tools

and online communities to support design and development, deliver

their end-to-end safety needs and increase asset utilisation.

Operating under the RS brand, we want RS to be more widely

recognised as an industrial and MRO solutions partner thereby driving

high-value customer spend, both existing and new, and increasing

customer lifetime value.

Product solutions

Our product range spans across five categories as we become first choice for our customers, as they consolidate

their supply chain needs, in order to deliver a more effective go-to-market strategy.

AUTOMATION

& CONTROL

MECHANICAL

& FLUID POWER

ELECTRONICS MAINTENANCE

SAFETY &

PROTECTION

Service solutions

Our expanding range of industrial service solutions ensures our customers can deliver operational effectiveness while

managing their costs and time more efficiently.

Our own-brand product range

Our sustainable product range

Our technology solutions business focused

on SBC, Internet of Things (IoT) and education

OUR BRAND ARCHITECTURE

RS Group plcAnnual Report and Accounts for the year ended 31 March 202312

We aim to be first choice

for all our stakeholders

Being easy to

do business

with

Providing an

extensive

product range

Solving our

customers’

problems

DESIGN PROCUREMENT INVENTORY MAINTENANCE

SAFELY AND SUSTAINABLY

DESIGN BUILD MAINTAIN REPAIR OPERATE

– Digitally led

– Human touch

– Technical expertise

– Fast and responsive service

– Product solutions

– Service solutions

– Drive customer efficiencies

– Streamline processes

– Extensive product offer

– Specialist product ranges

– Small volume purchases

– Long tail of technical

products

We provide the link between

suppliers and industrial customers

who buy many different products

in small volumes for the

maintenance, repair and

operation of their businesses.

Understanding our customers’

needs and providing a wide and

diverse range of product and

service solutions allows our

customers to keep their

businesses running smoothly

and efficiently in the most cost

and time effective way.

Our average order value is £255.

Business model

OUR COMPETITIVE

ADVANTAGE

We provide the product and service solutions that

help our customers design, build, maintain, repair

and operate industrial equipment and operations,

safely and sustainably.

We serve customers differing in size from small one-off purchasers to global

multi-site operators. Our service offer ranges from being digitally led for

transactional customers to a more specialist and solutions-led experience

for larger customers where we can increase our share of customer wallet

and generate more loyal relationships.

How we drive valueHow we do it

What we do

Digital experience

Service solutions

Human touch

Transactional

customers

Value-add

customers

High spend

customers

Value add

transaction

high spend

Value add

high spend

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

13RS Group plc Annual Report and Accounts for the year ended 31 March 2023 13

Chief Executive Officer’s (CEO) introduction

It is a great honour to be appointed CEO of

RS Group and be a part of the RS executive team

as we continue delivering exceptional outcomes

for all our stakeholders.

I have been a long-time admirer of RS and a

shareholder for some time. My involvement with

the Company has been through my position as a

Non-Executive Director since 2016 and also

through the organisations I have worked in over

the past 25 years that have either been direct or

indirect customers of RS.

RS is incredibly well positioned within a large,

fragmented market. We are the link between

suppliers and industrial customers who buy many

different products in small volumes when required

for the maintenance, repair and operation of their

businesses. Crucially, we understand our

customers’ needs and the wide and diverse range

of products and service solutions that keep their

businesses running efficiently and smoothly.

Providing industry and product expertise,

responsive customer service and innovative

solutions to make our customers’ lives easier

underpins our differential offer.

We have an exciting growth strategy which I was

fortunate in my position as a Non-Executive

Director to have helped shape. The performance of

the Group over the last five years demonstrates

the strength of our strategic vision.

The strong progress we have made is down to our

great people who understand our vision and

ambition. I would like to congratulate all the

employees of RS for achieving another year of

outperformance. There is so much in RS that

excites me, but it is the people who are at the core

of our strength.

In the short time since I became CEO, I have visited

many of our offices and DCs across the Group and

met many different teams. I can see that RS is filled

with people with enormous energy, passion and

ideas on how to drive greater market share and

execute better.

My role is to harness these ideas, simplify our

processes so we can execute better and faster

to make our people’s lives easier and generate

profitable and sustainable growth and returns.

My focus is to accelerate our strategy, ensuring

we are aligned as one team to create the

greatest value-creating opportunities for all our

stakeholders. I believe that ESG should be

fundamental in our purpose, strategy and decision

making and I am delighted that RS has a strong

ESG ethos, both in how we work and also how we

help others. RS is positioned uniquely at the centre

of the global industrial value chain, allowing us to

help our suppliers and customers pivot towards

more sustainable product and service solutions.

I see tremendous potential to deliver ongoing

exceptional growth as we execute our strategy.

It is important that we continue to accentuate

our differentiated proposition, focus on improving

our operational capabilities, executing well and

prioritise our actions to deliver exceptional

financial performance. We have only just scratched

the surface of our opportunity and so to be CEO

of RS at this time of the journey is truly exciting.

DRIVING

VALUE-CREATING

GROWTH

Simon Pryce

CEO

RS is incredibly well positioned, providing product and service

solutions within the high‑service end of a large and fragmented

industrial and MRO market.

Annual Report and Accounts for the year ended 31 March 202314 RS Group plc

Business review

RS is full of great people who have delivered strong

profitable growth against a more challenging

economic backdrop working together as a team to

continue making amazing happen for a better

world.

Our journey

We continue to make progress on our journey as

we transition from being a product distributor to a

solutions provider for industrial customers around

the world. The strength of our proposition lies in

the combination of our broad product offer,

high-touch and digital-enabled service and

growing solutions portfolio, all delivered through

the increasingly effective use of data and the

knowledge and commitment of our amazing

people.

During the year, we have transformed our brand

architecture towards the RS brand globally that

can be recognised by our stakeholders anywhere

in the world. Operating as RS we can leverage our

brand strength and marketing assets more widely

to generate stronger supplier relationships and

deliver a better customer service. This will help us

fulfil our vision of becoming first choice for all our

stakeholders.

We are a global business operating under one

brand but are managed at regional and local

market level to ensure we can meet the specific

needs of our customers and suppliers better. This

allows us to understand the unique drivers of each

market so that we adapt our offer to local demands

and utilise local resources as much as possible to

increase efficiency and reduce costs. Our global

business functions, such as technology, people,

marketing and data, provide specialist support and

insight which the regional teams utilise to suit their

specific requirements. This empowers our regions

and local country markets giving them greater

accountability and responsibility.

For a Better World

We have made good progress towards our

2030 ESG action plan – For a Better World. We are

making positive strides towards our 2030 net zero

ambition and have set science-based targets

covering our Scope 1, 2 and 3 emissions, including

a commitment to reduce our direct emissions

by 75% by 2029/30 relative to 2019/20. We have

achieved leading status in a number of global

ESG ratings including being awarded AA rating

from MSCI and being included in the DJSI Europe

for the first time.

The world is at a pivotal point in the fight against

climate change and all businesses need to take

action to decarbonise their wider supply chain.

We are working together with our customers and

suppliers to reach a net zero value chain by 2050.

This involves us optimising our facilities and supply

chain, as we use our regional model to increase

the amount of inventory held locally, so reducing

freight miles.

This is also an exciting business opportunity for RS

as we help our suppliers develop new products

that use lower impact materials, offer our

customers solutions to reduce energy

consumption and decarbonise their facilities, and

offer a more sustainable product range, our Better

World products, that help customers tackle their

sustainability challenges (see page 56).

Reviewing 2022/23

We generated 17% revenue growth during the

year and our operating profit grew by 24%.

We have delivered very strong growth in our

industrial product ranges in all three regions, due

to a strong proposition and market share gains,

but experienced volume declines in our electronics

product range, reflecting the softer market and

strong performance of last year.

PERFORMANCE

UNDERPINNED

BY PURPOSE

RS at the 2022

electronica

conference in

Munich, Germany

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

RS Group plc 1515Annual Report and Accounts for the year ended 31 March 2023

Business review continued

We are working hard to support our customers

better – the designers, operators and maintainers

of industrial equipment and operations. Our

average order value has increased 21% to £255

(excluding RS Integrated Supply’s pass-through

sales orders), over and above inflation, as we have

focused our sales and marketing efforts on our

higher spending customers and promoted our

digital self-service to lower-spending transactional

customers. Our on time to promise metric

improved by 5 percentage points to 91%. We have

a lot of data, insight and knowledge of our

customers and their needs, and can see significant

upside from providing a more customised and

personalised offer as we develop our customer

segmentation and service model and deploy our

sales forces more appropriately.

We provide an important service to our suppliers

given our customer reach, technical knowledge

and execution capabilities. Our customers

generally require small volumes of many products

for their MRO needs and we provide the expert

knowledge for them to understand if these

products are compatible with their current

operations. Our suppliers do not tend to have the

distribution capabilities, or desire, to service or

deliver directly to these customers in such small

volumes. RS plays a very important role connecting

over 2,500 suppliers and 1.1 million customers.

Developing our offer

We are continuing to widen our product offer to

provide more specialist ranges, allowing us to

strengthen our supplier relationships further as we

help market, sell and distribute their existing and

new products. Such an example has been in safety

product and service solutions in EMEA where we

now offer a much more extensive, comprehensive

and specialist range after our acquisitions in

2020/21 of Needlers and Liscombe.

We have seen strong growth in our own brand,

RS PRO, which has benefited from enhanced brand

recognition and more targeted marketing

campaigns, such as an energy efficiency

promotion earlier this year. RS PRO also offers a

quality-assured alternative to the branded ranges,

providing customers with a lower priced option.

During the year, we invested in a state-of-the-art

RS PRO lab at our DC in Corby, UK, which allows our

team of engineers to test, monitor and measure

new products better.

We continue to grow our portfolio of product and

service solutions that increase the value add we

provide to our customers, driving greater loyalty,

recurring revenue and product pull through.

During the year, we expanded our service

solutions offer in Americas and Asia Pacific and

have enhanced our offer in EMEA, especially within

the maintenance areas where we have delivered

strong growth within calibration, predictive

maintenance and energy optimisation.

RS Integrated Supply, which provides outsourced

procurement and storeroom solutions to large

organisations, has seen a significant increase in

new contracts signed. We believe our global offer is

industry leading and are excited by our proposition

given the number of existing customers who are

expanding the number of sites we service for

them.

We are monitoring our offer versus the market and

competitors to ensure we are providing value to

our customers while optimising our gross margin.

During the year, we benefited from the combined

effect of price inflation and a lagging effect in our

cost of sales due to our low inventory turn and

greater utilisation of our price optimisation tools to

calculate the best pricing and discounts.

Continuing to invest in the future

Cost pressures have continued to be a headwind

during the year, especially for labour, technology,

freight and energy. Additionally, we have invested

in our operating model to strengthen our

proposition. This has focused on areas such as

branding, digital, technology and systems and

areas relating to our strategy.

As an organisation, we believe we are connected

closely to our people and are aware of the more

difficult economic backdrop and cost of living crisis

they have experienced. We have therefore taken

steps to support our employees during the year

with an ad hoc payment in November 2022.

A further ad hoc payment was approved in March

2023 and paid in April to all eligible employees,

At RS, we are committed to offering our customers

solutions which help them to achieve their sustainability

ambitions. This supports our ambition to be first choice

for customers and acts as a key differentiator for our

brand.

RS Industria

has partnered with Brompton Bicycles,

manufacturers of folding bicycles, to help them improve

their manufacturing efficiencies, increase reliability and

reduce electricity consumption.

After expanding their bicycle manufacturing plant into

neighbouring industrial units, Brompton Bicycles

encountered a challenge with maintaining visibility over

electricity consumption, given that the separate industrial

units use different electricity accounts, meters and

networks.

RS Industria

is a solution that digitally connects a wide

range of industrial equipment, providing a continuous

stream of operating insights which enables engineers

and operational managers to significantly improve

reliability, operating efficiencies and sustainability in a way

that is simple, fast and affordable. By digitally connecting

each location’s industrial equipment, RS Industria

created a single picture of electricity consumption,

enabling Brompton Bicycles to optimise their electricity

purchasing and save an expected £60,000 each year,

which equates to 80,000 kWh of annual energy savings

which is c. 17 tonnes of CO

e emissions.

Additionally, due to the modular nature of RS Industria

Brompton Bicycles are able to roll out other applications

of the solution quickly and cost effectively, creating a

more sustainable and agile business, better able to

respond to future events, whatever unfolds.

For more information on ESG solutions we

are offering our customers, see page 56.

KEEPING THE WHEELS

TURNING

ESG IN ACTION

RS Group plcAnnual Report and Accounts for the year ended 31 March 202316

problems and partnering more closely with our

suppliers to provide efficient and sustainable

solutions. We want to work with all our

stakeholders on our journey to realising our vision.

Working to a set of shared values

Our people bring our ambition and aspiration to

life, which is why having a high-performance,

purpose-led culture remains our highest priority.

To cultivate this culture we need to provide a clear

set of values and behaviours, and the training and

development support to achieve this. We have

been strengthening our leadership structure and

have a clear focus on executing our Amazing

Leaders framework while increasing diversity and

inclusion. All of this will ensure that we have the

very best people working together to deliver

results that delight all our stakeholders.

Operational efficiency

We want to do the basics brilliantly, thereby putting

in place strong foundations for us to operate more

efficiently. Key to this is executional excellence and

simplifying our business model. By operating more

efficiently, we become more effective which enables

our customers and suppliers to trust us to act as

partners to help solve their problems, allowing us

to engage in value-creating activities. Innovation is

crucial to support us in being more efficient.

Developing our differentiated proposition

We see significant opportunity to increase our

market share through differentiating our

proposition further through our product and

service solutions offer and enhancing our

customer experience. Ultimately, we want our

customers to come to RS as their first choice for

their industrial and MRO needs.

Ease of doing business

We provide a digital offer with human touch; a

combination that is crucial in delivering the best

customer service. Our customers want us to

provide the knowledge and insight but also the

ease of doing business. Being able to provide our

customers with a service that reduces the time and

increases the efficiency of their MRO procurement

will improve the overall customer experience and

differentiate us from our competitors, so

on acquiring high-quality, high-synergy businesses

and, more critically, businesses with a strong

cultural fit. We announced, post the year end on

27 April 2023, that we have reached agreement to

acquire Distrelec B.V. for €365 million which will

significantly expand our presence in continental

Europe, bring strong synergy potential and

accelerate our value creation further.

Our strong M&A track record was externally

recognised by the ICAEW as we were awarded the

2023 Corporate Development Award for increasing

our shareholder value through our strategic

market acquisitions.

Aligning our people with our strategy

Our performance has been driven by our people

and we recognise the importance of investing in

them to incentivise and reward the value they

bring to all our stakeholders. It has been an

ambition of the Group that all our people share in

the long-term success of the Company, which is

why we launched the RS YAY! Award during the

year, awarding up to 100 performance shares to

every eligible employee. More details on the

RS YAY! Award is set out on page 122.

How we drive our vision

At RS, our vision is to become first choice for all our

stakeholders: our people, customers, suppliers,

communities and shareholders. This includes

finding the best answers to solve our customers’

expanding our share of customers’ wallets and

increasing their loyalty.

Solving our customers’ problems

We aspire to be more than just a product or price

to a customer. We want to provide product and

service solutions that meet the needs of designers,

operators and maintainers of industrial equipment

and operations as they manage their design,

procurement, inventory and maintenance needs.

Our ability to solve challenges for our customers

by combining our products, services and digital

solutions together is a key differentiator.

Extensive product offer

We continue to introduce new products across our

wide product portfolio, helped by our strong

supplier relationships, our digital capabilities and

greater DC capacity. Our own brand, RS PRO, is a

huge lever for growth and profitability and a great

value alternative for our customers.

Looking forward

We operate in a large and fragmented market and

have great people with the capabilities to turn our

opportunities into realities, customers with whom

we can grow our share of wallet and suppliers with

whom we work in partnership. We have a solid

strategy that we are executing where ESG is both

core and represents a potentially significant

business opportunity. We continue to strengthen

our proposition through widening our product

range including our own brand and sustainable

product ranges, expanding innovative and

sustainable solutions and developing our digital,

technical and service capabilities to improve our

customer experience. We are financially strong,

providing us with the opportunity to accelerate our

growth ambitions organically and inorganically.

Despite the challenging external environment, the

breadth of opportunity for both improvement and

growth is exciting. We will continue to invest to

drive future market share gains while managing

our cost base appropriately as we target

value-creating sustainable growth. We are

confident of the Group’s strategy and future

prospects and look forward to taking this business

forward at pace.

excluding our senior leaders, to help them deal

with the impact of exceptional personal cost

inflation.

Creating value through acquisitions

We have accelerated our growth inorganically in

the year with the addition of domnick hunter-RL

(Thailand) Co., Ltd. (DH) in Thailand and Risoul in

Mexico. Both acquisitions have expanded our

service solutions capabilities, our product range

and deepened our geographic coverage. In

addition, Risoul will benefit from the global trend of

near shoring, especially within North America, and

so is experiencing a strong market backdrop and is

performing slightly ahead of our initial

expectations. Integration of both businesses is

going well and we are excited about the

opportunities to develop their service solutions

capabilities and to introduce our own-brand range.

We expect to generate significant shareholder

value through expansion of their product range

and services, developing their digital offer and

leveraging our execution expertise. Read more

about our acquisitions on page 27.

Our acquisition pipeline remains strong. We have a

disciplined approach to mergers and acquisitions,

focusing on four areas: (i) our solution capabilities;

(ii) product range; (iii) geographic reach and (iv)

operational and cost efficiencies through

consolidation opportunities. We continue to focus

We have accelerated our organic

growth through acquisitions in

Thailand and Mexico.”

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

17RS Group plc Annual Report and Accounts for the year ended 31 March 2023 17

Our people

BRINGING

YOUR

TRUE SELF

TO WORK

Our high-performance, purpose-led culture excites

and empowers our people.

Diversity and inclusion (D&I) is important for all our people and

our future, so creating a more representative and inclusive

environment is an essential part of our strategy. We are on a

journey to build the diverse representation, inclusion and culture

to attract, energise and empower amazing talent. Listening to

and learning from each other, our employee resource groups and

amazing external speakers has been a real focus this year,

alongside training to build greater trust and cultural intelligence.

The data and insights we have gleaned will help us supercharge

our D&I and culture plans to take us to the next level.

countries with RS operations

>8,700

employees

We are creating a safe, inclusive

and dynamic culture where our

people can thrive and grow.

Annual Report and Accounts for the year ended 31 March 202318 RS Group plc

CULTURE IN ACTION

We are committed to using our

skills to be a force for good not only

for our business, but for the

communities around us. At RS in

Fort Worth, US, we hosted a Giving

Fair to help raise awareness on

non-profit organisations in the

local area. The increased exposure

led to amazing volunteering and

partnering experiences from our

people, including food bank

donations and home restoration

projects for families in need.

Inspired by RS Elevate, a group

dedicated to connecting women

across the RS Group, our newly

acquired business in Mexico

established their own community of

women in leadership. Risoul put in

place a community to help promote

and celebrate the success of women

in business, helping to create a more

inclusive and dynamic environment

for our people to grow.

MEXICO

As a business, our purpose is about

making amazing happen for a

better world. Seven simple words

that describe why we do everything

we do today – and everything we

want to do in the future. To help

connect our Corby community to

our business purpose and help

them understand their role in

delivering our strategy, we

organised a Do it with Purpose day

so our people could share their

purpose and how they are

contributing to making amazing

happen for a better world.

The health, safety and wellbeing of

our people is fundamental to a

high-performing culture. At RS in

South Africa, we celebrated Wellness

Day, honouring healthy living and life

choices by giving our people access

to a range of services throughout the

day from full medical onsite

check-ups, to Investlife for financial

wellbeing, and even some

self-defence classes.

SOUTH AFRICA

Celebrating the heritage of our

people is important to us. It is a

person’s unique, inherited sense of

identity: the values, traditions and

culture handed down by previous

generations that shapes who we

are today. To celebrate Heritage

Week, RS employees in Sydney,

Australia, shared their traditions

and values from a diverse range of

cultures through clothing, dance,

music and food.

Creating an open and trusting

environment empowers our people

to bring their true self to work. At

our CoE in Foshan, China we

opened our doors to our people

and their families to get together

with activities and food. The event

also gave more insight and

understanding about our

workplace, culture and

environment.

At RS, celebrating our success is a

key component to the high-

performance, purpose-led culture.

In Frankfurt, Germany, we brought

together over 450 employees,

families and friends to celebrate

and recognise the hard work of our

people through the challenges of

the COVID-19 pandemic, the

commissioning of the DC and the

30th anniversary of RS in Germany.

CHINAGERMANY

AUSTRALIA

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

19RS Group plc Annual Report and Accounts for the year ended 31 March 2023 19

OUR STRATEGY FOR

VALUE CREATION

Strategy in action

Our strategy has been set in order to achieve

our vision and purpose of delighting all our

stakeholders enough to become their go-to

partner; their first choice. We have set out four

key actions that we believe will ensure we build

the right capabilities and infrastructure to grow

and scale our business more efficiently towards

achieving our strategic vision. Fundamental

to the strength of our progress against these

actions is having a purpose-led culture as

we deliver sustainable value creation.

We believe we can drive stronger revenue and value-creating profitable

growth. To do this, we need and want to be great. We want to improve our

competitive strengths further by benchmarking our business against the

highest global standards. This is our Journey to Greatness (J2G), our increased

ambition to focus on doing the right things that will make the biggest

difference, working together as one team to make them happen at pace.

Our strategy is measured and rewarded against a scorecard which groups

our target metrics into three key areas of focus: cultural transformation;

operational efficiency; and growth accelerators. To reward the delivery of our

ambition, in June 2022 we introduced the J2G Long Term Incentive Plan (LTIP)

Award based on the achievement of exceptionally stretching adjusted EPS

growth targets, quantifiable key long-term performance indicators linked

to the strategic scorecard and a ROCE underpin. More details on the J2G

LTIP Award is set out on page 126 of the Directors’ Remuneration report.

OUR STRATEGY IS BASED ON FOUR KEY ACTIONS TO DELIVER OUR VISION

Scale

Increase scale

in global industrial

and MRO markets

Scale

Operational excellence

Deliver

operational

excellence with

great people

Operational excellence

Expand

product and

service solutions

Expand

Customer experience

Improve

digitalisation and

customer experience

on pages 26 – 27

on page 22

on page 25

on pages 23 – 24

Reinvestment

to accelerate

growth

Innovation

Best customer

and supplier

experience

High-

performance

team

Operational

excellence

Our vision:

First choice

Advancing sustainability

Championing education

and innovation

Doing business responsiblyEmpowering our people

RS Group plcAnnual Report and Accounts for the year ended 31 March 202320

In June 2023, RS in Fort Worth, US,

ranked 33 on the list of inspiring

workplaces in North America by

The Inspiring Workplaces Group.

RS received special recognition for

our inclusive practices, which were

demonstrated in part by attracting

and retaining more LGBTQ+

employees in the year.

Read more about

ESG goal: Empowering

our people on page 62

EMPOWERING OUR

PEOPLE IN ACTION

7,385

active users of MyAcademy, our

global digital learning platform

employees taking part in

FutureShapers programme in 2022/23

PURPOSE-LED

CULTURE

Our people are our greatest assets. The more we understand

ourselves and each other, the better we can perform.

To develop a high-performance, purpose-led culture, our people need clear expectations and

connection to our purpose and strategy, the capabilities to execute and the motivation to deliver.

Underpinning this are our inspiring leaders who provide the direction, coaching and support,

as well as creating a safe and inclusive environment, where our people can perform at their best.

This year, 87% of our desk-based global workforce completed inclusion training to help us

understand our different teams, cultures and perspectives better. We successfully piloted

a new programme, Remarkable Women, to enable female leaders to transform their mindset

encouraging bold and daring action. Our most senior leaders have been through an in-depth

process to gain personal leadership insight, to inform their development journey and future

investment in leadership.

RS Group plc 21Annual Report and Accounts for the year ended 31 March 2023

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Designed to help our engineering

customers buy products they need,

quickly and easily, the RS Think Hub

digital platform features product

comparison tools to filter products

by material, brand or other

product-specific attributes. Its major

feature allows customers to quickly

compare products from multiple

companies, rather than supplier-

specific brands – giving quick, easy

sight of specification differences

allowing our customers to choose

the best solution for them.

IMPROVING CUSTOMER

EXPERIENCE IN ACTION

Strategy in action continued

63%

of revenue through digital channels

c. 4%

of Group revenue spent on digital

IMPROVE

DIGITALISATION

AND CUSTOMER

EXPERIENCE

A technology-enabled experience powered

by a human touch and specialist knowledge.

Our digital-led offer means that we are easy to do business with. Our fast and responsive model

aims to deliver a seamless end-to-end customer experience through digital channels, human

touch or a combination of both with specialist support and product knowledge. In combination

with our solutions offer we are working towards delivering a frictionless, seamless and intuitive

flow through our digital and offline channels. We are focusing on providing a more personalised

and bespoke customer service for higher-value customers as we optimise our cost to serve.

RS Group plc22 Annual Report and Accounts for the year ended 31 March 2023

>750k

stocked products

>80k

RS PRO products

EXPAND OUR

BROAD

PRODUCT OFFER...

A broad and deep range of industrial and

MRO products to meet our customers’ needs.

We offer a broad and deep product range including many specialist and technical items.

Our strong and extensive supplier relationships ensure wide product choice, availability and

substitute options. Our range expansion plans continue to form a core part of our growth

strategy. We are building out our product offer using data and insight as we become a product

category specialist. In doing so, we are meeting the needs of our industrial customer base while

ensuring we have the availability to be the single source provider of choice. Our own brand,

RS PRO, is a key differentiator for us, offering customers high quality, competitively priced products.

We have introduced our Better

World product range, which delivers

improvements in sustainability for

our customers. These improvements

are supported by clear and

credible third-party sustainability

certifications, supporting our

customers’ requirements for trust

and transparency.

Read more about

ESG goal: Advancing

sustainability on page 50

ADVANCING SUSTAINABILITY

IN ACTION

RS Group plc 23Annual Report and Accounts for the year ended 31 March 2023

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

25%

of revenue from service solutions

>22

types of service solutions

Strategy in action continued

...AND OUR

SERVICE

SOLUTIONS OFFER

A portfolio of solutions to solve our customers’ problems and

create value.

We provide product and service solutions to make our customers’ lives easier. We are solving

our customers’ problems across the design, build and maintain lifecycle which drives closer

and stronger relationships, recurring revenue and greater customer lifetime value.

We are developing our service solutions offer within the areas of:

– Design: which support design engineers to develop product applications and pre-build prototypes.

– Inventory: that help our customers improve product availability, reduce waste

and inventory-carrying costs.

– Procurement: that improve visibility for our customers and reduce purchase-to-pay costs.

– Maintenance: that ensure customers optimise their asset reliability, reduce downtime and

energy costs and ensure compliance.

Keeping an eye on water consumption

is a time consuming task, but a

necessary and crucial one to

maintain environmental compliance.

For one customer, RS Industria

helped design a plant monitoring

system to help observe, detect and

alert the customer on their water

limit consumption, helping them

save 100,000 litres per day of water.

Read more about

ESG goal: Advancing

sustainability on page 50

ADVANCING SUSTAINABILITY

IN ACTION

RS Group plcAnnual Report and Accounts for the year ended 31 March 202324

Our supply chain optimisation

programme included expanding our

DC in Bad Hersfeld, Germany to store

and ship products more locally to

our customers. We are also using

lower-carbon modes of transport

and have reduced the intensity of our

product transport emissions by 28%

since our baseline year of 2019/20.

Read more about

ESG goal: Advancing

sustainability on page 50

ADVANCING SUSTAINABILITY

IN ACTION

CoEs

>770

CoE employees

DELIVER

OPERATIONAL

EXCELLENCE

We are developing our operating model to be

sustainable and scalable to support our growth.

We have many initiatives focused on delivering operational excellence.

Following the commissioning of our DC expansion in Bad Hersfeld, Germany, in 2021/22,

our focus during the year has been on improving efficiencies and scaling operations.

In Asia Pacific, we have approved investment to upgrade our network of DCs in the region

to reduce our costs to serve and improve customer service levels.

We continue to utilise our Global Shared Business Services (GSBS) based in our four CoEs

which now serve more than 25 countries in 30 languages. Through our CoEs we are minimising

transactional costs by standardising and streamlining our end-to-end processes with robotic

process automation and other system solutions.

Our continuous improvement approach and engaged workforce have helped us deliver efficiency

cost and time savings in the year. We are increasing the use of automation and data analytics to

provide best-in-class service to our customers.

RS Group plc 25Annual Report and Accounts for the year ended 31 March 2023

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

ESG IN ACTION

ESG considerations are an implicit

part of our evaluation when assessing

our M&A targets. ESG indicators are

quantified and evaluated as part of

the economic case for an acquisition

and factored into our modelling

assumptions, aligned with our strategic

ambitions. The development of robust

ESG reporting systems and clear action

plans and initiatives are prioritised, as

part of integrating the business into RS.

We want our acquisitions to participate

fully in our 2030 ESG action plan.

Read more on the next page

Our growth ambitions

We see opportunities to continue to take market share across

all our operating areas. Our market outperformance results from

selling more product and service solutions to existing and new

customers, growing our branded and own-brand product range

and leveraging our digital and data capabilities to improve our

customer service and experience. All of this should increase our

share of customer wallet and attract new customers.

We are accelerating organic growth by adding high-quality,

strategic acquisitions that will develop our:

Product and

service solutions

Product extensions

and adjacencies

Geographic

opportunities

Operational

efficiencies

OUR

GROWTH

AMBITIONS

RS Group plcAnnual Report and Accounts for the year ended 31 March 202326

Our growth strategy is driven primarily by organic opportunities,

with acquisitions accelerating our growth ambitions and

generating greater sustainable value for all our stakeholders.

domnick hunter (DH)

In June 2022, we acquired DH in

Thailand, a leading distributor and

service provider of major air

compression, purification and

filtration products, with onsite

service expertise. We are excited

about adding DH to the RS Group as

it accelerates significantly the

development of our service

solutions offer in Asia Pacific and

provides opportunities to cross-sell

our product offer to DH’s customers.

Risoul

We welcomed Risoul to the RS

Group in January 2023. Risoul is a

leading distributor of industrial

automation product and service

solutions and the largest

authorised Rockwell Automation

distributor in Mexico. Risoul

provides significant growth

opportunities to the RS Group by

expanding our position and

execution expertise in Mexico and

driving cross-selling synergies

across our product and service

solutions offer.

ACCELERATING

VALUE CREATION

Attractive market opportunity | Value creation potential | Availability

Cultural and strategic alignment | ESG considerations and opportunities

Our disciplined investment criteria:

BUILD BUY

* Subject to customary closing conditions, including German, Austrian and Italian regulatory clearances.

We are accelerating organic growth by

adding high-quality, strategic acquisitions.”

ACQUISITIONS IN ACTION

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

RS Group plc Annual Report and Accounts for the year ended 31 March 2023 27

FINANCIAL

KPIs

Key performance indicators

Our six financial key performance indicators

(KPIs) help us to deliver the successful

implementation of our strategy and monitor

and drive our performance.

Strategic actions

Improve digitalisation and customer experience

Expand product and service solutions

Deliver operational excellence

Increase scale in global industrial and MRO markets

Like-for-like

revenue growth

10%

Adjusted

operating

profit conversion

29.7%

Adjusted

operating

profit margin

13.5%

Adjusted

earnings per share

(EPS)

63.6p

22/2321/2220/2119/2018/19

29.7

28.4

22.0

25.8

26.3

22/2321/2220/2119/2018/19

13.5

12.5

9.4

11.3

11.7

22/2321/2220/2119/2018/19

63.6

51.3

31.3

37.7

37.0

22/2321/2220/2119/2018/19

By driving a differentiated customer

experience and providing innovative

solutions, we aim to drive market

share gains and higher revenue

growth, which in turn drives profit

growth. Like-for-like revenue growth

is adjusted for trading days, currency

movements and to exclude the

impact of acquisitions until they have

been owned for a year.

We are constantly striving to make

our operating model as lean and

efficient as possible so we can

convert a higher percentage of gross

profit into adjusted operating profit.

Our aim is that each region, each

market and each individual takes

responsibility for our performance

and constantly questions whether

we can do things more efficiently

to drive greater returns.

A great customer experience,

high-performance team and

operational excellence should all

drive improvement in adjusted

operating profit margin. A higher

adjusted operating profit margin

should drive higher returns for our

shareholders. It is adjusted operating

profit expressed as a percentage of

revenue.

Adjusted EPS is a measure used by

investors in deciding whether to

invest in the Company. It is a

measure of the growth and

profitability of the Company that also

reflects management performance.

Link to strategic actions

Link to remuneration

Performance measure

in annual bonus

Link to remuneration

Performance measure in

long term incentive plan

1. 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 3 on pages 151 to 154

for reconciliations).

RS Group plcAnnual Report and Accounts for the year ended 31 March 202328

£2bn

of cash collection managed

89%

of Group indirect

spend managed

ACCELERATE

STRATEGIC

ACTIONS

GSBS is a network of teams located across our regions

based in four CoEs providing efficient and high-value

competency and expertise for the Group. With a global

reach and presence, we can leverage fully our regional

expertise, network synergies and talent.

GSBS offers a suite of cross-function services across

finance, customer services, payroll and indirect

procurement. In 2022/23, GSBS managed a large number

of transactions for the Group including the collection of

c. £2 billion cash from customers, processed one million

supplier invoices and three million customer orders, and

managed c. £300 million of indirect spend.

During the year, GSBS has optimised its operating model

to support the Group’s strategic actions. Utilising its

global presence, a Follow the Sun model was deployed to

drive real-time transactional data processing to enhance

not only customer experience but also our cash

collection. Similarly, the model allowed us to enhance our

supplier payment on-time performance from 83% to 86%.

Through increased automation and improved

digitalisation, GSBS are creating efficiencies and cost

savings for the Group. By delivering a 4% automation

increase in receivable management, we saw our

automated cash allocation rate on transactions improve

from 78% to 82% in the year. The digitalisation of invoices

for our customers in EMEA has helped generate

£0.6 million of cost savings as well as contribute to our

ESG efforts.

In the year, GSBS implemented a virtual European

language hub in Poland covering 11 languages to

enhance our service capabilities by breaking down

language barriers and enhancing cultural affinities

with our customers and suppliers in continental Europe.

Return on capital employed

(ROCE)

30.8%

Adjusted

operating cash flow

conversion

92%

30.8

28.7

19.4

24.0

29.5

22/2321/2220/2119/2018/19

70.8

100.3

62.1

64.2

22/2321/2220/2119/2018/19

ROCE is a measure used by investors

in deciding whether to invest in the

Company. A tight focus on working

capital control and more disciplined

capital investment, coupled with

increased profitability, will drive

improved returns for our

shareholders. ROCE is measured

as adjusted operating profit

expressed as a percentage of the

monthly average of net assets

excluding net debt and retirement

benefit obligations.

By tight working capital management

and disciplined capital investment,

we aim to convert a high percentage

of our operating profit into operating

cash flow. Adjusted operating cash

flow conversion is defined as

adjusted free cash flow before

income tax and net interest paid, as

a percentage of adjusted operating

profit. The higher the conversion

the more cash we have available

to invest in our business to drive

future growth and returns for

our shareholders.

Link to strategic actions

Link to remuneration

Underpin in long term incentive plan

STRATEGY IN ACTION

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

RS Group plc 29Annual Report and Accounts for the year ended 31 March 2023

NON-FINANCIAL

KPIs

Key performance indicators continued

We have eight non-financial KPIs to help

measure progress against our strategy.

Strategic actions

Improve digitalisation and customer experience

Expand product and service solutions

Deliver operational excellence

Increase scale in global industrial and MRO markets

ENVIRONMENT

Carbon intensity

(tonnes of CO

e due to Scope 1 and 2

emissions / £m revenue)

1.7

Carbon emissions

(tonnes of CO

e due to

Scope 1 and 2 emissions)

5,000

Packaging intensity

(tonnes / £m revenue)

1.63

Waste

(% of waste recycled)

76%

1.7

2.4

3.7

6.1

6.5

22/2321/2220/2119/2018/19

5,000

6,300

7,500

12,000

12,400

22/2321/2220/2119/2018/19

1.63

2.01

2.31

2.38

2.48

22/2321/2220/2119/2018/19

76%

75%

76%

79%

75%

22/2321/2220/2119/2018/19

We recognise the role and

responsibilities we have as a

global business to address our

environmental impacts and help

tackle climate change. We are

decoupling our business growth

from our carbon footprint and thus

our carbon intensity continues to

decline. We are extending our use

of renewable electricity while

accelerating a focus on energy

efficiency programmes.

We target our absolute carbon

reduction in line with our net zero

action plan. This is a measure in our

sustainability-linked loan (see page

36 for more details).

Our aim is to provide the best

customer experience in the most

sustainable way. We work across our

network of DCs to reduce packaging,

while increasing recycled content

and recyclability. This is a measure in

our sustainability-linked loan (see

page 36 for more details).

Ensuring we are able to grow and

scale the business in a sustainable

way is key. This metric includes not

only what we recycle but also what

we reuse. We implement waste

reduction initiatives internally and

by working with our suppliers.

Link to strategic actions

Link to remuneration

Performance measure

in annual bonus

1. 2021/22 % of total waste recycled updated following supplier data corrections.

RS Group plcAnnual Report and Accounts for the year ended 31 March 202330

CUSTOMER PEOPLE HEALTH AND SAFETY

Group rolling 12-month Net

Promoter Score (NPS)

49.6

Employee

engagement

Percentage of management

that are women

30%

All accidents

(per 200,000 hours)

0.40

49.6

50.6

54.4

55.7

54.0

22/2321/2220/2119/2018/19

30%

32%

30%

32%

26%

22/2321/2220/2119/2018/19

0.40

0.53

0.44

0.69

0.88

22/2321/2220/2119/2018/19

There is a strong correlation between

high customer loyalty scores and

our financial performance. NPS is

a customer satisfaction measure.

Achieving consistently strong

customer satisfaction ratings is a key

priority and will help drive stronger

financial performance.

We have updated our NPS

methodology from 1 April 2022 to

make it more representative of our

customer base. The changes made

are to weight NPS by percentage of

orders; separate out B2B from B2C

customers, with B2B becoming our

primary metric; and customers that

opted out of marketing can be

included in the survey. Prior years

have not been restated.

The fulfilment of our people in the

workplace is a key priority. Our aim

is to increase employee engagement

by building a diverse and customer-

centric culture and offering the

right training and development

opportunities. Having more engaged

employees reduces staff turnover,

improves productivity and helps us

serve our customers better.

Empowering our people to bring

their true self to work creates a

culture of excellence where everyone

can thrive. Gender diversity in

leadership is a key action of our 2030

ESG action plan. This is a measure in

our sustainability-linked loan (see

page 36 for more details).

We continue to make progress

towards the long-term target of

zero accidents on the basis that all

accidents are preventable. A safe

working environment is critical for

the wellbeing of our employees and

the success of our business.

Link to strategic actions

Link to remuneration

Performance measure

in annual bonus

Link to remuneration

Performance measure in

long term incentive plan

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

RS Group plc Annual Report and Accounts for the year ended 31 March 2023 31

STRONG FINANCIAL

PERFORMANCE

Financial review

We have delivered excellent financial performance helped

by our strong inventory availability and ongoing

commitment of all our amazing people.”

Revenue

£2,982m

Change: +17% 2021/22: £2,554m

Operating profit

£383m

Change: +24% 2021/22: £309m

Like-for-like

revenue growth

10%

2021/22: 26%

Adjusted

operating profit

£402m

Like-for-like

change: +18%

2021/22: £320m

Net debt

£113m

2021/22: £42m

Adjusted

operating profit margin

13.5%

2021/22: 12.5%

Overall results

2023 2022 Change

Like-for-like

change

Revenue £2,982.3m £2,553.7m 17% 10%

Gross margin 45.3% 44.2% 1.1 pts 1.8 pts

Operating profit £383.0m £308.8m 24% 17%

Adjusted

operating profit £402.2m £320.4m 26% 18%

Adjusted

operating profit margin 13.5% 12.5% 1.0 pts 0.9 pts

Adjusted

operating profit conversion 29.7% 28.4% 1.3 pts 0.9 pts

Profit before tax £371.5m £302.2m 23% 16%

Adjusted

profit before tax £390.7m £313.8m 25% 17%

Earnings per share 60.4p 48.9p 24% 16%

Adjusted

earnings per share 63.6p 51.3p 24% 16%

Cash generated from operations £413.0m £267.1m 55%

Adjusted

free cash flow £263.6m £162.9m 62%

Adjusted

operating cash flow conversion 92.0% 70.8% 21.2 pts

Net debt £113.0m £42.1m

Net debt to adjusted

EBITDA 0.2x 0.1x

Return on capital employed 30.8% 28.7%

Dividend per share 20.9p 18.0p 16%

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 3 on pages 151 to 154 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 3 on pages 151 to 154 for

reconciliations).

JANE TITCHENER

INTERIM CFO

RS Group plcAnnual Report and Accounts for the year ended 31 March 202332

Revenue

Group revenue increased by 17% to

£2,982.3 million. Like-for-like growth was 10%

after adjusting for the £54.0 million impact of

acquisitions, £116.6 million from favourable

exchange rate movements and a negative impact

of £10.6 million from fewer trading days. Revenue

momentum slowed during the year, with second

half like-for-like revenue growth of 4%, after 16% in

the first half, due to tougher comparatives and the

more challenging macroeconomic environment

which has resulted in lower demand.

Industrial production figures, supplier indications

and results reported by peers show that we

continue to outperform the industrial market and

are gaining share as our customers have relied on

our product availability, the breadth of our range

and service delivered by our experienced teams.

We have seen a reduction in our total customer

numbers to 1.1 million from over 1.2 million as we

have focused less on low lifetime value and one-off

low margin transactional customers with high

costs to serve, instead concentrating on higher-

value opportunities. Our average order value grew

to £255 from £211 (excluding RS Integrated

Supply’s pass-through sales orders) with much of

the growth driven by price inflation.

Our industrial product ranges, which account for

76% of Group revenue, grew by 16% like-for-like

during the year with strong growth across all

ranges, with 21% like-for-like growth in the first half

and 12% growth in the second half.

Our electronics products range accounts for 23%

of Group revenue and is predominantly supplied to

our industrial customers as they become more

digitalised and connected. We had a more

challenging year as supply constraints eased and

demand softened especially for passives and

semiconductors components. This was coupled

with record growth last year causing tough

comparatives especially in the second half,

resulting in like-for-like growth of 1% in 2022/23

overall but split between 12% like-for-like growth in

the first half to a 10% decline in the second.

OKdo (our technology solutions business focused

on SBC, IoT and education) declined by 52% on a

like-for-like basis following the end of the

Raspberry Pi supply agreement, reducing our

Group like-for-like revenue growth from 12% to

10%. OKdo now accounts for 1% of Group revenue

and we are repositioning the offer closer to our

industrial customer base.

RS PRO, which is our main own-brand product

range and accounts for 13% of Group revenue,

grew by 19% on a like-for-like basis, due to the

broadening product range and end-to-end sales

and marketing focus in the regions. Our

competitively priced offer continues to gain

traction particularly in the current less favourable

economic climate and we now have the capability

to demonstrate quality and value through our

expanded design and test facilities.

Digital, accounting for 63% of Group revenue,

performed slightly ahead of the Group overall,

delivering like-for-like revenue growth of 14%. Web

revenue increased by 12% on a like-for-like basis,

while eProcurement and other digital, which are

used predominantly by our larger customers, grew

by 21% on a like-for-like basis.

Service solutions revenue, accounting for 25% of

our Group revenue, increased by 25%, 21%

like-for-like, to £734.0 million with our digital

solutions offer being one of the strongest areas.

2,982.3

2,553.7

22/23

revenue

21/22

revenue

116.6

Currency

movement

2,670.3

21/22 at

constant

exchange

rates

(10.6)

Trading

day

movement

54.0

Acquisitions

268.6

Like-

for-like

growth

+10%

Like-for-like revenue development

£m

Gross margin

Group gross margin increased 1.1 percentage

points to 45.3%. Like-for-like gross margin

improvement was 1.8 percentage points excluding

the dilutive impact from exchange rates and our

recent acquisitions. The dilutive impact from

acquisitions, in part, reflects the lower digital

participation within the acquired businesses

compared to the rest of the Group. We expect this

dilutive impact, on a full-year basis, to reduce over

time as integration continues. During the year we

benefited from a lagging effect in our cost of sales

due to our low inventory turn and a more

constrained electronics supply chain for most of

the year providing pricing opportunities. The gross

margin also benefited from our continued focus on

gross margin optimisation through direct

procurement initiatives, commercial discipline,

discount policies and expanding our own-brand

ranges.

Operating costs

Total operating costs, which include regional and

central costs, increased by 18%. Excluding

amortisation and impairment of acquired

intangibles and acquisition-related items, total

adjusted operating costs increased by 18%, 13% on

a like-for-like basis.

A large proportion of our operating costs relates to

our people and broadly half of the like-for-like cost

increase. We remain mindful of the competitive

pressures for talent we continue to face and so

have updated many of our employee benefits

programmes to be more inclusive and increased

the level of benefits relating to health and

wellbeing. These, together with the pay rise across

the Group in June 2022 and the c. £10 million

ad hoc payments to our employees, have helped

reduce our employee voluntary annual turnover

rate to 9.9%.

Operating costs in the regions have been impacted

in the second half by electricity and gas cost

increases. More recently, sea freight costs have

started to ease and fuel surcharges have been

avoided in most of our domestic carriers. We

remain focused on optimising our network of

distribution centres to minimise freight costs and

miles and we anticipate further benefits from our

expanded DC in Bad Hersfeld, Germany, as we

route less inventory through our UK DCs and

source more products from continental Europe.

We invest in our business to ensure it can support

the strong organic growth we are delivering and

the organic and inorganic opportunities we see. As

a result, operating costs included c. £20 million of

strategic investment, a c. £7 million increase year

on year, to strengthen our digital and commercial

capabilities, technology platform, product and

service solutions capacity, our rebranding and to

improve our operating basics.

Central costs (Group strategic investment, Board,

Group Finance and Group Professional Services

and People costs that cannot be attributed to

region-specific activity) increased by £8.6 million to

£60.5 million. This included investment in global

rebranding, innovation and Group technology

infrastructure.

Adjusted operating costs as a percentage of

revenue increased by 0.3 percentage points to

31.9%, although excluding the one-off payments to

our employees this would have been

0.1 percentage point lower than last year. Our

simplified operating model has driven higher

conversion of gross profit into operating profit,

with adjusted operating profit conversion

1.3 percentage points higher at 29.7%. We remain

committed to our target of a 30% adjusted

operating profit conversion and high-quality

profitable growth.

33RS Group plc Annual Report and Accounts for the year ended 31 March 2023 33

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Financial review continued

Items excluded from adjusted profit

To improve the comparability of information

between reporting periods and between

businesses with similar assets that were internally

generated, we exclude certain items from adjusted

profit measures. The items excluded are described

below (see Note 3 on pages 151 to 154 for

definitions and reconciliations of adjusted

measures).

Amortisation and impairment of acquired

intangibles

Amortisation and impairment of acquired

intangibles was £16.6 million (2021/22: £11.6 million)

and relates to the intangible assets arising from

acquisitions. Although Needlers has traded as

expected since acquisition, its rebranding to RS

Safety Solutions, effective from 1 November 2022,

has entailed an impairment of £3.3 million for the

net book value of the Needlers brand acquired in

December 2020. This has resulted in an update to

the definition of adjusted profit to exclude

impairment of acquired intangibles as well as their

amortisation.

Acquisition-related items

Acquisition-related items of £2.6 million relate to

transaction costs incurred in the year which are

directly attributable to the businesses acquired

during the year.

Operating profit

Operating profit increased by 24% to

£383.0 million. Excluding the impact of acquisitions

and the favourable impact of currency movements,

adjusted operating profit saw a like-for-like

increase of 18%. Adjusted operating profit margin

improved 1.0 percentage points to 13.5%.

320.4

21/22

adjusted

operating

profit

18.1

Currency

movement

338.5

21/22

constant

exchange

rates

3.9

Acquisitions

59.8

Like-

for-like

growth

+18%

402.2

22/23

adjusted

operating

profit

Like-for-like adjusted operating

profit movement

£m

Net finance costs

Net finance costs were £12.2 million up from

£7.1 million mainly due to the impact of higher

interest rates and higher net debt due to the

acquisition of Risoul. Our fixed to floating rate

interest rate swaps matured during the year and,

as a result, 49% of the Group’s gross borrowings

excluding lease liabilities at 31 March 2023

(2021/22: 35%), was at fixed rates, with surplus

cash deposited at variable rates.

Profit before tax

Profit before tax grew 23% to £371.5 million.

Adjusted profit before tax was up 25% to

£390.7 million, 17% on a like-for-like basis.

371.5

22/23

profit

before tax

16.6

Amortisation

of acquired

intangibles

2.6

Acquisition-

items

22/23

adjusted

profit

before tax

390.7

Adjusted profit before tax reconciliation

£m

Taxation

The Group’s income tax charge was £86.7 million

(2021/22: £72.2 million). The adjusted income tax

charge, which excludes the impact of tax relief on

items excluded from adjusted profit before tax,

was £90.5 million (2021/22: £72.3 million), resulting

in an effective tax rate of 23.2% on adjusted profit

before tax (2021/22: 23.0%).

Going forward we expect the effective tax rate on

adjusted profit before tax to increase to c. 26% in

2023/24 reflecting the increase in the UK corporate

income tax rate.

Earnings per share

Earnings per share increased 24% to 60.4p.

Adjusting for items excluded from adjusted profit

and associated income tax effects, adjusted

earnings per share of 63.6p grew 16% on a

like-for-like basis.

Cash flow

Cash generated from operations was

£413.0 million (2021/22: £267.1 million) as we

continue to be focused on our cash conversion.

Higher EBITDA (earnings before interest, tax,

depreciation and amortisation) more than offset

continued inventory investment to support

revenue growth. As a result, adjusted operating

cash flow conversion was 92.0%, an increase of

21.2 percentage points.

Net interest paid rose by £5.6 million to

£12.6 million due to our higher net finance costs.

Income tax paid rose to £93.9 million from

£57.1 million due to taxable profit being higher

than 2021/22 with more significant growth

in higher tax jurisdictions. Also, we made some

small overpayments which we expect to utilise

in 2023/24.

Net capital expenditure increased to £46.0 million

from £42.5 million as we continued to focus our

investments on optimising our DCs, implementing

new product management systems, augmenting

digital commerce capabilities and strengthening

our technology platforms.

Capital expenditure remained at 1.3 times

depreciation, in line with our typical maintenance

capital expenditure levels of 1.0 – 1.5 times

depreciation. We anticipate capital expenditure in

2023/24 to be £50 – 60 million including planned

Summary cash flow

£m 2023 2022

Operating profit 383.0 308.8

Add back depreciation and amortisation 64.6 63.7

EBITDA 447.6 372.5

Add back impairments and loss on disposal of non-current assets 11.5 2.4

Movement in working capital (48.9) (94.8)

Defined benefit retirement contributions in excess of charge (10.6) (21.4)

Movement in provisions (1.4) (1.7)

Other 14.8 10.1

Cash generated from operations 413.0 267.1

Net capital expenditure (46.0) (42.5)

Operating cash flow 367.0 224.6

Add back cash effect of adjustments

3.1 2.4

Adjusted

operating cash flow 370.1 227.0

Net interest paid (12.6) (7.0)

Income tax paid (93.9) (57.1)

Adjusted

free cash flow 263.6 162.9

1. Adjusted excludes the impact of substantial reorganisation and acquisition-related items cash flows.

RS Group plcAnnual Report and Accounts for the year ended 31 March 202334

spend to deliver our 2030 ESG action plan such as

c. £4 million to begin decarbonising our DC in

Beauvais, France.

Given our focus on conserving cash, adjusted free

cash flow, which excludes cash outflows of

£3.1 million (2021/22: £2.4 million) related

to substantial reorganisation costs and

acquisition-related items, was £263.6 million

(2021/22: £162.9 million).

Working capital

Working capital as a percentage of revenue

increased by 0.7 percentage points to 21.8%.

We continue to monitor receivables collection

closely, which remains our greatest short-term

liquidity sensitivity. We continue to limit our

exposure through tightening credit policies,

including short payment terms and low credit

limits for new customers, and seeking payment

commitments for overdue balances before

releasing new orders to existing customers, which

have helped lead to higher cash generation. The

acquisitions increased trade and other receivables

by £39.7 million and, combined with the impact of

the weaker sterling exchange rate, led trade and

other receivables to end the year at £692.0 million

(2021/22: £594.3 million).

Gross inventories increased by £100.8 million to

£660.0 million with £32.2 million due to the

acquisitions. We have extended our product

offering in Americas, started to add inventory into

our extended DC in Bad Hersfeld, Germany, and

invested in inventory across the Group to ensure

continued availability. Our inventory turn has

decreased slightly to 2.6 times from 2.7 times, but

improved from the 2.4 times delivered in the first

half. Inventory provisions have increased by

£14.0 million to £43.7 million, £2.5 million due to

the acquisitions and the balance mainly due to the

slowdown in sales of electronics products.

Overall trade and other payables increased to

£658.9 million from £584.1 million with the

acquisitions accounting for £35.6 million of this

increase. The remaining increase reflects the

growth in inventory and the impact of the weaker

sterling exchange rate.

Looking forward we continue to manage our

working capital position actively and remain

focused on receivables collection. Given the more

uncertain economic backdrop, we are restricting

our investment in inventory to products which we

know, from utilising data from our customers’

website searches, will sell quickly. However, we

understand that demand and supply dynamics can

change quickly and that our systems and orders

need to remain agile to be able to adapt according

to market forces. We will continue to invest in the

right inventory to ensure that we remain well

positioned to maintain service levels and deliver

strong growth as the markets recover. We pay our

suppliers to terms and continue to work with some

of our larger suppliers to improve terms where

possible.

Net debt

Our net debt was £113.0 million, only £70.9 million

higher than at 31 March 2022 as a result of our

strong cash generation despite the acquisitions

increasing net debt at their acquisition dates by

£234.3 million.

On 24 October 2022 we refinanced our

£300 million sustainability-linked loan (SLL) facility

which had a maturity of November 2024. The new

SLL facility is for £400 million with a five-year term

on broadly unchanged rates and we increased our

lender base by three to a total of 11 banks. The SLL

has a lender option accordion of up to a further

£100 million and an option for the Group to extend

for up to two further one-year terms subject to

individual lender approval. £24.2 million was drawn

down at 31 March 2023 and subsequently repaid

in April 2023. This SLL together with the

£160.4 million of private placement loan notes,

form our committed debt facilities of

£560.4 million.

The Group’s financial metrics remain strong, with

net debt to adjusted EBITDA of 0.2x and EBITA to

interest of 34.2x, leaving significant headroom for

the Group’s banking covenants of net debt to

adjusted EBITDA less than 3.25 times and EBITA to

interest greater than 3 times.

(113.0)

(42.1)

22/23

net debt

21/22

net debt

(234.3)

Acquisitions

(88.6)

Dividends

260.5

Free

cash

flow

(5.7)

Net new

leases

and

employee

(2.8)

Currency

movement

Movement in net debt

£m

Return on capital employed (ROCE)

ROCE is the adjusted operating profit for the

12 months ended 31 March 2023 expressed as a

percentage of the monthly average capital

employed (net assets excluding net debt and

retirement benefit obligations). ROCE remained

strong at 30.8% up from 28.7% last year.

Summary balance sheet

31 March 2023 31 March 2022

£m Assets Liabilities Net assets Assets Liabilities Net assets

Intangible assets 704.8 – 704.8 473.3 – 473.3

Property, plant and equipment 186.3 – 186.3 177.3 – 177. 3

Right-of-use assets 46.9 – 46.9 45.8 – 45.8

Investment in joint venture 1.5 – 1.5 1.5 – 1.5

Other non-current assets and

liabilities 13.4 (104.1) (90.7) 7.9 (70.1) (62.2)

Current assets and liabilities 1,330.0 (684.5) 645.5 1,137.1 (609.8) 527.3

Capital employed 2,282.9 (788.6) 1,494.3 1,842.9 (679.9) 1,163.0

Retirement benefit net assets /

(obligations) 0.8 (37. 2) (36.4) 0.3 (12.7) (12.4)

Net cash / (debt) (including

lease liabilities) 260.3 (373.3) (113.0) 258.0 (300.1) (42.1)

Assets / (liabilities) 2,544.0 (1,199.1) 1,344.9 2,101.2 (992.7) 1,108.5

Net debt analysis

£m 2023 2022

Non-current borrowings (184.6) (151.7)

Bank overdrafts (139.8) (99.5)

Lease liabilities (48.9) (48.7)

Interest rate swap liabilities – (0.2)

Gross borrowings (373.3) (300.1)

Cash and short-term deposits 260.3 257.9

Interest rate swap assets – 0.1

Net debt (113.0) (42.1)

35RS Group plc Annual Report and Accounts for the year ended 31 March 2023 35

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Financial review continued

Retirement benefit obligations

The Group has defined benefit pension schemes in

the UK and Europe, with the UK scheme being by

far the largest. All these schemes are closed to new

entrants and in Germany and Ireland the pension

schemes are closed to accrual for future service.

Overall, the accounting deficit of the Group’s

defined benefit schemes at 31 March 2023 was

£36.4 million compared to £12.4 million at

31 March 2022.

At 31 March 2023, the UK defined benefit scheme

had an accounting surplus of £34.9 million

(2021/22: £24.9 million). Under the scheme’s

matching asset portfolio, the decrease in the

value of assets was mainly offset by the decrease

in liabilities, which was mainly caused by an

2.1 percentage points increase in the discount

rate to 4.9%, leading to the increase in accounting

surplus. Under the scheme’s rules the Group does

not have an unconditional right to any surplus that

may arise on the scheme and so the accounting

surplus has been restricted to £nil. An additional

liability of £26.2 million has been recognised

which is equal to the present value of the agreed

future deficit contributions under the revised

recovery plan.

The triennial funding valuation of the UK scheme at

31 March 2022 showed a deficit of £36.4 million on

a statutory technical provisions basis. A recovery

plan, which replaces the previous recovery plan,

has been agreed with the trustee of the UK

scheme and deficit contributions of £11.1 million

per annum will be paid with the aim that the

scheme is fully funded on a statutory technical

provisions basis by 30 September 2025.

Dividend

The Board intends to continue to pursue a

progressive dividend policy while remaining

committed to a healthy dividend cover over time by

driving improved results and stronger cash flow.

The Board proposes to increase the final dividend

to 13.7p per share. This will be paid on 21 July 2023

to shareholders on the register on 16 June 2023. As

a result, the total proposed dividend for 2022/23

will be 20.9p per share, representing an increase of

16% over the 2021/22 full-year dividend. Adjusted

earnings dividend cover for 2022/23 was 3.0 times.

Foreign exchange risk

The Group does not hedge translation exposure

on the income statements of overseas subsidiaries.

Based on the mix of non-sterling denominated

revenue and adjusted operating profit, a one cent

movement in the euro would impact annual

adjusted profit before tax by £2.1 million and a one

cent movement in the US dollar would impact

annual adjusted profit before tax by £1.2 million.

The Group is also exposed to foreign currency

transactional risk because most operating

companies have some level of payables in

currencies other than their functional currency.

Some operating companies also have receivables

in currencies other than their functional currency.

Group Treasury maintains three to seven months

hedging against freely tradable currencies to

smooth the impact of fluctuations in currency.

The Group’s largest exposures related to euros

and US dollars.

Retirement benefit obligations

31 March 2023 31 March 2022

£m UK Other Total UK Other Total

Fair value of scheme assets 425.4 6.6 432.0 585.7 7.6 593.3

Defined benefit obligations (390.5) (5.8) (396.3) (560.8) (7.3) (568.1)

Effect of asset ceiling / onerous liability (61.1) – (61.1) (24.9) – (24.9)

Status of funded schemes (26.2) 0.8 (25.4) – 0.3 0.3

Unfunded schemes – (11.0) (11.0) – (12.7) (12.7)

Total net liabilities (26.2) (10.2) (36.4) – (12.4) (12.4)

ESG IN ACTION

SUSTAINABLE

REFINANCING

FOR THE FUTURE

In 2021/22, to demonstrate our commitment to

integrate ESG into all aspects of our business, we

converted our £300 million revolving credit facility into

an SLL with three ESG metrics relating to Scope 1 and 2

e emissions, packaging intensity and percentage of

management that are women.

During the year, it was felt that the SLL, which remains

undrawn, was insufficient to match the growth

ambitions of the Group. M&A is an important part of

our strategy and having access to committed undrawn

funding puts us in an excellent position to move quickly

should opportunities arise.

After consulting with existing banks and potential

lenders, it was decided to refinance the SLL on similar

pricing terms but with reduced extension fees and the

benefit of the arrangement fee spread over a longer

period. The new SLL facility has increased to

£400 million spread evenly across 11 banks (an increase

of three banks) and refreshed ESG metrics to reflect the

overachievement by the Group on Scope 1 and 2 CO

emissions targets in its first two years.

The achievement of amending and restating the SLL

during a period of increased headwinds was recognised

by the Association of Corporate Treasurers in 2022, who

awarded RS with Deal of the Year for loans below

£750 million.

Annual Report and Accounts for the year ended 31 March 202336 RS Group plc

Regional review

ESG IN ACTION

INTEGRATING

ESG INTO OUR

SUPPLY CHAIN

In February 2023, we hosted an EMEA supplier

event in Frankfurt, Germany, for over 400

suppliers. ESG was a key theme with the aim of

demonstrating how focusing on sustainability

can enable our suppliers to build stronger

partnerships and new commercial

opportunities.

We introduced 10 key asks of our suppliers

under our three ESG goals of advancing

sustainability, empowering people and doing

business responsibly. Within these asks we

prioritised four key areas: signing our ethical

trading declaration, offering more sustainable

products, setting SBTs and assessing ESG

performance via EcoVadis and Sedex platforms.

Our German business grew strongly in the first half

as we continued to benefit from our deep and

broad product range. In the second half growth

slowed with a reduction in electronic product

volumes as supply constraints eased and demand

softened. Our highly automated and recently

expanded DC in Bad Hersfeld, Germany, is

increasing its stocked product lines.

France has continued to see solid growth and

share gains due to our strong proposition. The

teams have utilised data and insight to ensure we

have the right products available locally, with

high-quality content and relevant pricing.

RS Integrated Supply in EMEA secured several new

customers during the year. However, the

operational investment from expanding into new

territories and delay in some new contracts

launching, largely from the customer side, has had

an impact on the financial performance. Spend

levels from customers in some of the heavier

industries are now recovering to pre-pandemic

levels.

OKdo revenue was impacted by the termination of

the Raspberry Pi supply agreement. This has led to

a decline in OKdo’s revenue of 46% like-for-like and

it now accounts for 2% of the region’s revenue.

New innovative lines have been added including

ROCK products launched in July 2022.

Supply shortages, which impacted the early part of

2022/23, have eased during recent months and

enabled an improved service to our customers.

This has supported an improvement in our rolling

12-month NPS over the year.

Revenue grew by 12% to £1,768.5 million benefiting

from price inflation and strong engagement with

our larger customers who participate in many of

our service solutions. Operating profit increased

by 13%, 12% on a like-for-like basis, with operating

profit margin increasing to 15.6% driven by

improvements to gross margin and operating

efficiencies in our markets.

Digital performance remains ahead of the region’s

revenue growth as we continue to improve user

experience and content quality for customers

transacting on our websites. As larger customers

migrate to eProcurement, we have also been able

to increase our share of wallet. Web revenue grew

by 14% on a like-for-like basis.

Our main own brand, RS PRO, has continued to

outperform in all markets. We have continued to

build the RS PRO range with a focus on products

that promote efficiency. We have also expanded

our design and test facilities in Corby, UK, to allow

us to demonstrate and validate RS PRO’s quality.

Our industrial product ranges performed

consistently well throughout the year with

like-for-like revenue growth of 17%.

UK and Ireland, our largest market in EMEA

accounting for 39% of the region’s revenue, saw

strong growth. There was a benefit from selling

price increases, most of which were a direct

pass-through of supplier cost increases, along with

continued recovery in sectors such as transport,

defence and original equipment manufacturing

which had been impacted significantly during

COVID-19. We have focused on industries where

we believe we can deliver most value through our

service solutions.

EMEA

PERFORMANCE

PETE MALPAS

PRESIDENT EMEA

ELAINE POINTON

CFO EMEA

Overall results

2023 2022 Change

Like-for-like

change

Revenue £1,768.5m £1,579.5m 12% 12%

Operating profit

£275.8m £243.7m 13% 12%

Operating profit

margin 15.6% 15.4% 0.2 pts 0.1 pt s

Digital revenue

£1,311.1m £1,126.3m 16% 16%

RS PRO revenue

£338.0m £279.9m 21% 21%

Service solutions

revenue

£519.3m £430.3m 21% 21%

1. Like-for-like adjusted for currency; revenue also adjusted for

trading days.

2. See Note 2 on pages 149 and 150 for reconciliations to Group

operating profit.

3. See Note 2 on pages 149 and 150 for disaggregation of revenue

analysis and reconciliations to region’s revenue.

Highlights

74%

of revenue from digital

19%

of revenue from RS PRO

29%

of revenue from

service solutions

49.2

NPS

of total segment

operating profit

60%

of Group

revenue

59%

RS Group plc

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

3737Annual Report and Accounts for the year ended 31 March 2023

Regional review continued

ESG IN ACTION

NEW NAME,

NEW

POSSIBILITIES

In February 2023, a celebratory event for our

employees was held in Fort Worth, US, to

announce the name change to RS. In addition

to celebrating the name change, the event

provided an opportunity for colleagues from

across the globe to showcase the broad range

of product and service solutions that are

offered by the Group in other regions.

The change of name not only unifies the RS

brand identity but enables us to leverage our

expertise and experience across the Group. It

provides exciting new opportunities to improve

efficiencies, generate sustainable value and

increase scalability worldwide.

our large customers onto our eProcurement

platforms. Web revenue like-for-like growth was in

line with the region’s revenue growth due to

reduced traffic associated with a lower demand

mainly from lower value customers who had used

our website during supply shortages. There was

expected, temporary disruption with our

transactional customers during the February 2023

rebrand as search engines re-indexed our new

ecommerce domain and our sales teams

concentrated our marketing efforts on our

higher-service, higher-value customers. We have

increased our paid advertising to attract higher

value traffic.

RS Integrated Supply in Americas has benefited

from a greater focus on more profitable accounts

and operational processes that provide greater

scalability and improved efficiency. This led to an

improvement in customer retention rates. We have

a robust future pipeline and, because of working

closely with our operations in EMEA, have won

contracts to service the European operations of

some of our US-based customers.

RS PRO has a low participation rate within

Americas, but we expect strong growth following

the branding changes as customers associate the

product range with the brand.

Our stocked product range expanded by 25% in

line with our strategy to broaden our offer further

into the industrial MRO market. Service levels from

our DC have been stable throughout the year and

we continue to drive efficiency benefits from the

recent investment in scale and automation.

Despite supply chain disruption over the year, our

teams were able to provide great customer service

and availability across our product range which

meant our rolling 12-month NPS was broadly stable.

Revenue increased 32% to £945.5 million, driven by

our acquisition of Risoul which has delivered

slightly ahead of our expectations. Excluding

Risoul, exchange rate movements and the impact

of trading days, like-for-like revenue growth of 11%

was driven by price increases and product

availability. Operating profit increased 28% on a

like-for-like basis with operating profit margin

increasing from 13.8% to 15.7%, due to improving

gross margin and a leaner cost base.

Given market supply constraints in the first half, we

benefited from our strong product availability and

customers building inventory levels to protect

continuity in their production. In the second half,

the market weakened resulting in an easing in

global supply constraints and increased

competitive pricing pressures, reflected in our

like-for-like growth of only 1% against very strong

comparatives, following 21% like-for-like growth in

the first half.

We saw a reduction in the number of resellers and

small customers who traded with us during the

period of global supply constraints as they

reverted to their legacy and lower priced volume

suppliers. Additionally, there have been significant

decreases in trading within specific market

segments due to some legislative shifts.

Our sales and marketing teams have focused on

identifying new revenue generating opportunities

tied to providing a more comprehensive and total

solution for our customers. This has included our

expanded product offering, exciting new supplier

partners and a new virtual technical solutions centre

capable of helping customers evaluate products,

design projects and maintain their operations.

Our digital like-for-like revenue growth was ahead of

the region’s revenue growth as we moved some of

AMERICAS

PERFORMANCE

DOUGLAS MOODY

PRESIDENT AMERICAS

MANISHA KADOCHE

CFO AMERICAS

Overall results

2023 2022 Change

Like-for-like

change

Revenue £945.5m £718.7m 32% 11%

Operating profit

£148.5m £99.3m 50% 28%

Operating profit

margin 15.7% 13.8% 1.9 pts 2.3 pts

Digital revenue

£404.8m £311.6m 30% 15%

RS PRO revenue

£7.1m £4.8m 48% 31%

Ser vice solutions

revenue

£166.0m £123.8m 34% 16%

1. Like-for-like adjusted for currency and to exclude the impact of

acquisitions; revenue also adjusted for trading days.

2. See Note 2 on pages 149 and 150 for reconciliations to Group

operating profit.

3. See Note 2 on pages 149 and 150 for disaggregation of revenue

analysis and reconciliations to region’s revenue.

Highlights

43%

of revenue from digital

of revenue from RS PRO

18%

of revenue from

service solutions

65.9

NPS

of total segment

operating profit

32%

of Group

revenue

32%

Annual Report and Accounts for the year ended 31 March 202338 RS Group plc

ESG IN ACTION

PRIORITISING

SAFETY

STANDARDS

The COVID-19 pandemic resulted in challenges

to the world of work. In Asia Pacific, travel

restrictions continued to disrupt normal work

practices in 2022/23, causing us to rethink how

we carry out essential business activities safely

and sustainably.

In April 2022, we introduced remote health,

safety and environmental (HS&E) audits for our

DCs in Australia, China, Japan, Singapore and

Hong Kong. This enabled our team members to

carry out critical audits without the need for

travel, including temperature, hazard and

health checks.

17 remote audits were completed in 2022/23,

providing our leaders with the insight they

need to help embed our strong HS&E culture

across Asia Pacific.

onsite services capability from our acquisition, DH;

the launch of integrated solutions including vendor

managed inventory, Product Plus; onsite

calibration services and air leak surveys. Revenue

from larger customers has grown as this

proposition resonates, driving profitable growth

and increased share of wallet.

Revenue from Australia and New Zealand has

grown solidly throughout the year, benefiting from

strong growth in large industrial customers. Our

success with this customer group provides a

blueprint to scale across the rest of the region.

Greater China, which represents 26% of the

region’s revenue, was impacted by extended

lockdowns under the zero COVID-19 policy,

ongoing geopolitical uncertainty and greater

exposure to the electronics sector leading to a

contraction in revenue during the second half.

South East Asia saw strong growth in the first half

but lower growth in the second half with softer

demand for electronics products. We have

invested in expanding our local inventory capacity

in Thailand and Singapore which will support

revenue growth and improve lead times.

Japan and Korea grew in the first half, continuing

the trend from the second half of the previous year,

but revenue contracted in the second half,

impacted by supply issues of single-board

computing products and lower demand of

electronics products which together represent

more than half of the market’s revenue.

Supply shortages, which have only recently started

to improve, impacted our rolling 12-month NPS.

Revenue increased 5% to £268.3 million, driven by

beneficial currency movements, strong

performance in the industrial sector and our

acquisition of DH in Thailand. Like-for-like revenue

declined by 2% reflecting a challenging geopolitical

backdrop and tough comparators particularly in

respect to the weakening electronics sector, the

latter accounting for over a third of the region’s

revenue. Operating profit increased 31%,

22% like-for-like, with operating profit margin

increasing from 11.5% to 14.3%, having benefited

from improving gross margin and effective cost

control.

While digital like-for-like revenue change is better

than the region’s, weaker market demand and

global inventory constraints, particularly in

electronics products, have impacted web

conversion with higher growth where our paid

activities are focused on buoyant industries and

products with good availability. Customers are

migrating away from web channels, in particular to

our eProcurement platforms, which resonate well

with our larger customers who are focused on

reducing procurement costs through vendor

rationalisation.

Like-for-like growth in our own brand, RS PRO,

outperformed the region’s revenue. In support of

our improved go-to-market strategy, we have

launched bespoke RS PRO product ranges focused

on solutions and energy efficient products.

OKdo revenue fell by 66% like-for-like, impacted by

the termination of the Raspberry Pi supply

agreement. The new OKdo product range with

ROCK is being rolled out across the region. OKdo

now accounts for 3% of the region’s revenue.

We have boosted our product and service

solutions proposition within the region by adding

ASIA PACIFIC

PERFORMANCE

SEAN FREDERICKS

PRESIDENT ASIA PACIFIC

DAISY WANG

CFO ASIA PACIFIC

Overall results

2023 2022 Change

Like-for-like

change

Revenue £268.3m £255.5m 5% (2)%

Operating profit

£38.4m £29.3m 31% 22%

Operating profit

margin 14.3% 11.5% 2.8 pts 2.9 pts

Digital revenue

£160.8m £155.7m 3% 0%

RS PRO revenue

£37. 2m £34.0m 9% 5%

Service solutions

revenue

£48.7m £33.9m 44% 37%

1. Like-for-like adjusted for currency and to exclude the impact of

acquisitions; revenue also adjusted for trading days.

2. See Note 2 on pages 149 and 150 for reconciliations to Group

operating profit.

3. See Note 2 on pages 149 and 150 for disaggregation of revenue

analysis and reconciliations to region’s revenue.

Highlights

60%

of revenue from digital

14%

of revenue from RS PRO

18%

of revenue from

service solutions

20.2

NPS

of total segment

operating profit

of Group

revenue

39RS Group plc Annual Report and Accounts for the year ended 31 March 2023 39

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Risks, viability and going concern

The Group has risk management and internal control processes to identify,

assess, manage and monitor the risks which have the potential to affect the

achievement of its strategy.

HOW WE MANAGE OUR RISKS

EFFECTIVELY

The risk management process

The Board has overall accountability for the

Group’s risk management, which is managed

by the Senior Management Team (SMT) and

co-ordinated by the Group’s risk team. The

principal elements of the process are: the

identification of risks, their assessment, their

mitigation and then the ongoing monitoring of

these risks. These four steps are explained below.

1. Identification of risks

We identify risks through a variety of sources.

These are either external, to ensure that

developing risk themes (emerging risks) are

considered, and also internal, from within the

Group including from the Board, senior, regional

and country management teams. This process

involves market and function risk leaders to

provide bottom-up visibility of possible risks.

The sharing of these identified risks is two-way:

from the local country teams to more senior

management and also from the Board to the

broader business management. The purpose

is to identify those risks which if they occurred

and became issues, would have a material

quantitative or reputational impact on the

Group and the achievement of its strategy.

2. Assessment of risks

Management identifies the controls for each

risk and assesses the impact (using both financial

and non-financial criteria) and likelihood of the

risk occurring (using consistent measures).

These assessments consider the effects of the

existing controls leading to the resulting net

or residual risk.

This assessment process is supplemented by

an annual risk and controls questionnaire which

is completed by all relevant operating locations

and Group-wide functions. This provides more

detailed risk information across the Group and

is reviewed by the Group’s risk team.

3. Mitigation of risks

The Group’s principal risks are owned by the SMT

with specific mitigation actions / controls owned by

individual members. The SMT collectively reviews

the risk register, the controls and mitigating

actions at specific Group risk review meetings

which are scheduled through the year.

The effects of these controls, and the resulting net

or residual risks, are compared with the Group’s

risk appetite. This determines if the control actions

are sufficient or if other actions are required.

OUR RISK MANAGEMENT PROCESS

– Operational. These risks are related to those that

could impact internal areas e.g. the business’s

infrastructure, ways of working and people.

The Group has a lower appetite for these risks

and mitigating actions are often processes

and direct controls.

– Regulatory / compliance. External regulations

and requirements can be very localised. The

Group’s risk appetite is low for these risks

and mitigations are often specific actions to

ensure compliance.

4. Monitoring of risks

The Group risk team reviews all the Group’s

principal risks each quarter with the respective

business owners. These include assessing the

effectiveness of existing controls, the resulting

residual risks and identifying any further necessary

actions. The Risk Committee (including certain

members of the SMT) meets periodically

throughout the year to review and discuss the

Group’s risks.

The Board

The Board confirms that it has undertaken

a robust assessment of the Group’s principal

and emerging risks, including those that could

threaten its business model, future performance,

solvency or liquidity, and assessed them against

the Group’s risk appetite.

For several principal risks, members of the SMT

will, as part of their ongoing activities, update

the Board on these risks and their mitigation.

This allows the Board to determine whether the

actions being taken by management are sufficient.

Our risk appetite

In accordance with the UK Corporate Governance

Code, the Board has a defined risk appetite: the

risk that the Group is prepared to take to achieve

its strategy.

The Group determines its risk appetite for

its principal risks by considering their

characteristics, including:

– Strategic. These risks are often caused

by external developments. Mitigation is

generally directed at a Group level supported

by local activities.

Identify potential risks

Assess

the risk

Determine and treat the risk

Monitor

and review

RS Group plcAnnual Report and Accounts for the year ended 31 March 202340

ACCOUNTABLE AND RESPONSIBLE TEAMS

MANAGING RISKS INACTION:

BEING CYBER

SECURE

Cyber security is not just about computers and networks, it is very much

about people and behaviours. Our information security team are

passionate about helping our people to stay safe online and to provide

them with the knowledge to make the right security decisions, whether at

work or at home.

This includes working with third-party specialists who are experts at using

humour to get key security messages across. The power of this type of

approach is not to be underestimated; emotionally engaging with people

has a proven effect on changing behaviour.

However, we are not just delivering computer-based training. We do a lot

of face-to-face sessions with our employees to help demonstrate real-life

hacking techniques, which often has the effect of people immediately

changing their work and personal passwords after our training. We

consider it really important to bring security issues to life for our

employees to ensure that they think about information security in and

beyond the workplace.

Recognising that security can be perceived as complicated and fearful, we

take an engaging, friendly and people-focused approach to ensure that

employees feel safe to reach out and ask questions. This includes making

simple how to guides and videos that help non-specialists to answer

common questions.

Overall accountability

Board

Overall accountability for the Group’s approach to risk management. Supported by the

Audit Committee to ensure effective internal controls and risk management systems,

the Board also approves the Group’s risk appetite and the principal risks.

Risk Committee

Responsible for owning and reviewing the

Group’s risk management process, risks and

mitigating internal controls and making

recommendations to the Board.

Markets, businesses, regions

and Group functions

Identifying, reviewing and communicating

local risks using risk registers where

applicable.

Risk owners

Group Risk

Supports the business to identify, assess,

manage and report risks. This includes

providing a consistent measurement process

for risks and helping identify risks that

should be reported at a Group level.

Other specialist functions

Other functions complementing the Group

risk team that oversee areas including legal,

compliance and environmental and health

and safety teams.

Supporting teams

Operational Audit

Operational Audit, as part of its scheduled audits, reviews the effectiveness

of the Group’s mitigating controls for its risks.

Assurance

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

41RS Group plc 41Annual Report and Accounts for the year ended 31 March 2023

Risks, viability and going concern continued

Our principal risks and uncertainties

We have identified 11 principal risks. While this is

the same number as last year, this includes the

removal of one risk and the addition of another.

These changes are:

– The removal of the risk that the UK defined

benefit pension scheme cash requirements are

more than the cash available. This is due to the

reduced likelihood and lowered impact of this risk

driven by ongoing improvements to the scheme

funding position and the de-risked cash flow

driven investment strategy.

– Including a risk to reflect the increased

importance, and associated risks, of the Group’s

activity to acquire value-accretive businesses.

In addition, we have amended the principal risk

associated with the COVID-19 pandemic, disclosed

last year, to a more general risk associated with the

risk of a pandemic more generally.

With climate change moving to a principal risk in

2021/22, the risk management process did not

identify any further emerging risks.

Talent and people resources Change in customer, supplier or

competitor behaviours

Geopolitical environment

What is the risk and how could it affect us?

We do not attract and retain the necessary

high-performing employees to ensure that we achieve

our ambitious performance targets.

What is the risk and how could it affect us?

Unforeseen changes to customer spending behaviour

and market assumptions (including competitors)

which are different from those upon which our

performance plans are based.

What is the risk and how could it affect us?

Future global destabilisation which impacts our

international business activities such as increasing

operating costs, additional trade sanctions and supply

chain delays.

What are we doing to manage the risk?

– Developing existing employee competencies and

introducing external expertise where appropriate.

– Continual employee performance conversations to

align personal objectives with the Group’s strategy.

– Regular employee talent reviews and succession

planning for the business’s more senior / critical roles.

– Developing the business brand to attract high potential

talent.

What are we doing to manage the risk?

– Maintaining strong relationships with customers and

suppliers to grow existing business and identify new

opportunities.

– Monitoring market developments, including the

competitive environment.

– Targeted acquisitions that complement both our

existing business and strategic growth areas.

What are we doing to manage the risk?

– Continually monitoring the existing markets in which

the Group operates to identify potential uncertainties

that may impact our service to customers within

countries, regions or globally.

– Through our supplier (direct and indirect) relationships,

identifying potential supply vulnerabilities and ensuring

appropriate resilience is in place.

– Considered as part of the due diligence process when

looking at potential acquisition targets.

Risk direction

While the recruitment and retention of key talent

remains a challenge, we do not see current market

conditions altering significantly.

Risk direction

We anticipate the changes in customer, supplier and

competitor behaviour to accelerate. Our monitoring

provides the early indications of changes that may

impact our business model and enables us to

implement changes where appropriate.

Risk direction

In the current more uncertain external environment,

further actions may be required quickly to address

unforeseen circumstances and maintain service to

our customers.

Link to strategic actions

RS Group plcAnnual Report and Accounts for the year ended 31 March 202342

Delivery of strategy: The RS Way M&A activity Organisational resilience

What is the risk and how could it affect us?

Our revenue and profit growth activities are not

successfully implemented with lower than forecasted

financial performance.

What is the risk and how could it affect us?

We do not have the appropriate expertise to

undertake detailed and effective due diligence.

We are unable to achieve forecast business growth

and / or realise forecast synergies.

What is the risk and how could it affect us?

An unplanned event disrupting our critical

infrastructure, including key locations and core

transactional systems, and third-party suppliers and

other external factors resulting in the business being

unable to serve customers.

What are we doing to manage the risk?

– Improving the basics for customers with prioritised

proposals and projects, including revenue growth and

supporting activities across shared business services

and supply chain infrastructure.

– Integrated project management governance structure

with accountabilities designed to support delivery on

time and to cost, within resources and capabilities.

What are we doing to manage the risk?

– Building internal M&A capability including training,

secondments and external hires where appropriate.

– Process to develop opportunity pipelines with our

business units.

– Clear returns criteria for investments.

– Rigorous due diligence, valuation, contract negotiation

and integration processes.

– Ownership of the business plan and synergy targets by

the acquiring business.

– Robust post-merger integration planning and

execution, including detailed synergy capture plan.

What are we doing to manage the risk?

– Documented and tested business continuity plans at

DCs, sales and back-office locations.

– Global network with the ability to fulfil customer orders

by another DC and maintain service.

– Ongoing assessments of critical third-party inventory

suppliers and appropriate inventory levels to mitigate

risk where identified.

– Resilient IT systems infrastructure featuring operating

redundancies and disaster recovery.

– Core Group transaction systems managed from a data

centre.

– Periodic testing of IT disaster recovery plans across the

Group.

– Strict control over upgrades to core transaction

systems and other applications.

Risk direction

We have a number of key initiatives in progress to help

support the financial performance outcome of the

strategy.

Risk direction

We continue to seek opportunities to grow

inorganically. Existing mitigations ensure that

irrespective of size, complexity or geographic location,

we undertake and complete a transaction

successfully.

Risk direction

There have been no significant changes to the

footprint or operations of the Group which

significantly change the overall level of resilience.

Link to strategic actions

Risks direction definition

The risk is likely to increase

within the next 12 months

The risk is likely to remain stable

within the next 12 months

The risk is likely to reduce

within the next 12 months

Strategic actions

Improve digitalisation and customer experience

Expand product and service solutions

Deliver operational excellence

Increase scale in global industrial and MRO markets

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

43RS Group plc Annual Report and Accounts for the year ended 31 March 2023 43

Cyber security breach / information loss Future global pandemics Macroeconomic environment

What is the risk and how could it affect us?

An attack on our systems, sites or data with loss of

confidential information and / or disruptions to the

Group’s transactions with customers and suppliers.

Also accidental data loss due to employee or partner

action (or inaction).

What is the risk and how could it affect us?

We do not appropriately manage the uncertainties

associated with a pandemic and subsequent recovery.

These may include changing customer demand, the

recovery of receivables and liquidity risk, and delays

and difficulties sourcing inventory and associated cost

volatility.

What is the risk and how could it affect us?

Our revenue, and hence profit, could be adversely

affected by a decline in the global macroeconomic

environment.

What are we doing to manage the risk?

– Investing in expertise and technical solutions, including

anti-malware software to protect business PCs and

laptops. External emails are identified to all business

recipients. Firewalls to protect against malicious

attempts to penetrate the business IT environment.

– Computer emergency readiness team to track software

vulnerabilities and respond to security incidents.

– Procedures to update security patches and regularly

undertake control reviews to consider the security

implications of IT changes.

– Security reviews with selected third-party suppliers.

What are we doing to manage the risk?

– Resilient supply chain network with DCs across the

globe and multiple suppliers ensuring the continuation

of supply.

– Continued ability to switch between office / home

working as and when required to maintain service to

our customers and suppliers.

– Internal health and safety specialists within DCs to

implement local guidance and maintain operations.

– Group crisis management and business continuity

structures to assess and take appropriate actions.

What are we doing to manage the risk?

– The business is inherently strongly cash generative

with an unleveraged balance sheet.

– Significant headroom maintained on debt covenants

and banking facilities.

– Foreign exchange cash flow hedging for relevant

business trading purposes.

– Proactive cost management and control of inventory.

– Frequent business financial performance reviews

covering cash flow and profitability including revenue,

gross margin and operating costs. This includes more

significant costs such as freight.

Risk direction

We continue to invest in controls and employee

education to protect the business countering the

increasing external risks.

Risk direction

Improving international and business preparedness.

Risk direction

Despite global economic instability, GDP growth is

more optimistic than originally forecast.

Link to strategic actions

Risks direction definition

The risk is likely to increase

within the next 12 months

The risk is likely to remain stable

within the next 12 months

The risk is likely to reduce

within the next 12 months

Strategic actions

Improve digitalisation and customer experience

Expand product and service solutions

Deliver operational excellence

Increase scale in global industrial and MRO markets

Risks, viability and going concern continued

Our principal risks and uncertainties continued

RS Group plcAnnual Report and Accounts for the year ended 31 March 202344

Climate change Legal and regulatory compliance

What is the risk and how could it affect us?

We do not adequately manage the potential impacts

on the business due to climate change effects. This

could be either:

– The physical risks of more extreme weather conditions

disrupting supply chain channels and customer service.

– The transition risks associated with the consequences

of the migration to a carbon-neutral economy.

What is the risk and how could it affect us?

We fail to manage legal and regulatory compliance

risks which could lead to:

– Serious health and safety incidents / breaches.

Non-compliance with trade, transport or product

regulations.

– Breaches of any other regulatory or legislative

requirements.

What are we doing to manage the risk?

– Undertaken detailed climate scenario analysis of

physical and transition risk impacts on the Group (see

pages 72, 75 and 76).

– Strategies and controls to mitigate physical

climate-related risks on operations and wider

supply chain.

– Net zero plan and science-based targets to

decarbonise our DCs, transport network and products.

– Increasing sustainable products, packaging and

transport options to support our customers’ climate

goals.

– Integrating climate risks and opportunity as part of

M&A due diligence, integration and future action plans.

What are we doing to manage the risk?

– Target Zero, including accident reporting, reduction

strategies and actions provided by specialist support.

– Internal specialist expertise, supported, where needed,

by suitably qualified / experienced external partners.

– Ongoing reviews of relevant national and international

compliance requirements.

– Training and awareness programmes focusing on

anti-bribery, competition, data protection legislation

and modern slavery awareness.

– Code of conduct for all employees.

– Ethical sourcing policy for suppliers.

– Our trade compliance systems which scan customer

orders to ensure relevant trade compliance

requirements are being followed.

– Working with our suppliers to obtain relevant product

information, for example any restrictions on use.

Risk direction

Analysis of both transition and physical climate

change impacting both physical locations and

business operations do not highlight a significant

impact on the Group. We continue to seek new

opportunities which deliver a sustainable proposition

to our customers and suppliers.

Risk direction

We do not anticipate any new or significant changes to

existing global or local legislation / regulations

impacting the Group.

Link to strategic actions

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

RS Group plc 4545Annual Report and Accounts for the year ended 31 March 2023

Risks, viability and going concern continued

Viability statement

Assessment of prospects

The Group’s strategy is focused on delivering

sustainable growth and value-creating

opportunities for all our stakeholders and includes

a number of key actions. They are discussed in

more detail on pages 20 to 27.

Our business model, as described on page 13,

is structured so that the Group is a global

omni-channel provider of product and service

solutions for designers, builders and maintainers

of industrial equipment and operations to a very

broad spread of customers both in terms of

industry sector and geography. The Group is not

reliant on one particular group of customers or

suppliers, with its largest customer accounting for

under one percent of revenue and its largest

supplier less than four percent of revenue. Our

business model is differentiated by: our global

network of distribution centres; our talented and

customer-centric team; our strong supplier

relationships; our broad and deep product offering

and service solutions capabilities; and our strong

digital presence. The Group has high inventory

availability with products sourced from a large

number of suppliers and provides customers with

a reliable and fast service.

The Group’s results and financial position are

reviewed monthly by both our SMT and the Board.

Every day the SMT receives an analysis of the

previous day’s revenue and gross margin. The

Board receives and reviews monthly management

accounts, including cash flows, and also receives

regular performance and forecast updates from

the CFO and Chief Executive Officer.

We update our detailed rolling 18-month forecast

of the Group’s income statement, balance sheet

and cash flows frequently which are regularly

reviewed, and the assumptions approved, by the

Board.

The Group’s long-term prospects are assessed

primarily through our strategic and financial

planning process. This includes the preparation of

a five-year strategic plan and an annual target

setting process involving both Group and regional

management which are updated annually and

reviewed and approved by the Board. The SMT

receives and reviews a scorecard each quarter

showing progress against the strategic plan

objectives. The Board also receives updates and, if

appropriate, the strategic plan is updated

depending on progress and performance.

The Board also considers the long-term prospects

of the Group as part of its regular monitoring and

review of risk management and internal control

system, as described on pages 40, 88 and 94.

Our regular cash flow forecasts enable us to track

closely our net debt position and to take any

necessary actions on a timely basis. Our capital

position is supported by regular reviews of the

Group’s funding facilities and banking covenants’

headroom, through the Board’s Treasury

Committee. In October 2022 we refinanced our

£300 million sustainability-linked loan facility to a

five-year £400 million sustainability-linked loan

facility with a lender option accordion of up to a

further £100 million and the maturity may be

extended at the option of the Group for up to two

further one-year terms subject to individual lender

approval. Only £24.2 million of this facility was

drawn down at 31 March 2023.

As described throughout this Annual Report and

Accounts, the Group’s performance over the past

year has been strong with like-for-like revenue

growing by 10% and adjusted free cash flow of

£263.6 million leading to net debt to £113.0 million

(including lease liabilities of £48.9 million) at

31 March 2023. We also paid dividends during the

year of £88.6 million (2021/22: £76.2 million) and

the two acquisitions we completed during the year

increased net debt by £236.9 million. We have

ended the year with a strong balance sheet.

Details of our sources of finance are outlined in

Note 22 on page 177, with the earliest facilities

maturing being two tranches of our private

placement loan notes in 2026/27.

The Group’s debt covenants are EBITA to interest

to be greater than 3:1 and net debt to adjusted

EBITDA to be less than 3.25:1. At 31 March 2023

EBITA to interest was 34.2x (2021/22: 44.6x) and

net debt to adjusted EBITDA was 0.2x (2021/22:

0.1x) (see Note 3 on page 153 for reconciliations)

and under our strategic plan these are also

comfortably met.

Viability assessment period

In its assessment of the Group’s viability, the

Board has reviewed the assessment period and

has determined that a three-year period to 31

March 2026 continues to be most appropriate.

The robustness of the strategic plan is significantly

higher in the first three years with the final two

years being a high-level extrapolation. The Group

has few contracts with either customers or

suppliers extending beyond three years and, in

the main, contracts are for one year or less.

The business operates with a minimal forward

order book, generally taking orders and shipping

them on the same day. In addition, as more

business becomes digital and we become more

agile, speed of change increases and so visibility is

relatively short term. Of the Group’s long-term

obligations, the UK pension scheme is the largest

and its triennial funding valuation forms the basis

of our agreeing its funding with its trustee. Our

share-based payment schemes are also mainly for

three years.

Assessment of viability

Each of the Group’s principal risks and

uncertainties on pages 42 to 45 has a potential

impact on the Group’s viability and so the Board

considered various scenarios and examined a

number of factors that could impact each in the

future. It decided which scenarios would have the

most impact on the viability of the Group and

determined an appropriately severe but plausible

stress test for each of these scenarios.

The strategic plan approved at the March 2023

Board meeting, adjusted to include the estimated

effect of our acquisition of Distrelec B.V. which is

expected to be completed in about July 2023 and

the approved new three-year acquisition term loan

facility of €150 million, is considered to reflect the

Board’s currently best estimate of the future

prospects of the Group. Therefore, in order to

assess the viability of the Group, the scenarios and

stress tests were modelled by overlaying them

onto the adjusted strategic plan to quantify the

potential impact of one or more of them

crystallising over the assessment period.

RS Group plcAnnual Report and Accounts for the year ended 31 March 202346

The scenarios considered and the severe and

plausible stress tests for the principal risk and

uncertainty ‘Talent and people resources’ were

assessed to have less impact on the Group’s

viability.

In performing the above tests it was assumed that

no major reorganisations or significant working

capital initiatives occur in mitigation, capital

expenditure is unchanged from that in the

strategic plan, dividends continue to be paid and

there are no changes in debt financing.

The results of the above stress tests showed the

Group would be able to withstand the impact of

these scenarios occurring.

Reverse stress tests were also undertaken to

assess the circumstances that would threaten the

Group’s current financing arrangements. These

included significant declines in like-for-like revenue,

significant declines in revenue and gross margin

and a major deterioration in cash collection and

would have to result in adjusted operating profit

margin falling to under 3% in at least one of the

following three years. Also, a reverse stress test of

an acquisition of a significantly loss-making

business was undertaken and would have to cost

over £400 million to use up our debt facilities. All

these reverse stress tests assumed that no major

reorganisations or significant working capital

initiatives occur in mitigation, capital expenditure is

unchanged from that in the strategic plan,

dividends continue to be paid and there are no

changes in debt financing. The Board considers

the risk of these circumstances occurring to be

remote.

The above scenarios are hypothetical and

extremely severe for the purpose of creating

outcomes that have the ability to threaten the

viability of the Group; however, multiple control

measures are in place to prevent and mitigate any

such occurrences from taking place. If any of these

scenarios actually happened, various options are

available to the Group to maintain liquidity so as to

continue in operation.

Confirmation of viability

Based on the assessment outlined above, the

Board has a reasonable expectation that the

Group will be able to continue in operation and

meet its liabilities as they fall due over the three

years to 31 March 2026.

Going concern

The going concern period is defined as a period of

at least 12 months from 23 May 2023.

Based on the assessment outlined above and the

output of our detailed rolling 18-month forecasts,

the Board believes that it is appropriate to continue

to adopt the going concern basis in preparing the

Group’s accounts.

The scenarios and related stress tests modelled and how they link

to the principal risks and uncertainties were:

Scenario and related stress tests modelled Link to principal risk and uncertainties

Revenue and gross margin down with no cost

mitigations

Revenue falls in 2023/24 by more than that seen

in the first half of 2021/22 (when the biggest

impact of COVID-19 was seen) with a further

decline in 2024/25. Gross margin declines in

2023/24 by 5 percentage points and operating

costs stay static as no mitigation is taken. Costs

move in line with revenue in future years.

– Changes in customer, supplier or competitor

behaviours

– Geopolitical environment

– Delivery of strategy: The RS Way

– M&A activity

– Future global pandemics

– Macroeconomic environment

– Climate change

– Legal and regulatory compliance

Cash collection down

Cash collection from trade receivables

deteriorates leading to trade receivables

impaired by 5% of revenue in 2023/24.

– Geopolitical environment

– Future global pandemics

– Macroeconomic environment

Significant infrastructure failure

Major incident at the DC with the largest impact,

destroying the building and its contents.

– Organisational resilience

– Climate change

Major cyber breach / information loss

Major system failure (possibly caused by a cyber

attack) leading to a serious loss of service, fines

for data breach and loss of reputation leading to

halving of revenue growth.

– Organisational resilience

– Cyber security breach / information loss

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

47RS Group plc 47Annual Report and Accounts for the year ended 31 March 2023

Environmental, social and governance (ESG)

COLLABORATING

FOR

PEOPLE, PLANET

AND PROFIT

Advancing sustainability 50

Championing education and innovation 58

Empowering our people 62

Doing business responsibly 68

RS Group plcAnnual Report and Accounts for the year ended 31 March 202348

FOR A

BETTER WORLD

Our purpose and 2030 ESG action plan will generate

greater long-term value for our stakeholders and triple

bottom line benefits for people, planet and profit.

Our 2030 ESG action plan

Our purpose, making amazing happen for a better

world, reflects our focus on delivering results for

people, planet and profit. To reinforce this

commitment, our 2030 ESG action plan – For a

Better World, sets out our four global goals with

15 supporting actions.

With insights gathered from our ESG double

materiality assessment, the plan complements

our Group strategy, The RS Way, by delivering

long-term value for all our stakeholders.

Our approach supports six of the UN SDGs

and lays the foundation for our long-term vision

to 2050. Our key commitments and 2022/23

performance highlights can be found in the

table below.

See our progress against our 15 supporting

actions on pages 50 to 71

ESG Report: rsgroup.com/esg

Supporting six United Nations

Sustainable Development

Goals (UN SDGs)

OUR 2030 ESG ACTION PLAN

GLOBAL GOALS KEY ACTION AREAS PERFORMANCE HIGHLIGHTS

Advancing sustainability

Developing sustainable

operations and product and

service solutions for our

customers and suppliers

Net zero emissions in direct

operations by 2030, value chain

before 2050, Science Based

Targets initiative (SBTi), UN Global

Compact’s Business Ambition

for 1.5°C and UN Race to Zero

commitments

58%

reduction in Scope 1 and

2 emissions

since

2019/20

92%

of Group electricity from

renewable sources

28%

reduction in Scope 3

transport emissions

intensity

since 2019/20

Championing education

and innovation

Partnering with education providers,

building skills and fostering innovative

solutions that improve lives

Building skills and fostering

innovation with 1.5 million

engineers and innovators

1.3m

members, students and

start-ups engaged

through DesignSpark

£330k

raised to support The

Washing Machine

Project to improve lives

since 2019/20

c. 4,400

educational institutions

use our educational

products in their

teaching

Empowering our people

Creating a safe, inclusive and

dynamic culture where everyone

can thrive and grow

Working towards 40% women

and 25% ethnically diverse

leaders

employee engagement

score – up from 75 in

2021/22

44%

of the Board are

women, including the

Chair and 22% are

ethnically diverse

42%

reduction in our all

accident frequency

rate

since 2019/20

Doing business responsibly

Ensuring the highest ethical

standards throughout our

business and global supply chain

Increasing screening and ESG

objectives for suppliers. ESG

metrics in employee rewards

and sustainability-linked loan

50%

of employees have their

annual incentive aligned

to carbon reduction

targets

£400m

sustainability-linked loan

(SLL) to help facilitate

ESG action

49%

of RS PRO suppliers

are Sedex members

1. Scope 1 and 2 CO

e emissions updated to reflect changes in reporting and emissions factors.

2. Percentage of total electricity use.

3. Tonnes of CO

e due to Scope 3 transport emissions per tonne of product sold.

4. Per 200,000 hours worked.

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

49RS Group plc Annual Report and Accounts for the year ended 31 March 2023 49

ESG continued

ADVANCING

SUSTAINABILITY

As a critical partner in the global industrial

sector, we play an important role in advancing

sustainability and tackling climate change. By

developing a cleaner and greener distribution

model and providing sustainable product and

service solutions for our customers, we can make

a real and lasting impact and differentiate our

brand with our customers and suppliers.

Our commitments and progress

2030 ACTIONS PERFORMANCE STATUS COMMENTARY READ MORE

By 2030 in our direct operations:

– Carbon emissions: Be net zero with a

science-based target (SBT) to reduce absolute

emissions from our own operations by 75%

– Packaging: Make our packaging more

sustainable: reduce intensity by 30%

, with 100%

of packaging widely reusable or recyclable and

made with at least 50% recycled content

– Recycling and Waste: Reduce, reuse and

recycle our waste: reduce intensity by 50%

recycle > 95% and achieve zero waste to

landfill in our direct operations

58%

reduction in Scope 1 and 2

emissions since 2019/20

– Good progress made through

distribution centre (DC) energy

efficiencies and renewable

electricity

Pages 53 and 54

ESG Report

rsgroup.com/

esg

32%

reduction in packaging intensity

since 2019/20

– Reduction due to eco-totes and

pallets for product movements

between our sites in Europe

76%

of total waste recycled.

Increased by 1 pts in 2022/23

– Percentage of waste recycled has

remained fairly static and is an

area of focus for DC teams in

2023/24

Working towards a net zero

global value chain by 2050:

– Product transportation: Reduce Scope 3

transport emissions by 25% per tonne of

product sold

– Products and solutions: Develop innovative

and sustainable product and service solutions

for all our customers, including offering

100,000 Better World products by 2025

– Supplier engagement: Commit to engaging

67%

of suppliers by spend to set SBTs by 2025

28%

reduction in intensity of Scope 3

transport emissions since

2019/20

– Reduction due to modal shifts and

optimising our supply chain to

source, store and ship more

products locally to customers

Pages 55 to 57

ESG Report

rsgroup.com/

esg

25%

of suppliers by spend have set

SBTs or have committed to set

them by 2025 with the SBTi

– There was a 6 pts increase in

suppliers committing to SBTs from

2021/22, but more progress is

needed to achieve our ambitious

2025 target

Status key

Each of our actions are broken down into a series of annual targets that need

to be met in order to remain on track to achieve our 2025 and 2030 goals.

The colour coding below reflects our current position:

On track or ahead

Slightly behind target – monitor closely

Not on track – further action required

More information is available in our full ESG scorecard: rsgroup.com/ESG

1. By 2029/30 from 2019/20.

2. Scope 1 and 2 emissions updated to reflect changes in reporting and emissions factors.

3. Tonnes per £m revenue (excluding acquisitions completed in 2022/23).

4. Prior year % of total waste recycled updated following supplier corrections.

5. Tonnes of CO

e due to Scope 3 transport emissions per tonne of product sold.

6. Target increased from 65% to 67% to cover two thirds of suppliers by spend.

RS Group plc50 Annual Report and Accounts for the year ended 31 March 2023

Our progress

in 2022/23

By 2030:

Net zero in our

direct operations

Before 2050:

Net zero across our

wider value chain

Buildings

Energy Management

– Reduced total energy usage by 12% and energy

intensity by 20% from 2021/22. Supported by

temperature controls, energy efficiency

initiatives and by providing our top 10 largest

sites with environmental management

dashboards (EMDs) to help them manage

environmental and net zero actions locally

(see case study to the right)

– During 2022/23 92% of Group electricity use

was from renewable sources

Decarbonisation

– Proposal approved to invest in decarbonising

our DC in Beauvais, France. See case study to

the right

– Decarbonisation proposal in development

for our DC in Nuneaton, UK

Vehicles

– 54% of UK company car fleet is electric or hybrid

– Increasing electric vehicle (EV) infrastructure

with 70 new charging points across the UK,

Germany and Republic of Ireland

Engagement and reporting

– Introduced an internal shadow carbon price

to help quantify carbon costs and savings

– Group-wide quarterly sustainability reporting

– SBT to cut absolute emissions

by 75% by 2029/30, from 2019/20

– Increase onsite renewable

electricity generation and 100% of

Group electricity from renewable

sources by 2030

– Low carbon DCs delivered

through low carbon technology

and efficiency projects

– Net zero emissions company car

and van fleet

– Gold standard offsets for residual

emissions

– 67% of our suppliers by spend to

set SBTs by 2025

– 25% reduction in Scope 3

transport emissions, per tonne

of product sold by 2029/30, from

2019/20

– Develop innovative and

sustainable product and service

solutions for all our customers

– Utilise wider societal and

technological developments

in increased availability of

low carbon energy, heating and

cooling technology, global

logistics solutions, carbon capture

and storage capabilities

SUSTAINABILITY

INACTION

DECARBONISING

OUR DCS

Delivering energy reductions

This year, our internal decarbonisation efforts have been focused on energy

management and efficiency in our buildings to reduce energy use, costs and

carbon emissions.

We introduced a new energy management policy, which mandates the

procurement of green electricity where available and standardises heating

controls and settings. We have also invested in low energy technologies, such

as LED lighting, and introduced EMDs at our top 10 largest sites which include

monthly targets for energy reductions, in line with Group CO

reduction

targets.

As a result, total energy usage has reduced by 12% and energy intensity has

reduced by 20% in the year from 2021/22. It has also led to a 36% reduction

in energy-related CO

e emissions across the Group, supporting us in our

journey to net zero by 2030.

Decarbonising Beauvais

In 2022/23, investment was approved to conduct net zero building

optimisation at our DC in Beauvais, France, which accounts for around 10%

of the Group’s overall CO

e emissions.

The proposal includes the replacement of gas boilers with air source heat

pumps and the installation of solar panels on the roof of the building, following

the successful installation of solar panels on the DC roof in Bad Hersfeld,

Germany. It will also have a positive impact on employee wellbeing by enabling

greater control over temperature variability. The upgrade begins in 2023/24

and will run until 2024/25 and is expected to cost £3.7 million.

Our pathway to net zero:

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

51RS Group plc Annual Report and Accounts for the year ended 31 March 2023 51

OUR PATHWAY TO NET ZERO IN OUR DIRECT OPERATIONS

ESG continued

Our net zero roadmap

To avoid the worst impacts of climate change, the

world needs to limit global warming to a maximum

of 1.5°C above pre-industrial levels in line with the

2015 Paris Agreement. To achieve this, we all need

to decarbonise on a global scale. This requires

businesses to develop robust net zero strategies

throughout their value chains to accelerate

sustainable systems.

At RS, we believe that climate action is not only

the right thing to do, but that supporting the low

carbon transition is integral to our long-term

commercial success. The global industrial sector

has a major role to play in delivering sustainable

product and service solutions that enable the

world’s engineers, innovators and problem solvers

to decarbonise and to help low carbon industries

to thrive.

With our seat at the heart of the global supply

chain, we are well-placed to support our 1.1 million

customers through this transition.

We are committed to being net zero by 2030.

We have set SBTs covering our Scope 1, 2 and 3

emissions, which are currently being validated by

the SBTi and include a commitment to reduce our

direct emissions by 75% by 2030, from 2019/20.

We have also set supporting targets for packaging,

waste and transportation to drive further

environmental performance and climate action.

Beyond our own business we are committed to

supporting our customers and suppliers on their

journey to tackling climate change and achieving

net zero by 2050. We will do this by offering an

increasing range of sustainable product and

service solutions to our customers (see the launch

of our Better World product range on page 56) to

help them reduce their environmental impacts, as

well as committing to engage 67% of our suppliers

by spend to set SBTs by 2025. At the end of

2022/23, 25% had done so with the SBTi

(see page 57).

We know that we have a challenging task ahead.

We are focusing on the use of renewable energy

sources, investing in our infrastructure to upgrade

our systems and to decarbonise our buildings,

finding greener transportation solutions while

continuing to investigate emerging low carbon

technologies that will support us in the longer

term. The primary challenges to achieving our

goals are cost and the availability of proven

technology, particularly when it comes to product

transportation.

Climate change and the energy transition

Our ambition is to become net

zero in our business by 2030 and

across our value chain by 2050.

1. Group performance excluding businesses acquired post 2019/20 baseline year.

2. Performance and plan rebased to 2019/20 to include businesses acquired prior to 2022/23.

29/3024/2522/2319/2014/15

’000 tonnes CO

40% reduction 14/15–19/20

Min 75% SBT reduction

19/20–29/30

Trajectory for 1.5°C

Offsets to net zero in 29/30

Net zero trajectory

Actual performance 19/20–22/23*

Actual performance to 19/20

The journey to 2019/20

Our performance & trajectory to 2029/30

RS Group plcAnnual Report and Accounts for the year ended 31 March 202352

5,000

6,300

7,500

12,000

22/23

21/2220/2119/2018/19

12,400

6.5

6.1

3.7

2.4

1.7

By 2029/30 in our direct operations we are targeting net zero with a SBT to reduce absolute emissions

from our own operations by 75% from 2019/20.

Scope 1 & 2 emissions (tonnes CO

e) Carbon intensity

2,3

5,000

21% reduction from 2021/22

1.7

29% reduction from 2021/22

Total Scope 1 and 2 CO

e emissions reduced by

21% in the year due to a shift to renewable

electricity, energy management efficiencies across

our sites and the purchase of Energy Attribute

Certificates for selected sites where renewable

electricity is not readily available. However our

progress has been impacted with an increase in

use of company vehicles (up 24% on 2021/22),

particularly in our company car fleet (up 33% on

2021/22) as we conducted more in-person

meetings with customers following the easing of

restrictions after the COVID-19 pandemic.

The roll out of electric company cars will help to

tackle this issue in the near term, with 54% of

our UK company cars now electric or hybrid.

We are closely monitoring our carbon emissions

and progressing with our net zero initiatives in

order to stay on track to meet our targets.

See page 55 for Scope 3 emissions progress

Greenhouse gas (GHG) emissions and Streamlined Energy and Carbon Reporting (SECR) disclosure

In accordance with the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013

and the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report)

Regulations 2018, our 2022/23 Group emissions were:

METRIC 2022/23 2021/22

Group Scope 1 emissions

Combustion of fossil fuels

tonnes CO

e 4,557 4,881

Operation of facilities, including fugitive emissions

tonnes CO

e 121 153

Group Scope 2 emissions

Purchased electricity (market-based) tonnes CO

479 1,456

Intensity metric

e due to premises energy and vehicles use

per £m revenue tonnes CO

e/£m 1.7 2.4

Total GHGs per £m revenue

tonnes CO

e/£m 1.8 2.4

SECR disclosures

UK total Scope 1 and 2 emissions (market-based) tonnes CO

e 3,121 3,345

UK energy consumption GWh 29.2 32.3

Group Scope 3 emissions

Purchased goods and services (including capital goods) tonnes CO

e 1,900,000 2,100,000

Upstream transportation and distribution tonnes CO

e 48,200 53,900

4. Table excludes emissions and revenue from acquisitions completed in 2022/23.

5. Includes emissions of 2,059 tonnes relating to fuel use in company vehicles (2021/22: 1,657 tonnes).

6. Includes 121 tonnes of CO

e due to fugitive emissions from air-conditioning systems (2021/22: 153 tonnes).

7. Scope 2 emissions calculated using CO

factors as CO

e factors are not consistently available for all countries. Market-based emissions

from electricity purchased from renewable sources were nil tonnes CO

in 2022/23. Market-based emissions from electricity purchased

from non-renewable sources have been calculated using grid average emission factors. We also calculate our Scope 2 emissions using

the location-based approach and grid average factors, these emissions were 7,753 tonnes CO

in 2022/23 (2021/22: 7,667 tonnes).

8. SECR: UK emissions were 61% of 2022/23 global market-based emissions. UK energy use, including vehicles energy use, was 57% of

global energy use.

9. Scope 3 emissions covering purchased goods and services (including capital goods) and upstream product transportation and

distribution. Scope 3 emissions are not included in the SECR intensity measurement disclosures.

GHG emissions are calculated in line with the GHG Protocol (Corporate Standard) using UK Department for Environment, Food & Rural

Affairs and country-specific grid average International Energy Agency emissions factors. Data is updated to reflect reporting methodology

changes and current emission factors. Further details can be found in the ESG data centre on our website: rsgroup.com/esg

In 2022/23, the Group commissioned independent external assurance for its absolute Scope 1

and 2 CO

e emissions and Scope 3 categories 1 and 4 CO

e emissions; the carbon intensity of

direct operations; product transportation emissions intensity and packaging intensity from

ERM CVS. Their independent assurance report is set out on pages 77 and 78.

e (tonnes)

e intensity (tonnes CO

e / £m revenue)

Scope 1 & 2 emissions

1,2,3,4,5

tonnes CO

5,000

Carbon emissions (Scopes 1 and 2) in our direct operations

1. We acquired Risoul y Cia, S.A. de C.V. (Risoul) and domnick hunter-RL (Thailand) Co., Ltd. (DH) in 2022/23. Environmental performance for

both acquisitions will be reported in the Annual Report and Accounts for the year ending 31 March 2024 and restated to the point of

ownership in 2022/23. This is to ensure robust reporting processes have been established to ensure data integrity prior to external

disclosure. Early indications suggest that there will be a significant impact on the Group’s direct carbon emissions and we expect to

re-baseline our emissions targets for Scope 1, 2 and 3 CO

e emissions with the SBTi and our sustainability-linked loan.

2. KPI is on a constant exchange rates basis and is updated to reflect changes in reporting methodology and / or emissions factors.

3. Tonnes CO

e per £ million revenue (excluding acquisitions completed in 2022/23).

4. Covers the operations under our financial control globally but excludes several smaller sites where energy costs and consumption

are included in lease costs.

5. CO

e for prior years updated to include additional data.

Environmental management systems

28 sites covering 50% of our operations by revenue and 67% by floor area are covered by ISO 14001

environmental management certifications.

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

53RS Group plc Annual Report and Accounts for the year ended 31 March 2023 53

4,760

5,360

4,670

4,700

22/23

21/2220/2119/2018/19

4,750

2.48

2.38

2.31

2.01

1.63

ESG continued

By 2029/30 we want to reduce, reuse and recycle our waste: reduce intensity by 50%, recycle over 95%

and achieve zero waste to landfill in our direct operations.

Waste intensity

1,2

Waste recycled

1.31

No change from 2021/22

76%

increased by 1 pts from 2021/22

Waste and plastic pollution is a major global

concern for people and planet and a key

contributor to the world’s biodiversity crisis. It is

our global responsibility to reduce, reuse and

recycle our waste and play our part in helping

support a cleaner and greener world.

Furthermore, by reducing our use of natural

resources, we have a great opportunity to reduce

costs and minimise our GHG emissions.

In 2022/23, waste intensity was unchanged in

the year and down by 12% since 2019/20. The

proportion of total waste that is recycled increased

by 1 percentage point to 76%, however it is down

by 3 percentage points from the baseline year of

2019/20.

Waste will be an area of specific focus for our

DC management teams in 2023/24 to achieve

our goal of recycling more than 95% of our waste

by 2029/30 and to have zero waste to landfill.

Waste that is not recycled is typically sent to

incineration for energy recovery. In 2022/23, 5%

of our total waste was sent to landfill.

We encourage our markets to engage in activities

with employees that help to promote good

recycling practices and reduce waste. We have also

introduced a new Group print, promotional and

gifts policy which provides guidance and direction

in the choice of appropriate printing, procuring

gifts and sourcing sustainably to reduce waste.

Packaging Recycling and waste

Packaging (tonnes)

Packaging intensity (tonnes / £m revenue)

Packaging use

2,3

tonnes

4,760

1. Tonnes / £ million revenue (excluding acquisitions completed in 2022/23).

2. KPIs are on a constant exchange rates basis and are updated to reflect changes in reporting methodology and / or emissions factors.

3. Packaging data for prior years restated to include updated unit weights.

By 2029/30 we want to make our packaging more sustainable: reduce intensity by 30%, with 100%

of packaging widely reusable or recyclable and made with at least 50% recycled content.

Packaging intensity

1,2,3

Packaging reusable or recyclable

1.63

19% reduction from 2021/22

94%

2 pts increase from 2021/22

Packaging is one of the biggest sustainability

concerns for our customers, who have a keen

interest in the amount and type of packaging

used and its ability to be recycled or reused.

Urgent action is required to drive circular economy

solutions, which is being supported by stricter

regulations around packaging, such as the

European Union’s plastics tax and Extended

Producer Responsibility schemes. At RS, we are

advocating that our suppliers develop innovative

solutions to help reduce packaging and waste.

Packaging intensity reduced by 19% from 2021/22.

This reduction was supported by the continued roll

out of reusable eco-totes and pallets for product

movements between our sites in Europe.

Automated packing machines used at three of

our largest DCs produce made-to-fit boxes that

eliminate excess packaging and air space. We have

also increased the proportion of packaging by

weight which is reusable or recyclable to 94%, up

from 92% in 2021/22.

Currently, 42% of our total packaging by weight is

made from materials with at least 50% recycled

content. At our DC in Corby, UK, we are switching

our small component plastic bags to a more

sustainable alternative that is made with 50%

recycled content. Roll out is planned in 2023/24.

In 2022/23, we introduced 100% recyclable paper

padded envelopes in our DC in Milan, Italy, which

will be rolled out to Bad Hersfeld, Germany, in

2023/24. We are also running a trial at our DC in

Corby, UK, to replace white cardboard boxes with

brown recycled cardboard, which contain a higher

proportion of recycled content. If successful, the

switch will take place in EMEA and Asia Pacific in

2023/24, as we are already using brown cardboard

boxes in Americas.

Packaging intensity is one of our

sustainability-linked loan targets (see page 70).

Following the excellent progress we have made

this year towards our 2030 goal, we will be

re-baselining this target in 2023/24.

Annual Report and Accounts for the year ended 31 March 202354 RS Group plc

By 2029/30 we aim to reduce Scope 3 transport emissions by 25% per tonne of product sold.

Scope 3 transport emissions intensity

1,2

1.21

6% reduction from 2021/22

One of the most material areas for our Scope 3

emissions is our product transportation, which

includes inbound deliveries from suppliers and

outbound deliveries to customers under RS

control. With hundreds of thousands of product

shipments every week, it is critical that we find

ways to reduce our transport emissions footprint.

Since 2019/20 we have reduced our transport

emissions intensity

by 28%, thereby achieving our

2029/30 goal seven years early. Our progress has

been made possible through modal shifts from

air to sea or air to road and optimising our supply

chain to source, store and ship more products

locally (see sustainability in action case study on

the right).

This has been supported by our global DC network

and the expansion of Bad Hersfeld, Germany, to

serve our European partners. We are also setting

up a larger site (part powered by solar panels) in

Spain and extending our site in Singapore in

2023/24.

We will be resetting our 2030 product

transportation emissions target during the course

of 2023/24 to be more ambitious and take account

of our great progress, while incorporating the

Group’s newly acquired businesses.

We are continuing to engage our freight partners

to prioritise decarbonisation and lower carbon

technologies, for example electric last-mile

deliveries, air efficiencies and the use of

sustainable fuel alternatives.

Scope 3 emissions

To stay on track with a 1.5°C limit for global

warming the world urgently needs businesses

to take action. Key to this is understanding the

emissions that sit across our value chains, both

upstream with suppliers and downstream with

customers (known as Scope 3 carbon emissions)

and developing robust action plans and initiatives

to tackle these.

In 2022/23, we conducted a Scope 3 assessment

and this identified purchased goods and services

and upstream transport and distribution (product

transportation) as our two most material

categories. As such we have disclosed these two

categories below and had the methodologies and

data externally assured. We will also provide more

detail on our wider Scope 3 emissions categories

in our ESG Report: rsgroup.com/esg

This action will ensure our ESG programme keeps

pace with increasing regulatory, investor and

customer requirements for more granular and

robust Scope 3 carbon emissions reporting, as

well as proactive decarbonisation action.

In 2022/23 our Group Scope 3 emissions

from our two key categories were:

– Purchased goods and services (including capital

goods): 1,900,000 tonnes CO

– Upstream transportation and distribution:

48,200 tonnes CO

SUSTAINABILITY

INACTION

REDUCING

TRANSPORT

EMISSIONS

We are sourcing, storing and shipping more products

regionally and locally to our customers, as well as

switching to low carbon modes of transport (from air

to sea or road) which is helping to reduce carbon

emissions in our supply chain.

In 2022/23, we made good headway in reducing Scope

3 transport emissions intensity, particularly in Asia

Pacific where we benefited from fuel efficiency gains

in the transportation industry as well as more locally

held inventory, which reduced the distance our

products travelled.

In Europe, we have added products into our expanded

DC in Bad Hersfeld, Germany which is used to serve

our European customers. Since 2019/20, 50% more

products have been sourced from suppliers here.

This activity will continue in 2023/24 and remains a

key driver of our carbon reduction plans in EMEA.

1. Tonnes of CO

e due to Scope 3 emissions per tonne of product sold (excluding acquisitions

completed in 2022/23).

2. KPI is updated to reflect changes in reporting methodology and / or emissions factors.

Product transportationDecarbonising our global value chain

With hundreds of thousands of

product shipments every week,

it is critical that we find ways to

reduce our transport emissions

footprint.

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

RS Group plc 5555Annual Report and Accounts for the year ended 31 March 2023

ESG continued

By 2029/30 we want to develop innovative and sustainable product and service solutions for all our customers, including offering 100,000 Better World

products by the end of 2024/25.

Sustainable products

c. 20,000

Products in our Better World product range launched in the UK and Republic of Ireland in 2022/23

Customers are telling us that they want products

that are sustainable, responsibly made and that

help them to reduce their environmental impact.

They seek products and solutions that are more

energy efficient, save energy, reduce water

consumption or help reduce emissions.

We are responding to our customers’ needs with

the launch of our Better World product range and

by developing solutions like RS Industria

, which

connects and monitors factory operations to

reduce costs and make energy savings, as well as

other sustainability solutions to reduce carbon

emissions (see sustainability in action on page 16).

We are also promoting sustainable engineering

design through our DesignSpark platform to

1.3 million members (see page 59) and are helping

customers to streamline their buying and

consolidate their supply chains to be greener and

more efficient through RS Integrated Supply.

Providing these value-creating solutions attracts

new customers, increases revenue and is a key

differentiator for our brand.

Introducing our Better World

sustainable product range

In 2022/23 we partnered with external

sustainability experts to create a robust product

framework to meet the growing demand from

customers and other stakeholders for more

sustainable products.

Our Better World product offering, initially launched

in the UK and Republic of Ireland in March 2023,

identifies products that have an improvement in at

least one area of sustainability. These improvements

are supported by clear and credible third party

sustainability certifications or eco-labels, supporting

our customers’ requirement for trust and transparency.

Our approach to this is evolutionary. We have

started by using certifications as this is something

that many products already have, with claims

having already been externally verified. We are,

however, actively continuing to develop our model

and, as a next step, want to showcase claims and

improvements around key attributes such as using

more sustainable raw materials, carbon or energy

reduction and circularity.

Further ahead the aim is to offer tools, for instance

similar to a product lifecycle assessment, which

can be run in a more automated and efficient way.

We hope to have 100,000 Better World products

on offer to our customers by the end of 2024/25.

The Better World product range forms the

foundation of our alignment towards the EU

taxonomy for sustainable activities and, as we

progress in developing the framework, we will

begin to report key metrics that are considered

taxonomy-aligned.

Our aim is to complete a taxonomy benchmarking

analysis over the next year in preparation for

reporting in 2023/24.

Opportunities with new low carbon

industries

Beyond our traditional customer sectors, there is

also a huge opportunity for us to work together

with our suppliers to serve the new industries

and customer segments that will drive the low

carbon transition.

To stay on track with a 1.5°C future, a US$125

trillion investment is required globally in the low

carbon economy by 2050

Renewable, green hydrogen, EVs and smart

mobility, carbon capture and storage industries

will continue to grow and be a priority. As an

industry, we must pivot our product and service

solutions to support these new sectors to help

support a more sustainable world.

At RS we are increasing our support of the offshore

wind industry (see sustainability in action to the

right) and the EV charging market. We are focused

on building our capability and relationships to

serve these sectors better and we want to partner

with our suppliers to offer the product and service

solutions they need to grow.

SUSTAINABILITY

INACTION

ADVANCING

ESG SOLUTIONS

The offshore wind sector has seen, and will continue to

see, exponential growth, as demand for clean energy

and support for sustainability initiatives increase. As an

organisation committed to providing ESG solutions to

our customers, we have identified a unique opportunity

to enhance our position in the UK offshore wind sector.

According to Offshore Renewable Energy (ORE)

Catapult, the UK’s leading innovation centre for

offshore renewable energy, the UK offshore wind

maintenance, repair and operations market is projected

to reach £1.3 billion per year by 2030

In 2022/23, RS was selected to participate in a business

transformation programme with the Offshore Wind

Growth Partnership, part of ORE Catapult, to enhance

our position as a supplier to the offshore wind industry

through dedicated market intelligence, insight and

business support. This has been instrumental in

helping us to build a sophisticated value proposition,

establishing RS as first-choice for customers in this

sec tor.

By increasing our activity and visibility at what is a

pivotal point for the offshore wind sector, we are well

placed to deliver long-term value for our shareholders.

2. Source: www.great.gov.uk/international/content/investment/

sectors/offshore-wind/.

Sustainable products and service solutions

1. Source: Lead co-chair of Think 20 (T20) Bambang

Brodjonegoro June 2022: en.antaranews.com/

news/232289/world-needs-us125-trillion-to-

achieve-2050-emissions-targett20.

Annual Report and Accounts for the year ended 31 March 202356 RS Group plc

Supplier engagement

By 2029/30 we want to commit to engage 67% of suppliers by spend to set SBTs by 2025.

Suppliers by spend setting SBTs

25%

6 pts increase from 2021/22

With over 2,500 direct suppliers and more than

750,000 stocked products, it is vitally important

we collaborate with our supplier partners to

decarbonise our value chain.

We have committed to 67% of our suppliers by

spend setting SBTs with the SBTi by 2025 and

to date 25% have done so. We have made good

progress this year with a six percentage point

increase in suppliers (by spend) committing to

SBTs from 2021/22. However, more progress is

needed if we are to stay on track to achieve our

ambitious 2025 target. We know that setting SBTs

has a strong impact on carbon reduction.

During 2022/23, we engaged with over 400 key

suppliers at our EMEA supplier conference in

Frankfurt, Germany, emphasising the importance

of prioritising ESG and sustainability action.

This included a focus on carbon reduction,

developing more sustainable product and service

solutions and setting SBTs for their direct and

value chain emissions. By focusing on these

areas, we believe we will increase suppliers’

impact, strengthen their business and generate

significant stakeholder value.

We also introduced a new ESG Supplier Handbook

to inspire positive action and to help embed

positive ESG principles.

WHAT’S NEXT?

> Carbon emissions:

– Progress building decarbonisation initiatives at Beauvais, France, and

Nuneaton, UK

– Key focus on energy efficiency initiatives and monitoring through EMDs at

largest sites

– Roll out of EVs and critical infrastructure across the Group

> Packaging:

– Introduce additional automated packaging machines in Bad Hersfeld, Germany,

(2023/24) and Beauvais, France (2024/25)

– Introduce more reusable materials for packaging used for internal product

replenishments

– Prioritise recycled and recyclable materials, with particular focus on reducing

plastics and finding sustainable alternatives e.g. bioplastics

> Recycling and waste:

– Achieve zero waste to landfill at sites with alternative facilities available,

i.e. recycling facilities

– Launch EMD for waste streams focused on reuse, recovery and recycling

– Collaborate with waste management providers, with particular focus on the UK

and the US

> Product transportation:

– Decarbonise our logistics by sourcing and storing more products locally

and regionally and by shifting our transportation modes

– Network optimisation which includes increasing local sourcing, storing

and deliveries in EMEA and Asia Pacific

– Engage freight partners to prioritise decarbonisation and lower carbon

technologies, for example EVs, air efficiency and the use of sustainable fuel

alternatives

> Sustainable product and service solutions:

– Expand RS Better World product range to 100,000 products by 2024/25

– Collaborate with our suppliers to offer customers more products that are

made with sustainability in mind, as well as those that help to reduce

environmental impacts

> Supplier engagement:

– Further engagement with suppliers to set SBTs to reach 67% of our suppliers

by spend by 2025

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

57RS Group plc Annual Report and Accounts for the year ended 31 March 2023 57

ESG continued

CHAMPIONING

EDUCATION AND INNOVATION

People and innovation are key to driving a more

sustainable and inclusive world. It is essential

that we build skills to inspire the next generation

of innovators – to ensure our sector and business

have both the future skills to thrive and to

foster the development of sustainable solutions

that improve lives.

At RS, we provide accessible educational

technologies, inspirational learning content and

immersive skills development opportunities

to help students embark on an exciting future

career in technology or engineering.

Our commitments and progress

2030 ACTIONS PERFORMANCE STATUS COMMENTARY READ MORE

Inspiring future engineers

and innovators:

– Reach one million young people with

educational technologies, learning

content and skills development

471,000

young engineers and students

reached through educational

programmes, products and

DesignSpark platform since

2020/21

– Increased the number of students

we engage with by 12% this year

through our enhanced education

programme

See page 59

ESG Report

rsgroup.com/esg

Purpose-driven innovation:

– Engage with 1.5 million engineers and

innovators in creating socially responsible

and sustainable solutions

319,000

engineers and innovators

engaged in purpose-driven

innovation initiatives since

2020/21

– Increased the number of

engineers and innovators

engaged by 16% this year, which is

slightly behind target. Following

the launch of our subscription-

based service, we anticipate

growth in DesignSpark members

will continue in 2023/24

See page 60

ESG Report

rsgroup.com/esg

Social impact partnerships:

– Support our social impact partners to

develop solutions that improve lives –

including supporting The Washing Machine

Project (TWMP) to help 100,000 people

in need

28,000

lives improved through TWMP

since 2019/20

– Good progress made in 2022/23

through fundraising and

volunteering support from RS

employees and our partners.

However more activities will be

required in 2023/24 to raise vital

funds for the charity

See page 61

ESG Report

rsgroup.com/esg

£330,000

Amount raised for TWMP

since 2019/20

Status key

Each of our actions are broken down into a series of annual targets that need

to be met in order to remain on track to achieve our 2025 and 2030 goals.

The colour coding below reflects our current position:

On track or ahead

Slightly behind target – monitor closely

Not on track – further action required

More information is available in our full ESG scorecard: www.rsgroup.com/ESG

RS Group plc58 Annual Report and Accounts for the year ended 31 March 2023

By 2029/30 we want to reach one million young

people with educational technologies, learning

content and skills development opportunities

to support future engineers and innovators.

Our global education programme

Globally we sell our educational product and

service solutions to c. 4,400 educational

institutions, making this an area of growth for

the Group and a core part of the education ESG

solutions that we are developing for customers.

In 2022/23, we relaunched our education

programme to pull together all the various aspects

of our education offering into one global

programme that will enable more of our markets

to participate in activities directly with our

education customers. This way, our teams can

reach out to more education customers with RS

products, as well as tools and resources from

DesignSpark, and provide support to upskill

students with Grass Roots learning content.

Our enhanced education programme has been

rolled out to 10 countries to date and by 2023/24

our aim is to reach 15 countries in total.

Number of young engineers and students

reached through educational programmes,

products and DesignSpark platform

471,000

12% increase from 2021/22

Our global education offering overview:

SCIENCE, TECHNOLOGY, ENGINEERING

AND MATHS (STEM) LEARNING – OKDO

EDUCATIONAL PRODUCTS / SERVICES –

GRASS ROOTS

ENGINEERS AND INNOVATORS –

DESIGNSPARK

OKdo offers a broad range of coding and electronics products,

tools and games to get young people switched on to the exciting

possibilities of engineering from a young age.

Our smart education and STEM technology solutions are one

of the most affordable and accessible ways for young people

to learn coding, wherever they are in the world. Our aim is to

inspire, enable and unleash the potential of the next generation.

We partner with c. 4,400 educational institutions across

10 countries to offer a broad range of educational product and

service solutions that enable young engineers and innovators

to learn the skills they need for their future careers.

Our early investment and ‘by your side’ support of engineers

from the start of their careers help to create lifetime loyalty with

our future customers and address the skills and diversity gaps in

our industry.

Our DesignSpark platform is a hotbed of engineering design,

innovation and resources for 1.3 million budding engineers,

hobbyists, professionals and students across 193 countries.

Curious minds from all walks of life use our design resources,

programming software and technology updates to improve

productivity and innovate responsibly.

Key actions in 2022/23

– Sponsored the FIRST LEGO League

to help children understand

the basics of STEM and apply their skills in an exciting competition,

while building habits of learning, confidence and teamwork skills

– Sponsored the BBC’s do your :bit challenge by donating 5,000

micro:bits to disadvantaged communities. By taking part in the

challenge, it is estimated that we are positively impacting c. 20,000

young people globally

– Signed a distribution agreement with ROCK, a series of next

generation single-board computers designed to target industrial

customers and the education sector

Key actions in 2022/23

– Global roll out of Grass Roots’ education programme to

10 countries across the globe

– Held Grass Roots’ annual flagship event REflect, designed to

inspire young people from global ethnic majority backgrounds

into STEM

– Sponsored Formula Student

, a global student engineering

competition run by the Institution of Mechanical Engineers.

We provided £1,000 of RS products to support over 30 teams

to build their cars, ahead of the grand finale at Silverstone

Key actions in 2022/23

– Launched DesignSpark 2.0, a new subscription-based service

(free until 31 March 2023) which provides members with more

access to the bill of materials and sustainability-related information

– Championed #ActivistEngineering projects to inspire engineers

to put engineering responsibility at the heart of their product

designs while also using their skills to positively impact the lives

of people and the planet

– One example is the Breathe Better Bear, which is designed to

monitor air quality at schools. The innovative device is currently

being used in Malta to make poor air quality more visible so that

actions can be taken to improve environments for school children

More information

ESG Report: rsgroup.com/esg

www.okdo.com

More information

ESG Report: rsgroup.com/esg

uk.rs-online.com/web/content/discovery/education

More information

ESG Report: rsgroup.com/esg

www.rs-online.com/designspark/home

1. https://www.firstlegoleague.org/

2. https://www.imeche.org/events/formula-student

Inspiring future engineers and innovators

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

59RS Group plc Annual Report and Accounts for the year ended 31 March 2023 59

ESG continued

By 2029/30 we want to engage with 1.5 million engineers and innovators in creating socially responsible

and sustainable solutions.

Number of engineers and innovators engaged

319,000

16% increase from 2021/22

As a purpose-driven business at the heart of the

global industrial sector, we are passionate about

nurturing innovative technologies and

purpose-driven engineering that will benefit

people and the planet. By 2029/30 our aim is

to bring together 1.5 million engineers and

innovators to create sustainable solutions that

will help shape a better future.

Teams entered the championship

and 30 RS colleagues participated as

mentors and judges.

RS INNOVATORS

CHAMPIONSHIP

The RS Innovators Championship is a global competition

for teams of young innovators to design sustainable

solutions to five challenges (linked to the UN SDGs) that

will help transform how the industry currently operates

to enable a better world.

Teams of up to five young people were asked to pick a

challenge for a chance to win £10,000. The challenge

categories included training and language; water

filtration; sustainable packaging; sustainable products;

and smart distribution centres, which are all aligned to

the sustainability goals of RS and its partners like TWMP.

Ten shortlisted teams participated in masterclasses and

a mentoring programme for six weeks to help them

develop their idea in preparation for the virtual final pitch

day. The masterclasses were focused on assisting the

teams to build a strong value proposition and business

fit for the solution with consideration of people, planet

and profit.

Also, the teams were each assigned a business mentor

who arranged coaching sessions and offered guidance

and business links to sense check their ideas.

In March 2023, the NextGen Engineers team from South

Africa were crowned the winners for their innovative

solution for filtering water, linked to TWMP. By filtering out

impurities, such as rock and sand, the device enables the

reuse of water, which makes it a perfect filtration solution

for low-income or displaced people around the world.

Find out more about the competition here: rs-online.com/

designspark/home

Purpose-driven innovation

CHAMPIONING

EDUCATION IN ACTION

RS Group plcAnnual Report and Accounts for the year ended 31 March 202360

WHAT’S NEXT?

> Inspiring future engineers and innovators:

– Complete the roll out of our education programme to a further five

countries in Thailand, Malaysia, the Philippines, Spain and the US

> Purpose-driven innovation:

– Collaborate with the FAB15 (our Fresh Advisors Board) to generate

innovative solutions to ESG and business challenges utilising the

fresh perspective of the younger generation

– Develop DesignSpark #ActivistEngineering campaigns to cover wider

ESG challenges

> Social impact partnerships:

– Support TWMP to roll out additional projects around its mass

manufacturing and distribution strategy and its next community pilot

in the Republic of Congo and Kenya

Social impact partnerships

By 2029/30 we want to support our social impact partners to develop solutions that improve

lives – including supporting TWMP to help 100,000 people in need.

Amount raised for TWMP Total number of lives impacted

£330,000

£218,000 to 2021/22

28,000

1,260 to 2021/22

The Washing Machine Project

70% of the world’s population do not have

access to an electric washing machine. While

handwashing clothes might sound like a simple

task, it disproportionately affects the health,

wellbeing, education and livelihoods of women and

girls in low-income communities around the globe.

To tackle this challenge through innovation, we

support the TWMP and TWMP Foundation – a

global charity that uses the power of sustainable

engineering to provide displaced and low-income

communities with accessible and affordable

off-grid washing machines.

In 2022/23 we worked with the TWMP to support

refugees from Ukraine who were living in Poland,

by donating five electric washing machines and a

tumble dryer to the refugee centre in Warsaw. We

also supplied RS PRO parts for the construction of

Divya 1.55, the latest version of the manual-crank

washing machine.

Employees from across the organisation have

volunteered several hundred hours of their time

to assist with TWMP this year. Technical and

non-technical employees have provided the charity

with expertise in critical areas, such as sourcing

manufacturing and logistics solutions, while 323

volunteers helped to build 30 washing machines at

our DC in Corby, UK, enabling machines to support

communities in Uganda, Kenya and the US.

Engineers Without Borders

International

We have partnered with Engineers Without

Borders-International (EWB) since 2020/21, to

support their mission to place global responsibility

at the heart of engineering.

We sponsor their Engineering for People Design

Challenge, which sees 20,000 students a year take

part in designing solutions to real world problems

in the UK, US, South Africa and Australia. The

challenge forms a key part of the curriculum for

first and second year engineering students,

encouraging them to broaden their awareness

of the social, environmental and economic

impacts of their engineering solutions.

1. Total raised since 2019/20.

2. Total number of lives impacted since 2019/20.

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61RS Group plc Annual Report and Accounts for the year ended 31 March 2023 61

ESG continued

EMPOWERING

OUR PEOPLE

Our unique team of over 8,700 individuals is the

lifeblood of our business. Every day, their passion

and expertise enable us to delight our customers

and make amazing happen for a better world.

Our commitments and progress

2030 ACTIONS PERFORMANCE STATUS COMMENTARY READ MORE

Engaged employees:

– Achieve and maintain an employee

engagement score in the top 10% of

high-performing companies

employee engagement score

(out of 100)

– Improved from 75 in 2021/22

and achieved our highest score

to date

See page 63

ESG Report

rsgroup.com/esg

Diversity and inclusion (D&I):

– Ensure our team is reflective of the

customers, suppliers and communities we

serve by working towards 40% of our senior

leaders being women and 25% being

ethnically diverse

30%

women in senior leadership

roles

– We have not made progress

towards our 2029/30 D&I goals

with the percentage of ethnically

diverse leaders at 11% and the

percentage of female leaders

decreasing by 2 percentage points

to 30%. This means we have not

achieved our 2022/23 target for

the percentage of management

that are women and the linked KPI

within our SLL facility

See page 63

ESG Report

rsgroup.com/esg

11%

ethnically diverse senior leaders

Health, safety and wellbeing:

– Aim for zero accidents involving our people

0.40

25% improvement in our all

accident frequency

since

2021/22

– Improvement on previous year’s

performance. We are now back

to a more historical trend. Further

progress is required to reach

zero accidents

See page 66

ESG Report

rsgroup.com/esg

Volunteering:

– Inspire 50% of colleagues to volunteer

to support their communities and build

new skills

18%

of employees have volunteered

in the last two years

– Continued support from our

people has resulted in a 15

percentage point increase this

year. However there is more work

to do to reach our goal

See page 66

ESG Report

rsgroup.com/esg

1. Per 200,000 hours.

Status key

Each of our actions are broken down into a series of annual targets that need

to be met in order to remain on track to achieve our 2025 and 2030 goals.

The colour coding below reflects our current position:

On track or ahead

Slightly behind target – monitor closely

Not on track – further action required

More information is available in our full ESG scorecard: www.rsgroup.com/ESG

RS Group plc62 Annual Report and Accounts for the year ended 31 March 2023

Engaged employees

By 2029/30 we want to achieve and maintain an employee engagement score in the top 10% of

high performing companies.

Employee engagement score

Up from 75 in 2021/22

We know that having an engaged and motivated

team is critical to ensuring a high-performance

culture and delivering our future success. A high

employee engagement score is one of the best

indicators of being an employer of choice and will

help us to attract and retain the best talent to

support our ongoing business transformation.

We gather regular feedback through our annual

MyVoice survey to understand how our people feel

about working for us and what we can do to better

support them.

In 2022/23 we made improvements to our

engagement survey by focusing questions on the

topics that matter most to our people

(benchmarked externally) and by providing

additional information around the meaning of each

question to remove ambiguity. We also increased

the number of managers who receive engagement

reports for their teams and held upskilling sessions

with c. 670 managers globally.

Joan Wainwright, a Non-Executive Director and

one of the designated employee engagement

directors, met with representatives from our

employee resource groups (ERGs) during a visit

to Corby, UK, in March 2023.

D&I

By 2029/30 we want to ensure our global team is reflective of the customers, suppliers and communities

we serve by working towards 40% of our senior leaders being women and 25% being ethnically diverse.

% of female leaders % of ethnically diverse leaders

30%

2 pts decrease from 2021/22

11%

Not reported in 2021/22

As a business we want to ensure we have the

capabilities required to deliver our strategy and

to ensure that our people love being part of RS.

This means we want to recruit the best people,

develop talent, generate greater innovation

and listen to a range of different views and

perspectives. By embracing differences we are

better suited to understanding our customers

and suppliers and finding unique solutions to

meet their needs.

We have not made progress towards our 2029/30

D&I goals this year, with the percentage of

ethnically diverse leaders at 11% and the

percentage of female leaders decreasing by

2 percentage points to 30%. This means we

have not achieved our 2022/23 target for the

percentage of management that are women

and the linked KPI within our SLL facility.

We know we have much more work to do in

recruiting, attracting and retaining more diverse

talent and in embedding diversity in the succession

planning of our SMT. We are monitoring these KPIs

closely to ensure a concerted effort and investment

throughout the business.

In 2022/23 we introduced our first global D&I

survey, which has been informed by our ERGs who

represent each of our diversity disciplines. The

survey included key questions about diversity

characteristics (in countries where we are legally

able) and asked employees whether they think they

are well-represented at RS and what we need to

do more of to move the D&I agenda forward.

We also launched the second phase of our

mandatory inclusion training, focusing on cultural

intelligence to build trust and launched a campaign

across eight of our markets to encourage people

to disclose more personal diversity data in relation

to gender, ethnicity, disability, mental health and

sexual orientation.

1. As at 31 March 2023, we were four points away from the top

10% of high performing companies. These global benchmarks

are updated twice a year.

Our people plan

Our priority is to become first choice for our people and to position RS as a career destination of choice. We will do this by creating a purpose-led, high-performance and inclusive culture and

making this our greatest differentiator. We have a clear people strategy and plan for the next year, which sets out where we are investing in our people and culture to support our strategy.

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

63RS Group plc Annual Report and Accounts for the year ended 31 March 2023 63

ESG continued

Inclusion

We want to empower our people to bring their true

self to work, creating a culture of psychological

safety so everyone can excel and thrive. We are

supporting our people to achieve their best by

building an inclusive workplace. This year we

placed particular emphasis on driving greater

D&I around gender, ethnicity and LGBTQ+.

Gender

We are committed to promoting gender diversity

across the Group. Our gender representation

across all levels in the organisation sits at a near

50/50 split and 44% of the Board including our

Chair are female.

In 2022/23, 30% of senior leaders were women

which is a 2 percentage point decline from 2021/22

and means we have not achieved our target for

2022/23. This decline is due to a number of factors

but ultimately we have hired more men than

women. This is disappointing and we are firmly

committed to addressing this in 2023/24 by

focusing on diverse talent in succession planning

and hiring processes.

Despite the results, in 2022/23 we undertook a

number of steps to develop more women into

senior positions and to build a pipeline of future

talent, such as business partnering with talent

teams in the regions, challenging recruiters to

provide diverse long and shortlists and

successfully piloting a new Remarkable Women

programme, which enables female leaders

to transform their mindset and adopt bold,

daring action.

We are bringing gender diversity to the forefront

of our agenda with Elevate, our women’s ERG to

help address gender imbalance through a series of

cultural and engagement activities. A key event this

year was hosted at our DC in Corby, UK, as part of

International Women’s day where Jenny Garrett

OBE, an award winning career coach and

leadership trainer, explored how we can all

embrace equity to create more gender-balanced

companies at all levels.

We also signed the Menopause Workplace Pledge,

which is focused on encouraging organisations to

take positive action and support all people affected

by menopause in the workplace. We also signed

the Endometriosis Friendly Employer scheme to

help our employees overcome the challenges they

face due to endometriosis and other menstrual

health conditions.

RS also featured in the FTSE Women’s Review for a

second consecutive year, published in March 2023.

This is a UK government-backed independent,

voluntary and business-led initiative aimed at

increasing female corporate representation.

Overall we were placed 54 in the review, which

is down on our previous ranking of 33. We

maintained our position in the top half of our peer

group; however we are aware that we need to

do more to increase female representation in

senior positions.

More information about our gender diversity

performance and plans to address our gender pay

gap will be included in our 2022/23 Gender Pay

Gap report, which will be published on our website

later this year: rsgroup.com/esg.

For the full year ending 31 March 2023, we

complied with the Financial Conduct Authority’s

diversity reporting requirements regarding gender

and ethnic diversity of the Board and Management.

Ethnicity

In 2022/23, 11% of our senior leaders and two

Board members, representing 22%, of the Board,

were ethnically diverse. We know that we still have

a long way to go and we are committed to

becoming a more ethnically diverse organisation

by being proactive in our recruitment practices

and internal development programmes.

A key action in 2022/23 was joining the HALO Code

in the UK and the CROWN Act in the US, which

were created to prevent race-based hair

discrimination. Our aim is to ensure that

employees feel encouraged and empowered

to show their natural hair at work.

Our EmbRACE ERG has focused on raising

awareness around ethnically diverse communities

within RS. Over the last year we have supported

Heritage Week and Black History Month, with

events aimed at driving conversations and

discussions around ethnicity, equality and

inclusion, including supporting the first

Advancing Racial Equity conference in the UK

in February 2023.

At the beginning of 2023/24 we signed a three

year contract with Flair Race in the Workplace to

investigate the experiences and views of our

workforce with regards to racial equity in the

workplace. This will include a questionnaire to

UK and US based employees, where the results

will be used to determine key strengths and

improvement areas.

LGBTQ+ community

We are focused on creating an inclusive culture

where the LGBTQ+ community can thrive, find

support and are empowered to bring their true

self to work. Our Spectrum network is our LGBTQ+

community and allies group, offering guidance,

support and education to employees.

Over the last year, we have supported Trans in the

City, a global platform for organisations to further

inclusion of transgender, non-binary and gender

diversity in business. One of our RS leaders is a

director at Trans in the City and helps to increase

visibility of members of the LGBTQ+ community.

We also sponsored Dallas Pride in the US and

celebrated many inspirational current and

historical LGBTQ+ role models during LGBTQ+

history month, including a session with Helen

Richardson-Walsh talking about her experiences

as a gay woman in the GB Olympic hockey team,

and the importance of an inclusive culture and

leadership to achieving high performance. We

look forward to supporting Dallas Pride again in

2023/24 and we are the gold sponsors of Corby’s

first ever Pride march, in the UK.

Gender and ethnicity split at 31 March 2023

Total employees Management

1,2,5

Board of Directors

3,4,5

Chair, CEO, CFO and

Senior Ind Director

3,4,5

Gender 2023 2022 2023

2022 2023 2022 2023 2022

Female 4,206 3,843 42 42 4 4 1 1

(48%) (50%) (30%) (32%) (44%) (44%) (25%) (25%)

Male 4,562 3,811 96 89 5 5 3 3

(52%) (50%) (70%) (68%) (56%) (56%) (75%) (75%)

Ethnicity

Not disclosed

– 2 1 – –

(11%) – (22%) (11%) – –

1. Permanent and temporary employees who operate at a senior level in the Group and typically, although not exclusively, are the Senior

Management Team and their direct reports (including directors of subsidiary entities). Contractors and agency staff are not included.

In 2021/22, four temporary employees (three female and one male) were also excluded.

2. Compiled through our employee database and collected on a self-reporting basis.

3. Collected on a self-reporting basis and agreed directly with the Board.

4. Data includes gender and ethnicity information for David Egan who left the organisation on 3 May 2023.

5. We will collect the full gender and ethnic diversity split of the Senior Management Team and the full ethnic diversity split of the Board

and report this in our 2023/24 annual report to fully comply with the listing requirement LR9.8.6 R.

6. The management gender split has been subject to assurance by ERM CVS. See independent assurance report on pages 77 and 78.

7. 101 of our 138 senior managers self-reported their ethnicity via the employee database and 11 managers identified as ethnically

diverse (non-white).

RS Group plcAnnual Report and Accounts for the year ended 31 March 202364

Talent development and leadership

Attracting and retaining top talent remains key to

our long-term success. Our talent strategy is about

enabling and accelerating the development of

our most high-performing people, with a strong

diversity lens, while providing all our people

with opportunities to learn, grow and achieve

their full potential.

Our Future Shapers programme is focused on

investing in our people and their careers by

growing and developing their leadership skills.

This programme continues to grow with 16

employees taking part in 2022/23, experiencing

award-winning executive development from

experts Ivy House through participation in their

masterclass programme, coaching, mentoring and

personal development. Additionally, we ran an

Include Me development programme designed

to promote an inclusive culture, which was

experienced by c. 300 leaders between January

and May 2022.

Learning and development

We are committed to investing in skills, education

and training programmes for our people. Through

our global learning hub, My Academy, over 159,000

hours of training were completed in 2022/23, on

both mandatory and non-mandatory content.

This online learning is supplemented by local

bespoke learning where required. For example,

our EMEA sales teams have been trained in value

selling and RS Americas is partnering with

education providers and industry experts

to enable employees to gain professional

qualifications and upskill their technical

and behavioural capabilities.

In addition, as part of a partnership with

Women in Electronics, we have 30 women

in our organisation, at all levels of the

business, participating in personal and

professional development.

We continue to provide apprenticeships and in

2022/23 we supported 267 colleagues in the UK

to develop their knowledge, skills and behaviours

in roles that include various levels of management,

data analytics, project management and business

transformation. RS in the UK is a Gold member of

the 5% club, a dynamic movement of employers all

of whom are inspired to take action for increased

inclusive and accessible workplace training.

Reward and benefits

Our Group reward policy ensures base pay levels

are set to ensure we pay a real-living wage, are

competitive to attract and retain top talent and

offer market-leading bonus and long term

incentive plans (LTIPs).

We regularly evaluate our incentive schemes and

benefits packages to provide the most competitive

physical, financial and social wellbeing benefits.

In response to the cost of living crisis, in 2022/23

we supported our people through this difficult

period, providing ad hoc cost of living support

payments. We also introduced two new benefits:

– For employees we introduced the RS YAY! Award,

a share plan that enables colleagues across

the globe the potential to own up to 100 shares

in RS Group plc (see remuneration in action

on page 122)

– For senior leaders we introduced the Journey

to Greatness (J2G) LTIP Award, and one of its

performance measures is linked to our employee

engagement score (see page 120)

Top 100

For the second consecutive year, RS ranked in the

Top 100 Apprenticeship Employers in the UK for 2022

>200

leaders from across the Group

joined our Global Leaders Event

in April 2022

EMPOWERING OUR

PEOPLE IN ACTION

AMAZING

LEADERS

Our Amazing Leaders framework (show passion, act

with humility, demonstrate trust) is the blueprint for

leadership across RS. To continue to evolve culture

through leaders’ behaviour, Amazing Leaders has

been integrated into performance conversations,

talent discussions and all leadership development

activity, including team development.

At our Global Leaders Event in April 2022 over 200 leaders

from across the Group came together to craft and share

their personal leadership purpose, articulating the impact

of their leadership on others – creating a strong

foundation to grow a more purpose-led culture.

All new leaders joining the organisation are invited to

participate in a small group session to explore Amazing

Leaders and identify the personal development that is

important to them. Our goal is to ensure that all leaders

know what good looks like and take personal ownership

and responsibility for becoming the best leader they

can be for their people, using the tools and resources

that RS provides.

Capability development

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

65RS Group plc 65Annual Report and Accounts for the year ended 31 March 2023

ESG continued

By 2029/30 we aim for zero accidents involving our people.

All accident frequency rate (per 200,000 hours)

0.40

25% improvement from 2021/22

Target Zero performance

The health, safety and wellbeing of our people

underpins everything we do. Through our Target

Zero programme, we are committed to protecting

our people, reducing incidents and supporting

physical and mental health.

Our performance has improved this year and we

are now back to a more historical trend on health

and safety. This is following a focus on establishing

a stronger health and safety culture at our newer

sites that had higher accident rates in 2021/22.

This is in part reflected in the increased reporting

of near misses and an enhanced understanding

of unsafe acts leading to near misses and potential

accidents.

None of the accidents reported in the year resulted

in life-changing injuries and there were no

work-related fatalities. In Asia Pacific, we were able

to conduct remote visual audits of our operations

in order to keep people safe in the region,

which has been particularly advantageous due

to travel restrictions. In 2022/23 we completed

17 visual inspections.

All our sites have health and safety management

systems in place. Of these, 27 sites are certified

to ISO 45001 or an equivalent standard, covering

67% of floor area and 45% of sites.

Promoting mental health and

physical wellbeing

Ensuring our people are happy, healthy and able

to perform at their best is vital to our success. To

provide emotional support to our people, we have

63 mental health first aiders across the Group. We

have provided all employees with access to online

mental health awareness training, to equip our

managers in particular, with the resources they

need to support their teams.

By 2029/30 we want to inspire 50% of our employees to use their volunteer time to have a positive

impact on global communities.

% of employees who have volunteered in the last two years

18%

3% in 2021/22

2023 2022 Change

All accidents 33 40 (18)%

All accident frequency rate per 200,000 hours 0.40 0.53 (25)%

Lost time accidents 22 23 (4)%

Lost time accident frequency rate per 200,000 hours 0.27 0.31 (13)%

Total calendar days lost 333 252 +32%

Near misses reported 16,740 13,770 +22%

Near misses per head 1.96 1.76 +11%

For more health & safety data please visit our ESG data centre: www.rsgroup.com/ESG

Health, safety and wellbeing Volunteering

1. Includes the 3% recorded in 2021/22.

Each year, our employees receive two days paid

leave to volunteer at charitable initiatives and

good causes that boost their physical and mental

wellbeing, as well as benefiting the communities

that surround us.

In the last two years, 18% of our people

volunteered to support their chosen charitable

cause, or one of our social impact partners –

The Washing Machine Project or Engineers

Without Borders-International (see page 61).

Examples include employees in the UK

supporting a local hospice and food bank, as

well as colleagues in Spain and Italy planting

trees in the local community.

RS Group plcAnnual Report and Accounts for the year ended 31 March 202366

WHAT’S NEXT?

> Engaged employees:

– Continue to improve our employee engagement score to reach

the top 10% of high-performing companies

– Deliver on outcomes of employee engagement surveys,

ensuring that we continue to listen and act on the opinions

of all of our people

> D&I:

– Continued focus on creating a more diverse leadership team and

a more inclusive culture

– Evolve our D&I strategy and improve our diversity data across all

of our businesses and markets

> Capability development:

– Focus on leadership and management development

– Evolve our learning platform and offerings to support development

of strategic capabilities underpinning delivery of our strategy

> Health, safety and wellbeing:

– Focus on zero accidents across the organisation

– Continued focus on mental health and the overall wellbeing

of our employees

> Volunteering:

– Encourage employees to use their two paid annual

volunteering days, giving their time and skills to have

a positive community impact

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

67RS Group plc Annual Report and Accounts for the year ended 31 March 2023 67

DOING BUSINESS

RESPONSIBLY

As we grow, it is essential we do so responsibly.

Our strong governance, ethics and compliance

approach ensures that doing the right thing

underpins everything we do, both within our direct

business and global value chain, so that we remain

a trusted and transparent partner to our

stakeholders.

We are committed to raising environmental and

ethical standards across our supply chain through

our responsible procurement approach and ESG

supplier action plan. To support this, we are

introducing ESG objectives into our supplier

partnerships, starting with our strategic suppliers.

ESG continued

Status key

Each of our actions are broken down into a series of annual targets that need

to be met in order to remain on track to achieve our 2025 and 2030 goals.

The colour coding below reflects our current position:

On track or ahead

Slightly behind target – monitor closely

Not on track – further action required

More information is available in our full ESG scorecard: www.rsgroup.com/ESG

Our commitments and progress

2030 ACTIONS PERFORMANCE STATUS COMMENTARY READ MORE

Incentivising ESG progress:

– ESG-related targets included in our employee

rewards programme across all levels and

geographies

50%

of employees had their annual

incentive aligned to Group

carbon reduction in 2022/23

– 50% of employees were

incentivised to deliver our Scope 1

and 2 carbon emissions reduction

targets in 2022/23

See page 70

ESG Report

rsgroup.com/esg

Responsible supply chain:

– Evaluate our suppliers against our high

ethical and environmental standards. Set

ESG objectives for strategic suppliers

52%

of suppliers by spend signed our

ethical trading declaration

– We have increased supplier

engagement on ESG priorities

through the launch of our ESG

supplier action plan and

handbook. The results have been

positive and we will continue to

embed our ESG objectives into

partnership scorecards and

quarterly business reviews

See page 71

ESG Report

rsgroup.com/esg

50%

of suppliers by spend have an

EcoVadis membership

49%

of RS PRO suppliers by spend

with a Sedex membership

RS Group plc68 Annual Report and Accounts for the year ended 31 March 2023

Strategic oversight from the top

Our commitment to ESG is driven by strong

governance from the very top of the Group.

The Board has strategic oversight for ESG,

while the SMT is responsible for the operational

management of our 2030 ESG action plan and

overseeing development of our ESG Solutions

brand for customers.

In 2022/23 we established the ESG solutions

function to ensure dedicated oversight for delivery

of our 2030 action plan across RS and with our

stakeholders, while supporting business growth

through the development of ESG product and

service solutions. Debbie Lentz, President ESG

Solutions is responsible for all ESG aspects and

sits on the SMT reporting to the CEO.

To reinforce our strong ESG governance approach

we have an ESG Committee comprised of key SMT

members and chaired by a Non-Executive Director.

It meets twice a year to govern development,

delivery and reporting of our 2030 ESG action plan.

Our strong ESG leadership approach is

complemented by a suite of policies and

procedures that ensures robust governance, ethics

and compliance across our business and wider

supply chain. All our policies and standards are

available on our website: rsgroup.com/esg

The Board and its Committees support the

strategy and governance of the Group’s ESG

approach. The Board has at least one overarching

ESG strategy session each year, supported by deep

dive sessions on key ESG topics and performance

updates and reviews. In 2022/23 the Board

reviewed the Group’s ESG double materiality

results (page 9), the 2030 ESG action plan and net

zero performance and future priorities and the

ESG solutions function’s commercial strategy.

The Board is supported by the Audit Committee.

The Audit Committee oversees compliance to the

11 recommendations of the Task Force on Climate

Related Financial Disclosures (TCFD), reviews and

recommends to the Board approval of key ESG

disclosures, ensures horizon scanning of emerging

We are also members of the United Nation’s Global

Compact (UNGC) and our priorities are aligned to

six UN SDGs. For further standards and

compliance please see our ESG Report and

assurance of our data by ERM CVS (pages 77

and 78).

In December 2022, we were shortlisted for the

Lloyds Bank Sustainable Business of the Year

Award at the edie Awards 2023. The award

recognises organisations that are scaling up

commitments and actions across all areas

of corporate sustainability to advance the

green economy.

To read more about our ESG approach,

performance and progress, our 2022/23 ESG

Report can be found here: rsgroup.com/esg.

Strong governance, ethics and

compliance approach

Modern Slavery

We have a responsibility both as a business and

as individuals to tackle any form of modern slavery.

We will not tolerate, facilitate or condone any form

of modern slavery across our business or

throughout our supply chains. This is supported

through the commitment to, and compliance of,

our employees, suppliers and third-party providers

with our RS Group anti-slavery and human

trafficking policy.

Ethics

We have a broad set of ethical standards for our

people and suppliers. Our procurement policy is to

only source products and services from those that

meet, or are willing to take action to meet, those

standards. This is made clear to all our employees

through our Code of Conduct and to our suppliers

through our ethical trading policy.

Whistleblowing

Speak Up, our dedicated whistleblowing policy and

helpline, promotes an open and accountable

culture where employees can raise ethical

concerns confidentially without fear of victimisation.

The independent reporting tool is operated by a

third party and available to all our global employees.

ESG legislation and compliance with developing

reporting requirements. The Audit Committee

reviewed our 2022/23 ESG, TCFD and Scope 3

disclosures and quantitative climate-scenario

modelling.

ESG reporting approach

Our ESG approach is tailored to meet our

stakeholders’ needs identified in our ESG

materiality assessments. It is focused on

generating long-term value for all our stakeholders

by mitigating our key ESG risks and leveraging the

opportunities, as well as meeting existing and

emerging regulatory requirements.

We have achieved leading status in a number

of global ESG ratings (see page 1) including being

awarded a AA by MSCI and being included in the

Dow Jones Sustainability Indices Europe for the

first time. This reflects our strong progress,

differentiates our brand against our competitors

in the eyes of our customers and supplier partners

and places us in a good position for inclusion

in ESG investment funds.

We are progressing our actions to comply with

emerging ESG regulations, such as the

International Sustainability Standards Board (ISSB),

UK Transition Plan Taskforce (TPT), Corporate

Sustainability Reporting Directive (CSRD) and the

EU and UK Green Taxonomies. The completion and

disclosure of our ESG double materiality results,

Scope 3 emissions disclosure and assurance and

our enhanced TCFD disclosure with financial

modelling, forms a key part of these emerging

requirements and puts us in a strong position for

early compliance.

For our reporting, we align to the sector-specific

recommendations of the Sustainability Accounting

Standards Board (SASB) and the Global Reporting

Initiative (GRI). In 2022/23 we completed a gap

analysis to ensure that any additional data required

by these standards was consolidated into our ESG

data centre. This has supported us in preparation

for the ISSB standards which are due to be

finalised in 2023/24.

In 2022/23, we received 38 Speak Up reports

globally and they were reviewed and monitored by

our Audit Committee (see page 111). Appropriate

actions were taken to address them. We continued

to deliver Speak Up training, awareness and

refresher campaigns across the Group.

Anti-bribery and corruption

We have a zero-tolerance stance on all forms of

bribery and corruption and are committed to

conducting our business affairs in line with UNGC

Principle 10. Our Group-wide anti-bribery policy

covers our stance on bribes, gifts and hospitality,

facilitation payments, political and charitable

contributions. In the anti-bribery campaign which

finished in 2022/23, 90% of our employees in

higher risk markets and roles (c. 2,000 employees)

completed the anti-bribery training.

Data and information security

We have a robust information security programme,

central to which is an information security policy

that is aligned with the principles of NIST-CSF and

ISO 27001. We recognise the high level of trust that

our customers, suppliers and employees place in

us. This is why we maintain a high level of focus on

data and information security as part of our cyber

security breach / information loss principal risk

(see page 44).

We delivered dedicated information security

training to c. 5,800 employees in 2022/23. We also

deliver engaging security awareness material

regularly that helps our employees to stay safe

online, including short videos featuring

information security tips developed through

collaboration with security specialists. See

managing risks in action on page 41.

Privacy

In 2022/23, 88% of our employees who deal with

personal data from the UK and EU (c. 3,500

employees) completed privacy training, with more

frequent training given to employees who handle

personal data as a core part of their role.

ESG governance

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69RS Group plc Annual Report and Accounts for the year ended 31 March 2023 69

ESG continued

By 2029/30 we want to include ESG-related targets in our employee rewards programme across all levels

and geographies.

Incentivising ESG 2022/23 progress

ESG metrics in the Group RS Way

performance scorecard

50%

of employees with carbon

reduction in annual bonus

By integrating ESG targets in our employee

rewards programme we are driving progress

of our 2030 ESG action plan.

We have eight ESG metrics in our performance

scorecard, including three SBTs covering Scopes 1,

2 and 3 emissions, which the Board reviews

annually and uses to manage performance. Our

Group annual incentive also has a performance

measure linked to our climate action goals.

In 2022/23, 50% of Group employees have their

annual incentive aligned to Group carbon

reduction and 89 of our senior leaders participate

in the J2G LTIP which has employee engagement

as a measure.

Sustainability-linked loan (SLL)

In October 2022, we refinanced our SLL facility,

which increased from £300 million to £400 million,

and its maturity has been extended to five years at

similar terms to the previous SLL facility that was

agreed in October 2021. It is directly linked to the

achievement of three of the Group’s most material

2030 ESG actions which are: the reduction of direct

carbon emissions (Scope 1 and 2 CO

e emissions),

packaging intensity and the percentage of

management that are women.

DOING BUSINESS

RESPONSIBLY IN ACTION

DIVERSIFYING

OUR SUPPLY CHAIN

At RS, we believe that promoting diversity and inclusion within our own

business and across our value chain leads to greater innovation, better

decision making and ensures we can recruit and retain top talent to

our industry.

We have set specific diversity targets to ensure our team reflects the

communities we serve by working towards 40% of our leaders being women

and 25% ethnically diverse by 2030. Also, we ask our supplier partners to

prioritise diversity and inclusion within their own businesses and sourcing

programmes with their suppliers.

As part of this commitment, we have established our first supplier diversity

and inclusion programme within the RS Integrated Supply business in the US.

We have chosen to start in the US as supplier diversity within procurement is

already a mature and best practice approach there due to supporting

regulation. It is also a high priority for our customers.

Our aim is to provide opportunities to businesses that have historically been

underrepresented in global supply chains by making it easier for them to

partner with us. By working with small, disadvantaged, women-owned,

ethnically diverse and other underrepresented businesses we are building

stronger and more diverse supply chains, which ultimately helps to create

more equal communities and resilient local economies.

We will consider expanding this to other countries in the future, as our

experience and stakeholder priorities increase.

Incentivising ESG progress

Annual Report and Accounts for the year ended 31 March 202370 RS Group plc

By 2029/30 we want to evaluate all our suppliers against our high ethical and environmental standards and set ESG objectives for

strategic suppliers.

Suppliers signed our ethical trading declaration

Suppliers with EcoVadis membership

52%

23 pts increase from 2021/22

50%

10 pts increase from 2021/22

Suppliers have committed to SBTi

RS PRO suppliers are Sedex members

25%

6 pts increase from 2021/22

49%

19 pts increase from 2021/22

1. Suppliers by spend.

WHAT’S NEXT?

> ESG governance:

– Review ethics and compliance policies to ensure they reflect

best practice

– Review ESG governance structure at a Board and SMT level

> Incentivising ESG progress:

– Further embedding ESG KPIs into annual incentives and objectives

> Responsible supply chain:

– Embedding our 10-step supplier ESG action plan with EMEA and

Indirect Procurement suppliers, while further rolling out the

programme to suppliers in other regions

– Developing ESG objectives in partnership with suppliers

and embedding into partnership scorecards and quarterly

business reviews

– Continue to create supporting materials that help to educate and

facilitate conversations with suppliers around Better World

products, EcoVadis and Sedex assessments and carbon reduction

and setting SBTs

– Embedding the new supplier ESG qualification / requalification

questionnaire across the Group

– Working proactively with suppliers to drive ESG performance

improvements using the intelligence gathered from launching

Better World products, EcoVadis, Sedex, SBTi and Scope 3 emission

reporting to set objectives and drive progress

Responsible supply chain

Highlights from 2022/23 include:

– All of suppliers on our existing RS database are risk screened against global

government-issued lists

– Created a supplier questionnaire containing key ESG requirements that

suppliers must complete as part of our pre-qualification process as well as

requalification at agreed intervals. This was rolled out by Indirect

Procurement, Americas and RS Integrated Supply in 2022/23 and will be

extended across the Group in 2023/24

– 143 inspections of RS PRO Asia suppliers have taken place since May 2019.

This covers 90% of RS PRO suppliers operating in higher-risk sourcing

countries

– Held an EMEA Supplier ESG Forum in February 2023, where we launched

our ESG Supplier Handbook and set out three key asks linked to our global

ESG goals with 10 key actions (see pages 37 and 57). The handbook is

available on our website: rsgroup.com/esg

– 225 suppliers attended six webinars with EcoVadis in March 2023, to

share the platform, benefits of getting rated and best practice in the four key

areas of environment, labour and human rights, ethics and sustainable

procurement

– Held EcoVadis training for c. 120 employees in product and supplier

management roles

More information in our ESG Report: rsgroup.com/esg

Embedding ESG standards with our

key suppliers

It is vital that businesses across the value chain

are aligned on the issues that matter most and

collaborating to drive ESG action.

By championing sustainable products and

packaging, green logistics, a net zero supply chain

and responsible procurement practices, we are

reinforcing our pivotal role at the centre of the

global industrial value chain, helping to drive ESG

action with our supplier partners, on behalf of

our customers.

By establishing clear standards upfront in our

supplier engagement process, we can ensure that

we are prioritising suppliers that share our values

and that display clear evidence of taking ESG

improvement actions both within their own

businesses and with their partners.

In 2022/23, we continued to strengthen our

approach towards screening and managing

suppliers, which helps to reduce risk and increase

our value to customers. We target our top 67% of

suppliers by spend (c. 350 businesses) as well as RS

PRO suppliers, to embed our ESG standards within

their processes.

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71RS Group plc Annual Report and Accounts for the year ended 31 March 2023 71

TCFD:

OUR PROGRESS

ESG continued

At the time of publication of this Annual Report, we have complied with the

requirements of Listing Rule 9.8.6R, by including climate-related financial

disclosures that are consistent with the TCFD recommendations across its

four pillars and 11 recommendations.

For further information on how we embed action

on our CRROs across our governance, strategy,

financial investments, risk management and

metrics and targets see our TCFD Factsheet

2022/23.

In 2022/23 we conducted a quantitative financial

analysis of our CRROs across different time

horizons and scenarios in order to provide further

granularity around the financial impact of our key

climate-related risks and opportunities. The basis

of the financial models is the existing RS Group

five-year strategic plan and capital allocations.

Selected climate scenarios were overlayed onto

these and projected out to 2050 to show how the

business plan may be impacted under various

climate scenarios.

We modelled the unmitigated financial impact

range of the transition risks and opportunities

under three different climate scenarios from the

International Energy Agency, which were used in

our previous TCFD analysis, reflect best practice

and are consistent with the CDP. For physical risks,

we used two Intergovernmental Panel on Climate

Change Representative Concentration Pathways

(RCPs) – see reference table on page 75.

We identify the timeframe for when the

risk / opportunity is likely to emerge:

– Short-term: 0–5 years

– Medium-term: 5–10 years

– Long-term: 10–100 years

There are no short-term CRROs identified and

therefore we have modelled our medium and

long-term CRROs in the table on page 76.

In 2022/23 a £3.7 million investment was

approved to begin decarbonising our DC

in Beauvais, France. Net zero costs for

DCs have been built into the goodwill

impairment on page 169.

FINANCIAL IMPACT OF CLIMATE CHANGE –CURRENT ASSESSMENT

In 2021/22 we published our first TCFD disclosure which was consistent with the

11 recommendations and was well received by our stakeholders. Our 2022/23 disclosure builds

on this and reflects progress made, specifically in relation to quantitative climate-modelling

of our CRROs. Below we provide a summary of the results.

Through our ongoing work in 2022/23, we identified five key CRROs:

Transition:

1. Changes in market demand and customer segments (risk / opportunity)

a. Opportunity: growth in customer segments linked to the low carbon economy (e.g. renewables

or EVs) and product categories that enable the net zero transition e.g. automation and control

products that reduce energy consumption

b. Risk: decline in traditional customer segments reliant on fossil fuels and product categories that

aren’t required in the low carbon economy

2. Logistics decarbonisation (risk)

Risk: increased costs associated with carbon freight taxes and low carbon technologies

3. Reduced emissions and energy costs by installing solar panels at DCs (opportunity)

Physical:

4. Impact of extreme heat on our DCs (risk)

5. Impact of extreme weather (storms / floods / landslides on DCs (risk))

The progress table on pages 73 and 74 is a summary of our most material actions taken in 2022/23 as we

believe that this is the most valuable information to our stakeholders. Where possible, we have made use

of the TCFD Final Report and Annexes (October 2021), and technical supplements for our quantitative

modelling and scenario analysis. We will continue to use these resources to strengthen our disclosure in

the future.

For an in-depth overview against all 11 recommendations, please review our standalone TCFD factsheet

at: rsgroup.com/esg

RS Group plcAnnual Report and Accounts for the year ended 31 March 202372

Our key progress in 2022/23 included:

TCFD Pillar 2022/23 Highlights More information Future plans

Governance

– ESG solutions function formed which is focused on broadening the ESG solutions we offer our customers See page 56 – Further embedding awareness, ownership

and action relating to our CRROs with

management teams across the Group

– Reviewing and strengthening our ESG

governance structure and developing climate

skills at a Board, SMT and management level

– Better World product range launched in UK and Republic of Ireland See page 56

– Five ESG sessions held with the Board and Audit Committee in 2022/23, covering ESG solutions, launch of Better World products, 2030 ESG

action plan, TCFD quantitative climate scenario analysis, actions, disclosures and results and ESG performance reporting

See pages 69, 94 and 97

– Strategic ESG solutions session with SMT and Board to support development of Better World products and new sustainability solutions for

customers, and review net zero delivery progress and future initiatives

See page 69

See page 4 in TCFD

2022/23 standalone

factsheet

– TCFD session held with the SMT and key functional management teams e.g., product and supply chain leadership team and ESG solutions team,

to further embed awareness, ownership and action related to our CRROs

See page 69

See page 4 in TCFD

2022/23 standalone

factsheet

– Formalisation of a net zero steering group to lead and coordinate global decarbonisation and net zero delivery across our operations See page 4 in TCFD

2022/23 standalone

factsheet

Strategy

– Quantitative modelling of CRROs performed across a range of global warming outcomes from 1.4 ºC to 4.3 ºC See below and pages 8 to

13 in TCFD 2022/23

standalone factsheet

– Increase Better World product range and roll

out to other EMEA and US markets

– Establish ESG solutions offerings for

customers

– Grow support to low carbon industries e.g.

UK offshore wind and EV industries

– Advocating with suppliers and customers to

focus on operational and product

decarbonisation

– Progress initiatives for net zero 2030 in direct

operations: site decarbonisation at Beauvais,

France, and Nuneaton, UK; energy

management across all DCs and continue

switch to electric or hybrid vehicles

– Establish ESG strategy, initiatives and

reporting in new acquisitions: Risoul and DH

– New capital expenditure requirements for net

zero activities will continue to being built into

the financial five-year plan, as they are

defined

– Preparing our climate transition plan in

preparation for UK TPT

– ESG solutions function formed with customer sustainability propositions a key focus e.g., Better World products launched in UK and Republic of

Ireland, new services to help customers save energy and achieve climate goals such as RS Industria

(see page 16), as well as to establish RS as a

leading maintenance, repair and operations provider for low carbon growth industries e.g. UK offshore wind sector

See page 56

– RS leading suppliers and industry to focus on development of sustainable product and service solutions, as well as serving low carbon industries See pages 56 and 71

– Increased sustainable packaging and logistics optimisation to support our customers’ climate goals. In 2022/23 we reduced packaging intensity

by 32% and Scope 3 product transport emissions intensity by 28% since 2019/20

See pages 54 and 55

– ESG supplier action plan launched with EMEA and Integrated Supply suppliers. Key actions around product sustainability, carbon reduction and

setting SBTs

See page 71

– Net Zero transition plans outlined with Scope 1, 2 and 3 carbon emissions targets and initiatives to decarbonise our DCs, transport network and

products – validation in progress with SBTi

See pages 51 and 52

– £3.7 million financial investment approved to begin decarbonising our DC in Beauvais, France (e.g. solar panels on roof, heat pumps for space

heating) and funding approved to scope activities at Nuneaton, UK DC. Further pipeline of net zero energy management projects underway

worldwide

See page 51

– Strategy to acquire businesses with stakeholder value-creation opportunities and product offerings that support sustainability. ESG is a key

workstream for due diligence and integration in acquisitions including with Risoul and DH. Year one priority is to obtain robust climate-related

data and establish a pipeline of decarbonisation initiatives for energy, buildings and vehicles

Pages 6 and 7 of TCFD

2022/23 standalone

factsheet

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

73RS Group plc Annual Report and Accounts for the year ended 31 March 2023 73

ESG continued

TCFD Pillar 2022/23 Highlights More information Future plans

Risk

– High level CRRO risk register and mitigation plans developed with functional and regional business owners Page 14 of TCFD 2022/23

standalone factsheet

– Group risk team embedding CRRO risk

– Proactive climate business continuity

planning for Fort Worth, US, in line with

exposure risk to physical effects of extreme

weather events

– Strategies and controls in place to mitigate physical climate-related risks on operations and wider supply chain Page 11 of TCFD 2022/23

standalone factsheet

– Review of ESG impacts incorporated at due diligence stage of acquisitions and net zero investment lines added to integration plans See pages 4, 6 and 14 of

TCFD 2022/23 standalone

factsheet

Metrics and

targets

– Progressing towards 2030 net zero target with 58% reduction in direct carbon emissions since 2019/20 and a 28% reduction in Scope 3 product

transportation intensity (links to physical risks and logistics decarbonisation costs)

See pages 50, 52 and 55 – Further Scope 3 carbon emissions reporting

refinement to provide more robust and

granular data and move to an activity-based

reporting model for supplier and product

categories. Greater focus on Scope 3 action

plans and increased disclosure of initiatives

and progress

– Re-baselining targets for Scope 1 and 2

carbon emissions, packaging intensity and

Scope 3 product transportation emissions

– Finalising validation of our Scope 1, 2 and 3

targets with the SBTi

– Carbon intensity reduced by 72% since 2019/20 (links to physical risks) See page 53

– Progressing validation of our Scope 1, 2 and 3 carbon targets with SBTi (links to all CRROs) See page 52

– In 2022/23, we conducted a Scope 3 assessment and this identified purchased goods and services and upstream transport and distribution

(product transportation) as our two most material categories. As such we have disclosed these two categories on page 55 and had the

methodologies and data externally assured. We will also provide more detail on our wider Scope 3 emissions categories in our ESG Report:

rsgroup.com/esg (links to transition CRROs)

See page 55

– Sustainability-linked loan facility increased to £400 million and extended to five years, aligned to carbon reduction goals and supports net zero DC

investment (links to physical risks and logistics decarbonisation costs)

See page 70

– 50% employees have their annual incentive aligned to Group climate reduction goals (links to physical risks) See page 70

– Internal shadow carbon price applied and reported by businesses in an RS Carbon Reduction League for direct operations, business travel and

product transportation (links to physical risks and solar panel opportunity)

See page 51

– Five climate metrics monitored by the SMT quarterly and Board twice a year as part of The RS Way scorecard include: carbon emissions,

packaging intensity, percentage of waste recycled, product transportation, percentage of suppliers by spend signed up to SBTi (links to all CRROs)

See pages 50 to 57

– Key CRRO metrics being monitored by relevant functional management teams include:

⸰ Physical – DC and office temperatures, employee productivity and wellbeing, energy reductions

⸰ Transition – Better World products and ESG solutions revenue, freight costs and carbon intensity

See pages 10 to 13 of TCFD

2022/23 standalone

factsheet

– Overall CDP climate leadership score of A- and A for supplier engagement (links to all CRROs) See page 1

RS Group plcAnnual Report and Accounts for the year ended 31 March 202374

Temperature rise/

stabilisation by 2100

Transition scenarios

NZE – The Net Zero Emissions by 2050

1.4°C stabilisation

APS – The Announced Pledges Scenario

2.1°C rise

STEPS – The Stated Policies Scenario

2.6°C rise

Physical pathways

RCP 8.5 – Representative Concentration Pathway 8.5

4.3°C rise

RCP 4.5 – Representative Concentration Pathway 4.5

2.4°C rise

1. Maps out a way to achieve a stabilisation in the rise in global average temperatures by 2100, alongside

universal access to modern energy by 2030.

2. Assumes that all aspirational targets announced by governments are met on time and in full, including

their nationally determined contributions, long‐term net zero and energy access goals.

3. Does not take for granted that governments will meet all announced goals and instead looks at where the

energy system might evolve to without additional policy implementation, looking at existing policies and

measures and those under development.

4. A pathway where greenhouse gas emissions continue to grow unmitigated, leading to a best estimate

global average temperature rise of 4.3°C by 2100.

5. A moderate scenario in which emissions peak at about 2040 and then decline, leading to a best estimate

global average temperature rise of 2.4°C by 2100.

Further information can be found in our standalone TCFD 2022/23 factsheet: rsgroup.com/esg

KEY FINDINGS

– The revenue opportunity for sustainable

products and services and targeting new

customer segments linked to the low carbon

transition is significant

– We are focusing on growing our existing

product mix, introducing new sustainable

product and service solutions and targeting

low carbon customer segments. With our

diversity and agility – we are well placed to

capitalise on this opportunity

1. Products

– Costs for logistics are likely to increase due to

decarbonisation of transport technologies and

increasing carbon taxes

– Decarbonising our logistics emissions by modal

shift, supply chain localisation and optimisation

and sustainability KPIs for logistics providers

remains a high priority to reduce cost and

carbon impacts and meet customers’ growing

sustainability requirements

2. Logistics

– Our exposure to the physical effects of

climate change is limited

– Our DCs are in areas of low likelihood of

physical disruption, with the exception of Fort

Worth, US, where we are doing proactive DC

improvements and insurance and business

continuity planning

3. Physical

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

75RS Group plc Annual Report and Accounts for the year ended 31 March 2023 75

ESG continued

Raw

risk / opportunity

Mitigating

activity cost

Residual

risk / opportunity

Medium-term

financial impact

(£m p.a. as at 2030)

Long-term

financial impact

(£m p.a. as at 2050) Investment

Medium-term financial

impact

(£m p.a. as at 2030)

Long-term

financial impact

(£m p.a. as at 2050)

NZE APS STEPS NZE APS STEPS NZE APS EPS NZE APS STEPS

Transition Definition

Risk 1a. Product: changes in customer

segments and product demand

Decline in traditional customer segments reliant

on fossil fuels and product categories that are

not required in the low carbon economy

1 1 1 1 1 1 1 1 1 1 1 1 1

Risk 2. Logistics: decarbonisation costs Increased costs associated with carbon freight

taxes and low carbon technologies

1 1 1 1 1 1 1 1 1 1 1 1 1

Opp 1b. Product: changes in customer

segments and product demand

Growth in customer segments linked to the low

carbon economy and product categories that

enable the net zero transition

2 1 1 3 2 1 1 2 1 1 3 2 1

Opp 3. DC solar generation Solar panels on DCs to reduce energy costs

and increase resilience

1 1 1 1 1 1 1 1 1 1 1 1 1

Physical

Risk 4. Physical: Impact of extreme

heat on DCs

Increased costs associated with cooling systems

or potential impacts on the health, safety and

wellbeing of our DC people which could reduce

productivity

1 1 1 1 1 1 1 1 1 1 1 1 1

Risk 5. Physical: Impact of severe

weather on DCs

Flooding and storms have the potential to

disrupt our operations and logistics and cause

physical damage to our infrastructure

1 1 3 1 1 2 1 1 1 2 1 1 2

Impact key: Risks Opportunities

This impact key is aligned

with how we measure our

global risks and was also

used to distinguish the

financial impact of our key

ESG material issues, as

shown on page 9.

Very high (5) Very high (5) Group / region / business e.g. EMEA, Asia Pacific, Americas, Integrated Supply – Greater than 32% of operating profit

High (4) High (4) Group / region / business e.g. EMEA, Asia Pacific, Americas, Integrated Supply – Between 24% and 32% of operating profit

Medium (3) Medium (3) Group / region / business e.g. EMEA, Asia Pacific, Americas, Integrated Supply – Between 16% and 24% of operating profit

Low (2) Low (2) Group / region / business e.g. EMEA, Asia Pacific, Americas, Integrated Supply – Between 8% and 16% of operating profit

Very low (1) Very low (1) Group / region / business e.g.. EMEA, Asia Pacific, Americas, Integrated Supply – Less than 8% of operating profit

See pages 11 to 13 of our TCFD

factsheet for the actions and key

metrics monitored for each of our

CRROs.

High level results of the quantitative financial scenario analysis

of our CRROs are shown below, with the financial impact

of each risk / opportunity shown in the key.

RS Group plcAnnual Report and Accounts for the year ended 31 March 202376

ESG

ASSURANCE

Independent limited assurance statement to RS Group plc

ERM Certification and Verification Services Limited (ERM CVS) was engaged by RS Group plc (the Group) to provide limited assurance in relation to the selected information set out below and presented in RS Group’s

2022/23 Annual Report and Accounts (the Report).

Engagement summary

Scope of our assurance

engagement

Whether 2022/23 data for the following ESG key performance indicators (KPIs) shown on pages 53 to 55 and 64 of the Report are fairly presented, in all material respects, with the

reporting criteria:

– Total Scope 1 and Scope 2 GHG emissions (tonnes CO

– Total Scope 3 GHG emissions from the following categories (tonnes CO

e):

⸰Category 1 – Purchased goods and services

⸰Category 4 – Upstream transportation and distribution

– Carbon intensity (tonnes of Scope 1 and 2 CO

e per £ million revenue)

– Product transportation emissions intensity (tonnes CO

e per tonne of product sold)

– Packaging intensity (tonnes per £ million revenue)

– Percentage of management that are women (percentage)

Reporting period

– 2022/23 (1st April 2022 – 31st March 2023)

Reporting criteria

– WBCSD/WRI GHG Protocol Corporate Accounting and Reporting Standard (2004, as updated in 2015 with the Scope 2 Guidance) for the Scope 1 and Scope 2 GHG emissions

– WBCSD/WRI GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard for the Scope 3 GHG emissions

– The Group’s internal definitions (basis of reporting) for the packaging intensity and percentage of management that are women KPIs, as described on pages 54 and 64 of

the Report

Assurance standard

and level of assurance

We performed a limited assurance engagement, in accordance with the International Standard on Assurance Engagements ISAE 3000 (Revised) ‘Assurance Engagements other

than Audits or Reviews of Historical Financial Information’ issued by the International Auditing and Standards Board.

The procedures performed in a limited assurance engagement vary in nature and timing from and are less in extent than reasonable assurance engagement. Consequently, the

level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement

been performed.

Respective responsibilities

The Group is responsible for preparing the Report and for the collection and presentation of the information within it, and for the designing, implementing and maintaining

of internal controls relevant to the preparation and presentation of the selected performance data.

ERM CVS’s responsibility is to provide conclusions to the Group on the agreed scope based on our engagement terms with the Group, the assurance activities performed and

exercising our professional judgement. We accept no responsibility, and deny any liability, to any party other than the Group for the conclusions we have reached.

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

77RS Group plc Annual Report and Accounts for the year ended 31 March 2023 77

Our conclusion

Based on our activities, as described below, nothing has come to our attention to indicate that the

2022/23 data for the ESG KPIs listed under Scope above and shown on pages 53 to 55 and 64 of the

Report are not fairly presented, in all material respects, with the reporting criteria.

Our assurance activities

Considering the level of assurance and our assessment of the risk of material misstatement of the

performance data, a multi-disciplinary team of sustainability and assurance specialists performed a

range of procedures that included, but was not restricted to, the following:

– Assessing the appropriateness of the reporting criteria for the selected ESG KPIs

– Interviews with the Group management personnel and external consultants responsible for the

management of the ESG KPI data to understand and evaluate the data management systems and

processes (including internal review processes) used for measuring, collecting and reporting the ESG

KPI data

– In-person site visits to three RS Group operating facilities in the United Kingdom, Germany and France

to review the data measurement, collection and reporting processes at the facility level and to test the

consistency of reported 2022/23 data for the energy and fuel use underlying the GHG emissions and

for packaging with underlying source data and related documentation

– An analytical review of the 2022/23 data for all the Group locations included in the reporting boundary,

including a review of the completeness of the data and of the mathematical accuracy of the

consolidation of the data

– A review of the unit conversion and emission factors used in the calculation of the GHG emissions data

and the alignment of these factors with the relevant sources

– A review of the definition of management roles applied by the Group in the calculation of the

percentage of management that are women, and a review of employee data by gender and grade

– A review of the presentation in the Report of the data relevant to the scope of our work, to ensure

consistency with our findings

The limitations of our engagement

The reliability of the assured information is subject to inherent uncertainties, given the available methods

for determining, calculating or estimating the underlying information. It is important to understand our

assurance conclusions in this context.

Our independence, integrity and quality control

ERM CVS is an independent certification and verification body accredited by the United Kingdom

Accreditation Service to ISO 17021:2015. Accordingly, we maintain a comprehensive system of quality

control, including documented policies and procedures regarding compliance with ethical requirements,

professional standards and applicable legal and regulatory requirements. Our quality management

system is at least as demanding as the relevant sections of ISQM-1 and ISQM-2 (2022).

ERM CVS applies a code of conduct and related policies to ensure that its employees maintain integrity,

objectivity, professional competence and high ethical standards in their work. Our processes are

designed and implemented to ensure that the work we undertake is objective, impartial and free from

bias and conflict of interest. Our certified management system covers independence and ethical

requirements that are at least as demanding as the relevant sections of Parts A & B of the IESBA Code

relating to assurance engagements.

The team that has undertaken this assurance engagement has extensive experience in conducting

assurance on environmental, social, ethical and health and safety information, systems and processes,

and provides no consultancy related services to the Group in any respect.

Gareth Manning

Partner, Corporate Assurance

UK, London

19 May 2023

ESG continued

ERM Certification and Verification Services Limited

www.ermcvs.com

Email: post@ermcvs.com

RS Group plcAnnual Report and Accounts for the year ended 31 March 202378

Non-financial information statement

NON-FINANCIAL

AND SUSTAINABILITY

INFORMATION STATEMENT

Our approach Policies and standards Due diligence Outcomes of policies Further information

Environmental

matters

We are developing sustainable operations

and product and service solutions to help

reduce environmental impacts and tackle

climate change.

Our strategic focus is to proactively limit

our environmental impacts to ensure our

business grows sustainably.

– Code of Conduct

– Global Environmental Policy

– Supplier Ethical Trading

Declaration

– Group Energy Management Policy

– Group Print, Promo and Gifts

policy

– The Board has strategic oversight

of the Group’s environment and

climate-related actions, which

includes our Group Environmental

Policy

– We monitor our environmental KPIs

on a quarterly basis and provide an

update on performance twice a year

– We collaborate with our strategic

suppliers to decarbonise our global

value chain, which includes asking

suppliers to develop more

sustainable products and set

science-based targets for their

direct and value chain emissions

– Read more about our net zero

commitments and climate action

as well as how we are advancing

sustainability across our global

value chain on pages 50 to 57 and

in our ESG Report:

rsgroup.com/esg

– Advancing

sustainability pages 50

to 57

– TCFD report

on pages 72 to 76

– ESG report:

rsgroup.com/esg

People

Our priority is to position RS as a career

destination of choice. We will do this by

creating a purpose-led, high performance

and inclusive culture that becomes our

greatest differentiator.

Our aim is to recruit the best people,

develop talent, generate greater

innovation, and encourage a range of

different views and perspectives.

– Code of Conduct

– Group Health & Safety Policy

– Modern Slavery Policy

– Diversity and Inclusion Policy

– Gender Pay Gap Report

– Employee Data Protection Policy

– Bullying and Harassment Policy

– Family Friendly Policy

– Benefits Policy

– Supplier Ethical Trading

Declaration

– The Board has oversight of our

people strategy which sets out

where we are investing in our people

and culture to support our strategy

– People-related policies are reviewed

by the Group’s HR function annually

to ensure they reflect best practice

and meet minimum control

standards

– Every employee is accountable for

reading and following the policies

included

– Employees are requested to

complete annual training on

diversity & inclusion

– Read more about how we are

empowering our people on pages

62 to 67 and in our ESG Report:

rsgroup.com/esg

– Empowering our

people pages 62 to 67

– Governance Report

pages 82 to 99

– Nomination

Committee report

pages 100 to 103

– ESG report:

rsgroup.com/esg

This section of the Strategic Report constitutes the Group’s non-financial

information statement, produced to comply with sections 414CA and 414CB

of the Companies Act 2006. A description of our principle risks and impact of

business activity can be found on pages 40 to 45. Some of the information

listed is incorporated by cross-reference and some of the below policies can

also be found on our corporate website: rsgroup.com/esg/codes-policies-

and-standards

1. RS Board reviews and approves this policy/standard on an annual basis.

2. RS Board receives regular updates on this policy/standard.

79RS Group plc Annual Report and Accounts for the year ended 31 March 2023 79

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Non-financial information statement continued

Our approach Policies and standards Due diligence Outcomes of policies Further information

Social matters

We have strict standards of behaviour that

we expect of our employees and supply

chain partners, which are set out in our

global Code of Conduct and Ethical

Trading Declaration. This includes

respecting and safeguarding our

people and the wider community.

We believe in inspiring our employees to

give back to our communities through

volunteering activities and fundraising.

Through our social impact partnership

with The Washing Machine Project, our

aim is to positively impact the lives of

over 100,000 people globally by 2030.

– Code of Conduct

– Group Health & Safety Policy

– Modern Slavery Policy

– Supplier Ethical Trading

Declaration

– Volunteering Policy

– We ask our suppliers to commit to

strong labour practices and ensure

their business and supply chain is

free from modern slavery by signing

our Ethical Trading Declaration

– We ask our third-party suppliers

to get EcoVadis rated and RS PRO

suppliers to become Sedex

members to continuously

benchmark and improve

their approach

– We conduct ethical inspections of

our high-risk private-label suppliers

– Employees are each given two days

a year to volunteer for their chosen

charitable cause

– Read more about how we are

empowering our people on pages

62 to 67 and in our ESG Report:

rsgroup.com/esg

– Empowering our

people pages 62 to 67

– Doing business

responsibly pages 68

to 71

– ESG report:

rsgroup.com/esg

Respect for

human rights

We recognise and respect the Universal

Declaration of Human Rights, ensuring

that all people have freedom, equality

and dignity.

We uphold the highest ethical and legal

standards within our own business and

throughout our supply chain. We only

source products and services from

organisations that are willing to both meet

these standards and ensure compliance

throughout their own supply chains.

– Code of Conduct

– Group Health & Safety Policy

– Modern Slavery Policy

– Supplier Ethical Trading

Declaration

– Speak Up Policy (whistleblowing)

1,2

– We ask our third-party suppliers

to get EcoVadis rated and RS PRO

suppliers to become Sedex

members to continuously

benchmark and improve

their approach

– We conduct ethical inspections

of our high-risk private-label

suppliers. See page 71

– Read more about how we are

empowering our people on pages

62 to 67 and in our ESG Report:

rsgroup.com/esg

– Doing business

responsibly pages 68

to 71

– ESG governance page

– ESG report:

rsgroup.com/esg

Anti-bribery

and corruption

We have a zero-tolerance stance on all

forms of bribery and corruption and are

committed to conducting our business

affairs in line with the United Nations

Global Compact Principle (UNGC) 10.

Our Group-wide anti-bribery policy covers

our stance on bribes, gifts and hospitality,

facilitation payments, political and

charitable contributions.

– Code of Conduct

– Anti-Bribery Policy

1,2

– Group Marketing Campaigns

Policy

– Group Competition Law

– Compliance Policy

– Group Embargoes Policy

– Speak Up Policy (whistleblowing)

1,2

– Employees are required to complete

an annual training on anti-bribery

and corruption prevention

– Read more about how we are

empowering our people on pages

62 to 67 and in our ESG Report:

rsgroup.com/esg

– ESG governance page

– Governance report

pages 82 to 99

– Audit Committee

report pages 104 to

111

– ESG report:

rsgroup.com/esg

Non-financial KPIs

More information on our non-financial KPIs is included on the pages below:

– Business model (page 13)

– Our strategy in action (pages 20 to 25)

– Non-financial KPIs (pages 30 and 31)

– ESG (pages 48 to 78)

1. RS Board reviews and approves this policy / standard on an annual basis.

2. RS Board receives regular updates on this policy / standard.

RS Group plcAnnual Report and Accounts for the year ended 31 March 202380

SECTION 172

STATEMENT

The Companies Act 2006 and section 172

Under the Companies Act 2006, our Directors are required

to act in a way that they consider, in all good faith, would

most likely promote the success of RS Group plc and its

stakeholders. Throughout 2022/23, we have strived to

continue to demonstrate how, as a considerate, sustainable,

responsible and solutions-driven business, our Board of

Directors and the SMT have achieved this. Throughout this

report, there are many examples of how we have taken into

account our key stakeholders: our people, customers,

suppliers, communities and shareholders. Details of how the

Board in particular has considered these stakeholders’

interests can be found in the Corporate Governance Report

on pages 91 to 95.

Forward-looking statements This financial report contains certain statements,

statistics and projections that are or may be forward looking. The accuracy and

completeness of all such statements, including, without limitation, statements

regarding the future financial position, strategy, projected costs, plans and

objectives for the management of future operations of RS Group plc and its

subsidiaries is not warranted or guaranteed. These statements typically contain

words such as ‘intends’, ‘expects’, ‘anticipates’, ‘estimates’ and words of similar

import. By their nature, forward-looking statements involve risk and uncertainty

because they relate to events and depend on circumstances that will occur in the

future. Although RS Group plc believes that the expectations reflected in such

statements are reasonable, no assurance can be given that such expectations

will prove to be correct. There are a number of factors, which may be beyond the

control of RS Group plc, which could cause actual results and developments to

differ materially from those expressed or implied by such forward-looking

statements. Other than as required by applicable law or the applicable rules of

any exchange on which our securities may be listed, RS Group plc has no

intention or obligation to update forward-looking statements contained herein.

The long-term consequences of decisions that are taken

Board oversight of our strategy and ongoing monitoring of performance against agreed metrics Pages 20 and 28 to 31

Ensuring we have robust data driven insight to support our key decisions and continuously improving our

executional capabilities

Pages 22 and 25

Acquisition and integration of domnick hunter and Risoul into the Group’s business to create effective synergies Pages 27 and 92

Accelerating growth ambitions organically and inorganically Pages 26 and 27

Focusing our effort and resource on where we can add value Pages 13 and 20

The interests of our employees

Prioritising the health, safety and wellbeing of our workforce Pages 31 and 66

Developing a high-performance, purpose-led culture and investing in our people to attract and retain the

best talent

Pages 6, 18, 21, 62 to 67

Providing career development and learning opportunities Page 65

Continuing our programme of Board employee engagement Page 95

The need to foster our business relationships with our customers, suppliers and regulators

Expanding our product range, supplier depth and global service solutions offering Pages 7, 11, 13 and 24

Aligning our operating plans to build organisational capabilities and a scalable market strategy Pages 10, 11 and 13

Engaging with our suppliers to help ease significant supply chain challenges Pages 7, 56, 57 and 71

The impact of the Group’s operations on the environment and community

Enhancing a purpose-led culture, driving our environmental, social and governance goals in our commitment

for a better world

Pages 48 to 78

Driving to be a sustainable and responsible leader in our sector Pages 68 to 71

Supporting suppliers to provide more sustainable and clean products Page 71

Our reputation for having high standards and sound ethical conduct

Code of conduct: for our people (Speak Up) and our suppliers Page 69

Ensuring anti-bribery training is regularly rolled out to our employees Page 69

Ensuring we apply a zero-tolerance approach to modern slavery Page 69

The need to act fairly between members of the Company

Continuing to pursue a progressive dividend policy Page 36

Increasing operating effectiveness, delivering increased mid-teen operating profit Page 33

The Strategic Report was approved by the Board on 23 May 2023 and is signed on its behalf by:

Simon Pryce

Chief Executive Officer

81RS Group plc Annual Report and Accounts for the year ended 31 March 2023 81

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Governance report

CORPORATE

GOVERNANCE

Corporate governance at a glance 83

Chair’s letter 84

Our Board of Directors 86

Board leadership and governance framework 88

Board activities during the year 91

Board evaluation 96

Nomination Committee report 100

Audit Committee report 104

Directors’ Remuneration report 112

Directors’ report 133

Statement of Directors’ responsibilities 136

RS Group plcAnnual Report and Accounts for the year ended 31 March 202382

BOARD COMPOSITION

As at 31 March 2023

GOVERNANCE

AT A GLANCE

UK CORPORATE GOVERNANCE CODE

Compliance statement

The UK Corporate Governance Code 2018

(theCode)appliedtothefinancialyearended

31 March 2023. The Code is publicly available

at www.frc.org.uk

For full details of all the Code’s Principles and how

the Company has applied them, see page 98.

The Company confirms that it applied the

Principles and, since the implementation

of the new Remuneration Policy from

14 July 2022 which brought Executive

Director’s pension entitlement in line

with the rate of the majority of the wider

UK workforce, has complied with the

Provisions of the Code during 2022/23.

HIGHLIGHTS OF BOARD ENGAGEMENT

DURING THE YEAR

People

c. 110 employees attended four engagement

sessions with a Non-Executive Director in

London and Corby, UK, Fort Worth, US, and

Beauvais, France

Shareholders

Weheldthreespecificengagementprogrammes

with our major shareholders during the year in

respect of the adoption of a new Directors’

Remuneration Policy and changes to the Chief

ExecutiveOfficer(CEO)position

Suppliers

The Board met with representatives from

three of our key suppliers at Fort Worth, US,

in September

SKILLS AND EXPERIENCE

M&A

Climate

change and

sustainability

Strategy

International

operations

Distribution

Emerging

markets

Service

industry

Finance

Supply chain

Customers

Director

Digital

Alex Baldock

Louisa Burdett

Rona Fairhead

Navneet Kapoor

Bessie Lee

Simon Pryce

David Sleath

Joan Wainwright

KEY HIGHLIGHTS

Board activities 2022/23

– Took part in a dedicated strategy deep dive

digital workshop

– Continued monitoring and review of our

purpose-led strategy

– Monitored the progress of streamlining the

supplychainandproductofferingtogive

end-to-end visibility and better customer

experience

– Oversaw the acquisition pipeline, including

completion of two strategic acquisitions

during the year

– Recruitment of new CEO

– Adoption of enhanced ESG reporting

– Completion of externally-facilitated

Board evaluation

– Site visits to Fort Worth, US and Corby, UK to

witnesstheGroup’sculturefirsthand

– Adoption of the Board Diversity and Inclusion

Policy (Board D&I Policy)

– Strengthened the Group’s succession planning

and career development for members of the

senior management team (SMT)

– Approved the adoption of The RS Way

scorecard and the Journey to Greatness Long

Term Incentive Plan Award (J2G LTIP Award)

– Launched the RS YAY! Award to promote

employee shareholding

Board priorities for 2023/24

– RecruitmentofaChiefFinancialOfficer(CFO)

– Continue embedding environmental, social

and governance (ESG) and further

enhancement of ESG reporting

– Receive detailed regional deep dives

– Further development of the customer

experience

– Continued focus on D&I strategy

– Continued supply chain focus

– Developing purpose-driven innovation

– Product expansion and supplier strategy

– Continued development of the M&A pipeline

Board tenure

Years

0–3 years 3

3–6 years 3

6+ years 3

Gender

Female 4

Male 5

Ethnicity

Ethnic minority 2

Non ethnic minority 7

Age of Directors

Years

45–54 3

55–64 6

Independence

Independent 7

Executive 1

Independent Non-Executive Chair 1

Simon Pryce was an Independent Non-Executive Director

throughout the year and was appointed as CEO with effect

from 3 April 2023

0 9

Nationality

British 5

Chinese 1

Indian 1

American 1

Dual British / Australian 1

0 9

Governance overview

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

83RS Group plc Annual Report and Accounts for the year ended 31 March 2023 83

Chair’s letter

CHAIR’S

LETTER

Dear Fellow Shareholder,

On behalf of the Board, I am pleased to present

our Governance Report for the year ended

31 March 2023.

Good governance is fundamental to the continued

success of the Company. By ensuring that the

Board has oversight and is supporting our

strategy,weareconfidentindrivinglong-term

sustainable success for all of our stakeholders. We

also recognise the value in ongoing engagement

with our stakeholders, to help ensure that our

priorities mirror those of our wider community.

Board changes

As announced on 16 December 2022, Lindsley

Ruth stepped down as CEO during the year. On

behalf of the Board and everyone at RS, I would like

to thank him for his many achievements and wish

him happiness, health and every future success.

As part of our enhanced succession planning,

David Egan, CFO, took on the role of Acting CEO

when Lindsley went on a leave of absence at the

beginning of November 2022. As a result of

Lindsley stepping down, David continued as Acting

CEO until Simon Pryce was appointed as CEO on

3 April 2023. As announced on 3 May 2023, David

stepped down from the Board with immediate

effect.JaneTitchenerhasbeenappointedas

Interim CFO until a permanent replacement CFO

is appointed.

Simon is a highly experienced business leader of

customer-focused, global industrial manufacturing

and services businesses. The Board is very

confidentthatSimonhastherightleadershipstyle,

skills and experience to lead RS to continued future

success in the next stage of the Group’s growth.

Full details of the CEO selection process can be

found on page 101.

NavneetKapoorjoinedtheBoardwitheffectfrom

1 June 2022 and brings with him great international

experience, in particular in the transformation

anddigitalfields.Iwouldliketowelcomehimto

the Board.

We have a strong leadership team which is aligned

behind a clear strategy, focused on delivering

profitablegrowthandmarketsharegains,and

myselfandtheBoardhaveeveryconfidencein

our people.

Stakeholder engagement

As a result of the announcement of Lindsley’s leave

ofabsence,Iofferedtospeaktoourtop25

shareholders to discuss and answer any questions

they had. I held calls with 22 shareholders, who

represented c. 66% of the Company’s share

Lindsley’s subsequent departure in December

2022, similar invitations for engagement were

offered,resultinginfurthercallswitheight

shareholders, who represented c. 31% of the

Company’s share register. These calls provided

shareholders with the opportunity to hear about

the steps the Board had taken over the previous 18

months to strengthen its succession planning,

which enabled us to act swiftly and appoint David

as Acting CEO. It also gave shareholders the

opportunity to ask questions and provide

feedback.

On the announcement of Simon’s appointment in

March 2023, a further round of calls were held with

shareholders. These calls provided shareholders

with details of the selection process undertaken to

identify Simon as the strongest candidate, and

answer any questions shareholders had regarding

his appointment.

Inadditiontotheabove,therewassignificant

engagement with shareholders earlier in the year

in respect of the Directors’ Remuneration Policy

(Remuneration Policy) which was put to

shareholders at the 2022 Annual General Meeting

(AGM). Full details of investor engagement relating

to remuneration can be found on page 116.

ForthefirsttimesincebeforetheCOVID-19

pandemic, our Board members took part in

physical site visits. In September 2022, the Board

visitedtheFortWorth,US,officeanddistribution

centre (DC), and in March 2023 the Board visited

the Corby, UK, DC. During the US visit the Board

met the Americas leadership team and the service

solutions team.

RS Group plc84 Annual Report and Accounts for the year ended 31 March 2023

We recognise the value in

ongoing engagement with our

stakeholders, to help ensure that

our priorities mirror those of our

wider community.”

Our people are fundamental to the success of our

business and achieving our strategy. In addition to

site visits, the Board regularly met with members

of the SMT and received regular updates from

the people team. This included an update on the

evolution of our people plan and how it supports

our strategy. The Board also approved The RS Way

scorecard during the year and received regular

updates on progress against targets.

Embedding ESG into our

governance processes

As part of our commitment to ESG, and ensuring

strong governance and Board oversight, the ESG

Committee was established in 2021. Our ESG

Committee meets twice a year to discuss

performance against our targets and progress in

the core areas of our ESG action plan. This is

chaired by Joan Wainwright, as Non-Executive

Director, and members include the CFO, President

ESGSolutionsandtheChiefPeopleOfficer,

CompanySecretary&SeniorVice-President,

Group Professional Services.

The purpose of the Committee is to lead the

development and execution of our 2030 ESG

action plan – For a Better World. Full details of

ESG-related activity during the year, along with

our ESG ambitions and targets, can be found on

pages 48 to 78.

An inclusive and diverse company

We believe that creating a culture where our

people feel safe and empowered to bring their

true self to work fosters an environment where

everyone can thrive. During the year, the Board

adopted a new Board D&I Policy which sets out the

Board’s approach to driving D&I within senior

management roles. Full details can be found on

page 103.

In the UK, the Board met the sales team and were

given a demonstration of the new RS PRO lab. A

deep dive into strategy and performance of both

areas was conducted during each visit along with

the opportunity to meet our regional leadership

teams and employees to discuss regional

initiatives. Tours of each of the DCs were also

conducted where members of the Board were

givenfirsthanddemonstrationsoftheGroup’sDC

operations and processes.

Joan Wainwright, as one of our designated

employee engagement directors, held employee

forums with colleagues in the UK in June 2022 and

March 2023, the US in September 2022 and France

in December 2022. Further information about the

structure and outcome of these meetings can be

foundonpages92and95.

The Board also took the opportunity while in Fort

Worth, to meet with senior representatives from

three of our key suppliers of Americas. Discussions

held were focused on what the suppliers felt they

needed from distribution partners to succeed

and their views on the market outlook for the

year ahead. This was an incredibly valuable

engagement, giving the Board and suppliers

an opportunity to ask probing questions and

challenge the thinking around the best ways to

grow together and share in future success.

Strategy and culture

The Board continues to oversee the Group’s

medium and long-term strategy. This included

a dedicated strategy deep dive in January 2023.

As part of this, an innovative digital workshop

was held where each Director was given the

opportunitytoexperiencedifferentcustomer

personas through the use of technology. In

addition to this, a review of strategic capabilities,

data, technology and digital innovation was

undertaken. Further information regarding this

can be found on page 99.

Succession planning

Since joining the Company in November 2020, I

have worked with the Nomination Committee to

enhance our succession planning and the career

development of senior management. During the

year, this work ensured that when Lindsley went on

a leave of absence in November, we had plans in

place to ensure strong leadership of the Company

continued and the momentum behind driving

the strategy was maintained. We are continuing

to build a strong pipeline of talent within the

organisation, which includes initiatives such

as the Future Shapers and Amazing Leaders

programmes, to help ensure we identify and

support future leaders. Further information on

our succession planning and the work of the

Nomination Committee can be found on pages

100 to 103.

Board evaluation

After two years of internal Board evaluations, we

conducted an externally facilitated Board

evaluation during the year, in line with the Code.

After conducting a tender process, Clare Chalmers

Limited (Clare Chalmers) was engaged to carry out

the evaluation process. This process concluded

thattheBoardcontinuestofunctioneffectively

andidentifiedareasofimprovement.Fulldetails

of the tender process, outcomes of the evaluation

and progress against the previous year’s actions

can be found on pages 96 to 97.

Rona Fairhead

Chair

23 May 2023

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

85RS Group plc 85Annual Report and Accounts for the year ended 31 March 2023

Our Board of Directors

THE RIGHT

BLEND OF

SKILLS AND

EXPERIENCE

Members as at 23 May 2023

Nomination Committee

Audit Committee

Remuneration Committee

Treasury Committee

Committee Chair

Rona Fairhead

Chair

Committee membership

Date of appointment Nov 2020

Skills, experience and contribution

Rona brings a tremendous range of commercial and strategic

experience to the Company. Rona’s strong understanding of UK

corporate governance and her extensive experience in digital

transformation and international expansion provide the Board

with strong and valuable leadership to deliver long-term

sustainable value for all our stakeholders. Previous roles have

included chair of the BBC Trust, Minister of State in the UK

Department for International Trade, non-executive director of

HSBC Holdings plc and PepsiCo, Inc. and chair and chief executive

officerofFinancialTimesGroup.

Current external roles

– Non-executive director of Oracle Corporation

– Member of the House of Lords

– Member of the advisory board of Hong Kong

Exchanges & Clearing Limited

David Sleath

Senior Independent Director

Committee membership Date of appointment Jun 2019

Skills, experience and contribution

David brings a wealth of experience to the Board, including

valuable insight into the dynamics of service-led business models,

having been the senior independent director at Bunzl plc. As

servingchiefexecutiveofficer,andpreviouslychieffinancial

officer,ofSEGROplc,Davidhasstrongmanufacturingand

distribution experience. He also brings to the Board in-depth

financial,strategicandgovernanceexperience,whichare

essential to his role as Senior Independent Director. David has

also previously served as president of the British Property

FederationandgroupfinancedirectorofWagonplc.

Current external roles

– ChiefexecutiveofficerofSEGROplc

– Board member, European Public Real Estate Association

Alex Baldock

Independent Non-Executive Director

Committee membership Date of appointment Sep 2021

Skills, experience and contribution

Alex has extensive experience in digital transformation,

accelerating omni-channel growth and embedding customer

focus, evidenced through his successful transformation of Currys

plc.AlexwaspreviouslychiefexecutiveofficerofShopDirect,now

theVeryGroup,whereheledthebusiness’sdigitaltransformation

from a catalogue retailer to the UK’s second largest e-commerce

pureplay and through four consecutive years of record growth in

sales,profits,customersatisfactionandcolleagueengagement.

Current external roles

– Group chief executive of Currys plc

Louisa Burdett

Independent Non-Executive Director

Committee membership

Date of appointment Feb 2017

Skills, experience and contribution

Louisabringsawealthoffinancial,commercial,M&Aandrisk

management experience to the role of Non-Executive Director

and Chair of the Audit Committee. Louisa is a chartered

accountantandhasheldseniorfinancialpositionsinindustrial,

manufacturing, publishing and pharmaceutical companies. Louisa

waspreviouslythechieffinancialofficerofMeggittplc,group

financedirectoratVictrexplc,andchieffinancialofficeratOptos

plc and the Financial Times Group.

Current external roles

– ChieffinancialofficerofCrodaInternationalplc

Simon Pryce

Chief Executive Officer*

Committee membership Date of appointment Sep 2016*

Skills, experience and contribution

Simon is a highly experienced business leader of

customer-focused, global industrial manufacturing and service

businesses. He has a strong track record of driving results and

delivering excellent stakeholder outcomes through enhanced

performanceandtheeffectiveexecutionoforganicandinorganic

growthstrategies.Previousrolesincludechiefexecutiveofficer

of Ultra Electronics Holdings plc, group chief executive at BBA

Aviationplcandarangeofinternationalfinanceandmanagement

roles at GKN plc, JP Morgan and Lazards.

Current external roles

– None

RS Group plcAnnual Report and Accounts for the year ended 31 March 202386

Other Directors who served during the year

Lindsley Ruth stepped down from the Board on 16 December 2022.

David Egan stepped down from the Board on 3 May 2023.

Joan Wainwright

Independent Non-Executive Director

Committee membership

Date of appointment Nov 2019

Skills, experience and contribution

Joan has extensive experience in distribution, transforming digital

platforms to generate revenue growth and leading customer

experience programmes that drive measurable improvements.

Her extensive knowledge of customer experience aligns with the

Company’s vision and provides a strong insight into the customer

dynamic in the US. Joan’s previous roles include president,

Channel & Customer Experience at TE Connectivity Ltd, vice

president,publicaffairsatMerck&Co,anddeputycommissioner

of communications at the U.S. Social Security Administration.

Current external roles

– Director of NJM Insurance Group

Bessie Lee

Independent Non-Executive Director

Committee membership Date of appointment Mar 2019

Skills, experience and contribution

Bessie has extensive strategic experience in digital marketing

technology and media knowledge, principally in China. She has

in-depth experience of the world of eCommerce and digital

media. She is a frequent media commentator, blogger and

international speaker. Bessie has more than 30 years of

experience in the media communications industry in Greater

China.Herpreviousrolesincludechiefexecutiveofficer

at Mindshare, GroupM and WPP in China.

Current external roles

– ChiefexecutiveofficerofWithinlink

– ChiefexecutiveofficerofJLLGreaterChina

– Non-executive director of Abcam plc

Clare Underwood

Company Secretary

Date of appointment Mar 2022

Skills, experience and contribution

Clare brings a wealth of FTSE 100 governance experience to

supporttheBoardineffectivegovernance.Theskillsand

knowledge from her previous roles at John Laing Group plc and

Cable and Wireless Communications plc enable her to provide

first-classcompanysecretarialadviceandsupport.Clareleadsthe

Group Professional Services team and is responsible for legal,

governance, compliance, pensions and information security.

Navneet Kapoor

Independent Non-Executive Director

Committee membership Date of appointment Jun 2022

Skills, experience and contribution

Navneet brings great international experience, in particular in the

transformationanddigitalfieldsandchangefromproductto

services-driven approaches. In his current role, he is responsible

for driving changes across culture and leadership, modernising

processes and technology landscapes, and developing digital

platforms and ways of working. Prior to this, Navneet held various

senior leadership roles at Target India, part of Target Corporation,

and was vice president, marketing at General Electric in Asia.

Current external roles

– Executive vice president and chief technology and information

officerofA.P.Møller–MærskA/S

* Joined in September 2016 as Non-Executive Director. Appointed as CEO on 3 April 2023.

During the year Simon was also a member of the Audit and Nomination Committees,

and was the Chair of the Remuneration Committee. He stepped down from each of

theseCommitteeswitheffectfrom14March2023.Simonbecameamemberofthe

Treasury Committee as at 3 April 2023.

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

87RS Group plc Annual Report and Accounts for the year ended 31 March 2023 87

Board leadership and governance framework

BOARD LEADERSHIP

AND GOVERNANCE

FRAMEWORK

PURPOSE, STRATEGY AND CULTURE

To achieve the long-term sustainable value

generation of the Group, the Board has

continued to work closely with the SMT on the

Group’s purpose of making amazing happen for

a better world.

The Board is responsible for ensuring that the

Group’s culture is aligned with its purpose,

values and strategy.

During the year, activities conducted by the

Board to assess and monitor the culture

have included:

– Regular updates from the CEO and Acting CEO

that provide insight into the business and how

it is operating, including the strategic KPIs.

– Updates regarding the people team’s

approach in supporting the Group’s culture

and its people were provided during the year,

including a presentation regarding the people

plan as part of the strategy deep dive in

January 2023.

– Joan Wainwright (as one of the designated

directors for employee engagement)

conducted four employee engagement

sessions during the year. In-depth feedback is

then provided to the Board following these

engagements, with discussions held regarding

outcomes.Seepages92and95forfurther

information.

– The Board reviewed the outputs from

employee engagement surveys which were

conducted during the year.

– TheBoardvisitedtheFortWorth,USoffice

andDCinSeptember,andtheCorby,UKoffice

and DC in March. Each of these included the

opportunity for members of the Board to meet

employees of the DCs and have informal

discussions with the regional leadership.

– In addition to ongoing strategic updates, the

Board participated in a customer experience

workshop in January 2023; further details of

this can be found on page 99.

– Regular information received on the usage of

the Group’s whistleblowing facility and how

reports have been followed up, allowing it to

assesstheeffectivenessofthefacilityand

actions taken.

– ViatheNominationCommittee,monitoring

succession and talent pipelines for the

Executive Directors and senior management.

Role of the Board

The Board’s principal responsibility is to ensure the

long-term sustainable success of the Group as a

whole. The Board is accountable to stakeholders

fortheGroup’sfinancialandoperational

performance and is responsible for taking strategic

decisions and providing oversight across the

Group, ultimately to ensure stakeholder interests

are protected. The Board aims to lead with

integrity and in a sustainable commercial manner

to ensure value is created for all the Group’s

stakeholders. The Board also provides leadership

to executive and senior management and applies a

robust governance framework to ensure that this

leadershipisdeliveredeffectively.

The Board is responsible for ensuring that the

strategic objectives are adequately resourced and

supported to help ensure the long-term success of

the Group, realisation of its strategy, and to

monitortheeffectivedeploymentofthose

resources. The Group’s risk management

framework supports the strategic aims of the

Group,withcontrolstohelpmitigateidentified

risks. The Board regularly reviews the internal

controls and overall risk management framework,

with support from the Audit Committee. Full details

of the risk management framework can be found

onpages40to45.

The Board is supported by its Committees, which

make decisions and recommendations on matters

delegated to them by the Board. This enables

the Board to spend time on strategic, long-term

matters. Each Committee comprises

Non-Executive Directors only and has an

experienced Chair. Regular updates are provided

to the Board by the Committee Chairs as well as by

the Chair of the Board, the CEO and CFO. Further

information regarding the governance structure

can be found on pages 88 to 90. Each Committee

of the Board has provided reports on how they

have discharged their responsibilities and details of

their activities during the year, which can be found

on pages 100 to 132.

The key topics the Board has focused on this year,

as well as those it plans to assess for the coming

year, are set out on page 83.

Division of responsibilities

There is a clear division of responsibilities between

the leadership of the Board and the executive

leadership of the Group. The responsibilities of the

Chair, CEO, CFO, Senior Independent Director (SID),

Board and Committees are agreed by the Board.

See page 90 for the overall governance framework

and page 89 for the division of responsibilities.

Meetings during the year

The Board held a combination of in-person and

virtualmeetingsin2022/23andabreakdownof

attendance is shown in the table on page 89.

In addition to the eight scheduled Board meetings,

afurtherfiveadhocmeetingswereheld.

There may be instances during the year where a

Director is unable to attend a meeting. If this is

the case, they are provided with all the meeting

information and have the opportunity to discuss

their feedback with the Chair or Company

Secretary to ensure their contributions are

raised at the meeting.

During the year, the Chair held a number of

meetings with the Non-Executive Directors without

the Executive Directors being present. The

Non-Executive Directors also met without the

Chair to discuss the Chair’s performance.

The Chair and the Committee Chairs ensure Board

and Committee meetings are structured to

facilitate open discussion, debate and challenge.

As part of the annual Board evaluation process,

the functioning of the Board and each of its

Committees are reviewed and considered by the

Boardasawhole.Thefindingsoftherevieware

used to establish an ongoing programme of

actionstoimproveeffectivenessofboththeBoard

and the Committees. Further information on this

can be found on pages 96 to 97.

Matters reserved for the Board

All matters that have a material impact upon the

Group are reserved for the Board and are formally

set out in a schedule which can be found on our

website at rsgroup.com/investors/corporate-

governance

RS Group plcAnnual Report and Accounts for the year ended 31 March 202388

1. Lindsley Ruth stepped down from the

Board on 16 December 2022. Lindsley

was unable to attend two meetings

prior to stepping down due to personal

reasons and his leave of absence.

2. David Egan was appointed as

Acting CEO from 3 November 2022 to

2 April 2023 and stepped down from the

Board on 3 May 2023.

3. Navneet Kapoor joined on 1 June 2022.

Navneet was unable to attend one

Board and Nomination Committee

meeting due to prior commitments.

4. Simon Pryce was Non-Executive

Directorduring2022/23andwas

appointed as CEO from 3 April 2023.

Simon stepped down as member of all

Committees and as Chair of the

RemunerationCommitteewitheffect

from 14 March 2023 and therefore did

not attend the Committee meeting held

in March as a member.

5. JoanWainwrightbecametheChairof

the Remuneration Committee with

effectfrom14March2023.

C ChairofBoard/Committee.

Division of responsibilities and attendance at scheduled meetings for the year ended 31 March 2023

Position Board Nomination Audit Remuneration Responsibilities

Chair

Rona Fairhead

8/8

3/3

– – – Leading the Board and ensuring its oversight of strategy, performance, value creation, culture, stakeholders

and accountability

– Promoting open, trusting, challenging discussions and debate and constructive relations between Executive and

Non-Executive Directors

– LeadingtheBoardsuccessionplanning,andseekingtoensureeffectivecommunicationwithshareholders

Executive Directors

CEO

Lindsley Ruth¹

4/6 – – – – ManagingandleadingtheGrouponaday-to-daybasis,makingdecisionsonmattersaffectingtheoperationand

performance of the Group’s business

– Developing, leading and implementing strategy

– Ensuring robust management succession plans are in place

– Responsible for ESG, including climate-related matters

CFO

David Egan²

8/8 – – – – Financialmanagementandimplementationandmonitoringoffinancialcontrols

– DevelopingtheGroup’sfinancialpoliciesandstrategies

– Ensuring a commercial focus across the business activities and appropriateness of risk management

– Together with the CEO, designing, developing and implementing strategic plans and managing day-to-day operation

of the Group

Senior Independent Director

David Sleath

8/8 3/3 4/4 5/5 – Acting as a sounding board to both the Chair and the CEO

– Acting as a conduit for the views of other Non-Executive Directors and conducting the Chair’s annual

performance appraisal

– Being available to shareholders to help resolve concerns

Independent Non-Executive Directors

Alex Baldock

8/8 – 4/4 5/5 – Overseeing and constructively challenging executive management regarding the performance of management

against agreed performance objectives, and helping to develop and set the Group’s strategy

– SatisfyingthemselvesontheintegrityoffinancialinformationandreviewingtheGroup’sriskexposureandcontrols

– Through the Remuneration Committee, determining the remuneration of Executive Directors

Louisa Burdett

8/8 3/3 4/4

5/5

Navneet Kapoor

5/6 2/3 – –

Bessie Lee

8/8 3/3 – –

Simon Pryce

8/8 2/2 4/4 4/4

Joan Wainwright

8/8 3/3 – 5/5

Company Secretary

Clare Underwood

– SupportingandadvisingtheBoardonmattersrelatingtogovernance,ensuringgoodinformationflowsandprovidingpracticalsupporttotheDirectors

– Organising Directors’ induction and training

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

89RS Group plc Annual Report and Accounts for the year ended 31 March 2023 89

OUR GOVERNANCE FRAMEWORK

Board leadership and governance framework continued

The Board

Chair:

Rona Fairhead

The Board is responsible for establishing the purpose, values and

strategy for the Group, ensuring the culture is aligned, and promoting

thelong-termsustainablesuccessoftheCompanyforthebenefitof

our members and stakeholders.

The Board discharges some of its responsibilities directly, or has

delegated authority to its Committees.

Treasury Committee

Chair:

Jane Titchener

– Monitors the Group’s Treasury Policy

– Implements policies and processes for foreign exchange and option

deals

– Approves proposed Group capital structure changes

– Approves changes to authorised investments, counterparties

and borrowings

Nomination Committee

See pages 100 to 103 for further details

Chair:

Rona Fairhead

– Reviews the structure, skills, knowledge, experience and

diversity of the Board

– Identifiesandnominates,forapprovalbytheBoard,

candidatestofillDirectorpositions

– Leads succession planning for Non-Executive and

Executive Directors and the SMT

Audit Committee

See pages 104 to 111 for further details

Chair:

Louisa Burdett

– Monitorsintegrityoffinancialstatementsand

announcements

– ReviewstheGroup’sinternalfinancialcontrolsand

internal control and risk management systems

– Monitors the internal audit function

– Manages the external Auditors

Remuneration Committee

See pages 112 to 132 for further details

Chair:

Joan Wainwright

– Agrees the Remuneration Policy for Executive Directors

and remuneration structure for the SMT

– Oversees SMT and Group employee remuneration

– Approves the design and targets for incentive plans

RS Group plcAnnual Report and Accounts for the year ended 31 March 202390

Board activities during the year

BOARD ACTIVITIES

DURING THE YEAR

The following pages outline some of the key topics

reviewed, monitored, considered and discussed

by the Board during the year. Before the start of

each year, the Board and each of its Committees

consider and review a calendar of events and

agenda items for the year ahead. The Chair, with

assistance from the CEO, CFO and Company

Secretary, agrees the agenda for each Board

meeting.Thisprocessensuresthatsufficienttime

is being set aside for strategic discussions and

business critical items, while including regular

standing items, such as reports on trading and

financialperformanceandroutinereportingor

compliance requirements.

Our Strategic Report on pages 1 to 81

demonstrates how the business considers and

interacts with the Company’s key stakeholders: our

people, customers, suppliers, communities and

shareholders. This section of the Governance

Report sets out the areas of focus for the Board

during the year, how these relate to our strategic

aims and how our stakeholders have been

considered.

Activity Decision and s172 consideration

Strategy

The Board approved The RS Way scorecard

metrics which underpin the J2G LTIP and RS YAY!

Awards

Thestrategicvisiontobecomethefirstchoicefor

all our stakeholders is supported by The RS Way

scorecard. The scorecard enables the Board to

track progress against our key strategic actions.

Our key stakeholders are the foundation to this,

and with this in mind, the Board is updated on

progress on a quarterly basis. Further details

on these metrics can be found on page 126.

Linked to our stakeholders:

Customer

Shareholders

Community

Globe

Shareholders

Change of Company name

The Company changed its name from

Electrocomponents to RS Group during the year,

with a co-ordinated programme across all

regions to re-brand the Group to RS.

To bring the business together under one strong,

unifiedglobalbrand,theCompany’sname

changed during the year. The Board has

monitored progress of the rebranding, and in

particular any impacts on employee, customer

and supplier journeys, ensuring there was a

co-ordinated roll out, including an internal and

external communications programme and

rebranding exercise.Linked to our stakeholders:

Customer

Shareholders

Community

Globe

Shareholders

Strategy updates The Board receives regular updates on the

Company’s performance against our strategic

actions, and evaluates how external factors such

as the macroeconomic environment may impact

this, and makes any adjustments to plans it

deems necessary.Linked to our stakeholders:

Customer

Shareholders

Community

Globe

Shareholders

The Board delegates the day-to-day operational

decision-making of the business to the CEO and

CFO with support from the SMT and their teams.

The Board recognises, however, that doing so does

not absolve it of its accountabilities to the Group’s

stakeholders and the need to reinforce and

support management’s decisions by setting the

tone from the top. The Board must consider the

needs of, and impacts of its decisions on, all

stakeholders as well as the consequences of its

decisions in the long term. The Board recognises

that when making decisions it will sometimes have

to consider the competing interests of

stakeholders and that it may not always be

possible to deliver an outcome that is welcomed by

all stakeholders. In these situations, the Board is

guided by the need to consider the long-term

sustainability of the business.

Key

Customer

Our people

Customer

Customers Suppliers

Shareholders

Community

Communities

Globe

Shareholders

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

91RS Group plc Annual Report and Accounts for the year ended 31 March 2023 91

Board activities during the year continued

Activity Decision and s172 consideration

Acquisitions

The acquisitions of domnick hunter-RL (Thailand)

Co., Ltd. (DH) in Thailand, and Risoul y Cia, S.A. de

C.V. (Risoul) in Mexico were completed during the

year

As part of any acquisition process, a thorough

due diligence exercise is conducted. As part of

this, various stakeholders are considered, such as

the potential impact on employees, customers

and suppliers of the target company and the RS

region involved, to help ensure the acquisition

willprovidelong-termbenefitstoall.Oncean

acquisition has been agreed, an integration

management team leads the process through to

completion and then into full integration into the

Group. This includes regular meetings with all

relevant teams, ensuring that all workstreams are

in regular contact, completing their designated

actions and raising any concerns or issues. There

is also a heavy focus on engagement with

employees through activities such as town halls

and onsite visits. Rona Fairhead and David Egan

visitedtheRisoulofficesinlateJanuary2023to

meettheteam,andwitnessfirsthandhowthe

integration was progressing.Linked to our stakeholders:

Customer

Globe

Shareholders

The Group maintains an acquisition pipeline,

which is reviewed by the Board on a regular basis

The Board reviews the acquisition pipeline on a

regular basis, considering the current business

and its ongoing requirements, along with the

predictedbenefitsofpotentialacquisitions.

Target acquisitions are considered on each

of their merits. Detailed due diligence is

undertaken to determine if the target is a good

strategicfit.Forthoseacquisitionsseenasa

strongstrategicfit,theBoardreceivesregular

updates on progress, with key milestones being

highlighted for approval as part of the

governance process.Linked to our stakeholders:

Customer

Globe

Shareholders

Activity Decision and s172 consideration

Culture

People and culture updates

The Board receives regular updates which

includedifferentelementsofculturesuchas

engagement, employee retention, development,

management, succession planning and D&I.

Creating a high-performance, purpose-led,

customer-focused, diverse global talent base and

leadership team is one of our strategic priorities.

To help achieve this, the Board considered and

supportstheambitiontobecomefirstchoicefor

all our stakeholders, including our people. This

included aspirations regarding development of

skills and behaviours, identifying what good

leadership looks like, promoting D&I and

supporting the strategy. Further information

can be found on pages 21, 63 and 64.

Linked to our stakeholders:

Customer

Employee engagement

As part of Joan Wainwright’s and Bessie Lee’s role

as designated employee engagement directors,

theyregularlyvisitourofficesandDCs.In

addition to this, Board members also engaged

with various employees as part of the site visits

and strategy workshops conducted during

the year.

As a result of Joan’s site visits to the US, France

and UK during the year, she provided a detailed

report for the following Board meeting where key

themeswereidentified,anyissuesraisedand

discussed and actions agreed. Bessie Lee was

unable to hold any sessions during the year as

a result of local travel restrictions.

Linked to our stakeholders:

Customer

Key

Customer

Our people

Customer

Customers Suppliers

Shareholders

Community

Communities

Globe

Shareholders

RS Group plcAnnual Report and Accounts for the year ended 31 March 202392

Activity Decision and s172 consideration

Financial

Regular financial reporting cycle

The CFO provides regular updates to the Board

onfinancialperformance.Inadditiontooverall

results, these include performance against

scorecard metrics, our key performance

indicators (KPIs) and forecasts.

Consideration is given to operating costs and

expenditure against performance. Changes to

the methodology relating to Net Promoter

Score (NPS) were implemented in April 2022 to

make responses more representative of the

customer base.

Linked to our stakeholders:

Customer

Shareholders

Community

Globe

Shareholders

Investor relations updates Feedback arising from shareholder discussions

and investor roadshows are provided to the

Board along with any new investor insights,

which the Board considers on an individual basis.

Linked to our stakeholders:

Globe

Shareholders

Viability and going concern Aspartofthefull-yearandhalf-yearfinancial

process, the Board, on recommendation of the

Audit Committee, assesses the Group’s viability

and going concern. This process includes

considering the possibility of the Company failing.

Linked to our stakeholders:

Customer

Shareholders

Community

Globe

Shareholders

Payment of final and interim dividends Multiple stakeholders are considered when

deciding whether to approve the dividend,

including impact on employees, and their

remuneration and working conditions, customer

and supplier propositions, acquisitions and our

shareholder base.Linked to our stakeholders:

Customer

Globe

Shareholders

Audit tender The Audit Committee oversaw the audit tender

process during the year, which resulted in the

recommendation that either Deloitte LLP

(Deloitte) or PricewaterhouseCoopers LLP (PwC),

with a preference for Deloitte, be appointed as

the external Auditors of the Company for the year

ending31March2025.TheBoardapprovedthe

appointment of Deloitte.

Linked to our stakeholders:

Globe

Shareholders

Activity Decision and s172 consideration

Our people

J2G LTIP Award and RS YAY! Award

The Remuneration Committee and Board

reviewed the proposed all employee share

scheme and related performance conditions.

The Board supported the launch of the J2G LTIP

Award and RS YAY! Award to help drive

exceptionalperformanceandprovideaunified

incentive across the Group. Ahead of the AGM

to approve the J2G LTIP Award, an engagement

programme was conducted with shareholders

to discuss the structure and outcomes of the

proposed award.

In addition to consulting with shareholders in

April 2022, a follow-up exercise took place in

January 2023 to seek further shareholder

input on the J2G LTIP Awards and our wider

Remuneration Policy. Further details of

shareholder engagement in respect of

remuneration can be found on page 116.

A programme of employee communications was

launched around the RS YAY! Award to highlight

thescheme,itsbenefitsandwhatitmeanstobe

a shareholder of the Company (see page 122 for

further information).

Linked to our stakeholders:

Customer

Globe

Shareholders

Health and safety

The Board receives updates at each Board

meeting regarding health and safety

performance and related activity during the year,

with details of any incidents and causes of them.

Reports highlighted incidents which have

occurred during the year. Action plans were

implemented to address areas of concern,

increase focus, raise awareness and further

embed safety procedures. The Board monitors

progress against these action plans.

Linked to our stakeholders:

Customer

Pensions updates

The Board receives regular updates on the

fundingpositionoftheUKdefinedbenefit

scheme and the triennial valuation.

To help ensure the pension fund is appropriately

funded for our current and former employees,

the Board evaluates the funding position on

a regular basis. Further details regarding the

pension scheme can be found on page 36.

Linked to our stakeholders:

Customer

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

93RS Group plc Annual Report and Accounts for the year ended 31 March 2023 93

Board activities during the year continued

Activity Decision and s172 consideration

ESG

Enhanced ESG reporting The Audit Committee approved, and

recommended to the Board, the approach to ESG

reporting for the year. This included approval of

new ESG disclosures around an ESG double

materiality assessment, Scope 3 carbon

emissions reporting and the results of the

quantitative climate-scenario analysis for the Task

Force on Climate-related Financial Disclosures

(TCFD). The Board approved all of these

additional disclosures and the production of

a dedicated ESG report to meet our full ESG

reporting requirements.

Linked to our stakeholders:

Customer

Shareholders

Community

Globe

Shareholders

TCFD

The Company provides the TCFD report on pages

72 to 78, in line with our commitment to

providing transparent and quality climate

reporting. Our ESG report can be found at

rsgroup.com/esg/reporting-centre

The Audit Committee considered the TCFD report

to be included in the Strategic Report. The Board,

on recommendation of the Audit Committee,

adopted the TCFD report.

Linked to our stakeholders:

Customer

Shareholders

Community

Globe

Shareholders

Risk management

Risk management framework TheBoardreceivedregularupdatesfromtheVP

Audit and Risk regarding the Group’s risk register.

The Board considered the risks and opportunities

and reviewed the Group’s risk appetite during the

year. Further details regarding the Group’s risk

management framework can be found on pages

40to45.Linked to our stakeholders:

Customer

Shareholders

Community

Globe

Shareholders

Principal and emerging risks The Board undertook a robust assessment of

the Group’s principal and emerging risks during

the year. As part of the regular reporting of

operational activities, the Board received updates

on the principal risks and their mitigation.Linked to our stakeholders:

Customer

Shareholders

Community

Globe

Shareholders

Activity Decision and s172 consideration

Governance

AGM Approval of and recommendation to

shareholders for the resolutions put to

the 2022 AGM.

Linked to our stakeholders:

Globe

Shareholders

Compliance with the Code Evaluation of all aspects of the Code to review

compliance for the year ended 31 March 2023.

Linked to our stakeholders:

Globe

Shareholders

Whistleblowing Regular updates to the Board and Audit

Committee on instances reported via the

whistleblowing hotline. These are considered

by the Board and Audit Committee, along with

actionsidentifiedandanyfurtherescalation.

See pages 69 and 111 for more details.Linked to our stakeholders:

Customer

Policies and procedures A number of policies have been considered by

both the Audit and Nomination Committees and

the Board during the year. Full details of policies

can be found on pages 79 to 80.Linked to our stakeholders:

Customer

Shareholders

Community

Globe

Shareholders

Key

Customer

Our people

Customer

Customers Suppliers

Shareholders

Community

Communities

Globe

Shareholders

RS Group plcAnnual Report and Accounts for the year ended 31 March 202394

employee engagement

sessions held during

the year in France, UK

and the US

c. 110

employees who took

part during the year

EMPLOYEE

ENGAGEMENT

Joan Wainwright, Non-Executive Director and Chair of the

RemunerationCommittee,visitedourofficeandDCin

Beauvais, France, in early December 2022. This included a

tour of the DC and two employee engagement sessions,

one being in person and the other a virtual meeting. Each

meeting had a good mix of representation from across

the business to help ensure a wide range of views were

provided.ItwasJoan’sfirstvisittoourFrenchsiteandshe

witnessed a real energy and pride in the team. Key issues

and concerns were discussed as part of the sessions,

with an open and honest dialogue between Joan and

the employees. The teams were appreciative of the

opportunity to voice their opinions directly to a member

of the Board. Overall, Joan found that employees are proud

to be part of RS and are engaged fully in improving the

performance of the Group. Joan is due to revisit our French

site later in 2023.

Key themes and observations from Joan’s visits during

the year were around strategy, performance and culture,

working conditions, ways of working and highlighting areas

of potential improvement. These themes were fed back to

the Board and the relevant management team in order for

actionstobeidentified.

GOVERNANCE IN ACTION:

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

95RS Group plc 95Annual Report and Accounts for the year ended 31 March 2023

Board evaluation

BOARD

EVALUATION

Board evaluations provide invaluable insight and

objectivity to the Directors and the Committees,

which in turn enables the Board to improve its

leadership,effectivenessandfocus.Examining

each Director’s role and their corresponding

responsibilities within the overall Board dynamic

encourages collaborative decision making and

strategic clarity.

An evaluation is undertaken by the Board on an

annualbasis.During2022/23,weconductedan

external evaluation and appointed Clare Chalmers

to carry this out. The scope of the evaluation

covered the Board and Board Committees.

The process we followed for the evaluation is

set out below.

There is no connection between Clare Chalmers

and either RS Group or the individual Directors.

The outcomes from the 2022/23 Board evaluation are as follows:

Key recommendations Actions agreed

Succession planning and talent management

– Consideration to be given in respect of skills gaps and maintaining the

right balance of experience and background for new Board appointments

– Continued focus on talent, development and succession of the members

of the SMT

– Recruitment to take into consideration aspects such as existing

appointments, time commitments and locality

– Further agenda items to be included in the forward looking agenda

regarding key people topics and succession planning

Strategy

– Increased information to be provided to the Board regarding exploration

of opportunities in global markets, with the continued prioritisation

of technology and digital. Information provided on the market and

competitors to be further enhanced

– Refinehowprogressistrackedagainstthestrategy,withKPIsunderpinned

by deep dives and regular focus on critical areas such as technology and

new products

– Revised annual forward looking calendar for strategic discussions

to be reviewed

– Performance reporting and KPIs to be reviewed by management.

Deep dives to be aligned

Board effectiveness and process

– Agendas to have a sharper focus around priority topics and reduce the

number of standing reports and updates. Key topics to be presented as

deep dives at regular intervals to help further enhance discussion

– Continued consideration to be given on how to keep Board and

Committee papers short and easily navigable

– A review of agendas and standing reports will be built into the above

review of the forward looking calendar

– The Board paper template will be updated with clear guidance to users

on what information to include and level of detail required

OUR SEVEN-STAGE EXTERNALLY FACILITATED BOARD EVALUATION PROCESS

1 2 3 4 5 6 7

Tender and approval

of provider

Tender by four potential

providers to carry out the

evaluation. They were

assessed against criteria

agreed by the Chair.

Agree process

and timetable

The evaluator met with the

Chair of the Board and

Company Secretary to

discuss objectives and

agree the timetable

and approach.

Document review

A document review was

carried out whereby various

relevant materials such as

Board and Committee

papers, forward agendas,

Terms of Reference and

the Annual Report were

reviewed. The content

also helped to inform

the interview stage.

Board and Committee

observation

Observations of the Board

the and Audit Committee

were conducted. This

provided an overview of

the practical

arrangements and

meeting dynamics.

Interviews

Individual interviews with

each of the Directors,

members of the SMT

and the external Auditors

were conducted.

Reporting

A focused but descriptive

written report was

provided to the Chair and

Company Secretary,

explaining how the Board

is working and where

certain changes may

provide improvements.

Aspecificlistof

recommendations

was provided.

Feedback

A meeting was held with

the Chair to discuss the

draft report. Once

finalised,thereportwas

presented to the whole

Board for discussion and

actions arising from the

recommendations

were agreed.

RS Group plcAnnual Report and Accounts for the year ended 31 March 202396

Training and induction

As part of the Board’s continuous development,

the Directors receive regular updates from the

Company Secretary as well as a schedule of

briefingsandtrainingofferedexternally.External

training includes facilitated events, forum

discussions and seminars related to the listed

company environment, many of which were

offeredvirtually.In2022/23theBoardundertook

training on ESG reporting via the Audit Committee.

This included details of ESG double materiality

reporting assessment, Scope 3 carbon emissions

accounting and emerging ESG legislation. The

Board also received regular updates from senior

managementonspecifictopicssuchasdata

protection, supply chain and health and safety.

Finally, to enhance operational awareness, the

Board visited Fort Worth, US in September and

Corby, UK in March, which provided an opportunity

forDirectorstomeetwithemployees,seefirst

hand the DC and operations and to meet key

suppliers in Fort Worth, US.

The Company Secretary is available to all Directors

whenever needed and ensures that both Directors

and Committees have access to independent

professional advice (at the Group’s expense) if they

deemitnecessarytocarryouttheirroleeffectively.

Following the appointment of any new Director, the

Chair and Company Secretary ensure that a

customised induction to the Company and the role

of the Board is made available. The induction

programme is tailored to the individual Director,

based on their skills, experience and needs. New

Directors are provided with a Directors’ Manual

which sets out the relevant information on the

Company’s approach to governance, information

on key Group policies and day-to-day

administrative matters, as well as historical Board

packs and Committee papers if applicable.

Progress against the 2021/22 Board effectiveness evaluation

AsummaryoftheBoard’sprogressagainsttheactionsfromthe2021/22evaluationissetoutbelow.

Key outcomes Actions agreed Progress against actions

Board effectiveness and process

– While the level and balance of challenge is right,

there is still encouragement for the

Non-Executive Directors to challenge the

Executive Directors more and push harder

– Meeting agendas could be shorter with more

efficienttimeallocation.Continuedsupportfor

condensed meeting papers

– In-person meetings encouraged to build Board

effectiveness

– Encourage Non-Executive Directors to challenge

the Executive Directors more

– Reducelength/granularityandimprove

consistency of Board papers using clear

summariestohighlightkeyissues/areas

for discussion

– Return to a majority of in-person meetings, with

virtual/hybridmeetingsonlyformeetingswith

appropriate agenda topics

– Ensure time is allocated within the agenda to

allow increased focus on:

⸰Monitoring progress and execution of strategy

⸰Capitalising on growth opportunities

⸰Technology, including the Group’s

digital capabilities

– Continue to improve agenda to focus on key

matters and reduce time spent on papers for

information only

– Improve internal and external training

options list

– The Non-Executive Directors provide

constructive feedback to the Executive Directors

and SMT. This will be developed further during

2023/24

– Good progress has been made in respect of the

structure of Board papers and agendas during

the year. Further improvements will be made

tobuildinthe2023/24strategicagendaand

implement the recommendations arising from

the2022/23Boardevaluation

– All Board and Committee meetings held during

the year were in-person meetings with hybrid

arrangements to accommodate travel

restrictions

– External training options are communicated

to the Directors on a regular basis

Strategy

– Continued improvement in the quality of

strategy execution and status updates positively

received

– Monitoring progress and execution of strategy

highlighted as an area of focus for the Board

– Good advancement of competitor landscape in

terms of information, but increased discussion

and debate relating to competition encouraged

– Implement a scorecard to enable regular

monitoring of progress and execution

– Increase time devoted to competitors and our

relative position

– Good progress made during the year, with the

adoption of a strategic scorecard. Progress

against agreed targets is reviewed on a regular

basis by the Board

– Furtherworkwillbeconductedduring2023/24

in respect of competitors and our relative

position as part of the strategic agenda

Composition and succession

– Good satisfaction with the balance of the Board

but increased focus on diversity required

going forward

– Nomination Committee to continue to focus on

succession planning and diversity

– Succession planning has been further

developed during the year. Focus will continue

on succession planning, development and

enhancing diversity (see pages 100 to 103).

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

97RS Group plc Annual Report and Accounts for the year ended 31 March 2023 97

Corporate Governance Code compliance

If circumstances allow, a site visit to one of our DCs

is also arranged. This ensures that each new

Director can experience the day-to-day operations

of the distribution facilities and ultimately

understand better the culture of the business.

Navneet joined the Board during the year, bringing

with him a wealth of experience in digital and

transformation programmes. As part of his

induction, he met with other members of the

Board and the SMT. He took the opportunity

during the Board visits to Fort Worth, US and

Corby,UKtovisittheDCstoseefirsthandthe

operations and practices in those locations.

Appointment and time commitments

The Chair, SID and other Non-Executive Directors

each have letters of appointment with RS Group

plc, and do not serve, or are employed in any

capacity by the Group.

Non-Executive Directors are generally appointed

forthree-yearfixedterms;however,inlinewith

what is considered good governance practice, all

Directors are proposed for annual re-election (or

election if newly appointed) by shareholders at the

AGM, where letters of appointment for each

Non-Executive Director are available for inspection.

As illustrated on pages 86 and 87, the Board has

a diverse and appropriate range of skills and

experienceandworkseffectivelyinitsrole.

The expectation regarding time commitment for

Boardmemberstoeffectivelydischargetheir

duties is set out in the Directors’ letters of

appointment. The external commitments of our

Directors are kept under review to ensure they

havethetimetoeffectivelycontributetothe

activities of the Board and its Committees

throughout the year. Any additional external

appointment taken on by a Director must be

approved by the Chair prior to appointment,

to ensure that the Director’s ability to meet

the required time commitments to the Group

is maintained.

The Board, following the external evaluation

process, also considers whether each Director

performseffectivelyanddemonstratestheir

commitment to the role. The Board recommends

that all Directors be re-elected at this year’s AGM.

As recommended by the Code, the Executive

Directors who held roles during the year did not

hold more than one non-executive directorship in

aFTSE100companyoranyothersignificant

appointments.

UK Corporate Governance Code 2018

The Directors’ Report is set out in a way that helps shareholders and investors to evaluate how the Company has applied the Principles and complied with the

Provisions of the Code during the year. The table below signposts the most relevant parts of the Annual Report, in particular where supporting information

is not in the Directors’ Report.

Principles of the Code

Topic Page(s)

1. Board leadership and Company purpose

Chair’s introduction 4,5,84and

Our Board 86 and 87

Purpose, values and strategy 6 to 27

Culture 19, 21, 63 to

Board stakeholder engagement and decision making 91to95

Key performance indicators and strategic performance 28 to 31

Risk assessment 40

Risk management 40to45

Rewarding our people 65

Whistleblowing 69 and 111

2. Division of responsibilities

Our Board 86 and 87

Board leadership and governance framework 88 to 90

Board independence and time commitments 83 and 98

Committee reports 100 to 132

Board and Committee meeting attendance 89

Topic Page(s)

3. Composition, succession and evaluation

Our Board 86 and 87

Board leadership and governance framework 88 to 90

Board evaluation 96 and 97

Nomination Committee Report 100 to 103

4. Audit, risk and internal controls

Audit Committee Report 104 to 111

Statement of Directors’ responsibilities 136

Risk management 40to45

Principal risks and emerging risks 42to45

Going concern 47

Viabilitystatement 46 and 47

5. Remuneration

Directors’ Remuneration Report 112 to 132

Other remuneration disclosures 131 and 132

RS Group plcAnnual Report and Accounts for the year ended 31 March 202398

1.1m

customers

>750k

stocked products

CUSTOMER

EXPERIENCE

WORKSHOP

In January 2023, the Board took part in an innovative

customerexperienceworkshopattheLondon,UKoffice.

As part of this, each Director was given a customer

persona.Thesewererepresentativeofthedifferent

customers we have within the design, build, maintain,

operateandrepairlifecycle,andreflectedthedifferent

products they are interested in and why and how the

products add value to our customers. The Directors carried

out an exercise which demonstrated real-life experiences

through the eyes of the customer.

Aspartofourtransformationjourneytobecomethefirst

choice for our customers, we have an exciting agenda

ahead of us and this really brought it to life. Through these

digital experience enhancements, we will know our

customers even deeper and serve them with an enriched

experience making RS even easier to do business with.

GOVERNANCE IN ACTION:

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

99RS Group plc 99Annual Report and Accounts for the year ended 31 March 2023

Nomination Committee report

NOMINATION

COMMITTEE REPORT

Rona Fairhead

Chair

> Dear fellow shareholder

I am pleased to present the Nomination

Committee’s (the Committee) report for the year

ended 31 March 2023. This section of the Report

details how the Committee discharged its duties

during the year, along with its key activities.

Lindsley Ruth stepped down as CEO during the

year and, therefore, the Committee focused its

attention on the recruitment of a successor in the

latter part of the year. After a rigorous selection

process, Simon Pryce was appointed CEO with

effect from 3 April 2023. Simon is an experienced

and proven CEO of high-performing international

businesses with strong, effective cultures. He has

been an enormously valued member of the Board

for the last six years and been highly engaged in

the development of the Group’s strategy. The

Committee, along with the rest of the Board, is very

confident that Simon has the right leadership style,

skills and experience to lead the Group to

continued future success in the next stage of the

Group’s growth. I would like to thank Simon for his

commitment and contribution as Non-Executive

Director over the last six years. Full details of the

CEO selection process can be found in the

following pages. Further to the announcement

on 3 May 2023 detailing David Egan’s resignation,

the recruitment process to identify a new CFO has

started. Full details will be provided in the 2023/24

Annual Report and Accounts.

Throughout the year, the Committee further

enhanced its work to strengthen talent mapping,

development and succession planning for both

the Executive Directors and senior management.

Further details on this can be found on page 102.

The Board places great emphasis on ensuring its

membership reflects diversity in its broadest

sense. During the year, the Committee

recommended an updated Board D&I Policy, which

was subsequently adopted by the Board. This sets

out the objectives for Board membership in

respect of diversity, along with specific targets for

the senior management, as reflected in the

Group’s D&I Policy. Further details on the Board

D&I Policy can be found on page 103.

An external Board evaluation was conducted

during the year, with the process being overseen

by the Committee. The findings from the

evaluation were broadly positive, with some areas

of improvement being identified. These will

form the basis of an action plan which will be

implemented during the course of the year, with

oversight from the Committee. The Committee

also considered the actions identified from the

2021/22 internal evaluation and monitored

progress against these. Full details of the Board

evaluation process, outcomes and previous actions

can be found on pages 96 and 97.

I would like to take this opportunity to welcome

Navneet Kapoor as a member of the Committee.

His extensive international experience, in particular

in the transformation and digital fields and change

from product-driven to services-driven approaches

will bring valuable insight to the Committee and its

decision making in the future.

Rona Fairhead

Chair of the Nomination Committee

23 May 2023

KEY HIGHLIGHTS

Membership as at 23 May 2023

Rona Fairhead (Chair) Louisa Burdett

Navneet Kapoor Bessie Lee

David Sleath Joan Wainwright

Activities for 2022/23

– Enhancement of talent mapping,

development and succession planning

– Oversight of CEO selection process

– Adoption of the Board D&I Policy

– Oversight of the Board evaluation process

Priorities for 2023/24

– Recruitment of a new CFO

– Continued focus on improving the

succession planning process

– Work with the SMT to enhance materials and

data in respect of succession planning in

accordance with the findings of the Board

evaluation report

KEY ACTIVITIES DURING THE YEAR

JUL

Talent mapping and

succession planning for both

Executive Directors and SMT

DEC

Succession planning for CEO

role and SMT

Review of Committee Terms

of Reference

MAR

Recommendation of

appointment of Simon Pryce

as CEO

Adoption of the Board

D&I Policy

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023100

Committee structure, meetings

and responsibilities

The Committee is comprised of independent

members. There were two changes to the

Committee membership during the year, Navneet

Kapoor joined the Board and the Committee on

1 June 2022, and Simon Pryce stepped down from

the Committee with effect from 14 March 2023.

Details of Navneet’s appointment process can be

found in the Annual Report and Accounts for the

year ended 31 March 2022.

The Committee held three scheduled meetings

during the year and held a further four

unscheduled meetings to consider the leave of

absence of Lindsley Ruth and the CEO selection

process. Details of attendance at meetings can be

found on page 89.

In addition to the members, the regular attendees

at the meetings of the Committee have included

the CEO, CFO, Chief People Officer and the

Company Secretary.

The Committee Chair attends the Company’s

AGM and is happy to answer any questions from

shareholders on matters falling within the

Committee’s responsibilities.

Meetings of the Committee generally take place

shortly before Board meetings and activities of the

Committee are reported by the Chair to the Board

as a separate agenda item.

The Committee’s chief responsibilities have not

changed during the year. The Committee’s Terms

of Reference are reviewed formally and approved

annually and set out its principal duties in full,

including its authority to carry out its duties. These

are available at rsgroup.com.

CEO SELECTION PROCESS

The CEO selection process is set out below.

As a result of this rigorous process, Simon Pryce was identified as the strongest candidate for the role, being a highly experienced business leader of customer-focused, global industrial manufacturing and service

businesses. He has a strong track record of driving results and delivering excellent stakeholder outcomes through enhanced performance and the effective execution of organic and inorganic growth strategies.

1 2 3 4 5 6 7 8

Appointment of Russell

Reynolds Associates*

(Russell Reynolds)

as executive search

specialist. A role profile

was developed with

input from Russell

Reynolds, which

included the essential

skills and experience

requirements identified

by the Committee for

the role.

A diverse longlist of

candidates was

produced, based on

both the talent

mapping already in

place and a global

search conducted by

Russell Reynolds based

on the role profile

requirements and

market.

Rona Fairhead and

David Sleath worked

with Russell Reynolds to

reduce the longlist

down to a shortlist

including both internal

and external

candidates. These

candidates were

geographically spread,

and shortlisted due to

their strong experience

and relevant

backgrounds.

Interviews were

conducted with the

shortlisted candidates

with Rona Fairhead and

other Directors.

Those shortlisted

candidates who were

identified as the

strongest were

subject to full

psychometric

assessments with

Russell Reynolds

and met with other

members of the Board.

In addition to the

assessments detailed

under step five,

in-depth referencing

was undertaken

from previous

employers, peers

and direct reports.

Based on the outcome

of the rigorous

assessment and

referencing process of

the shortlisted

candidates, Simon was

identified as being

the strongest candidate

for the role.

The Remuneration

Committee met to

determine the

remuneration package

to be offered and,

having been agreed,

the Committee made

the recommendation to

the Board to appoint

Simon as CEO with

effect from 3 April 2023.

*Russell Reynolds Associates provides no other services to the Group and has no other connections with it or the individual directors.

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

101RS Group plc Annual Report and Accounts for the year ended 31 March 2023 101

Nomination Committee report continued

Board changes

As announced on 16 December 2022, Lindsley

Ruth stepped down as CEO due to personal

reasons. As part of the Company’s ongoing

succession plans, David Egan became the Acting

CEO when Lindsley went on a leave of absence

from 3 November 2022, and continued in this

role until the process to find a permanent

CEO concluded. During this time, David was

instrumental in driving transformation, excellent

performance and growth, and was supported by a

strong and highly experienced management team.

As detailed on page 101, a rigorous selection

process was conducted for the role of CEO, which

led ultimately to the appointment of Simon Pryce

effective 3 April 2023. Simon stepped down as a

member of the Committee and Audit Committee,

and as Chair of the Remuneration Committee with

effect from 14 March 2023, and did not take part in

any of the discussions regarding the CEO selection

process.

As detailed in last year’s report, Navneet Kapoor

joined the Board with effect from 1 June 2022 as a

Non-Executive Director. His full biographical details

can be found on page 87.

As announced on 3 May 2023, David Egan stepped

down as CFO with immediate effect. The

recruitment for a new CFO is underway.

Succession planning

Nurturing talent is a key enabler to creating a

high-performance, purpose-led culture to support

our strategy.

As part of the Committee’s ongoing

responsibilities, it has reviewed succession plans

for senior management and strengthened the

talent mapping process. Therefore, during the

course of the year, the Committee had a good

understanding of potential candidates, both

internally and externally, for key management

positions. This is an ongoing initiative, which

is reviewed and adapted to ensure it is

continuously fit for purpose and is reflective

of the current market.

Overall accountability for senior succession

planning is held by the CEO, with each SMT leader

accountable for building a strong succession

pipeline within the Group. This structure

encourages a culture whereby each senior leader

takes ownership of their respective plans,

while being supported with agreed processes

and a framework.

Our succession planning can be split into two tiers:

the first for the Executive Director positions, and

the second for key SMT roles.

The succession plans are split between short and

long-term requirements:

– Short-term requirements: for use in unplanned

or emergency situations, whereby interim cover

on a short-term basis is implemented.

– Longer-term requirements: for creating a

pipeline of talent within the organisation by

identifying individuals who have potential to step

into the role. Any gaps in experience and

knowledge are identified, and a development

plan devised and implemented to upskill

potential candidates.

CEO and CFO succession

To help inform the discussion on Executive Director

succession, the role specifications for both CEO

and CFO roles were refreshed during the year and

reflected an increased focus on digital, M&A,

change and culture. These have a five-year horizon,

defining what the Committee believes the

Company needs in that role in the medium to long

term. The CEO role specification was refreshed

further upon Lindsley’s departure.

SMT succession

Talent and development profiles for each of the

SMT will be used for tailored, meaningful and

stretching individual development. These will form

the basis of a much more focused approach to the

identification, succession and development of all

members of the SMT, based on the individual’s

specific aspirations, potential, strengths and

development areas. In addition to this, there is a

dedicated SMT Development Programme, which

includes focused development activities provided

by a range of leading industry experts, which will

include coaching and mentoring as required.

The following actions have been implemented

during the year:

– Regular conversations with every SMT successor

regarding their aspirations and gaps, agreeing

specific development actions and holding leaders

to account for actioning

– Regular reviews of the pipeline and development

plans for successors to the SMT, by each SMT

leader and the people team

– Success profiles for each role and alignment

of SMT core skills and experience

– Experience and skills gap-led leadership and

talent development programmes

Nurturing talent is a key enabler to creating

a high-performance, purpose-led culture

to support our stategy.”

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023102

Diversity and inclusion

During the year, the Committee adopted an

updated Board D&I Policy. This provides a

high-level overview of the Board’s approach to

driving D&I in our succession planning, selection,

nomination, operation and evaluation of the Board.

This policy works in conjunction with our wider

Group D&I policy and reflects the overall Group

targets for senior management. For further details

of performance against targets see page 64.

Policy statement

We believe that creating a culture where our

people feel safe and empowered to bring their

true self to work fosters an environment where

everyone can thrive. We are proud to support our

people to be their best by building an inclusive

workplace that supports everyone, irrespective of

ethnicity, disability, socio-economic backgrounds,

mental health conditions, neurological diversity,

age, religion, sexual orientation or gender identity.

The Board places great emphasis on ensuring that

its membership reflects diversity in its broadest

sense. We believe a key driver in delivering our

organisational diversity commitments is through

a Board which has a balance of skills, personal

and cognitive strengths, experience, diversity

(including of gender and of social and ethnic

background), independence and knowledge.

Consideration is given to the combination of

demographics, skills, experience, ethnicity, age,

gender and other relevant personal attributes on

the Board to provide the range of perspectives,

insights and challenge needed to support good

decision making.

New appointments are made on merit, taking

account of the specific skills and experience,

independence and knowledge needed to ensure a

diverse and rounded Board and the benefits each

candidate can bring to the overall composition of

the Board and its Committees.

The Committee is responsible for ensuring that the

Board has the right balance of skills, experience

and knowledge and, in accordance with its Terms

of Reference, shall:

– regularly review Board composition

– monitor and drive succession planning, talent

development and the broader aspects of D&I

for both Executive Directors and the SMT

– for any Director appointments, work with

executive search firms who reflect and

understand the Group’s values and approach to

diversity, including this Policy, and will honour

those values and approach in identifying and

proposing suitable candidates for appointment

to the Board and its Committees

– identify suitable candidates for appointment to

the Board on merit against objective criteria

having regard to:

⸰the benefits of diversity in promoting the success

of the Group for the benefit of its shareholders as

a whole

⸰the skills, experience, background, independence

and expertise of current members of the Board

and its Committees

– report annually in the Governance Report of the

Annual Report and Accounts on the

implementation of the Board D&I Policy and

other matters as required by the Code and other

regulatory and statutory requirements

– review the Board D&I Policy at least annually and

recommend any revisions to the Board

Objectives

Objectives for achieving Board diversity are

periodically reviewed. The Board aspires to be

comprised of:

– at least 40% women

– at least one of the senior Board positions

(Chair, CEO, CFO or SID) is a woman

– at least one Director from a minority ethnic

background, with a target of 25% by 2030, to

reflect the overall Group target for senior roles

held by ethnically diverse executives

The Board acknowledges that in periods of Board

change, there may be times when this balance is

not maintained.

Reflecting these aspirations, the Board will

aim to meet any recommendations set out

by the FTSE Women Leaders review (formerly

Hampton-Alexander Review).

The Board places high emphasis on ensuring the

development of diversity in the senior

management roles across the Group and supports

and oversees the Group’s ambition of achieving

40% of senior roles held by female executives and

of 25% of senior roles held by ethnically diverse

executives by 2030, as detailed in the Group’s

D&I Policy.

Responsibilities, monitoring and reporting

The Chair of the Board will lead the Board’s

diversity agenda and set measurable objectives,

with the aim of continuously improving D&I

generally, ultimately leading to better debate and

decision making.

The Board will be expected to role model inclusive

language, behaviours and practice in all

undertakings for and on behalf of the Group,

setting a clear tone from the top.

Board and Committee evaluation

The Committee, led by the Chair of the Board, is

responsible for overseeing the Board evaluation

process. An externally facilitated evaluation was

conducted this year by Clare Chalmers.

The Committee also considered the remaining

actions taken in response to feedback from the

previous internal review undertaken in 2021/22

and monitored progress against the agreed

actions. Full details of both the external evaluation

and actions against the previous year’s evaluation

are provided on pages 96 and 97.

Committee effectiveness

As part of this process, the Committee examined

its own performance and operational

effectiveness. The key finding in respect of

the functioning of the Committee was a

recommendation to improve the materials and

data submitted to the Committee to help support

the work of the Committee as main forum for

senior management succession planning.

The overall findings of the evaluation

demonstrated that the Committee operated

effectively and continues to discharge its duties

in line with its Terms of Reference.

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

103RS Group plc Annual Report and Accounts for the year ended 31 March 2023 103

Audit Committee report

AUDIT

COMMITTEE REPORT

Louisa Burdett

Chair

> Dear shareholder

As Chair of the Audit Committee (the Committee), I

am pleased to present the Committee’s Report for

the year ended 31 March 2023. The purpose of this

Report is to describe the work undertaken by the

Committee and explain how it has discharged its

responsibilities throughout the year.

The Committee’s main role is to monitor and

review the integrity of the Company’s financial

information. This includes recommending to the

Board whether the Company’s Annual Report and

Accounts, taken as a whole, is fair, balanced and

understandable and whether the assessment of

the Group’s going concern assumptions and

longer-term viability are reasonable. The

Committee is also responsible for providing

assurance to the Board that the Group’s internal

controls and risk management systems are fit for

purpose and regularly reviewed, as well as

overseeing the effectiveness and independence

of the external Auditors, PwC, including

recommending to the Board the approval of PwC’s

fees and appointment on an annual basis.

We continued to see professional, comprehensive

and robust work in all areas which has meant that

the Committee has been able to discharge its

obligations seamlessly throughout the year.

The Committee has continued to focus on the

Group’s financial reporting, including approving

the disclosures in relation to geopolitical

uncertainties and climate change, the Group’s

going concern and viability statements and the

Group’s use and definitions of alternative

performance measures. The Committee has

continued to focus on the key accounting

matters set out on pages 107 and 108. All of these

matters were conducted to the satisfaction of

the Committee.

We are pleased with the Group’s progress of its

ICFR review which we are confident will strengthen

and formalise its financial processes and controls

framework. This will stand it in good stead for

complying with the regulations coming out of the

UK’s corporate reform.

The Committee has spent some time

understanding all emerging ESG legislation and

the related disclosures and reviewed the Group’s

reporting approach to it, including the second year

of reporting the climate-related risks and

opportunities in relation to the Group’s obligations

under TCFD (see pages 72 to 78).

As part of its duties, the Committee has continued

to review the Group’s information security and

data protection controls, further details of which

can be found on page 109.

On behalf of the Committee, I would like to thank

our internal audit and finance teams and PwC for

their continued support over the past year.

I will be available as usual at this year’s AGM to

answer any shareholder questions in relation to

audit matters.

Louisa Burdett

Chair of the Audit Committee

23 May 2023

KEY HIGHLIGHTS

Membership as at 23 May 2023

Louisa Burdett (Chair) David Sleath

Alex Baldock Navneet Kapoor

Activities for 2022/23

– Oversaw the audit tender process, resulting in the recommendation to the Board of Deloitte or

PwC, with a preference for Deloitte to be appointed as the external Auditors of the Company

starting in 2024/25

– Reviewed and monitored the Group’s approach to risk and its internal control system and risk

management process, including evaluation of performance of the internal audit function

– Continued its focus on development of the Group’s information security strategy

– Reviewed the Group’s initial assessment of the likely impact of the proposals to restore trust in

audit and corporate governance by the UK’s then Department of Business, Energy & Industrial

Strategy (BEIS) corporate reform

– Reviewed the outcomes of the first phase and the progress of the second phase of the Group’s

review of internal controls over financial reporting (ICFR)

– Reviewed the fair value determination and initial integration of acquisitions completed in the year

and the effectiveness of their internal control systems

– Reviewed the Group’s ESG reporting approach, including the update on its climate-related risks

and opportunities in relation to TCFD

Priorities for 2023/24

– Continue to monitor the Group’s progress in its ongoing review of ICFR

– As the detailed regulations resulting from the UK’s corporate reform are published, review the

Group’s assessment of the impact and actions taken

– Monitor the plans for transition from PwC to Deloitte as external Auditors

– Continue to review risks and opportunities for ongoing ESG reporting, including TCFD

– Review the integration of 2022/23 acquisitions and assess the improvement in the effectiveness

of their internal control systems

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023104

Committee structure, meetings

and responsibilities

The Committee acts independently of

management to ensure the interests of our

shareholders are protected properly in relation to

financial reporting, risk and internal control. All

members of the Committee are independent

Non-Executive Directors, with sufficiently

wide-ranging business experience, expertise and

competence to enable the Committee to fulfil its

responsibilities effectively. There was one change

to the membership of the Committee during the

year as Simon Pryce stepped down from the

Committee on 14 March 2023, upon the

announcement of his appointment to the role of

CEO. Navneet Kapoor has been appointed to the

Committee with effect from 15 May 2023. Louisa

Burdett is a chartered accountant and, having held

senior financial management positions, has

extensive knowledge and experience of financial

markets, treasury, risk management and financial

accounting standards. Biographies for

the Committee members are set out on pages 86

and 87.

The Committee held four scheduled meetings

during the year, and held one further unscheduled

meeting to consider the external audit tender

recommendation. Meetings were held in line with

the financial and reporting cycles of the Company.

Meetings are generally held prior to Board

meetings so that optimum collaboration with the

Board is maintained. The Committee Chair

provides updates to the Board on the proceedings,

considerations and findings of each meeting.

The Committee Chair extends invitations to certain

other key individuals to attend meetings, including

the Chair of the Board, other Non-Executive

Directors who are not members of the Committee,

the CEO, CFO, the Company Secretary, Group

Financial Controller, Vice President Group

Operational Audit and Risk (VP Audit and Risk) and

the external Auditors, PwC. The Chief Information

Security Officer (CISO) also attends to provide

regular updates on the Group’s Information

Security strategy. The Data Protection Officer

attends meetings twice a year to give updates

on data protection matters.

During the year, the Committee held separate

sessions with the VP Audit and Risk and the

external Auditors without the presence of

management. The VP Audit and Risk and the

external Auditors have direct access to

the Committee Chair outside of formal

Committee meetings.

The Committee’s chief responsibilities have not

changed during the year. The Committee’s Terms

of Reference are reviewed formally and approved

annually and set out its principal duties in full,

including its authority to carry out its duties, and

are available in the corporate governance section

of our website: rsgroup.com.

The core functions of the Committee include:

– Supporting the Board in ensuring the integrity

of the financial and corporate reporting and

auditing processes

– Assisting the Board in assessing the long-term

viability of the Group by reviewing and

challenging the scenarios considered and severe

but plausible stress testing performed on the

principal risks

– Advising the Board on whether the half-year and

full-year financial reports present a fair, balanced

and understandable assessment of the Group’s

position and prospects

– Ensuring effective internal control and risk

management systems are in place

– Measuring the Group’s effectiveness in

managing risk and reviewing the risk

identification process

– Approving the remit of the internal audit function

and reviewing its effectiveness and findings

– Ensuring that an appropriate relationship is

maintained between the Group and its external

Auditors, including the recommendation to the

Board to approve their appointment and fees

– Monitoring progress of the Group’s information

security strategy to mitigate its major risks

– Reviewing the scope and effectiveness of the

external audit process

– Reviewing whistleblowing, fraud, anti-bribery and

corruption and data protection procedures

We continued to see professional,

comprehensive and robust work

in all areas which meant that the

Committee has been able to

discharge its obligations

seamlessly throughout the year.”

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

105RS Group plc Annual Report and Accounts for the year ended 31 March 2023 105

Audit Committee report continued

FAIR, BALANCED AND

UNDERSTANDABLE

The Board is required to confirm to the

Company’s shareholders that the

Annual Report and Accounts, taken

as a whole, is fair, balanced and

understandable and provides the

necessary information and key

messages to enable shareholders and

other stakeholders to assess the Group

and the Company’s position,

performance, business model and

strategy. The Committee advises the

Board on whether this confirmation

can be made and the Committee

assesses whether it can make this

recommendation to the Board by

following its regular, robust approach

which is:

– Ensuring regulatory requirements for

the Annual Report and Accounts were

thoroughly understood.

– Reviewing draft copies of the Annual

Report and Accounts early in the

reporting process to assess and

advise on direction and key

messages, with a near final version

provided to the Committee and Board

prior to sign-off of the Annual Report

and Accounts.

– Assessing management’s fair,

balanced and understandable

verification process and reviewing its

results. This included a cascaded

sign-off across the Group to

determine the accuracy, consistency

and clarity of the data, information

and language.

– Reviewing the use and disclosure of

alternative performance measures

and confirming its belief that

separate disclosure of these

measures enables readers of the

Annual Report and Accounts to

understand better the underlying

financial and operating performance

of the Group. The alternative

performance measures are

consistent with prior years except for

updating the definition of adjusted

profit measures to exclude

impairment of intangible assets

arising on acquisition of businesses

and not just their amortisation. The

definitions and reconciliations of

alternative performance measures

are set out in Note 3 on pages 151

to 154.

– Ensuring that a thorough review of

the Annual Report and Accounts was

undertaken by all appropriate parties

including external advisors.

The Committee has reviewed the

Annual Report and Accounts for the

year ended 31 March 2023 and has

advised the Board that, in its

opinion, the Annual Report and

Accounts, taken as a whole, is fair,

balanced and understandable and

provides the information necessary

to assess the Group’s position

and performance, business model

and strategy.

KEY ACTIVITIES DURING THE YEAR

MAY

– Reviewed the year-end key accounting judgements and issues (including tax) and approved their accounting

treatment; viability and going concern; and fair, balanced and understandable criteria

– Reviewed the TCFD report for its recommendation to the Board

– Recommended to the Board for approval the adoption of the Annual Report and Accounts for the year ended

31 March 2022 and the full-year results announcement

– Reviewed non-audit fees and the Non-Audit Services Policy

– Recommended to the Board for approval the re-appointment of PwC as Auditors

– Received an update on the ICFR programme

– Reviewed updates regarding operational audit reports, information security and quarterly whistleblowing

JUL

– Reviewed Group Operational Audit remit and performance

– Reviewed the key accounting judgements and issues

– Quarterly review of non-audit fees completed

– Approved PwC’s audit plan for 2022/23

– Reports from the Data Protection Officer and quarterly whistleblowing report received

– Review of operational audit reports

– Reviewed the external Auditors’ performance

– Audit tender commenced

– Received an update on the ICFR programme

NOV

– Received the half-year key accounting judgements and issues (including tax) and approved their accounting

treatment; going concern; and fair, balanced and understandable criteria

– Reviewed the draft interim results for recommendation to the Board

– Quarterly review of non-audit fees completed

– Reviewed PwC’s audit fees for 2022/23 and recommended their approval to the Board

– Reviewed updates regarding operational audit reports, information security and quarterly whistleblowing

– Audit tender update received

JAN

– Received Group Operational Audit update, reviewed the businesses’ risk and control assessment and approved

the 2023/24 operational audit plan

– Approved the key accounting judgements and issues

– 2022/23 ESG reporting approach agreed

– ICFR update received

– Quarterly review of non-audit fees completed

– Reviewed the Anti-Bribery & Corruption Policy and Procedures

– Report from the Data Protection Officer received

– Annual whistleblowing arrangements review and received the quarterly whistleblowing report

– Audit tender update received

MAR

– Recommended to the Board PwC and Deloitte, with a preference for Deloitte to be appointed as the

external Auditors of the Company for 2024/25

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023106

Financial reporting

The primary role of the Committee in relation to

financial reporting is to monitor the integrity of the

Group’s published financial information including

reviewing its full-year and half-year financial

results. The Committee undertakes this with both

management and PwC and concentrates on

ensuring compliance with the relevant financial

and governance reporting requirements. The

Committee considers the principal accounting

policies that are used when preparing these

results as well as reviewing the significant

accounting issues and areas of judgements made

as noted below and other key areas of focus as

noted on page 108. Also, this includes the fair,

balanced and understandable review as described

in more detail on page 106. The Committee

receives regular reports from the CFO and Group

Financial Controller to support this work.

Significant accounting issues

and areas of judgement

Management is required to exercise judgement

in a number of areas when preparing the Group

accounts and the Company accounts. The

Committee focuses on any significant areas of

judgement that may materially impact the Group’s

and Company’s reported results and assesses and

challenges, if necessary, whether these

judgements are reasonable and appropriate.

The Committee also reviews the clarity and

transparency of the related disclosures.

The significant accounting issues and areas of

judgement considered by the Committee during

the year, and how these were addressed, are set

out to the right.

Significant accounting issues and areas of judgement How the Committee addressed these matters and conclusions reached

Retirement benefit obligations

The Group has a material defined benefit pension scheme in the UK

and smaller defined benefit schemes in the Republic of Ireland,

Germany, France and Italy. At 31 March 2023, the total net deficit in

relation to these retirement benefit obligations was £36.4 million

(2021/22: £12.4 million), of which the UK was £26.2 million (2021/22:

£nil). Key judgements are made in relation to the assumptions used

when valuing the retirement benefit obligations. See Note 9 on pages

160 to 165.

Small changes to the assumptions used to value the UK retirement benefit

obligation, particularly changes in bond yields used to determine the discount rate,

can have a significant impact on the financial position and results of the Group.

The assumptions put forward by the actuaries, Head of Group Pensions and Group

Financial Controller were reviewed by the Committee. The Committee also reviewed

the external Auditors’ comparisons of the assumptions with those of other similar

schemes. After discussion, the Committee agreed the reasonableness of the

assumptions used in valuing the retirement benefit obligations at the half year and

year end.

At the half year, the impact of the volatility in the UK markets on the discount rate

caused the UK scheme’s obligations to decrease by £179.3 million. This was offset

by the decrease in the UK scheme’s fair value of scheme assets as a result of the

scheme’s liability hedging strategy. Therefore, the Committee also assessed the

adequacy of disclosure of this impact and agreed with the additional disclosure,

especially around sensitivities.

At the year end, the Audit Committee agreed with management’s decision to update

the discount rate sensitivity analysis to show the impact of a 0.5% movement as this

is considered to be currently a reasonably possible change.

Inventories valuation

Inventories represent a material proportion of the Group’s net

assets. At 31 March 2023, the Group had £616.3 million (2021/22:

£529.5 million) of inventories on the balance sheet. Judgements are

made in estimating the net realisable value of inventories. At

31 March 2023, inventory provisions were £43.7 million (2021/22:

£29.7 million). Sensitivity analysis on the assumptions was

performed, which indicates that any reasonably likely change in

assumptions, including the current global economic uncertainty and

longer-term impacts of climate change and environmental

regulations, is not expected to have a material impact on the current

net realisable value of inventories. See Note 17 on page 172.

From an International Accounting Standard (IAS) 1 ‘Presentation

of Financial Statements’ perspective, the judgements involved in

estimating the net realisable value of inventories do not have a

significant risk of resulting in a material adjustment to the carrying

amount of inventories within the next year. However, the Committee

believes that inventories and their management are so critical to the

Group’s operating model that areas of judgement in inventories

valuation are significant and require its particular focus.

The Group estimates the net realisable value of inventories in order to determine

the value of any provision required. The judgements made in the methodology used

to estimate the net realisable value relate to the number of years of sales there are

in inventories of each product and the value recoverable from these inventories.

These assumptions are based on recent experience and knowledge of the products

on hand and are reviewed regularly. The impact of supply constraints during the

year, the current global economic uncertainty and the longer-term impacts of

climate change and environmental regulations on these assumptions were

considered and the assumptions were adjusted where necessary to ensure they

remain appropriate. Also, adjustments were made to take account of the slowdown

in sales of electronics products and its impact on the net realisable value. The latest

review was presented to the Committee and it reviewed and agreed the

reasonableness of the assumptions.

In order to reach these conclusions, the Committee also discussed with senior

managers the inventory management process and the changes made during the

year to monitor and quickly flex the inventory position to ensure the Group remains

well positioned to maintain service levels within a supply constrained market while

also considering the impact of a potential global recession.

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

107RS Group plc Annual Report and Accounts for the year ended 31 March 2023 107

Going concern and viability statements

As part of the Committee’s responsibility to

provide advice to the Board, the Committee

reviewed and challenged the Group’s going

concern assumptions at the half year and full year

and reviewed and challenged the process and

assessment of the Group’s longer-term viability

at the full year.

Management included a going concern statement

in the Group’s half-year report. The Committee

reviewed the process conducted to prepare this

statement, including the assumptions used in the

reverse stress tests. It recommended to the Board

that it was appropriate to continue to adopt the

going concern basis in the half-year results. The

Committee also reviewed and agreed the wording

of the going concern statement and

recommended its approval to the Board.

For the viability statement in the Annual Report

and Accounts, the Committee reviewed the

assessment period and reviewed and challenged

the scenarios considered for each principal risk

and the determination of severe but plausible

stress tests and reverse stress tests. The

Committee reviewed the outcomes of these stress

tests and, as a result, recommended to the Board

that it is able to confirm the Group’s viability

statement and the going concern statement.

Details of these statements can be found on pages

46 and 47 of the Strategic Report.

Other key areas of focus

The Committee also reviews a number of other

key areas that require management to exercise

judgement. These judgements have not had a

significant effect on the amounts recognised in the

accounts in the year ended 31 March 2023 nor are

they significant estimates which have a significant

risk of resulting in a material adjustment to the

carrying amounts of the Group’s assets and

liabilities within the next year. However, the

Committee focuses on these areas to ensure these

judgements are also reasonable and appropriate

and to ensure they have not become significant.

Audit Committee report continued

These other key areas of focus in the year were:

Other key area of focus How the Committee addressed these matters and conclusions reached

Fair values and goodwill on acquisition of businesses

The Group completed the acquisition of DH on 30 June 2022 for

consideration of £4.1 million. The purchase price allocation resulted

in goodwill of £3.4 million and other intangible assets of £1.9 million.

The Group completed the acquisition of Risoul on 3 January 2023 for

cash consideration of £233.6 million less an accrual refund of

£0.2 million. The purchase price allocation resulted in goodwill of

£108.4 million and other intangible assets of £105.9 million.

Judgements are made in relation to the assumptions and data used

in determining the fair values of the intangible assets acquired and

the goodwill arising. See Note 28 on pages 182 and 183.

The Group reviewed the net assets acquired, identifying and fair valuing all the

assets and liabilities. For larger acquisitions the Group engages external

professional advisors for the identification and calculation of fair values of intangible

assets while ensuring that the assumptions and forecast cash flows used in the

valuation models are reasonable.

The Committee reviewed the process, discussed it with management and the

external Auditors and assessed the results of the work undertaken. The Committee

concluded that it is satisfied with the fair values and goodwill arising on acquisition

of businesses.

Impairment of goodwill and other assets

There is £463.3 million of goodwill on the balance sheet at

31 March 2023 (2021/22: £330.5 million). Judgements are made in

relation to the assumptions used in the value-in-use models which

are used to assess impairment of goodwill and other assets when

there are indicators that they may be impaired.

The value of goodwill is reviewed regularly for impairment using value-in-use

models using cash flows and discount rates as set out in Note 13 on pages 169. The

Committee reviews these impairment tests every year, including the main

assumptions. These assumptions also include consideration of the impact of climate

change. The Committee agrees with the tests’ confirmation that there remains

adequate headroom in place and no impairment provision is required.

Other assets are regularly reviewed to ensure there are no indicators that they may

be impaired. If any significant impairments are found, the Committee will also review

these impairment tests, including the main assumptions, confirming that the

valuation is reasonable.

The Committee also reviewed and agreed with the trade receivable impairment

allowance and disclosure in Note 22 on pages 176 and 177.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023108

Other matters

The Committee also carried out a range of other

activities in relation to financial reporting during

the year which included:

– Reviewing the impact of amendments to

accounting standards adopted during the year

– Reviewing the effective tax rate, judgements

made in relation to the levels of tax contingencies

for potential challenges by local tax authorities

and recoverability of losses, and relevant

disclosures

– Reviewing and agreeing the accounting

treatment and disclosure of any potential

post-balance sheet events at both the half year

and full year

– Agreeing with management’s assessment

that there are no indicators of impairment

for the investments the Company holds in

its subsidiaries

Internal control and risk management

The VP Audit and Risk provides quarterly reports to

the Committee which cover the performance of

the Group’s system of internal control and its

effectiveness in managing the Group’s principal

risks and identifying any control failings or

weaknesses. These reports highlight matters

which might impact the delivery of the Group’s key

strategic objectives or which indicate improvement

is required in any of the Group’s processes or

controls. The Committee carefully considers

these findings and discuss appropriate actions

where necessary.

An annual review of the Group’s risk management

processes is undertaken by the Committee, as

required by the Code, the Financial Reporting

Council (FRC) Guidance on Audit Committees and

the recommendations of the FRC Guidance on Risk

Management, Internal Control and Related

Financial and Business Reporting. These processes

include material controls which cover financial,

operational and compliance controls and risk

management systems. The outcomes of these

reviews are shared with the Board. These, in

combination with other updates to the Board on

the Group’s principal risks, allowed the Board to

assess the effectiveness of the Group’s systems of

internal control and residual risk prior to making its

statement in this Annual Report and Accounts.

Further information regarding the Group’s

principal risks can be found on pages 42 to 45

of the Strategic Report.

The internal control system and risk management

process have been in place during the year and up

to the date of this Report and Accounts. In the

event weaknesses are identified in the internal

control system, plans for strengthening them are

put in place and then regularly monitored. A small

number of weaknesses were identified including:

– Those in the businesses more recently acquired,

which generally are subject to internal audits

following their purchase. All the more significant

control weakness observations, where noted,

have actions and agreed timelines assigned

against them.

– Some internal control improvements required

across the Group’s indirect procurement

activities. These included observations relating to

the need for improved consistency of these

processes and controls across the Group. Actions

have been agreed and progress is being

reported to the Committee.

There were no other material control failings or

weaknesses identified during the year.

Internal ﬁnancial controls

Internal financial controls are the systems that the

Group employs to support the Board in

discharging its responsibilities for financial matters

and the financial reporting process as described

on page 136.

The main elements include:

– Assessments by internal audit on the

effectiveness of operational controls

– Clear terms of reference setting out the duties of

the Board and its Committees, with delegation to

management in all locations

– Group Finance and Group Treasury manuals

outlining accounting policies, processes

and controls

– Weekly, monthly and annual reporting cycles,

including targets approved by the Board and

regular forecast updates

– Local leadership teams reviewing financial results

against forecast and agreed performance

metrics and targets with overall performance

reviewed at region, business and Group levels

– Specific reporting systems covering treasury

operations, major investment projects and legal

and insurance activities, which are reviewed by

the Board and its Committees on a regular basis

– Whistleblowing procedures allowing individuals

to report fraud or financial irregularities and

other matters of concern

In 2021/22, in advance of the regulations arising

from BEIS’s corporate reform, the Group

commenced a review of its ICFR. The first phase,

completed during 2022/23, was to assess the

Group’s current financial reporting controls and

identify what improvements should be made.

The second phase, to action the improvements

required, started during the year and will continue

during 2023/24. The goal is to improve and build

on our existing financial reporting controls

focused on key areas. The Committee reviewed

the outcomes of the first phase and the progress

of the second phase and is pleased with the

work to date. It will continue to monitor the

Group’s progress.

Internal audit

The work of the internal audit function spans the

whole Group including, as and when relevant,

acquired businesses and provides independent

and objective assurance over the Group’s systems

of internal controls through a risk-based approach.

The Committee reviews and approves the scope

and resourcing of the internal audit plan annually

with the VP Audit and Risk. The scope of the plan is

determined by reference to the Group’s operating

risks and strategy as well as geographic, functional

and external risks. The Committee reviews:

– The level and skills of resources allocated to the

internal audit function to conduct this

programme of work

– The summary of the results of each audit and

the business team’s resolution of any control

issues identified

– The effectiveness of the internal audit function

The VP Audit and Risk has regular, open access to

the Committee Chair. Discussions focus on audit

planning and matters noted during internal audit

assignments. Other members of the Committee

are also available as required. The Committee

meets with the VP Audit and Risk without the

presence of management at least once a year.

Other activities

During the year, the Committee continued its focus

on enhancing the Group’s information security

strategy via regular updates from the CISO. These

included updates on information security risk

assessments relating to our industrial control

systems, including improvement actions both

underway and planned. Throughout the year, the

Committee also received updates on other specific

information security risks and improvement

actions, including strengthening IT access controls.

The Committee continued with its reviews of the

data protection compliance programme through

reports from the Data Protection Officer. The

Committee continued to provide oversight of the

Group’s compliance with laws regarding the

protection of personal data across its operations,

including the General Data Protection Regulation

and the UK’s Data Protection Act. The Committee

received regular reports from the Data Protection

Officer highlighting ongoing compliance work such

as training and awareness campaigns to embed a

culture of privacy by design, as well as assessments

of the impact of material changes to the Group’s

operations on its handling of personal data (such

as significant changes to systems).

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

109RS Group plc Annual Report and Accounts for the year ended 31 March 2023 109

The Committee received updates on current

and emerging ESG legislation during the year.

It discussed and agreed the ESG reporting

requirements for 2022/23 and future years,

including the results of the Group’s ESG double

materiality assessment, Scope 3 emissions and

additional disclosures in the Group’s second TCFD

report included in this Annual Report and

Accounts. The Committee was comfortable that

the disclosures contain appropriate and accurate

data and information and recommended to the

Board that it approve the ESG disclosures in this

Annual Report and Accounts, including the

TCFD report.

The Committee discussed and agreed to

recommend to the Board approval of an updated

Anti-Bribery and Corruption Policy.

External Auditors

Effectiveness and independence

The Committee is responsible for reviewing the

performance and effectiveness of the external

Auditors, PwC, as well as their appointment

and remuneration.

A review of the external Auditors’ performance and

effectiveness is undertaken by the Committee

each year. The review includes looking at

qualification, expertise, resources and

reappointment of the external Auditors, as well

as ensuring that no issues have arisen which

might adversely affect their independence

and objectivity.

The review also considers how robust the external

audit itself has been, as well as the quality of

delivery. It also addresses the FRC’s Audit Quality

Inspection Report on PwC as well as any feedback

received from the Group’s senior managers.

How well the external Auditors have exercised

professional scepticism and whether they have

provided an appropriate degree of constructive

challenge to management is assessed by the

Committee and, as part of risk evaluation planning,

the Committee also considers the risk of PwC

withdrawing from the market. The external

Auditors demonstrated professional scepticism

and challenge on the valuation of inventories, the

acquisition fair values of Risoul, the recoverability

of receivables and assumptions in the going

concern and viability assessments.

Audit Committee report continued

AUDIT TENDER PROCESS

The Committee approved the establishment of a steering group, comprised of the Committee Chair, CFO and Group Financial Controller, to oversee the process with approval sought from the Committee at each

key stage. The following steps took place during 2022/23, which ultimately resulted in Deloitte being chosen as the Group’s external Auditors for the year ending 31 March 2025, subject to shareholder approval at

the 2024 AGM.

1 2 3 4 5 6 7 8

Seven audit firms were

formally approached

with a request for

information (comprising

all of the big four and

three mid-tier firms).

The mid-tier firms were

selected based on their

geographical reach. Of

these, three audit firms

completed the request

for information (two of

the big four and one

mid-tier firm).

An evaluation scorecard

to assess the

information provided by

the three audit firms

was used to decide

which two firms to invite

to take part in the full

audit tender.

Partners from each of

the final two audit firms

were interviewed by the

steering group and

other senior finance

managers.

Formal invitations to

tender were issued to

the chosen audit

partners. A virtual data

room was established

and management held

meetings with each of

the firms (with each RS

manager asked to

provide feedback on the

audit firms). Also, each

audit firm visited our DC

in Nuneaton, UK and

were given several

opportunities to ask

questions of the Group

Financial Controller.

The tender documents

submitted were

reviewed by the

steering group, the

Chair of the Board,

other Committee

members and senior

finance managers.

Each audit firm was

invited to give a final

presentation to the

steering group, a

Committee member

and senior finance

managers, with the

incoming CEO

attending as an

observer. Also, the Chair

of the Board met each

prospective audit

partner. Separately,

each audit firm

showcased their

technology and data

analytics capabilities to

the Chief Technology

Officer, Group Financial

Controller, VP Audit and

Risk and Technology

Risk Manager.

A final grading of each

firm took place by

management, with a

preference being made

to the Committee.

The Committee

considered

management’s

preference and, after

debating the merits of

each firm,

recommended both

firms to the Board with

a preference for

Deloitte to be

appointed as external

Auditors for the year

ending 31 March 2025.

The Board approved

this preference in

March 2023.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023110

During the year, the Senior Statutory Audit Partner,

Sandeep Dhillon, or the Audit Director, together

with other relevant and appropriate members

of the PwC audit team, attended all of the

Committee’s meetings, with the exception of the

March meeting which discussed the audit tender

recommendation. PwC provided reports and

conclusions on the Group’s key accounting

judgements, internal control processes, Annual

Report and Accounts and half-year report.

Following its review, the Committee concluded

that it would recommend to the Board PwC’s

reappointment as the external Auditors

for 2023/24. The Board accepted this

recommendation and a resolution will therefore

be put to shareholders at the forthcoming AGM

to reappoint PwC.

Further details of how the Committee and PwC

work together, as well as how PwC’s independence

is maintained, can be found in the corporate

governance section of our website. As in previous

years’ reports, the Committee can confirm that the

Group does not engage PwC to undertake any

work that could affect their independence.

The Committee has satisfied itself that the

Company has complied with the provisions of the

Statutory Audit Services for Large Companies

Market Investigation (Mandatory Use of

Competitive Processes and Audit Committee

Responsibilities) Order 2014, published by the

Competition and Markets Authority on

26 September 2014.

Tender and rotation

Following an external tender process in 2014, PwC

was appointed as the Group’s external Auditors

with their first audit being the 2014/15 Annual

Report and Accounts.

The EU Audit Regulation and Directive, and the

Companies Act 2006 (Companies Act), states that

there should be a public tender every 10 years and

a change of external Auditors at least every 20

years. In accordance with this, the Company

conducted a retender process for the audit of the

Annual Report and Accounts for the year ending

31 March 2025, in order to make any necessary

changes to providers of other services in a timely

and orderly fashion and to appoint auditors before

the start of that year as these are in the best

interests of our shareholders. This resulted in the

recommendation by the Committee to the Board

for either PwC or Deloitte with a preference for

Deloitte to be appointed as the Group’s external

Auditors for the year ending 31 March 2025. Full

details of the tender process can be found on the

previous page. No contractual obligations exist

that might restrict the Committee’s choice of

external Auditors.

Non-audit assignments undertaken by

the Auditors

The Group operates a policy to ensure that the

provision of non-audit services does not impair the

external Auditors’ independence or objectivity and

that only permitted services are provided. In

determining this policy, the Committee took into

account possible threats to the external Auditors’

independence and objectivity.

The policy on non-audit services includes:

– In providing a non-audit service, the external

Auditors should not:

⸰Audit their own work

⸰Make management decisions for the Group

⸰Create a mutuality of interest

⸰Find themselves in the role of advocate for

the Group

– The total non-audit fees for any financial year

should not exceed 70% of the average of the

external audit fee over the last three years. In

practice the non-audit fees are normally

significantly below this level

The policy also states that the Committee has

pre-approved the CFO to have authority to

commission the external Auditors to undertake

non-audit work (not covered above) where there is

a specific project with a cost that is not expected to

exceed £50,000.

Full details of our policy in relation to non-audit

services can be found on the corporate

governance section of our website. This policy

was reviewed by the Committee during the year

and no changes were required.

During the year under review there were no

non-audit fees for PwC compared to audit fees of

£2.9 million plus audit-related assurance services

of £0.1 million. Further information on fees payable

to PwC are included in Note 5 on page 156.

The Committee has satisfied itself that its use of

the external Auditors complies with both the Code

and the FRC’s Ethical and Auditing Standards

regarding the scope and level of non-audit work

and non-audit fees incurred by the Group.

Fraud

The Committee is responsible for reviewing the

Group’s procedures for the prevention and

detection of fraud. Suspected cases of fraud must

be reported to the Company Secretary or General

Counsel within 48 hours and investigated by

operational management, Group Compliance or

internal audit, as appropriate. The outcome of

any investigation is reported to the Company

Secretary, General Counsel and the CFO. A register

of all suspected fraudulent activity and the

outcome of any investigation is maintained and

circulated to the Board on a regular basis, with the

Committee also receiving regular updates. The

Group takes steps in line with good business

practice to detect and prevent fraudulent activity.

The Committee is pleased to report that there

were no frauds of a material nature discovered

during the year, although the Group is subject to

various attempts at external and low-level credit

card and online fraud.

Whistleblowing

In accordance with the provisions of the Code of

Conduct, the Committee is responsible for

reviewing the arrangements whereby all of the

Group’s employees may, in confidence, raise

concerns about illegal, unethical or improper

behaviour or other matters and for ensuring that

these concerns are investigated and escalated as

appropriate. Reports may be raised directly to

senior management or through an external

third-party reporting tool. Whistleblowing is

referred to internally as Speak Up and is available

to all of the Group’s employees. The Committee

receives aggregated reports on matters raised

through these services and monitors their

resolution. A new European Whistleblowing

Directive came into force with effect from

December 2021 which required Member States to

implement new rules on whistleblowing regimes.

To date, the Directive has been incorporated into

national law in Denmark, Sweden, Portugal,

Republic of Ireland and France. The Group’s

existing policies and procedures (adopted globally)

have been updated to reflect the new legislation.

The Group will continue to monitor any national

laws that implement additional, relevant

requirements and make any required changes

to policies and procedures where appropriate.

For further information see pages 79 and 80.

Committee evaluation

This year, the Board underwent an externally

facilitated evaluation of its performance and the

activities of the Committee were reviewed as part

of this process. The results of the evaluation

demonstrated that the Committee continued

to operate effectively and provided sufficient

challenge, and that the composition worked well

with a good balance of experience. It was also

noted that the Committee was well supported by

the management team, who bring succinct and

precise papers and verbalise issues well, to

enable focused discussion and clear actions

and outcomes.

Further details of the evaluation process can

be found in the Governance Report on pages 96

and 97.

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

111RS Group plc Annual Report and Accounts for the year ended 31 March 2023 111

2022/23 ANNUAL INCENTIVE – OUTCOMES AGAINST PERFORMANCE MEASURES 62.3% OF MAXIMUM

ALIGNMENT WITH BROADER EMPLOYEE REWARDS

7,752

eligible employees were granted

an RS YAY! Award in July 2022.

Those eligible were permanent,

fixed-term and apprentice

employees employed on

the grant date

87%

of employees participate in

a bonus plan globally

£1,000

To support with the continued

high cost of living being

experienced worldwide, all

our eligible employees globally

(except Executive Directors)

received an ad hoc payment

of £500 in November 2022.

A further £500 was paid to our

eligible employees (except

senior leaders), employed on

28 February 2023 in April 2023

£300

All eligible non-management

employees in the UK received

a £300 lump sum payment in

June 2022 as part of the annual

pay review

5-5.9%

UK managers and

non-management employees

will receive average pay

increases of 5% and 5.9%

respectively in June 2023

Adjusted PBT

102.4% of target achieved

Target: £382m

Actual: £391m

Like-for-like revenue growth

90.2% of target achieved

Target: 11%

Actual: 10%

Adjusted free cash flow

141.3% of target achieved

Target: £187m

Actual: £264m

Group Net Promoter Score (NPS)

99.4% of target achieved

Target: 50.5

Actual: 50.2

e reduction

(Scope 1 and 2 emissions)

275% of target achieved

Target: 8.0%

Actual: 21%

Directors’ Remuneration report

REMUNERATION

AT A GLANCE

2022/23 PERFORMANCE

Like-for-like revenue growth

10%

2021/22: 26%

Adjusted profit before tax (PBT)

£391m

2021/22: £314m

Adjusted earnings per share (EPS)

63.6p

2021/22: 51.3p

e reduction (scope 1 and 2 emissions)

21%

2021/22: 20%

Return on capital employed (ROCE)

30.8%

2021/22: 28.7%

2020 LONG TERM INCENTIVE

PLAN(LTIP) – OUTCOME

AGAINSTPERFORMANCE

MEASURES: 50%

Adjusted earnings per share (EPS)

(cumulative for the three-year

period ended 31 March 2023)

146.2p

Maximum target: 130.0p

2019 LTIP: 120.3p

Total shareholder return (TSR)

11 of 17

Maximum target: Upper quartile

2019 LTIP: 5 of 17

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023112

REMUNERATION

COMMITTEE

Joan Wainwright

Chair

> Dear shareholder

On behalf of the Remuneration Committee (the

Committee), I am pleased to present the Directors’

Remuneration Report, and my first as Chair of the

Committee, for the year ended 31 March 2023.

I would like to take this opportunity to thank Simon

Pryce for his four years of leadership as Chair of

the Committee and congratulate him on his new

role as CEO. Along with the Board, I am confident

that Simon has the right leadership style and

experience (as described on page 86) to lead the

Group to further success. Details of Simon’s

remuneration and the CEO recruitment and

selection process the Committee followed, are

set out on page 114 and 101 respectively.

The Committee was pleased to see that the 2022

Remuneration Policy, which it believes is in the

best interests of the Company’s stakeholders,

was approved by shareholders at the 2022 AGM,

and subsequently implemented during the year.

Consistent with our long-standing commitment to

active engagement with our shareholders in this

area, the Committee undertook an extensive

multiphase consultation process with our major

shareholders, representing around 80% of the

proposals in early 2022. While the majority of

shareholders we engaged with were supportive,

including our largest shareholders, we recognise

that some of our shareholders were not able to

support the proposals ultimately. We have

continued to engage with our shareholders during

this year and further details of this process are

included on page 116.

Despite the continued challenges of the external

environment, this is an exciting time for the Group

and its stakeholders. In 2022/23, our business

delivered a strong performance. A summary

of the financial performance of the Group is

set out on pages 32 to 36. We believe our

remuneration and incentive outcomes for the

year, which are outlined on page 124, are reflective

of this performance.

Consideration of the wider

stakeholder experience

We continue to take a responsible approach to

ensure remuneration outcomes align with the

wider Company performance to drive exceptional

outcomes for all our stakeholders.

Our people remained essential to the delivery of

the strategy during the year. Our focus on people

was recognised externally including being a finalist

at the 2022 ProShare Awards and being awarded

our first Global Equity (GEO) Award for Best Plan

Communication (for a Company with under 10,000

people) for the RS YAY! Award.

The Group recognised that many of our people

continue to be impacted by the cost of living crisis.

Throughout the year we helped support our

people through these challenges with a series

of interventions, including:

– A competitive base pay increase in June 2022

(with an average UK increase of 4.8%), plus an

additional lump sum payment to our

non-management employees in the UK

– An ad hoc payment to our employees in

November 2022 (excluding Executive Directors)

– A further ad hoc payment to our employees

(excluding senior leaders) employed at

28 February 2023, was approved in March 2023

and paid in April 2023

– We have increased the number of employees

participating in a bonus plan globally

– Our proposed base pay increases for our UK

employee population for June 2023 will be 5%

to 5.9%

The wellbeing of our people remained an ongoing

priority, with an increased focus on sustainable

benefits, including a benefits open day in Corby,

UK, and a series of financial education events

including webinars on a range of topics such

as managing the cost of housing, saving for

retirement and UK capital gains tax.

KEY HIGHLIGHTS

Membership (as of 23 May 2023)

Joan Wainwright (Chair) Alex Baldock

Louisa Burdett David Sleath

Activities for 2022/23

– Supporting our people worldwide to navigate the cost of living crisis with a number of interventions

including one-off payments

– Successful launch and implementation of the RS YAY! all employee share award; granted 7,752

employees 100 performance shares, aligned with the strategy

– Extensive shareholder consultation

– Implementation of the Remuneration Policy (Policy) approved by shareholders at the 2022 AGM

to support accelerated delivery of the strategy and exceptional shareholder returns

– Review and alignment of 2022/23 incentive outcomes with Company performance

– Agreement of departure terms for Lindsley Ruth

– Remuneration structure for the CEO, Simon Pryce

Priorities for 2023/24

– Review our approach to employee share ownership, with the aim of enabling more of our people

to become shareholders and to share in the future success of the Company

– Ensuring that both short and long-term incentive outcomes continue to reflect the performance

of the Company, the experience of all our stakeholders and support delivery of the strategy

– Maintaining an active and open dialogue with shareholders and ensuring their views and those

of their advisors are sought and considered when determining executive remuneration

– Remuneration structure for the new CFO on appointment

113RS Group plc Annual Report and Accounts for the year ended 31 March 2023 113

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Directors’ Remuneration report continued

We continue to listen to our people to understand

how we can improve our benefit offerings to reflect

our diverse workforce at different life stages,

including medical support during menopause,

fertility treatment and support with neurodiverse

conditions.

Sharing success

Giving our people a chance to share in our

collective success remains a priority through the

provision of incentive plans and all employee

share plans. 87% of our employees globally now

participate in a bonus plan and we will continue

to build on this number. Our senior leaders

participate in LTIP programmes, with many also

being part of our J2G LTIP Award.

For the first time our people globally now have

the opportunity to become shareholders in the

Company, with the grant of 100 performance

shares each under the RS YAY! Award. The award is

aligned with both the strategy and the J2G LTIP

Award for eligible senior leaders. We believe that

the RS YAY! Award will enhance our people

engagement and ensure our people can share in

the future success of the Company. Further detail

of the award can be found on page 122.

We will continue to consider other ways to help

our people share in our overall success including

a review in the year ahead of our approach to

employee share ownership globally.

Executive Director transition

As previously announced, it was agreed that

Lindsley Ruth would step down from the Board

due to personal reasons in December 2022.

Lindsley continues to be available to the Board,

if required until the end of his notice period in

December 2023. In line with his service contract

Lindsley will receive his base salary for the duration

of his notice period.

When considering the treatment of Lindsley’s

incentives, the Committee recognised the

longevity of his service and the significant

contribution he made to the growth of the

business over that period. The Committee

exercised its discretion and determined that

Lindsley would be treated as a good leaver for the

purposes of his unvested LTIP and deferred bonus

awards earned from previous years. The pro-rated

LTIP awards will vest based on the original

performance conditions and remain subject to the

relevant holding periods. He will also receive a

pro-rata annual bonus for the year 2022/23,

excluding any deferred share element. Lindsley’s

J2G LTIP Award granted in July 2022 has lapsed in

full. Full details are set out on page 125.

David Egan led the Group as Acting CEO for a

five-month period from 3 November 2022 to

2 April 2023. David received a double hatting cash

allowance of £200,000 per annum pro-rated

during this period. When determining the value of

the allowance, the Committee considered market

data and the Group’s internal guidelines for such

allowances. The Committee decided that this

allowance was at the appropriate level and in line

with Group practice for the wider workforce while

also reflecting David’s increased workload and his

previous experience of covering the CEO role. The

double hatting allowance did not count as salary

for the purposes of pension benefits, the annual

bonus or LTIP awards. Full details of David’s

remuneration is detailed on page 123.

As announced on 3 May 2023, David resigned

from the CFO role with immediate effect. David

continues to be available to the Company while

on gardening leave, as required, until

3 November 2023. David will receive his base pay,

pension allowance and benefits for the first six

months of his notice period. Thereafter he will be

paid in lieu of notice for the final six months of his

notice period. The pension allowance and benefits

will not be provided during the final six months.

When considering the treatment of David’s

incentives, the Board recognised the significant

contribution David made during his long tenure,

driving transformation and on two occasions

acting as CEO. For incentives where he had

been in active employment throughout the full

performance period, the Committee exercised its

discretion and determined that David would retain

his 2020 LTIP Award and deferred bonus awards

from previous years. David was also awarded the

cash element of his annual bonus for the year

ended 31 March 2023. David’s J2G LTIP Award,

granted in July 2022, has lapsed in full, together

with his 2021 and 2022 LTIP Awards. Full details are

set out on page 125.

Remuneration arrangements for

Simon Pryce

Simon stepped down as a member and Chair

of the Committee on announcement of his

appointment as CEO on 14 March 2023. In line with

best practice, Simon excused himself from all

discussions related to the CEO appointment and

related remuneration.

Simon’s remuneration package was determined

by the Committee in line with our Remuneration

Policy, taking into account his experience and

background, shareholder guidance and the

external environment, and appropriate

market data.

Simon will receive an annual base salary, set on

appointment, of £750,191. He will not be eligible

for an increase during our normal pay review

in June 2023. His salary was set 3% above his

predecessor’s, representing an increase which is

below the expected 5% to 5.9% average increase

for the wider UK employee population. It also

reflects Simon’s position as an experienced and

proven CEO of high performing international

businesses.

Simon will participate in our annual bonus and LTIP

programmes and receive a pension allowance, as

set out in our 2022 Remuneration Policy (and

summarised on pages 118 to 119). Under the 2022

Remuneration Policy the pension allowance is set

in line with the rate available to the majority of the

UK workforce.

The Committee considered carefully the approach

to Simon’s participation in the J2G LTIP. The

Committee concluded that it was right for Simon to

participate in order to ensure ongoing alignment

with the SMT and the wider workforce through the

RS YAY! Award. The ability to ensure new recruits

could be included to ensure such alignment was

an important point raised by a number of

shareholders we spoke to when developing the

plan design initially in 2022. At the same time, we

looked to ensure that the calibration of his award,

which we will grant as soon as is reasonably

practicable, was in line with relevant best practice

principles. In this regard, note the following key

aspects of Simon’s award:

– His maximum award size was pro-rated to reflect

the remaining proportion of the performance

period (i.e. reducing the maximum award from

750% to 498% of salary).

– To align with both shareholders and existing

participants, the number of shares granted will

be calculated using the share price used to

determine the grants of J2G LTIP Awards made

in July 2022 (1,020.50p) and the salary of the

previous CEO. This results in a maximum number

of shares of 355,427, which translates, using the

grant share price and Simon’s salary, to an award

value of 483% of salary.

– The award is subject to exactly the same highly

ambitious performance targets as the original

J2G LTIP Award (see page 126) which require

exceptional financial and strategic performance

to be delivered to trigger even threshold vesting.

These targets remain at least as stretching as

they did when originally set. Therefore, there

is no windfall benefit to Simon from his

participation commencing after the start of the

performance period.

– An extended post-vesting holding period of three

years will apply to Simon’s award to ensure that

the total vesting and holding period is five years,

in line with established guidance.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023114

Simon is a highly

experienced business

leader of customer

focused, global industrial

manufacturing and

service businesses.”

In line with our Remuneration Policy, Simon will

be subject to the 400% of salary shareholding

guidelines (which extends into post-employment),

notwithstanding that this increased level had been

set partly in contemplation of a J2G Award level

significantly in excess of what Simon will receive.

The Committee notes that, as a result of his

existing holdings and an additional purchase made

since his appointment as CEO, Simon already holds

a shareholding of around 68% of salary.

Incentive outcomes for the year ended

31 March 2023

The 2022/23 annual bonus measures were

adjusted PBT, like-for-like Group revenue growth,

adjusted free cash flow, Group NPS and for the first

time included an environmental based measure of

e reduction (Scope 1 and 2 emissions), with

targets set for each at the start of the year. Further

detail of the specific targets and the performance

delivered are set out on page 124.

The 2020 LTIP Award, which was based on

performance over the three-years ended

31 March 2023, will vest at 50% of maximum.

This is based on the TSR performance being below

median of the peer group and the delivery of

cumulative EPS growth of 146.2p. Further detail on

the specific targets and the performance delivered

are set out on page 124.

In line with good practice and the terms of our

Remuneration Policy, the Committee considered

the formulaic outcomes of both the bonus and

2020 LTIP Award in the context of the broader

business performance, the intended purpose of

the award and the outcomes for our stakeholders.

Due to COVID-19 the grant of the 2020 LTIP

Awards was delayed from June 2020 partly to

mitigate the risk of unexpected windfall gains

following the reduction of the share price at that

time and to enable the setting of robust targets.

Ultimately, this resulted in the LTIP awards being

granted in November 2020 at a higher share price

compared to if the awards had been granted at

the normal time in June 2020. Therefore, the

Committee is satisfied that no further adjustment

is required.

No discretion has been applied to the Executive

Director incentives and, as a result, the formulaic

outcomes of 63.2% of maximum for the bonus

and 50% of maximum for the 2020 LTIP will

be delivered.

As detailed on page 125, neither Lindsley nor

David will be entitled to the deferred element of

the annual bonus. Therefore David earned a bonus

of 42.1%, and Lindsley earned a bonus of 30.0%

time pro-rated to 16 December 2022. Lindsley’s

2020 LTIP Award has also been time pro-rated

to this date.

Remuneration approach for the year

ending 31 March 2024

As set out in last year’s report following the market

re-alignment of base salaries in 2022/23, it is the

Committee’s current expectation that subsequent

salary adjustments during this Remuneration

Policy period will be in line with the framework

we apply for the wider UK workforce.

Simon Pryce’s salary for 2023/24 was set on

appointment. Other aspects of the package for

Executive Directors will reflect the Remuneration

Policy. The annual bonus will be based on a

balanced set of key financial and strategic targets

for the year and the LTIP structure will be

consistent with prior years. We will continue to set

stretching targets to reward sustainable, long-term

growth. Simon will receive a J2G LTIP Award as

described above.

The one minor change to the structure of the

annual bonus this year is the introduction of a 10%

element based on individual strategic targets. This

is intended to align with the framework already in

place for those SMT members below the Board

and support the business in driving and rewarding

key aspects of strategic transformation. The

Committee will ensure robust target setting and

an assessment framework, as well as high quality

disclosure of outcomes next year.

75% of the annual bonus will continue to be

based on financial targets for the year ending

31 March 2024. Further detail can be found on

page 131.

I would like to thank our shareholders for the time

taken to engage with us during the year and their

continued support at the last AGM, as well as all

Committee members for their significant

contribution during the year. We remain

committed to a responsible approach to executive

pay and believe the decisions made by the

Committee both reflect and build on constructive

shareholder dialogue. The Committee will continue

to engage with shareholders and institutional

investor bodies in the development of our

remuneration policies and structures and will

continue to emphasise the links to performance

and to consider wider stakeholders in its

deliberations. I hope that you will join the Board in

supporting the resolution to approve the 2022/23

Remuneration Report to be put to shareholders at

the 2023 AGM.

Joan Wainwright

Chair of the Remuneration Committee

23 May 2023

115RS Group plc Annual Report and Accounts for the year ended 31 March 2023 115

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Directors’ Remuneration report continued

Remuneration related shareholder consultation for the year ended 31 March 2023

In line with our continuing commitment to dialogue with our shareholders the Committee and Chair of the Board have offered our major shareholders several opportunities for engagement throughout the year.

This included during the development, and approval at the 2022 AGM, of the Remuneration Policy, and as a result of the CEO transition which took place in the second half of the financial year. Full details are

provided below.

Topic Timing and structure Feedback and impact

2022 Directors’

Remuneration

Policy

As reported last year we engaged extensively

with our top shareholders in respect of the

development of the 2022 Remuneration Policy

structure, including the J2G LTIP Award.

Following initial engagement towards the end

of 2021/22, in mid-April 2022, over 20 major

shareholders (representing c. 80% of the

addition to this, we engaged with shareholder

representative bodies and proxy agencies.

Subsequent to the 2022 AGM, in January 2023,

we engaged further with our top shareholders

(again, representing c.80% of the register) to:

– provide further explanation of our position

around the J2G LTIP Award in particular to

confirm that Lindsley Ruth’s J2G LTIP Award had

lapsed in full on his departure from the

Company

– give shareholders a further opportunity to

share any further perspectives on the

Remuneration Policy

As a result of the follow up engagement, we

also responded to a number of email queries

from shareholders.

The initial consultation process provided an opportunity for major shareholders to provide input into the preliminary development of the Remuneration Policy.

In this engagement the majority of shareholders we engaged with were supportive of the proposals, including our largest shareholders.

They acknowledged the approach the Committee had taken to align our remuneration with our high-performance, purpose-led culture and strategy, recognising

that it was distinctive against others in the market. They welcomed the continued focus on the long-term, share-based and performance-linked reward and

recognised that the ambitious targets and exceptional performance needed to deliver the top end of the J2G LTIP Award are well aligned with shareholder and

other stakeholder interests. Through the consultation process, we received valuable feedback and insights from all those we spoke to, with much of this directly

influencing the shape of the final proposals (for example, the J2G LTIP Award performance measures framework).

Based on investor feedback, both prior to and since the 2022 AGM, the Committee understands the main reasons why a minority of shareholders were not able

to support the Remuneration Policy. These related primarily to the potential maximum quantum under the J2G LTIP Award and actions required to deliver the

maximum pay out. We recognise these concerns, set in the context of wider social sensitivities with regards to potential quantum of executive pay. However,

the Committee continues to believe, as at the time of the 2022 AGM, that the introduction of the J2G LTIP Award was the right thing to do in order to provide a

framework to incentivise senior leadership to deliver truly exceptional performance which would deliver significant value for the Group and all its stakeholders,

at this stage of the Group’s evolution.

We will remain mindful of investor feedback and are committed to ensuring that any payments made under the J2G LTIP Award reflect the underlying performance

over the period. We retain the discretion to adjust awards if they are not deemed appropriate in the circumstances.

Simon Pryce’s

remuneration

package for

appointment

as CEO

On the announcement of Simon Pryce’s

appointment as CEO in March 2023, major

shareholders were offered the opportunity

to discuss both his appointment and related

remuneration with the Chair of the Board.

This engagement process provided an opportunity to provide shareholders with the background to the appointment and to hear feedback. Details about the CEO

selection process is set on page 101.

With respect to Simon’s remuneration package, we were able to explain the Committee’s approach, including how the Committee considered factors such as:

– his previous CEO experience and remuneration

– his knowledge of the Group

– the remuneration arrangements of the wider workforce

– alignment to the Remuneration Policy

– market data

– shareholder best practice

A summary of Simon’s remuneration package and the underlying rationale for each component, can be found in the Chair’s letter, with full details on pages 131

to 132.

Some shareholders raised the issue of Simon’s participation in the J2G LTIP Award. As described in detail on page 114, the Committee had considered this issue

carefully and concluded that it was right for Simon to participate in order to ensure ongoing alignment with both the SMT and the wider workforce through the

RS YAY! Award and, therefore, the Group’s strategy. The Committee had ensured that the calibration of his award was in line with relevant best practice principles,

such as being time pro-rated, calibrated using the same share price as the 2022 awards, subject to the same exceptionally stretching performance targets and

with an extended post-vesting holding period.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023116

Committee structure, meetings

and responsibilities

The Committee is comprised of independent

members. Upon announcement on 14 March 2023,

of his appointment as CEO, Simon Pryce stepped

down as Chair and a member of the Committee.

Joan Wainwright was subsequently appointed as

Chair. Joan has been a member of the Committee

since July 2021 and therefore meets the

requirements of the Code. There have been no

further changes to Committee membership during

the year. Details of the skills and experience of the

Committee members can be found on pages 86

to 87.

The Committee held five scheduled meetings

during the year, and held two additional meetings

to consider the remuneration for Lindsley’s

departure from the Company and the

remuneration package for our new CEO, Simon

Pryce. Simon did not take part in any discussions in

respect of the CEO selection and remuneration

package. Details of attendance at meetings can be

found on page 89.

The Chair of the Board, CEO, CFO, other Board

members, Company Secretary and Senior Vice

President Group Professional Services, Chief

People Officer and Vice President, Group Reward

were invited to attend Committee meetings to

advise on specific items and on matters relating

to the performance and remuneration of senior

managers, other than in relation to their own

remuneration. The Company Secretary acts as

Secretary to the Committee. Meetings of the

Committee generally take place shortly before

Board meetings, and activities of the Committee

are reported by the Chair to the Board as a

separate agenda item.

The Committee Chair attends the Company’s AGM

and is happy to answer any questions from

shareholders on matters falling within the

Committee’s responsibilities.

The role of the Committee is to consider the

remuneration packages designed to promote the

long-term success of the Company and to ensure

that Executive Directors and other senior

managers are compensated appropriately for their

contributions to the Group’s performance, taking

into consideration the wider employee group. The

Committee also considers the remuneration of the

Chair of the Board. The Board determines the

remuneration of the Non-Executive Directors.

No individual is present while decisions are made

regarding their own remuneration.

The Committee’s chief responsibilities have not

changed during the year. The Committee’s Terms

of Reference are reviewed formally and approved

annually and are available at: rsgroup.com.

Committee evaluation

This year, the Board underwent an externally

facilitated evaluation of its performance and the

activities of the Committee were reviewed as part

of this process. The results of this evaluation

demonstrated that the Committee continued to

operate effectively and in alignment with its Terms

of Reference.

Further details of the evaluation process can be

found in the Corporate Governance Report on

pages 96 to 97.

KEY ACTIVITIES DURING THE YEAR

APR

– Received feedback from shareholders in respect of the proposed Remuneration Policy

and launched a follow up round of shareholder engagement

MAY

– Considered 2021/22 bonus and 2019 LTIP Award outcomes

– Reviewed shareholder feedback on 2022 Remuneration Policy

– Reviewed performance against objectives for the prior year and set objectives for

the coming year

– Approved the Remuneration Report and Remuneration Policy to be put to shareholders

at the July 2022 AGM

– Approved enhanced Deferred Bonus Share Plan (DSBP) and 2022 LTIP rules

– Reviewed the proposed 2022 share awards

– Approved the structure of the J2G LTIP Award and launch of the RS YAY! Award

– Discussed the Gender Pay Gap Report

JUL

– Approved the granting of the 2022 LTIP and J2G LTIP Awards

– Reviewed the voting results from the AGM of the Remuneration Policy

DEC

– Approved Lindsley Ruth’s remuneration and leaver treatment on stepping down from

the role of CEO and departure from the Company

– Approved the double hatting allowance for David Egan while covering the CEO role

– Reviewed the SMT remuneration

– Approved LTIP grants, including the RS YAY! Award, to eligible people who joined the

Company in the period July to December 2022

– Approved and recommended to the Board the Committee’s Terms of Reference

– Reviewed the performance of the remuneration advisor

JAN

– Conducted additional follow up shareholder engagement regarding the Remuneration

Policy vote received at the 2022 AGM

MAR

– Reviewed shareholder consultation during the year and considered further action

– Reviewed the initial view of the 2022/23 outcomes for the annual bonus and 2020 LTIP

against the performance targets

– Approved remuneration package for the new CEO

– Approved pay review for the SMT

– Approved fees for the Chair of the Board

– Reviewed the 2022/23 Gender Pay Gap report

– Reviewed the Committee evaluation outcome

117RS Group plc Annual Report and Accounts for the year ended 31 March 2023 117

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Directors’ Remuneration report continued

DIRECTORS’

REMUNERATION

POLICY

The 2022 Remuneration Policy was approved by

shareholders at the AGM held on 14 July 2022 and

became effective from that date. The full

Remuneration Policy as approved by shareholders

is available in the Corporate Governance section of

our website at: rsgroup.com. We have set out a

summary below of those parts of the

Remuneration Policy which we believe

shareholders will find most useful.

Details of how the Remuneration Policy has been

applied during the year can be found throughout

the Annual Report on Remuneration on pages 123

to 132.

Linking our reward and

business strategy

The Remuneration Policy adopted at the 2022 AGM

is designed to:

– align incentive and stakeholder outcomes in

support of a high-performance culture, with the

opportunity for significant levels of reward for the

delivery of commensurately exceptional levels of

performance for our stakeholders

– ensure continued alignment with best practice

guidance and to reflect our ongoing commitment

to the highest standards of governance

The Remuneration Policy links directly to our KPIs

and how we measure our business performance.

The very stretching stakeholder outcomes that our

strategy has the potential to deliver is set out in

detail on pages 28 to 31.

The introduction of the J2G LTIP Award aligns our

remuneration with the strategy and is designed to

drive continued levels of exceptional profitable

growth and strategic delivery.

To align with best practice governance:

– Executive Director pensions are aligned to the UK

wider workforce level

– The shareholding guideline has been increased

from 250% to 400% of salary

– The post-employment shareholding guidelines

under which Executive Directors will be required

to retain the level of in-employment guideline for

two years post cessation of employment have

been enhanced

– Strengthened malus and clawback provisions

have been adopted by expanding the list of

events in which the Committee can invoke the

provisions to include error in assessment, serious

reputational damage and corporate failure

Summary of the 2022 Remuneration Policy and its operation in 2022/23

Element Details Implementation for 2022/23

Salary

Established by considering scope and responsibilities of the role, skills and experience, scale and complexity of the

Group, overall total compensation opportunity and competitive environment including consideration of appropriate

market data for companies of broadly similar size, sector and international scope to RS Group plc.

Salary increases will normally be based on the same framework which applies across the UK employee population.

From 1 June 2022:

Lindsley Ruth, CEO – £728,341 base salary

David Egan, CFO – £475,782 base salary

Increases reflected the sustained increase in the size of the business and recommitment to

appropriately market competitive levels of fixed pay, but benchmarked by reference to the FTSE

50–100.

From 3 November 2022 to 2 April 2023, David Egan received a double hatting allowance of

£200,000 per annum pro-rated, to reflect his additional responsibilities while acting as CEO.

See page 123 for further details.

Pension

and benefits

Pension allowance aligned with the prevailing rate for the majority of the wider UK employee population (currently

10.5% of base salary).

Other benefits include a company car (or cash allowance in lieu) and medical insurance.

Executive Directors do not normally receive total taxable benefits exceeding 10% of base salary.

Reflecting prioritisation of long-term performance-based pay in the mix of the package,

pension provision for the Executive Directors reduced to the rate available to, and typically

chosen by, the majority of the wider UK workforce (of 10.5% of base salary).

Benefits received in line with the Remuneration Policy.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023118

Element Details Implementation for 2022/23

Annual bonus

Maximum opportunity is 150% of base salary.

Based on financial and strategic performance measures which the Committee considers to be aligned to the strategy

and the creation of shareholder value. Such measures include revenue, profit, cash flow, NPS and ESG-related matters.

Before any bonus may pay out, a threshold level of adjusted PBT must be achieved.

For threshold performance, the bonus pay out will normally be nil, but in no circumstances will it exceed 10% of the

maximum opportunity. For target performance, the bonus pay out will be no higher than 50% of the maximum

opportunity.

The Committee has discretion to adjust the formulaic bonus outcomes (including down to zero) to ensure alignment of

pay with performance and fairness to shareholders and participants.

One third of total bonus payment will be deferred as shares, which vest after two years.

Dividend equivalents may be payable on shares which vest and will be delivered in the form of shares.

Malus and clawback provisions apply.

The bonus for the year ended 31 March 2023 was based on:

– 35% adjusted PBT

– 35% like-for-like Group revenue growth

– 10% adjusted free cash flow

– 10% Group NPS

– 10% environmental based measure of CO

e reduction (Scope 1 and 2 emissions), for the first time.

See page 124 for further details of the specific targets, the performance delivered and bonus

outcomes for the year.

LTIP award

The maximum LTIP award in respect of a financial year will be 250% of salary.

Awards vest after a performance period of three years, subject to the satisfaction of performance measures. The

performance measures for awards are determined annually and will include metrics linked to profitability, shareholder

value and capital efficiency.

A further holding period of two years will apply post vesting.

The level of vesting for threshold performance will be no higher than 25% of maximum.

Additionally, for the award to vest, the Committee must be satisfied that there has been a sustained improvement in the

Company’s underlying financial performance. The Committee has discretion to adjust the formulaic LTIP outcomes if it

does not reflect appropriately the underlying performance over the period or is not appropriate in the context of

circumstances that were unexpected or unforeseen when awards were made.

Dividend equivalents may be payable on any shares vesting and will be delivered in the form of shares.

Malus and clawback provisions apply.

The performance measures for awards granted in 2022 are as follows:

– 50% EPS

– 50% TSR

A ROCE underpin of 20% applies. If the underpin is not met at the end of the performance

period, the Committee retains the discretion to review the formulaic level of vesting and

consider whether any reduction should be applied.

See page 125 for details of awards granted during the year.

119RS Group plc Annual Report and Accounts for the year ended 31 March 2023 119

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Directors’ Remuneration report continued

Element Details Implementation for 2022/23

J2G LTIP

Award

The maximum J2G LTIP Award which may be granted over the life of the Policy is 750% of salary for each of the Executive

Directors on a one-off basis.

The J2G LTIP Award will vest based on the achievement of exceptionally stretching performance targets measured over

a performance period of three years to 31 March 2025. A further holding period of two years will apply post vesting.

The level of vesting for threshold performance is nil.

Additionally, for the award to vest, the Committee must be satisfied that there has been a sustained improvement in the

Company’s underlying financial performance. The Committee has discretion to adjust the formulaic J2G LTIP Award

outcomes if it does not appropriately reflect underlying performance over the period or is not appropriate in the

context of circumstances that were unexpected or unforeseen when awards were made.

Dividend equivalents may be payable on any shares vesting and will be delivered in the form of shares.

Malus and clawback provisions apply.

An Executive Director appointed during this Policy period may receive a J2G LTIP Award to align with other members

of the SMT. The Committee would set any award level with due regard to the proportion of the J2G LTIP Award

performance period which had elapsed at the time of appointment.

The following awards were granted in July 2022:

– Lindsley Ruth – Award over 535,282 shares (lapsed in full as of 16 December 2022)

– David Egan – Award over 349,668 shares (lapsed in full as of 3 May 2023)

– Simon Pryce – Award over 355,427 shares to be granted as soon as is reasonably practicable

The performance measures for the award are as follows:

– 70% adjusted EPS

– 30% a scorecard of KPIs directly linked to the strategy

A ROCE underpin of 20% also applies. If the underpin is not met at the end of the performance

period, the Committee retains the discretion to review the formulaic level of vesting and

consider whether any reduction should be applied.

The exceptionally stretching performance targets for the J2G LTIP Award are set out on page

126.

Shareholding

guidelines

Executive Directors are expected to build up and retain a personal holding in RS Group plc shares of 400% of salary. There is an expectation that Executive Directors retain at least 50% of any vested share awards until

this guideline is met.

Post-

employment

shareholding

requirement

Executive Directors must retain a personal holding in RS Group plc shares for a two-year period post-cessation of employment. This must be either equal to the 400% in-employment guideline or, if lower, the actual

shareholding at the date of cessation of employment.

The actual shareholding at cessation includes only shares which have vested (or are in a deferral or holding period, on a net-of-tax basis) from a share award which was granted after the effective date of the 2022

Remuneration Policy.

Remuneration for the wider workforce

The remuneration for the wider workforce is

based on principles broadly aligned with the

Remuneration Policy. Annual salary reviews

across the Group consider business performance,

local pay and market conditions, individual

performance and salary levels for similar roles

in comparable companies.

All Executive Directors and senior managers are

eligible to participate in annual bonus schemes. In

line with typical market practice, opportunities and

performance measures vary by organisational

level, geographical region and an individual’s role.

Other members of the SMT are eligible to

participate in the DSBP, LTIP and the J2G LTIP

awards on similar terms, including share

ownership requirements. Differences apply where

appropriate (e.g. in the grant levels awarded).

Awards made under the J2G LTIP Award and LTIP

awards are subject to performance conditions and

vest after three years subject to continued

employment. Outside of the SMT, managers may

be invited to participate in the LTIP. All our eligible

employees participate in the Company’s all

employee share plans. This includes an all

employee RS YAY! Award as set out on page 122.

It is important that our people have the

opportunity to share in the success of the business

that they help create. We achieved this in

2022/23 through:

– Providing all permanent, fixed term and

apprentice employees the opportunity to

become business owners through the award of

100 performance shares each under our RS YAY!

Award, which are subject to an adjusted profit

before tax compound annual growth rate

(CAGR) performance measure and are due

to vest in 2025

– Providing the opportunity to 87% of our

employees at all levels of the organisation

to participate in a bonus programme

– Providing a Save As You Earn (SAYE) plan

to further help our UK employees become

shareholders

– Providing a phantom SAYE plan in those

countries outside the UK where it is legally

possible to do so (which is cash settled

for participants)

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023120

Consideration of employment

conditions elsewhere in the Group

The Group seeks to promote and maintain good

relations with employee representative bodies –

including trade unions and works councils – as part

of its broader employee engagement strategy and

consultation on matters affecting our people and

business performance as required, in each case, by

law and regulation in the jurisdictions in which the

Group operates. The Committee is mindful of the

pay increases, incentive outcomes and share

award participation in relevant markets across the

rest of the Group when considering the

remuneration of the Executive Directors. Our

people have the opportunity to discuss various

topics including the Policy and framework via

various internal forums.

Chair and Non-Executive Director

remuneration

Non-Executive Directors do not have service

agreements, but instead have letters of

appointment. The Chair’s letter of appointment

and the Non-Executive Directors’ letters have a

three-month notice period. All Directors are

subject to re-election annually at the AGM. Neither

the Chair nor the Non-Executive Directors are

eligible to participate in any of the Company’s

bonus, share schemes or pension plans. Details of

the policy on fees paid to the Company’s Chair and

Non-Executive Directors are set out in the table to

the right.

Element: Fees

Objective

To attract and retain Non-Executive Directors of the highest calibre with broad commercial

experience relevant to the Group.

Operation

The fees paid to Non-Executive Directors are determined by the Board of Directors as a whole

and the fee paid to the Chair is determined by the Committee.

Non-Executive Directors and the Chair receive a single base fee. Additional fees may be payable

for additional Board duties, such as acting as Chair of the Audit, Nomination and Remuneration

Committees, and to the Senior Independent Director (SID).

Fee levels are normally reviewed annually, with any adjustments made typically effective from

1 April. Fees are reviewed by taking into account best practice and appropriate market data

including fee levels at other companies of broadly similar size, sector and international scope to

RS Group plc. Time commitment and responsibility are also considered when reviewing fees.

The Chair and the Non-Executive Directors may be provided with accommodation and travel

expenses to carry out their duties. This may include the settlement by the Company of any

associated tax liabilities in relation to these expenses. Other benefits arising from the

performance of duties may be provided.

Opportunity

Aggregate ordinary fees for Directors are limited to £1.2 million by the Company’s Articles

of Association.

The fees paid to Non-Executive Directors in respect of the year under review (and for the

following year) are disclosed in the Annual Report on Remuneration on page 123.

Performance

measures

Not applicable.

Compliance with Provision 40 and 41 of

the UK Corporate Governance Code

The Committee considers that the executive

remuneration framework appropriately addresses

the following factors under Provision 40 of

the Code.

As well as a focus on Executive Director

remuneration, the Committee has oversight of the

remuneration policies of the Group to ensure

alignment with the business strategy and values.

We value the contribution our people make to the

success of the Group and charge management

with the responsibility for ensuring a sustainable

approach to the remuneration of our people.

It is important to the Committee that all our people

are paid at a fair level reflecting the skills they

bring. We use benchmarking information to ensure

we pay competitively to attract and retain talent.

We engage regularly with employees on

remuneration in general via various forums

including the employee engagement survey and

round tables with Executive Directors and

Non-Executive Directors. Over the past year we

have engaged directly with our employees on the

introduction of the all employee RS YAY! Award

and the transition of the UK defined contribution

pension plan to a mastertrust. Also the Company

has a regular communication cadence to highlight

the range of benefits available, including our

medical, wellbeing, employee discounts and fleet

offerings. Additionally, the Company hosted a

series of events to build financial awareness on

topics ranging from an overview of UK capital

gains tax to managing the cost of housing in the

current high inflation climate.

121RS Group plc Annual Report and Accounts for the year ended 31 March 2023 121

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Directors’ Remuneration report continued

Factors under Provision 40

Clarity

We provide open and transparent disclosures of our Executive Directors’ remuneration arrangements including

undertaking engagement with key shareholders when considering changes to our Remuneration Policy.

Simplicity

We aim to ensure that remuneration arrangements for our Executive Directors and the wider workforce

are as simple as possible to drive understanding and engagement and we take time to engage with participants

and shareholders.

Predictability

The Remuneration Policy contains details of maximum opportunity levels for each component of pay, with actual

incentive outcomes varying depending on the level of performance achieved against specific measures.

Proportionality, risk and alignment to culture

The metrics used to measure performance for annual bonus and LTIP awards drive behaviours that are consistent

with the business strategy and values of the Group.

The annual bonus and LTIP award structures do not encourage inappropriate risk taking. They are subject to the

achievement of stretching performance targets and the Committee has the ability to apply discretion to the

formulaic outcomes.

Malus and clawback provisions also apply for both the annual bonus and LTIP award. Annual bonus deferral, LTIP

award holding periods and our shareholding guidelines provide a clear link to the ongoing performance of the

business and are therefore aligned with shareholder interests.

With regard to Provision 41, the Remuneration Policy operated as intended in terms of Company

performance and quantum.

REMUNERATION IN ACTION:

THE

RS YAY!

The RS YAY! Award is an all employee share award that

gives our people the opportunity to share in the

long-term success of the Company through receiving up

to 100 performance shares in the Group, if the adjusted

profit before tax CAGR performance target is met over

a three-year period to March 2025.

This award of shares to all our eligible employees is our

way of recognising the value of our people and what they

do. In return they will feel a deeper connection to what we

all need to achieve to help us become that purpose-led

organisation. This is the RS YAY!

For the first time, all of our

people have the opportunity

to become shareholders in

our business.”

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023122

ANNUAL REPORT ON

REMUNERATION

This part of the remuneration report has been prepared in accordance with Part 3 of the revised Schedule

8 set out in The Large and Medium-sized Companies and Groups (Account and Reports) (Amendment)

Regulations 2013 and Listing Rule 9.8.6R. The Annual Report on Remuneration will be put to an advisory

shareholder vote at the forthcoming AGM.

Implementation of Chair and Non-Executive Directors 2022 Remuneration Policy

for the year ended 31 March 2023

Single figure for total remuneration for Non-Executive Directors (audited)

The table below sets out a single figure for the total remuneration received by each Non-Executive

Director for the year ended 31 March 2023 and the prior year:

Total fees Taxable expenses

2023 2022 2023 2022

Rona Fairhead £366,800 £350,000 £5,213 £3,821

Alex Baldock

£64,662 £35,992 £1,756 £111

Louisa Burdett £79,662 £76,700 £2,089 £14

Navneet Kapoor

£53,885 – £1,275 –

Bessie Lee £69,662 £65,867 £5,437 £16,671

Simon Pryce

£78,854 £76,700 £1,822 £27

David Sleath £79,662 £76,700 £1,550 –

Joan Wainwright

£70,470 £65,867 £13,885 £28,993

1. Alex Baldock was appointed to the Board on 1 September 2021.

2. Navneet Kapoor was appointed to the Board on 1 June 2022.

3. Simon Pryce stepped down as a member and Chair of the Remuneration Committee on 14 March 2023, following confirmation of his

appointment to CEO of the Group from 3 April 2023.

4. Joan Wainwright was appointed Chair of the Remuneration Committee on 14 March 2023.

The Non-Executive Directors received base fees of £64,662 per annum. Fees were paid on a pro rata

basis reflecting length of time in the role. Additional fees of £15,000 per annum are paid in respect of the

SID role and to the Chairs of the Audit and Remuneration Committees. The Chair of the Nomination

Committee role is conducted by Rona Fairhead, Chair of the Board. Rona does not receive an additional

fee for chairing the Nomination Committee. Bessie Lee and Joan Wainwright each received an additional

fee of £5,000 per annum for their role as the Board’s representatives on employee engagement.

Implementation of Executive Director 2022 Remuneration Policy for the year ended

31 March 2023

Single figure for total remuneration for Executive Directors (audited)

The following table provides a single figure for total remuneration of the Executive Directors for the year

ended 31 March 2023 and the prior year. The value of the annual bonus includes the element of bonus

deferred under the DSBP, where relevant.

Lindsley Ruth David Egan

2023

2022 2023 2022

Base salary £506,864 £663,920 £469,235 £433,699

Double hatting allowance

– – £82,051 –

Taxable benefits

£12,611 £17,667 £15,970 £16,161

Pension benefit

£70,678 £119,506 £60,673 £78,066

Total fixed £590,153 £801,093 £627,929 £527,926

Annual bonus

£327,893 £801,844 £300,694 £523,796

LTIP

6,7

£895,303 £1,232,662 £646,873 £676,379

SAYE award discount

– – – £7,474

Total variable £1,223,196 £2,034,506 £947,567 £1,207,649

Total £1,813,349 £2,835,599 £1,575,496 £1,735,575

1. The total remuneration for Lindsley Ruth in 2022/23 details his actual earnings up to 16 December 2022, when he stepped down as CEO

and Director of the Board.

2. David Egan was paid a double hatting allowance of £200,000 per annum, pro rata for the period 3 November 2022 to 2 April 2023 for

acting in the role of CEO. The allowance earned during 2022/23 has been included in the above table.

3. Taxable benefits consist of medical insurance, car allowance and personal fuel allowance.

4. Each of the Executive Directors received the amounts shown above as a cash supplement in lieu of pension. The pension allowance was

reduced from 18% to 10.5% of base salary from 14 July 2022 and the actual amount received included above. The figures above include

an overpayment to Lindsley of £2,521 and David of £1,647, which will be recovered in full from their June 2023 payroll. No Executive

Director has prospective benefits under a defined benefit pension relating to qualifying service.

5. Annual bonus shows the full value of the annual bonus in respect of each year. The bonus is subject to service conditions set out in the

Remuneration Policy, which is available in the Corporate Governance section of our website at rsgroup.com. For 2022/23, the

formulaic outcome of the bonus was 63.2% of maximum, no discretion was applied. For 2022/23, Lindsley’s bonus payment was time

pro-rated to 16 December 2022 to reflect the period worked in the year. Both Lindsley and David’s bonuses will be delivered without the

share deferral element. For 2021/22 Lindsley and David received this value as one third shares and two thirds cash. Further detail can

be found on page 124 for 2022/23 and page 125 for 2021/22.

6. The LTIP award value for 2022/23 shows the value of LTIP awards made on 19 November 2020. The plan will vest at 50% of maximum

and has been time pro-rated to 16 December 2022 for Lindsley Ruth, to reflect the proportion of the performance period he held the

role of CEO. The value on vesting of the LTIP award has been calculated using the share price of 948.83p, being the average Middle

Market Quota (MMQ) share price over the three months to 31 March 2023 and will be updated in the 2023/24 Annual Remuneration

Report based on the actual share price on the date of vesting. The figure includes a dividend equivalent payment of £56,822 for

Lindsley and £41,055 for David in respect of the shares vesting which will be delivered in the form of shares. £169,193 of the total value

for Lindsley and £122,245 of the total value for David is in respect of the share price growth and dividends over the period since grant,

based on the assumed share price of 948.83p. Based on the increase in the share price from the date of grant to that used in the

valuation above, the increase in the share price for each share vesting was 127.16p. The proportion of the value disclosed in the single

figure attributable to share price appreciation is £112,371 for Lindsley Ruth and £81,190 for David Egan. The Committee did not exercise

any discretion in respect of the share price appreciation. Further detail can be found on page 124.

7. The LTIP award value for 2021/22 shows the value of the awards which vested on 18 July 2022. The value of the 2019 LTIP Award has

been restated based on the share price on the date of vesting of 939.35p. The figure includes dividend equivalent payments of £66,168

to Lindsley and £36,296 to David in respect of the shares vesting. £493,785 of the total value for Lindsley and £270,940 of the total value

for David is in respect of the share price growth and dividends over the period between grant and vesting.

8. The SAYE Award discount for 2021/22 is the difference between grant date value per share and the exercise price of 824.00p.

123RS Group plc Annual Report and Accounts for the year ended 31 March 2023 123

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Directors’ Remuneration report continued

Incentive outcomes for the year ended 31 March 2023 (audited)

Annual bonus in respect of performance for the year ended 31 March 2023

The performance measures, target ranges and performance against each of the measures for the

2022/23 annual bonus are outlined in the table below. Targeted performance was calibrated to deliver

a bonus of 75% of salary for the Executive Directors (50% of the maximum opportunity), with bonus

payments worth up to 150% of salary for achieving stretch performance targets.

Based on the Group’s performance in 2022/23, a bonus outcome of 63.2% of maximum bonus was

achieved. In line with good practice and the terms of our 2022 Remuneration Policy, the Committee

considered the formulaic bonus outcome in the context of business performance for the year in its

broadest sense. This review considered the resilience of delivery given the impact of ongoing external

challenges, as well as the overall experience of all the Group’s stakeholders and the intended purpose of

the award. No discretion has been applied to the Executive Director bonuses. The Committee considered

this to be appropriate. Further background on financial performance for the year ended 31 March 2023 is

provided in the Strategic Report.

Full details of the target ranges and performance against each of the measures, are as follows:

Measure and weighting

Performance

level

Payout (% of

max bonus) Target

Actual

performance

Earned bonus

(% of max)

Adjusted PBT

(35% weighting)

Threshold 0.0% £361.6m £390.7m 28.2%

Target 17.5% £381.6m

Maximum 35.0% £396.6m

Like-for-like Group

revenue growth

(35% weighting)

Threshold 0.0% 8.2% 10.1% 11.0%

Target 17.5% 11.2%

Maximum 35.0% 13.2%

Adjusted free cash flow

(10% weighting)

Threshold 0.0% £166.6m £263.6m 10.0%

Target 5.0% £186.6m

Maximum 10.0% £196.6m

Group NPS

(10% weighting)

Threshold 0.0% 49.0 50.2 4.0%

Target 5.0% 50.5

Maximum 10.0% 52.0

e reduction

(Scope 1 and 2 emissions)

(10% weighting)

Threshold 0.0% 6.0% 21.0% 10.0%

Target 5.0% 8.0%

Maximum 10.0% 16.0%

Total 63.2%

The final bonus outcome of 63.2% of maximum will result in a payment for Lindsley Ruth of £327,893,

reflecting that his bonus was time pro-rated to 16 December 2022 and will be paid without the share

deferral element. For David Egan a payment of £300,694 will be paid without the share deferral element.

2020 LTIP Awards vesting

A grant of shares was made under the LTIP rules in November 2020 to Lindsley Ruth over 195,486 shares,

the maximum number of shares capable of vesting is 176,740 as a result of being time pro-rated to

16 December 2022. David Egan was granted an award over 127,699 shares. Due to COVID-19 the grant of

the 2020 LTIP Award was delayed from June 2020 to November 2020 to mitigate the risk of unexpected

windfall gains following the decline of the share price at that time. Ultimately, this resulted in the LTIP

awards being granted in November 2020 at a higher share price compared to if the awards had been

granted in June 2020. The performance measures, target ranges and performance against each of the

measures over the three years ended 31 March 2023 are summarised in the table below:

Measure Weight

Threshold

(25% of max)

Maximum

(100% of max)

Performance

achieved

Vesting (% of

maximum)

Adjusted EPS

(cumulative 2020/21,

2021/22, 2022/23)¹

50% 105.0p 130.0p 146.2p 50.0%

TSR

(vs industrial / electronic peer group)¹

50% Median Upper

quartile

11 of 17 0%

ROCE

(average over 2020/21,

2021/22, 2022/23)

Underpin

20%

26.3%

Total 2020 LTIP Award vesting 50.0%

1. Straight-line vesting between measurement points. Vested awards will be subject to a two-year holding period post vesting.

2. TSR peer group comprises ABB, Arrow Electronics, Avnet, Bunzl, Datwyler, Essentra, Fastenal, Ferguson, MSC Industrial Direct, Rexel,

Rockwell, Schneider, Siemens, TE Connectivity, WESCO International and WW Grainger.

Following the end of the performance period, the Committee considered the level of vesting in the

context of the value creation for shareholders, the underlying financial performance of the Company

over the performance period, the intended purpose of the award and considered whether any discretion

should be applied. The Committee considered the level of vesting to be appropriate and no discretion

was applied.

Payments to past Directors (audited)

There were no payments to past Directors during the year.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023124

Payments for loss of office (audited)

Lindsley Ruth Outcome

Base salary

In line with his service contract, Lindsley will receive his base salary for the duration of his

12-months’ notice period, which commenced on 16 December 2022. Full details on the payment

in the year ending 31 March 2023 are set out on page 123.

2020, 2021 and

2022 LTIP Awards

Consistent with best practice, the LTIP awards will vest subject to the satisfaction of the

performance conditions assessed over the normal three-year performance period and will be time

pro-rated to 16 December 2022. These awards remain subject to a two-year post vesting holding

period and recovery provisions (malus and clawback) after he leaves the Company.

J2G LTIP Award

The J2G LTIP Award granted in July 2022 has lapsed in full.

2021 and 2022

DSBP

The shares granted were taxed as of 16 December 2022 to comply with the short-term deferral

exemption from section 409A of the US Internal Revenue Service. Shares were sold to settle

tax liabilities, with the balance of shares being retained in a nominee account until the normal

vesting date.

2023 Annual bonus

An annual bonus in respect of 2022/23, time pro-rated to 16 December 2022, will be paid, subject

to the achievement of performance targets. The deferred element of the award will not be granted.

No further bonuses will be paid to Lindsley.

Other payments

– £30,000 was made in support of his relocation from the UK to the US

– Up to £50,000 for the option of outplacement support

– Up to £10,000 tax advice contribution (in connection with termination of employment) and up to

£10,000 per annum for each year in which there is trailing employment income

– Up to £10,000 for legal fees

– Benefits which include UK and US medical cover, pension allowance and car and fuel allowances

will continue until 15 December 2023

David Egan Outcome

Base salary

David will be on gardening leave for the first six months of his notice period. Thereafter he will be

paid in lieu of notice for the final six months of his notice period ending on 2 May 2024. During both

periods he will receive his base salary on a monthly basis. Full details on the payment in the year

ending 31 March 2023 are set out on page 123.

2020 LTIP Award

Consistent with best practice, the LTIP awards will vest subject to the satisfaction of the

performance conditions assessed over the normal three-year performance period. These awards

remain subject to a two-year post vesting holding period and recovery provisions (malus and

clawback) after he leaves the Company.

2021 and 2022

LTIP Awards

The 2021 and 2022 LTIP Awards granted June 2021 and July 2022 have lapsed in full.

J2G LTIP Award

The J2G LTIP Award granted in July 2022 has lapsed in full.

2021 and 2022

DSBP

The DSBP awards due to vest in June 2023 and 2024 will vest in full. The shares from the 2022 award

will be taxed at David’s termination date, 3 November 2023, but the after-tax shares will not be

released until the normal vesting date. The shares from the 2021 award will vest and be taxed at the

normal vesting date. All DSBP shares are subject to clawback, which remains in force after he leaves

the Company.

2023 Annual bonus

An annual bonus in respect of 2022/23 will be paid, subject to the achievement of performance

targets. The deferred element of the award will not be granted. No further bonuses will be paid

to David.

Other payments

– Up to £50,000 for optional outplacement support and other professional support

– Up to £10,000 for legal fees in connection with the termination of his employment

– Benefits which include medical cover, pension allowance and car and fuel allowances will continue

until 3 November 2023.

Scheme interests awarded during the year ended 31 March 2023 (audited)

DSBP

During the year under review the following DSBP awards were granted to Executive Directors, relating to

annual bonus earned for performance over the year ended 31 March 2022. The shares have a two-year

vesting period and are subject to two years’ continuous employment.

Lindsley Ruth David Egan

Basis of award One third of

earned bonus

One third of

earned bonus

Number of deferred shares awarded 27,721 18,108

Award date face value (964.17p per share)

£267,278 £174,592

Performance conditions None None

1. The awards were made using the average of the share prices for the three dealing days immediately preceding 21 July 2022, the date

the deferred shares were awarded. The shares will be delivered in the form of restricted shares to be held for a period of two years.

The treatment of both Lindsley and David’s 2021 and 2022 deferred bonus awards are summarised

to the left.

2022 LTIP Award

During the year under review the following LTIP Awards were granted to the Executive Directors:

Lindsley Ruth David Egan

Basis of award (% of base salary) 250% 250%

Number of performance shares awarded

188,851 123,365

Award date face value (964.17p per share)

£1,820,845 £1,189,448

Performance period 1 April 2022 – 31 March 2025

Threshold vesting outcome 25%

Post-vesting holding period Two years

1. Lindsley Ruth’s unvested 2022 LTIP Award was time pro-rated to 16 December 2022 and, therefore, the maximum number of shares

capable of vesting is 44,800. David Egan’s 2022 LTIP Award lapsed in full on 3 May 2023.

2. The awards were made using the average of the share prices for the three dealing days immediately preceding 21 July 2022, the date

performance shares were awarded. The shares were awarded as performance shares, the performance conditions are detailed below.

The performance conditions are as follows:

LTIP targets

Measure Weight

Threshold

(25% of max)

Maximum

(100% of max)

Adjusted EPS CAGR (three-year CAGR of the 2024/25 adjusted EPS

compared with the 2021/22 adjusted EPS)

50% 7% 15%

TSR (vs industrial / electronic peer group)

1,2

50% Median Upper

quartile

ROCE (average of 2022/23, 2023/24, 2024/25) Underpin at 20%

If the underpin is not met, the Committee

will review the formulaic level of vesting

and consider whether it would be

appropriate to use its discretion to reduce

the level of vesting.

1. Straight-line vesting between measurement points.

2. TSR peer group is detailed on page 124.

125RS Group plc Annual Report and Accounts for the year ended 31 March 2023 125

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Directors’ Remuneration report continued

J2G LTIP Award

During the year under review the following one-off J2G LTIP Awards were granted to both Executive

Directors:

Lindsley Ruth David Egan

Basis of award (% of base salary) 750% 750%

Number of performance shares awarded 535,282 349,668

Award date face value (1,020.50p per share)

£5,462,553 £3,568,362

Performance period 1 April 2022 – 31 March 2025

Threshold vesting outcome 0%

Post-vesting holding period Two years

1. The awards were made using the average of the MMQ share prices for the dealing in the period 9 to 29 March 2022 (1,020.50p).

The shares were awarded as performance shares, the performance conditions are detailed below.

Both Lindsley’s and David’s awards lapsed in full on 16 December 2022 and 3 May 2023 respectively.

As set out in last year’s Annual Report on Remuneration, the performance targets were set at exceptional

levels of stretch. The EPS target range is set such that the threshold level of vesting (at which nil vests)

requires growth in excess of the top end of the base 2022 LTIP Award range. Maximum vesting of the

EPS target would equate broadly to a 2024/25 adjusted EPS of above 90p, and assuming no change to

multiples, would translate into shareholder value creation of around £3 billion, of which the total J2G LTIP

Award cost would be c. 1%. The quantum of the awards reflects the potential value creation that could be

delivered to the business and all its stakeholders.

The performance conditions are as follows:

Measure Weight

Threshold

(0% of max)

Maximum

(100% of max)

Adjusted EPS CAGR (three-year CAGR of the 2024/25 adjusted EPS

compared with the 2021/22 adjusted EPS)

70% 15% 21%

Key long term performance indicators (KPIs) scorecard (see to the

right)

30%

ROCE (average of 2022/23, 2023/24, 2024/25) Underpin at 20%

If the underpin is not met, the Committee

will review the formulaic level of vesting

and consider whether it would be

appropriate to use its discretion to reduce

the level of vesting.

The scorecard comprises the specific KPIs which will reflect execution of the strategy in each area best,

with specific focus on cultural transformation, operational and growth acceleration (with financials

already reflected in the EPS component). The scorecard measures each have a stretching target range,

which have been calibrated robustly to represent upper quartile levels of performance for threshold and

upper decile for maximum payment. The scorecard measures and weighting are:

Weighting Measure Threshold Maximum

Cultural

transformation

7.5% Employee engagement score

To be measured based on the 2024/25 Group

employee engagement survey outcome.

Upper

quartile

Upper decile

Operational

efficiency

7.5% On Time To Promise (OTTP)

Available product delivered when expected

in a cost effective and efficient manner.

Performance to be measured over the

three-month period ending 31 March 2025.

95% 98%

Growth

accelerators

5.0% Web revenue

Increased web traffic, increasing average

order value and increasing average order

frequency. Performance to be measured on

web revenue CAGR over the three-year

period ending 31 March 2025.

12.0% 14.5%

5.0% Service solutions revenue

To be more solutions led, solve customers’

challenges, drive value to stakeholders and

drive greater customer loyalty and pull

through products. Performance to be

measured on service solutions revenue

CAGR over the three-year period ending

31 March 2025.

12.5% 15.5%

5.0% New product introduction (NPI) revenue

A wider product range, driven by data

insights to ensure it is relevant, increases

customer loyalty and helps the Group

become their first choice. It also represents

deeper supplier relationships. A product is

included as an NPI for 12 months from its

introduction into the Group’s product range.

Once it has been in the Group’s product

range for a year its future revenue is not

included in NPI revenue. Performance to be

measured on NPI revenue CAGR over the

three-year period ending 31 March 2025.

14.5% 26.0%

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023126

SAYE

During the year under review, no SAYE Awards were granted to Executive Directors.

Total pension entitlements (audited)

The pension rate for Executive Directors is 10.5%, which aligns with the prevailing rate for the majority of the wider UK employee population, having been reduced from 18% with effect from 14 July 2022. Executive

Directors have no prospective entitlement to a defined benefit pension by reason of qualifying service.

External appointments

Lindsley Ruth was appointed non-executive director of Ashtead Group plc on 1 May 2019.

Percentage change in remuneration of the Directors and employees as 31 March 2023

The table below shows the percentage change in the annual cash remuneration of the Directors (comprising base salary / fees, the value of taxable benefits and earned annual bonus), as disclosed in the single figure

for total remuneration (tables on page 123) from the prior year compared with the average percentage change for all UK employees of the Group. This group consists of UK based SMT and employees. If the Directors

did not serve a full year their base salary / fee is annualised. This table will be built up over time to show the required five year history.

The upward change in bonus reflects the strong performance of 2022/23 bonus plans across the Group and increased employee participation levels. Benefits provided for broader employees include medical

insurance and for some employees vehicle or vehicle allowance. The increase in benefits for broader employees is explained by high levels of medical inflation impacting the cost of our plans, an increase to vehicle

allowances, and people changing vehicle selection and medical coverage levels or opting into of the medical plan. Additionally, the RS Safety Solutions employees benefit options increased in the year to align with

options for other UK employees.

Base salary / fees Taxable benefits Annual bonus

Change 2022/23 Change 2021/22 Change 2020/21 Change 2022/23 Change 2021/22 Change 2020/21 Change 2022/23 Change 2021/22 Change 2020/21

Lindsley Ruth

8.2% 3.2% 0% 0.6% 0.1% 0% (42.6)% 3.0% 272.9%

David Egan

8.2% 3.2% 0% (1.2)% 0.1% 0% (42.6)% 3.0% 272.9%

Rona Fairhead

4.8% 223.1% N/A N/A N/A N/A N/A N/A N/A

Alex Baldock

4.8% N/A N/A N/A N/A N/A N/A N/A N/A

Louisa Burdett 3.9% 9.6% 0% N/A N/A N/A N/A N/A N/A

Bessie Lee

5.8% 9.8% 0% N/A N/A N/A N/A N/A N/A

Navneet Kapoor

N/A N/A N/A N/A N/A N/A N/A N/A N/A

Simon Pryce

2.8% 9.6% 0% N/A N/A N/A N/A N/A N/A

David Sleath

3.9% (2.1)% 0% N/A N/A N/A N/A N/A N/A

Joan Wainwright

7.0% 9.8% 0% N/A N/A N/A N/A N/A N/A

UK based SMT and employee population 8.1% 1.92% 1.3% 5.6% (6.41)% (1.5)% 20.3% 17.7% 114.5%

1. Lindsley Ruth stepped down from the Board on 16 December 2022. Lindsley’s bonus will be delivered without the share deferral element. Further detail can be found on page 125. The change between 2021/22 and 2022/23 has been calculated on an annualised basis.

2. David Egan was paid a double hatting allowance of £200,000 pro-rated for the period 3 November 2022 to 2 April 2023 as compensation for covering the CEO role, which is excluded from the above table. David’s bonus will be delivered without the share deferral element.

Further detail can be found on page 125.

3. Rona Fairhead was appointed to the Board on 1 November 2020 as Non-Executive Director and received the Non-Executive Director base fee until she became Chair of the Board and Nomination Committee on 1 February 2021, at which point her fee was increased to the Chair’s

fee at that time of £350,000.

4. Alex Baldock was appointed to the Board on 1 September 2021.

5. Bessie Lee was appointed as Board employee engagement representative on 1 June 2021.

6. Navneet Kapoor was appointed to the Board on 1 June 2022.

7. Simon Pryce stepped down as Chair of the Remuneration Committee on 14 March 2023, following confirmation of his appointment as CEO of the Group effective 3 April 2023.

8. David Sleath stepped down as Chair of the Nomination Committee on 31 January 2021.

9. Joan Wainwright was appointed as Board employee engagement representative on 1 June 2021 and Chair of the Remuneration Committee on 14 March 2023.

127RS Group plc Annual Report and Accounts for the year ended 31 March 2023 127

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Directors’ Remuneration report continued

Performance graph and table

The following graph shows the 10-year TSR performance of the Company relative to the FTSE 250, FTSE

100 and All Share Indices. The FTSE All Share, FTSE 100 and FTSE 250 are broad equity market indices of

which RS Group plc has been a member in this period.

The table below details the CEO’s single figure of remuneration for the same period.

Total shareholder return

(value of £100 invested on 31 March 2013).

100

150

250

200

300

350

400

450

500

550

600

2013 2014 2015 2016 2017 2018 2019 2020 2021

2023

2022

FTSE All ShareFTSE 100RS Group plc FTSE 250

Source: Datastream

CEO Pay Ratio reporting

25th percentile pay ratio Median pay ratio 75th percentile pay ratio

Year Method Salary

Total pay

& benefits Ratio Salary

Total pay

& benefits Ratio Salary

Total pay

& benefits Ratio

2023

A £22,442 £25,349 104:1 £27,422 £32,845 80:1 £44,000 £55,134 48:1

2022 A £21,048 £22,552 115:1 £25,000 £27,770 93:1 £40,137 £46,333 56:1

2021 A £20,277 £25,813 99:1 £24,000 £31,404 88:1 £37,664 £51,858 49:1

2020 A £18,050 £20,427 207:1 £22,000 £25,424 166:1 £33,721 £40,300 105:1

1. UK-based employee data was taken from 31 March 2023. CEO data was taken as at 31 March 2023; annual incentive and LTIP reflect the

figures detailed for 2022 in the single figure for total remuneration table on page 123.

The Company adopted Method A in the regulations to calculate the pay ratios because this is considered

to be the most statistically robust methodology. Under Method A the total pay and benefits has been

calculated on a full-time equivalent basis to identify the 25th percentile, median and 75th percentile

people. No elements of pay have been omitted from the calculation and there has been no deviation

from the single figure methodology.

As a result of Lindsley Ruth stepping down from the role of CEO on 16 December 2022, the CEO pay ratio

was calculated using his earnings to this date, and those of David Egan while acting as CEO for the

balance of the year, including his double hatting allowance. This has resulted in a reduction to the ratios

as result of David’s remuneration being substantially below that of Lindsley’s. Had Lindsley held the CEO

position for the full year we would have expected the ratios to have been consistent with 2022.

In line with the Company’s reward practices, the median pay ratio employee receives a base salary at

market rates for their role and is eligible for the full range of benefits available to their peers of the same

level within the organisation.

Year ended

31 March

2014

Year ended

31 March

2015

Year ended

31 March

2016

Year ended

31 March

2017

Year ended

31 March

2018

Year ended

31 March

2019

Year ended

31 March

2020

Year ended

31 March

2021

Year ended

31 March

2022

Year ended

31 March

2023

Ian Mason Ian Mason Lindsley Ruth Lindsley Ruth Lindsley Ruth Lindsley Ruth Lindsley Ruth Lindsley Ruth Lindsley Ruth Lindsley Ruth

David Egan

CEO total remuneration 1,287 891 2,072 1,401 4,410 4,421 2,551 2,578 2,976 1,813 487

Annual bonus award

(as a % of maximum opportunity) 89.1% 16.9% 23.8% 82.5% 90.1% 68.0% 21.7% 80.8% 80.0% 63.2% 63.2%

LTIP award vesting

(as a % of maximum opportunity) 0% 0% N/A

N/A

100% 100% 91.3% 74.7% 46.0% 50.0% 50.0%

1. Lindsley Ruth joined the Company in 2015 and therefore did not receive any vested LTIP Awards in 2016 and 2017.

2. Lindsley Ruth’s remuneration for the year ended 31 March 2023 is pro-rated to reflect that he stepped down from the role of CEO on 16 December 2022.

3. David Egan’s remuneration for the year ended 31 March 2023 has been adjusted to reflect the period he acted as CEO (17 December 2022 to 31 March 2023).

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023128

Relative importance of spend on pay

The graphs below show total dividend paid by the Company to shareholders and expenditure on total

employee pay for the year and the prior year, and the percentage change year on year.

88.6

76.2

22/2321/22

Dividend

£m

16%

479.0

395.8

22/2321/22

Total employee pay expenditure

£m

21%

The total employee pay expenditure figures above include labour exit costs set out in Note 7 on page 157.

Director shareholdings (audited)

The interests of the Directors and their connected persons in the Company’s ordinary shares are shown

below, together with total share awards and share options and information on whether the Executive

Directors had met their shareholding requirements on 31 March 2023. For 2022/23, Executive Directors

were expected to build up a personal holding of 400% of salary in RS Group plc shares.

Share awards held Options held

Owned

outright

Shareholding

guideline

% base salary

Current

holding

% salary

Guideline

met?

LTIP

unvested,

subject to

performance

(A)

DSBP

unvested,

not subject to

performance

(B)

SAYE,

unvested but

not subject to

performance

(C)

Lindsley Ruth 1,062,828 400% 1,385% Yes 316,171 – 5,235

David Egan 418,282 400% 834% Yes 709,134 34,565 3,640

Alex Baldock 2,239

Louisa Burdett –

Rona Fairhead 49,976

Navneet Kapoor –

Bessie Lee –

Simon Pryce 54,000

David Sleath 10,590

Joan Wainwright –

1. The number of shares and current holding percentage of salary is shown as at 16 December 2022 for Lindsley Ruth and 31 March 2023

for David Egan.

2. Including J2G LTIP Award, where applicable. As set out on page 125, on stepping down from the Board Lindsley Ruth’s unvested LTIP

awards were time pro-rated to 16 December 2022 and his J2G LTIP Award lapsed in full and the number shown is the time pro-rated

maximum number of share awards capable of vesting.

3. In light of Lindsley Ruth stepping down as CEO, his 2021 and 2022 DSBP shares vested on 16 December 2022. Shares were sold to settle

tax liabilities and the balance of shares are to be retained until the normal vesting date.

The value of the shares used to calculate whether the shareholding guideline is met is 948.83p, being

the average MMQ share price over the three months ended 31 March 2023. Between the year end

and the date of this Annual Report and Accounts, there has been no movement in current Directors’

shareholdings. Details of the scheme interests contained in columns A–C are provided in the table to

the left.

Post-employment shareholdings

For Lindsley, the two-year holding period continues to apply to the 2018 LTIP Award which vested in

June 2021 and the 2019 LTIP Award which vested in July 2022. In addition to the LTIP holding periods and

the DSBP deferral periods set out on the page 125, the 2022 DSBP shares retained cannot be sold until

15 December 2025.

For David, the two-year holding period continues to apply to the 2018 LTIP Award which vested in

June 2021 and the 2019 LTIP Award which vested in July 2022. In addition the LTIP holding periods

and DSBP deferral periods set out on page 125 continue to apply.

Advisors

Deloitte was appointed by the Committee following a tender process and has provided independent

advice to it since 2015. Deloitte is a founding member of the Remuneration Consultants Group and

voluntarily operates under the Code of Conduct in relation to executive remuneration consultancy in the

UK (details of which can be found at www.remunerationconsultantsgroup.com). There is no connection

between Deloitte, the Company or its Directors.

During the year Deloitte provided advice in several areas, including:

– Independent advice to support the Committee in setting performance targets

– Support in drafting the Directors’ Remuneration Reports for the years ended 31 March 2022 and 2023

– Updates to the Committee on regulatory changes and the investor environment

Deloitte provides advice to the Company regarding globally mobile employees but the Committee does

not consider that this jeopardises the independence of Deloitte, which operates in line with the Code of

Conduct described above. Deloitte’s fees for the provision of executive remuneration consultancy

services to the Committee during the year, charged on a time and materials basis, totalled £63,700.

Executive Directors’ service contracts

Lindsley Ruth entered a service contract with the Company on 1 April 2015; as explained on page 114,

he stepped down from his role as CEO on 16 December 2022 and his contract will terminate on

15 December 2023. Lindsley will remain on gardening leave for the remaining duration of his contract.

David Egan entered a service contract with the Company on 1 March 2016; as explained on page 114, he

resigned from his role as CFO on 3 May 2023 and his contract will terminate on 3 November 2023. David

will remain on gardening leave for the remaining duration of his contract.

Simon Pryce entered a service contract with the Company on 13 March 2023, with an effective date of

3 April 2023. This contract has no fixed term and will continue until terminated by either party providing

12 months’ notice.

129RS Group plc Annual Report and Accounts for the year ended 31 March 2023 129

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Directors’ Remuneration report continued

Director’s share scheme interests (audited)

Share awards

Scheme Notes Date of award

Shares awarded

on 1 April

2022

Awarded during

the year

Vested during

the year

Lapsed during

the year

Shares awarded

on 31 March

2023

Normal

Vesting

date

Lindsley Ruth LTIP 1, 3 18 Jul 19 269,959 7,044 131,225 145,778 – 18 Jul 22

19 Nov 20 195,486 – – 18,746 176,740 4 Jun 23

24 Jun 21 165,945 – – 71,314 94,631 24 Jun 24

21 Jul 22 – 188,851 – 144,051 44,800 21 Jul 25

J2G LTIP 1,2 21 Jul 22 – 535,282 – 535,282 – 21 Jul 25

DSBP 3 8 Jun 20 30,216 979 31,195 – – 8 Jun 22

9 Jun 21 25,193 650 25,843 – – 9 Jun 23

3 21 Jul 22 – 28,437 28,437 – – 21 Jul 24

Total 686,799 761,243 216,700 915,171 316,171

David Egan LTIP 1, 3 18 Jul 19 148,133 3,864 72,005 79,992 – 18 Jul 22

19 Nov 20 127,699 – – – 127,699 4 Jun 23

24 Jun 21 108,402 – – – 108,402 24 Jun 24

21 Jul 22 – 123,365 – – 123,365 21 Jul 25

J2G LTIP 1,2 21 Jul 22 – 349,668 – – 349,668 21 Jul 25

DSBP 3 8 Jun 20 19,738 640 20,378 – – 8 Jun 22

2 9 Jun 21 16,457 – – – 16,457 9 Jun 23

2 21 Jul 22 – 18,108 – – 18,108 21 Jul 24

Total 420,429 495,645 92,383 79,992 743,699

1. All awards made to the Executive Directors under the LTIP and J2G LTIP awards are subject to performance conditions set out on pages 125 and 126 respectively. The normal vesting date for the LTIP award is the third anniversary of grant, the 2019 LTIP Award vested on

18 July 2022.

2. Lindsley Ruth’s J2G LTIP Award lapsed in full on 16 December 2022 when he stepped down from his role as CEO. The lapse in full of David Egan’s J2G Award, 2021 LTIP and 2022 LTIP Awards on 3 May 2023 will be reported in next year’s report.

3. Shares in lieu of dividends were awarded upon vesting of the 2019 LTIP Award, the 2020 DSBP and Lindsley Ruth’s 2021 and 2022 DSBP.

Share options

Scheme Date of grant Vesting date Expiration date Exercise price

under option

1 April 22

Granted during

the year

Exercised during

the year

Lapsed during

the year

Shares under option

31 March 23

Lindsley Ruth SAYE 7 Sep 20 1 Nov 25 30 Apr 26 573.00p 5,235 – – – 5,235

Total 5,235 – – – 5,235

David Egan SAYE 10 Sep 21 1 Nov 26 30 Apr 27 824.00p 3,640 – – – 3,640

Total 3,640 – – – 3,640

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023130

Summary of shareholder voting

Summarised below are the results at the 2022 AGM vote on the Remuneration Policy, the 2022 AGM vote

on the Directors’ Remuneration Report (excluding the part summarising the policy) and the 2022 AGM

vote on the LTIP:

2022 vote on Directors’ Remuneration Policy Total number of votes % of votes cast

For (including discretionary) 230,629,838 60.77%

Against 148,894,394 39.23%

Total votes cast (excluding withheld votes) 379,524,232

Votes withheld 25,152,385

Total votes (including withheld votes) 404,676,617

2022 vote on Directors’ Remuneration Report

(excluding the part summarising the policy) Total number of votes % of votes cast

For (including discretionary) 391,422,951 98.42%

Against 6,292,878 1.58%

Total votes cast (excluding withheld votes) 397,715,829

Votes withheld 6,960,788

Total votes (including withheld votes) 404,676,617

2022 vote on Long Term Incentive Plan Rules Total number of votes % of votes cast

For (including discretionary) 379,646,371 93.82%

Against 25,007,498 6.18%

Total votes cast (excluding withheld votes) 404,653,869

Votes withheld 22,748

Total votes (including withheld votes) 404,676,617

Further detail on the 2022 Remuneration Policy engagement is set out on page 116.

Remuneration Policy implementation for the Chair and Non-Executive Directors for

the year ending 31 March 2024

Following a review, the fees for the Chair and Non-Executive Directors will be increased by 3%. The pay

increases for UK employees are expected to be 5% for managers and 5.9% for non-management

employees. With effect from 1 April 2023, the Chair’s fees increased from £366,800 to £377,804 and the

Non-Executive Directors’ fees were increased from £64,662 to £66,601. The additional fees for the Audit

and Remuneration Committee Chairs and SID (£15,000) and roles in respect of employee engagement

(£5,000) remain unchanged.

Remuneration Policy implementation of Executive Directors for the year ending

31 March 2024

Base salary

Base salary for the Executive Director effective from 1 June 2023 (with the prior year comparator and the

change) are shown below:

Base salary

effective

1 June 2023

Base salary

effective

1 June 2022 Change

Simon Pryce

£750,191 – –

1. Simon Pryce was appointed to the role of CEO on 3 April 2023 with a base salary of £750,191 which is a modest increase of 3% from his

predecessor’s. Simon’s base salary will not be increased in 2023/24.

Benefits

Benefits will be provided in accordance with the Remuneration Policy. There are no changes in benefits

compared to the prior year.

Pension

The pension rate for Executive Directors is 10.5%, which aligns with the prevailing rate for the majority

of the wider UK employee population.

Performance-related annual bonus

The maximum annual bonus opportunity for Executive Directors will remain unchanged at 150% of base

salary. Simon Pryce’s annual bonus will be pro-rated from the date of his appointment.

The annual bonus will be based on a balanced set of key financial and strategic targets for the year, as set

out below:

Performance measure Weighting

Adjusted PBT 30%

Like-for-like Group revenue growth 30%

Adjusted free cash flow 15%

e reduction (scope 1 and 2 emissions) 15%

Individual strategic targets 10%

The specific targets are considered commercially sensitive as they may reveal information that damages

our competitive advantage. Accordingly, they will not be disclosed in advance but, to the extent the

Directors consider them to be no longer sensitive, will be disclosed retrospectively in the annual report

on remuneration for the relevant year.

The Committee retains the discretion within our Remuneration Policy to adjust the overall bonus outcome

to ensure alignment of pay with performance and fairness to shareholders and participants.

Before any bonus may be paid, a threshold level of adjusted PBT must be achieved. One-third of any

bonus earned by Executive Directors will be deferred into shares for a further two years under the DSBP.

131RS Group plc Annual Report and Accounts for the year ended 31 March 2023 131

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Directors’ Remuneration report continued

2023 LTIP Award

Simon Pryce will be granted a 2023 LTIP Award of 250% of salary in accordance with the

Remuneration Policy.

The performance measures of adjusted EPS and TSR are consistent with the prior year. The bespoke

TSR peer group of 16 of the Group’s global peers (as set out on page 124) will remain unchanged.

Vesting of these awards will be determined in accordance with the following performance targets

measured over the three years ending 31 March 2026.

Measure Weight

Threshold

(25% of max)

Maximum

(100% of max)

Adjusted EPS CAGR (three-year CAGR of the 2025/26 adjusted EPS,

compared with the 2022/23 adjusted EPS)

50% 5% 10%

TSR (vs industrial / electronic peer group)

1,2

50% Median Upper

quartile

ROCE (average of 2023/24, 2024/25, 2025/26) Underpin 20%

If the underpin is not met, the Committee

will review the formulaic level of vesting

and consider whether it would be

appropriate to use its discretion to reduce

the level of vesting.

1. Straight line vesting between measurement points.

2. TSR peer group is detailed on page 124.

Taking account of internal forecasts of performance over the performance period, the challenging

markets conditions in which the Group operates, our long-term growth ambitions and the expectations

of the investment community of the Group’s future potential performance, the adjusted EPS targets are

considered to be appropriately stretching. Maximum pay-out requires the delivery of an ambitious upper

target, which represent significant out-performance. The strong performance delivered in the 2023

financial year, which is the base year for the 2023 LTIP grant, also adds to the stretch.

The award will be subject to a post-vesting holding period of two years.

J2G LTIP Award

As noted in the Chair’s letter, Simon Pryce will be granted a pro-rated J2G LTIP Award of 498% of basic

salary of the Group’s former CEO. The share price used to determine the number shares to be awarded

will be the share price used to determine the grants of J2G LTIP Award in July 2022. The number of shares

to be granted will be no higher than 355,427 (being the time pro-rated number of shares subject to

the J2G LTIP Award granted to the former CEO of the Group which has now lapsed). Subject to the

achievement of the exceptionally stretching performance conditions as set out on page 126, awards are

due to vest in July 2025, and in line with best practice and shareholder expectations, an additional holding

period will be applied to Simon’s award such that the total vesting and holding period is five years.

As set out in last year’s report, the J2G LTIP Award is a one-off incentive plan and as such no further grants

will be made to Executive Directors after the above award has been made to Simon.

All employee share plans

Executive Directors can participate in any all employee share schemes offered to all employees on

identical terms, with the exception that they are not able to participate in the all employee RS YAY! Award

set out on page 122.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023132

This section (together with the information on

pages 82 to 132 and other information

cross-referenced by this section which is

incorporated by reference) constitutes the

Directors’ report for the purposes of the

Companies Act 2006 and fulfils the requirements

of the corporate governance statement for the

purposes of the Financial Conduct Authority’s

Disclosure Guidance and Transparency Rules (DTR).

Principal activities

RS Group is a global omni-channel provider of

product and service solutions for designers,

builders and maintainers of industrial equipment

and operations. RS Group plc is a public company

incorporated in England and Wales with company

number 647788.

A list of the Company’s investments and

subsidiaries at 31 March 2023 can be found in

Note 29 to the Group accounts on pages 183 to

186 of this Annual Report.

The principal activity of the Company is to act as

the holding company of the Group.

The Directors are not aware, at the date of this

report, of any major changes in the Group’s

activities in the coming year.

Results and dividends

The Group’s results for the year ended

31 March 2023 are set out in the Group

income statement on page 144.

The Board proposes, subject to approval of

shareholders at the AGM to be held on

13 July 2023, that a final dividend of 13.7p per

ordinary share be paid on 21 July 2023 to

shareholders whose names are on the register of

members at the close of business on 16 June 2023.

The Directors have declared dividends as follows.

Information incorporated by reference

The following information required to be disclosed

in this Directors’ Report (in accordance with Listing

Rule (LR) 9.8.4R and otherwise) is set out on the

page numbers below:

Content Page

Likely future

developments

5, 14 to 17

Diversity and Inclusion

Policy (including

disability

)

Employee engagement 63, 67, 85, 88, 92,

95 and 121

Other stakeholder

engagement

7 to 9, 91 to 94

and 116

Greenhouse gas

emissions

Names of Directors who

served during the year

86 and 87

Details of employee

share schemes

114, 120, 122, 132

and Note 8

Risk management

(including hedging) and

financial instruments

173 and 174,

176 to 180

Activity on

Company culture

18, 21, 63 and 64

Interest capitalised

by the Group

170

Long-term

incentive schemes

119 and 120, 124 to

126 and Note 8

1. Information required by the Large and Medium-sized

Companies and Groups (Accounts and Reports) Regulations

2008 and included in the Strategic Report.

During the year under review Computershare

Trustees (Jersey) Limited, trustee of the RS Group

Employee Trust (previously known as the

Electrocomponents Employee Trust) has waived its

right to receive dividends over its total holding of

336,084 shares as at 31 March 2023.

Appointment and retirement

of Directors

The appointment and retirement of Directors is

governed by the Company’s Articles, the Code and

the Companies Act. The Company’s Articles may

only be amended by a special resolution of the

shareholders in a general meeting.

In the interest of good governance and in

accordance with the provisions of the Code, all

Directors will retire and will seek re-election at the

forthcoming AGM.

Biographies of the current Directors can be found

on pages 86 and 87. Details of the Directors

seeking re-election at the AGM are set out in the

Notice of AGM.

Directors’ report

Dividends in 2022/23 Dividends in 2021/22

Interim dividend of 7.2p per ordinary share

(paid on 6 January 2023)

6.4p per ordinary share

Proposed final dividend of 13.7p per ordinary

share (to be paid on 21 July 2023)

11.6p per ordinary share

Total ordinary dividend of 20.9p per ordinary

share for the year ended 31 March 2023

18.0p per ordinary share

DIRECTORS’

REPORT

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

133RS Group plc Annual Report and Accounts for the year ended 31 March 2023 133

Board composition changes

Changes to the composition of the Board since

1 April 2022 up to the date of this Report are

shown in the table below. In addition to these,

Simon Pryce, having been a Non-Executive

Director since 2016, was appointed as CEO with

effect from 3 April 2023.

Joined the Board Left the Board

Navneet

Kapoor

1 June

2022

Lindsley

Ruth

16 December

2022

David Egan 3 May 2023

Directors’ interests

The Directors’ interests in, and options over,

ordinary shares in the Company are shown in the

Directors’ Remuneration Report. Since the year

end, there have been no changes to such interests.

In line with the requirements of the Companies

Act, Directors have a statutory duty to avoid

situations in which they have, or may have,

interests that conflict with those of the Company

unless that conflict is first authorised by the Board.

The Board has in place a formal conflicts of interest

management procedure. The Board is responsible

for considering whether authorisation is required,

and if it can be given, in relation to new situations

as they arise. The Board reviews annually any

conflict authorisations it has given and any

limitations that have been applied. The Company’s

Articles contain provisions to allow the Directors to

authorise potential conflicts of interest, so that if

approved, Directors will not be in breach of their

duty under company law.

The Company purchased and maintained

Directors’ and Officers’ liability insurance

throughout 2022/23, which was renewed for

2023/24. Neither the indemnity nor insurance

provides cover in the event that a Director or

Officer is proved to have acted fraudulently.

Substantial shareholders

The processes by which the Company seeks to

understand the views of its major shareholders are

described on page 8.

Information provided to the Company by

substantial shareholders pursuant to the DTR is

published via a Regulatory Information Service.

As at 31 March 2023 and 23 May 2023, being the

last practicable date, the Company had been

notified by its substantial shareholders under

Rule 5 of the DTR of the following interests in the

Company’s shares:

Powers of the Directors

Subject to the Articles, the Companies Act and any

directions given by special resolution, the business

of the Company will be managed by the Board,

who may exercise all the powers of the Company.

The Board may exercise all the powers of the

Company to borrow money and to mortgage or

charge any of its undertaking, property and

uncalled capital and to issue debentures or other

securities, whether outright or as collateral

security for any debt, liability or obligation of the

Company or of any third party.

Directors’ indemnities

In accordance with the relevant provisions of the

Companies Act and the Company’s Articles of

Association (Articles), the Company entered into a

new deed in 2023 to indemnify the Directors and

officers (from time to time) of the Company to the

extent permitted by the law. The deed for existing

Directors is available for inspection at the

registered office of the Company.

Shareholder

Number of

shares as at

31 March 2023

Percentage of

issued share

capital as at

31 March 2023

Number of

shares as at

23 May 2023

Percentage of

issued share

capital as at

23 May 2023

Ameriprise Financial, Inc.

61,286,939 12.965% 56,725,180 11.998%

BlackRock, Inc. 37,698,147 7.98% 37,698,147 7.98%

Mawer Investment Management 24,103,707 5.10% 24,103,707 5.10%

Jupiter Fund Management PLC 22,996,528 4.87% 22,996,528 4.87%

1. Ameriprise Financial , Inc. includes Threadneedle Asset Management Holdings Ltd.

Directors’ report continued

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023134

Share capital

As at 31 March 2023, the Company’s issued share

capital comprised a single class of 472,784,409

ordinary shares of 10p each, totalling £47,278,441.

Full details of share options, awards and shares

issued under the terms of the Company’s share

incentive plans can be found in Note 8 on pages

157 to 160.

The Company was authorised by shareholders at

the AGM held on 14 July 2022 to purchase up to 5%

of its ordinary share capital in the market. The

Company did not make use of this authority during

the year, and in line with market practice, will be

seeking to renew such authority at this year’s AGM.

Restrictions on voting rights

A member is not entitled to vote (in person or by

proxy) at any general meeting or class meeting if

either: (i) any call or other sum then payable by that

member in respect of that share remains unpaid;

or (ii) that member has been served with a notice

after failure to provide the Company with

information concerning interests in those shares

required to be provided under the Companies Act.

Voting rights may be exercised in person, by proxy

or, in relation to corporate members, by a

corporate representative. Proxy forms must be

submitted not less than 48 hours before the time

of the meeting or adjourned meeting.

Restrictions on transfer of shares

The Directors may, in the case of shares in

certificated form, in their absolute discretion and

without assigning any reason, refuse to register

any transfer of shares (not being fully paid shares)

provided that such discretion may not be exercised

in such a way as to prevent dealings in the shares

Independent Auditors and

audit information

Each Director who held office at the date of

approval of this Directors’ Report confirms that:

– So far as they are aware, there is no relevant audit

information of which the Company’s Auditors

are unaware

– That each Director has taken all steps that they

ought to have taken as a Director to make

themselves aware of any relevant audit

information and to establish that the Company’s

Auditors are aware of that information

This confirmation is given and should be

interpreted in accordance with the provisions

of the Companies Act.

Post balance sheet events

Post balance sheet events are detailed in Note 30

to the Group accounts.

Significant agreements: change

of control

The Company has a number of contractual

arrangements which it considers essential to the

business of the Company. Specifically, these are

committed loan facilities from a number of banks

and arrangements with third-party providers of

administrative services. A change of control of the

Company may cause some agreements to which

the Company is a party to alter or terminate. These

include bank facility agreements and employee

share plans, which would normally vest and

become exercisable on a change of control subject

to the satisfaction of any performance conditions

at that time. The Group has committed facilities

totalling £560.4 million as at 31 March 2023 which

contain clauses which require lender consent for

any change of control. Should consent not be

given, a change of control would trigger

mandatory repayment of the said facilities.

of that class from taking place on an open and

proper basis. The Directors may also refuse to

(whether fully paid or not) in favour of more than

four persons jointly, in which case notice of the

refusal must be sent to the allottee or transferee

within two months after the date on which the

letter of allotment or transfer was lodged with the

Company. A shareholder does not need to obtain

the approval of the Company, or of other

shareholders in the Company, for a transfer

of shares to take place.

Political donations

In the year ended 31 March 2023, the Group made

no political donations or contributions. It remains

the Company’s policy not to make political

donations. However, the application of the relevant

provisions of the Companies Act is potentially very

broad in nature and, as it did last year, the Board

will be seeking shareholder authority to make

political donations up to a defined limit to ensure

that the Group does not inadvertently breach

these provisions as a result of the breadth of its

business activities, although the Board has no

intention of using this authority.

AGM

The Notice of AGM is set out in a separate circular.

The AGM will be held at 12.00pm on Thursday

13 July 2023 at the offices of Allen & Overy LLP,

One Bishops Square, London E1 6AD. This year

we will be offering shareholders the ability to

attend in person. Shareholders can submit

questions relating to the business of the meeting

in advance to CompanySecretary@rsgroup.com.

Further information is set out in the Notice of AGM.

Articles of Association

Any amendments to the Articles of the Company

may be made in accordance with the provisions of

the Companies Act by way of a special resolution of

the Company’s shareholders in a general meeting.

The Articles were last approved by shareholders at

the AGM in 2021/22.

Governance arrangements

Information regarding the Company’s governance

arrangements is set out in the Governance Report

on pages 82 to 132. These pages are incorporated

by reference into the Directors’ Report.

On behalf of the Board:

Clare Underwood

Company Secretary

23 May 2023

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

135RS Group plc Annual Report and Accounts for the year ended 31 March 2023 135

Responsibility of Directors for

annual report and accounts

The Directors are responsible for preparing the

Annual Report and Accounts in accordance with

applicable law and regulation.

Company law requires the Directors to prepare

accounts for each financial year. Under that law

the Directors have prepared the Group accounts

in accordance with UK-adopted international

accounting standards (UK IAS) and Company

accounts in accordance with United Kingdom

Generally Accepted Accounting Practice (United

Kingdom Accounting Standards, comprising

Financial Reporting Standard 102 ‘The Financial

Reporting Standard applicable in the UK and

Republic of Ireland’ (FRS 102), and applicable law).

Under company law the Directors must not

approve the accounts unless they are satisfied that

they give a true and fair view of the state of affairs

of the Group and Company and of the profit or

loss of the Group and Company for that period.

In preparing the accounts, the Directors are

required to:

– Select suitable accounting policies and then

apply them consistently;

– State whether applicable UK IAS have been

followed for the Group accounts and United

Kingdom Accounting Standards, comprising FRS

102, have been followed for the Company

accounts, subject to any material departures

disclosed and explained in the accounts;

Each of the Directors, whose names and functions

are listed on pages 86 and 87 confirm that, to the

best of their knowledge:

– The Group accounts, which have been prepared

in accordance with UK IAS, give a true and fair

view of the assets, liabilities, financial position

and profit of the Group;

– The Company accounts, which have been

prepared in accordance with United Kingdom

Accounting Standards, comprising FRS 102, give

a true and fair view of the assets, liabilities and

financial position of the Company; and

– The Strategic 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 it faces.

In the case of each Director in office at the date

the Directors’ Report is approved:

– so far as the Director is aware, there is no

relevant audit information of which the Group

and Company’s Auditors are unaware; and

– they have taken all the steps that they ought

to have taken as a Director in order to make

themselves aware of any relevant audit

information and to establish that the Group

and Company’s Auditors are aware of that

information.

By order of the Board:

Simon Pryce

Chief Executive Officer

– Make judgements and accounting estimates

that are reasonable and prudent; and

– Prepare the accounts on the going concern basis

unless it is inappropriate to presume that the

Group and Company will continue in business.

The Directors are responsible for keeping

adequate accounting records that are sufficient

to show and explain the Group and Company’s

transactions and disclose with reasonable

accuracy at any time the financial position of the

Group and Company and enable them to ensure

that the accounts and the Directors’ Remuneration

Report comply with the Companies Act 2006.

The Directors are also responsible for

safeguarding the assets of the Group and

Company and hence for taking reasonable steps

for the prevention and detection of fraud and

other irregularities.

The Directors are responsible for the maintenance

and integrity of the Company’s website. Legislation

in the United Kingdom governing the preparation

and dissemination of accounts may differ from

legislation in other jurisdictions.

The Directors consider that the Annual Report and

Accounts, taken as a whole, is fair, balanced and

understandable and provides the information

necessary for shareholders to assess the Group

and Company’s position and performance,

business model and strategy.

Statement of Directors’ responsibilities

STATEMENT OF

DIRECTORS’ RESPONSIBILITIES

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023136

Report on the audit of the accounts

Opinion

In our opinion:

– RS Group plc’s Group accounts and Company

accounts (the accounts) give a true and fair view

of the state of the Group’s and of the Company’s

affairs as at 31 March 2023 and of the Group’s

profit and the Group’s cash flows for the year

then ended;

– the Group accounts have been properly

prepared in accordance with UK-adopted

international accounting standards as applied

in accordance with the provisions of the

Companies Act 2006;

– the Company accounts have been properly

prepared in accordance with United Kingdom

Generally Accepted Accounting Practice (United

Kingdom Accounting Standards, including FRS

102 ‘The Financial Reporting Standard applicable

in the UK and Republic of Ireland’, and applicable

law); and

– the accounts have been prepared in accordance

with the requirements of the Companies Act 2006.

We have audited the accounts, included within the

Annual Report and Accounts (the Annual Report),

which comprise: the Group and the Company

balance sheets as at 31 March 2023; the Group

income statement and the Group statement of

comprehensive income, the Group cash flow

statement, the Group and the Company statements

of changes in equity for the year then ended; and the

notes to the accounts, which include a description of

the significant accounting policies.

Our opinion is consistent with our reporting to

the Audit Committee.

Basis for opinion

We conducted our audit in accordance with

International Standards on Auditing (UK) (ISAs

(UK)) and applicable law. Our responsibilities under

ISAs (UK) are further described in the Auditors’

responsibilities for the audit of the accounts

section of our report. We believe that the audit

evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Independence

We remained independent of the Group in

accordance with the ethical requirements that are

relevant to our audit of the accounts in the UK,

which includes the FRC’s Ethical Standard, as

applicable to listed public interest entities, and

we have fulfilled our other ethical responsibilities

in accordance with these requirements.

To the best of our knowledge and belief, we

declare that non-audit services prohibited by

the FRC’s Ethical Standard were not provided.

Other than those disclosed in Note 5 to the Group

accounts, we have provided no non-audit services

to the Company or its controlled undertakings in

the period under audit.

Our audit approach

Overview

Audit scope

– We identified seven reporting components and

used component teams in five countries which,

in our view, required a full scope audit based on

their size.

– In addition, we used component teams to

perform audit procedures on specific account

line items of three reporting components, with

the Group engagement team performing audit

procedures on specific account line items of

one reporting component.

– The Group consolidation, accounts disclosures and

a number of other items (including taxation, Group

bonus accrual, goodwill, treasury, share-based

payments and UK retirement benefit obligations)

prepared by the head office finance function,

were audited by the Group engagement team.

– The reporting components that are part of our

audit scope as set out above account for 72% of

Group revenue and 84% of Group profit before tax,

substantial reorganisation costs, substantial asset

write-downs and acquisition-related items.

Key audit matters

– Inventory obsolescence provisions (Group)

– Defined benefit pension scheme liabilities (Group)

– Fair value of acquired intangibles – Risoul (Group)

– Carrying value of investments (Company)

Independent auditors’ report

INDEPENDENT

AUDITORS’

REPORT

TO THE

MEMBERS OF

RS GROUP PLC

Materiality

– Overall Group materiality: £18.70 million

(2021/22: £15.00 million) based on approximately

5% of Group profit before tax, substantial

reorganisation costs, substantial asset

write-downs and acquisition-related items.

– Overall Company materiality: £4.70 million

(2021/22: £4.49 million) based on approximately

0.5% of net assets.

– Performance materiality: £14.00 million

(2021/22: £11.25 million) (Group) and

£3.53 million (2021/22: £3.36 million) (Company).

The scope of our audit

As part of designing our audit, we determined

materiality and assessed the risks of material

misstatement in the accounts.

Key audit matters

Key audit matters are those matters that, in the

auditors’ professional judgement, were of most

significance in the audit of the accounts of the

current period and include the most significant

assessed risks of material misstatement (whether

or not due to fraud) identified by the auditors,

including those which had the greatest effect on:

the overall audit strategy; the allocation of

resources in the audit; and directing the efforts

of the engagement team. These matters, and

any comments we make on the results of our

procedures thereon, were addressed in the

context of our audit of the accounts as a whole,

and in forming our opinion thereon, and we do

not provide a separate opinion on these matters.

This is not a complete list of all risks identified

by our audit.

‘Fair value of acquired intangibles – Risoul’ is a new

key audit matter this year. ‘Tax Provisioning’, which

was a key audit matter last year, is no longer

included because of it has been reduced to

normal risk as there is no history of material

misstatements in this area and the fact that the

magnitude of the current provision is significantly

below our level of materiality. Otherwise, the key

audit matters below are consistent with last year.

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

137RS Group plc Annual Report and Accounts for the year ended 31 March 2023 137

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Independent auditors’ report continued

Inventory obsolescence provisions (Group)

Refer to page 107 (Audit Committee Report), page 148 (Note 1 Basis of preparation)

and page 172 (Note 17 Inventories).

Key audit matter How our audit addressed the key audit matter

The balance of gross inventories at 31 March

2023 was £660.00 million (2021/22: £559.20

million), against which provisions of £43.70

million (2021/22: £29.70 million) were held.

The Group’s business model is based on

having the broadest range in the industry

and delivering products on time, often

the next day.

This results in large quantities of inventory

comprising many different types of

products, being held for long periods

of time which raises the risk of

inventory obsolescence.

The inventory provisions are calculated

on an inventory cover basis with the

underlying calculation based on appropriate

product categorisation and assumptions

over sales trends, provision rates and

recoverable amounts.

The inventory provisions are calculated

within the Group’s accounting systems using

an automated process. Where necessary,

manual overlays are applied to these

provisions to account for unusual

circumstances that may have arisen during

the year or where there is a right of return

in place in which case no provision may

be required.

For the year-end inventory provisions, we assessed the

completeness of the data used by the Group’s

accounting system to calculate the provisions by

agreeing the sub-ledger to the general ledger.

We recalculated the provisions to ensure mathematical

accuracy and consistency of application with

the methodology.

We evaluated the reasonableness of management’s

estimates regarding the future annual sales and the

obsolescence percentage applied by comparing these

assumptions to historical sales and historical write-offs.

We found the assumptions to be reasonable.

We challenged manual overlays to the automated

calculation by validating the circumstances relating

to the adjustments or whether there was a right of

return under the contractual arrangements.

In assessing management’s consideration of

the estimation uncertainty within the inventory

obsolescence provisioning, we re-performed

management’s sensitivity assessment which

considered an increase in inventory cover days

and provisioning rates.

Based on our audit procedures, including the review

of disclosures given in Note 17, we agree with

the figures presented and with management’s

conclusions that based on the information available

at the time of the Board’s approval of the accounts,

such sensitivities would not result in a material change

to the inventory provisions.

Key audit matter How our audit addressed the key audit matter

The Group has net retirement benefit

obligations of £36.40 million at 31 March

2023 (2021/22: £12.40 million), which are

significant in the context of the overall

balance sheet.

The net retirement benefit obligations in

respect of the UK scheme is £26.20 million

(2021/22: nil). This is after the application of

asset ceiling rules to the scheme surplus of

£34.90 million whereby this is restricted to

zero given that under the scheme rules

there is no unconditional right to a refund of

surplus that may arise on the scheme. An

additional liability of £26.20 million has been

recognised on the balance sheet, which

represents the present value of deficit

contributions agreed at the latest statutory

funding valuation. The remaining £10.20

million net retirement benefit obligations are

made up of immaterial amounts in respect

of other European defined benefit pension

and retirement indemnity schemes.

The valuation of pension plan liabilities

requires estimation in determining

appropriate assumptions such as salary

increases, mortality rates, discount rates and

inflation levels. Movement in these

assumptions can have a material impact

on the determination of the liabilities.

Management uses external actuaries to

assist in determining these assumptions.

We used our actuarial experts to assess whether the

assumptions used in calculating the defined benefit

liabilities for the UK scheme were reasonable. We

challenged whether salary increases and mortality

rates assumptions were consistent with the specifics

of each plan and, where applicable, with relevant

national benchmarks.

We also assessed whether the discount rate and

inflation rates were consistent with our internally

developed benchmarks and in line with other

companies. We evaluated the calculations prepared

by the external actuaries to assess the consistency

of the assumptions and methodologies applied.

Based on our procedures, we noted that the

assumptions in respect of future improvements

in mortality, discount rate and commutation

assumptions are at the optimistic end of an

acceptable range. Overall, we consider valuation

of the UK defined benefit scheme liabilities to

be reasonable.

We reviewed the related disclosures in Note 9 to

the Group accounts which also included the

sensitivity analysis in respect of changes in

significant assumptions and consider these

disclosures to be appropriate.

Defined benefit pension scheme liabilities (Group)

Refer to page 107 (Audit Committee Report), page 148 (Note 1 Basis of preparation)

and pages 160 to 165 (Note 9 Retirement benefit obligations).

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023138

Key audit matter How our audit addressed the key audit matter

On 3 January 2023, the Group completed the

acquisition of 100% of the share capital of

Risoul y Cia. S.A. de C.V. and its subsidiaries

(Risoul) for purchase consideration of

£233.40 million.

The acquisition resulted in the recognition of

£214.30 million of intangible assets at the

acquisition date, primarily made up of

goodwill of £108.40 million and customer

contracts and relationships and distribution

agreements of £105.90 million.

Management determined the acquisition

date fair values of intangible assets with the

help of external valuation experts. The

calculation of these fair values involves

judgements and estimates regarding

forecasts and other assumptions used

in the valuation models.

We reviewed the share purchase agreement and

noted no unusual terms.

We agreed the consideration to the share purchase

agreement and reconciled the amount to bank

statements for the element paid by year end and

to receivables for any consideration refundable.

We audited the assumptions and bases of the valuations

utilising the assistance of our specialist valuation team

and performed work to test the bases and mechanical

accuracy of the models, the application of the valuation

methodology, appropriateness of the key assumptions

and inputs applied, including discount rates, long-term

growth rates, tax amortisation benefits and

contributory asset charges. Based on this work we did

not identify any issues.

We have performed an independent recalculation of

the overall weighted average cost of capital (WACC)

used in the valuation models and found management’s

WACC to be within a reasonable range.

We have reviewed the cash flow forecasts and agreed

these back to financial forecasts used in the due

diligence. We also challenged management in relation

to the forecasts and evidence for related key inputs

such as the proportion of revenue attributable to the

key supplier relationship with Rockwell and consider

these to be reasonable.

We examined the disclosures in respect of the

acquisition and found them to be appropriate,

providing a fair reflection of the accounting.

Overall, based on our work performed, we consider the

fair values of acquired intangibles and the related

disclosures in the Group accounts to be appropriate.

Fair value of acquired intangibles – Risoul (Group)

Refer to page 108 (Audit Committee Report), page 148 (Note 1 Basis of preparation)

and pages 182 to 183 (Note 28 Acquisitions).

Carrying value of investments (Company)

Refer to page 109 (Audit Committee Report) and page 189 (Note 8 Investments

in subsidiaries in the Company accounts).

Key audit matter How our audit addressed the key audit matter

The Company holds investments in subsidiaries

of £491.20 million at 31 March 2023 (2021/22:

£343.00 million).

Investments in subsidiaries are accounted for at

cost less provision for impairment in the

Company balance sheet. Investments are tested

for impairment if impairment indicators exist. If

such indicators exist, the recoverable amounts of

investments in subsidiaries are estimated in

order to determine the extent of the impairment

loss, if any. Any such impairment loss is

recognised in the profit and loss account.

The impairment assessment was identified as a

key audit matter given the size of the underlying

investment carrying values in the Company

accounts at 31 March 2023. The assessment

requires the application of management

judgement, particularly in determining whether

any impairment indicators have arisen that

trigger the need for an impairment assessment

and in assessing whether the carrying value

of each investment can be supported by

its recoverable amount.

We evaluated management’s assessment of

whether any indicators of impairment existed by

comparing the carrying values of investments in

subsidiaries to the net assets of the underlying

subsidiaries at 31 March 2023 and no impairment

indicators were noted.

Based on the procedures performed, we

concur with management that there are

no indicators of impairment in respect of

investment in subsidiaries.

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

139RS Group plc Annual Report and Accounts for the year ended 31 March 2023 139

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Independent auditors’ report continued

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative

thresholds for materiality. These, together with qualitative considerations, helped us to determine the

scope of our audit and the nature, timing and extent of our audit procedures on the individual financial

statement line items and disclosures and in evaluating the effect of misstatements, both individually and

in aggregate on the accounts as a whole.

Based on our professional judgement, we determined materiality for the accounts as a whole as follows:

their approach and findings, and participated in

the closing meetings of the significant and material

reporting components.

The reporting components that are part of our

audit scope as set out to the left account for 72% of

Group revenue and 84% of Group profit before tax,

substantial reorganisation costs, substantial asset

write-downs and acquisition-related items.

The impact of climate risk on our audit

As part of our audit procedures, we have considered

the potential impact of climate change on the

Group’s business and its accounts.

The Group continues to develop its assessment

of the potential impacts of climate change as

explained throughout the Strategic Report and in

more detail on pages 50 to 57 and pages 72 to 76.

As part of our audit, we have obtained

management’s climate-related risk assessment

and held discussions with management, together

with our own climate change experts, to

understand the process of identifying climate-

related risks, the determination of mitigating

actions and the impact on the Group’s accounts.

Management has assessed that the most likely

impacted accounts line items and estimates are

those associated with future cash flows since the

impact of climate change is expected to become

more notable in the medium to long term.

While auditing these forecast cash flows, we have

challenged management on reflecting the impact

of climate change and any climate change related

commitments in the forecasts.

We have not identified any matters as part of this

work which are inconsistent with the disclosures

in the Annual Report or would lead to any material

adjustments to the accounts.

How we tailored the audit scope

We tailored the scope of our audit to ensure that

we performed enough work to be able to give an

opinion on the accounts as a whole, taking into

account the structure of the Group and the

Company, the accounting processes and controls,

and the industry in which they operate.

The Group’s accounting process is structured

around a local finance function in most of the

Group’s country reporting components. These

functions maintain their own accounting records

and controls (although transactional processing

and certain controls for many reporting

components are performed at the Group’s EMEA,

Americas and Asia Pacific centres of expertise) and

report to the head office finance team through an

integrated consolidation system.

In establishing the overall approach to the Group

audit, we determined that we needed to conduct

audit work over the complete financial information

of RS UK, RS Germany, RS France, RS Italy, RS

Shanghai, RS Americas (including RS Americas

Canada), and RS Group plc. In each country we

used PwC component auditors to audit and report

on the aggregated financial information of that

reporting component. This work is supplemented

by audit procedures over specific balances

performed on RS Integrated Supply UK, RS

Integrated Supply US, Risoul, Bodenfeld, and

procedures performed centrally on the Group

consolidation, accounts disclosures, taxation,

Group bonus accrual, goodwill, treasury, share-

based payments, UK retirement benefit

obligations, acquisition accounting and certain

reporting component balances not covered by

local country component teams.

Where the work was performed by component

auditors, under our instruction, we determined the

level of involvement we needed to have in the audit

work at those reporting components to be able to

conclude whether sufficient appropriate audit

evidence had been obtained as a basis for our

opinion on the Group accounts as a whole. We

maintained regular communication with the local

teams, before, during and after their audit. We

directed the work of component teams, reviewed

Accounts – Group Accounts – Company

Overall materiality £18.70 million (2021/22: £15.00 million). £4.70 million (2021/22: £4.49 million).

How we determined it Approximately 5% of Group profit

before tax, substantial reorganisation

costs, substantial asset write-downs

and acquisition-related items.

Approximately 0.5% of net assets.

Rationale for

benchmark applied

Profit before tax adjusted for one-off

items is the key measure used by the

shareholders as a body in assessing

the Group’s performance. We

consider that excluding the substantial

reorganisation costs, substantial asset

write-downs and acquisition-related

items is appropriate as this provides

us with a consistent year-on-year

basis for determining materiality by

eliminating the non-recurring impact

of these items.

Net assets is the primary measure

used by the shareholders in assessing

the performance and position

of the entity as it reflects the

Company’s principal activity as

a holding company and is a generally

accepted auditing benchmark.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023140

For each component in the scope of our Group

audit, we allocated a materiality that is less than

our overall Group materiality. The range of

materiality allocated across components was

between £1.00 million and £7.30 million. Certain

components were audited to a local statutory audit

materiality that was also less than our overall

Group materiality.

We use performance materiality to reduce to an

appropriately low level the probability that the

aggregate of uncorrected and undetected

misstatements exceeds overall materiality.

Specifically, we use performance materiality in

determining the scope of our audit and the nature

and extent of our testing of account balances,

classes of transactions and disclosures, for

example in determining sample sizes. Our

performance materiality was 75% (2021/22: 75%)

of overall materiality, amounting to £14.00 million

(2021/22: £11.25 million) for the Group accounts

and £3.53 million (2021/22: £3.36 million) for the

Company accounts.

In determining the performance materiality, we

considered a number of factors – the history of

misstatements, risk assessment and aggregation

risk and the effectiveness of controls – and

concluded that an amount at the upper end of

our normal range was appropriate.

We agreed with the Audit Committee that we

would report to them misstatements identified

during our audit above £0.935 million (Group audit)

(2021/22: £0.75 million) and £0.244 million

(Company audit) (2021/22: £0.224 million) as well as

misstatements below those amounts that, in our

view, warranted reporting for qualitative reasons.

Based on the work we have performed, we have

not identified any material uncertainties relating to

events or conditions that, individually or collectively,

may cast significant doubt on the Group’s and the

Company’s ability to continue as a going concern

for a period of at least twelve months from when

the accounts are authorised for issue.

In auditing the accounts, we have concluded that

the Directors’ use of the going concern basis of

accounting in the preparation of the accounts is

appropriate.

However, because not all future events or conditions

can be predicted, this conclusion is not a guarantee

as to the Group’s and the Company’s ability to

continue as a going concern.

In relation to the Directors’ reporting on how they

have applied the UK Corporate Governance Code,

we have nothing material to add or draw attention

to in relation to the Directors’ statement in the

accounts about whether the Directors considered

it appropriate to adopt the going concern basis

of accounting.

Our responsibilities and the responsibilities of

the Directors with respect to going concern are

described in the relevant sections of this report.

Reporting on other information

The other information comprises all of the

information in the Annual Report other than the

accounts and our auditors’ report thereon. The

Directors are responsible for the other information,

which includes reporting based on the Task Force

on Climate-related Financial Disclosures (TCFD)

recommendations. Our opinion on the accounts

does not cover the other information and,

accordingly, we do not express an audit opinion

or, except to the extent otherwise explicitly stated

in this report, any form of assurance thereon.

In connection with our audit of the accounts, our

responsibility is to read the other information and,

in doing so, consider whether the other

information is materially inconsistent with the

accounts or our knowledge obtained in the audit,

or otherwise appears to be materially misstated.

If we identify an apparent material inconsistency or

Conclusions relating to going concern

Our evaluation of the Directors’ assessment

of the Group’s and the Company’s ability to

continue to adopt the going concern basis of

accounting included:

– understanding of the mechanics and key inputs

into the going concern model and holding

discussions with Group management and

regional finance to obtain an understanding

of the trading performance and future outlook

for their respective markets;

– evaluating the key assumptions within

the forecasts;

– reviewing the terms of the existing debt

and facilities;

– considering the potential downside sensitivities

that management had applied and their

likelihood and whether more severe scenarios

could apply and the associated impact on

available liquidity;

– assessing management’s stress testing and

whether this appropriately considered the

principal risks facing the business and the

likelihood of events arising that could erode

liquidity and breach covenants within the

forecast period;

– assessing the performance of the Group since

year end and comparing it with the Board

approved cash flow forecasts; and

– reviewing the disclosures within the Annual

Report and validating that it accurately described

management’s going concern considerations.

material misstatement, we are required to perform

procedures to conclude whether there is a material

misstatement of the accounts or a material

misstatement of the other information. If, based

on the work we have performed, we conclude

that there is a material misstatement of this

other information, we are required to report

that fact. We have nothing to report based

on these responsibilities.

With respect to the Strategic Report and Directors’

Report, we also considered whether the

disclosures required by the UK Companies Act

2006 have been included.

Based on our work undertaken in the course of

the audit, the Companies Act 2006 requires us

also to report certain opinions and matters as

described below.

Strategic report and Directors’ Report

In our opinion, based on the work undertaken

in the course of the audit, the information given

in the Strategic Report and Directors’ Report for

the year ended 31 March 2023 is consistent with

the accounts and has been prepared in accordance

with applicable legal requirements.

In light of the knowledge and understanding of

the Group and Company and their environment

obtained in the course of the audit, we did not

identify any material misstatements in the

Strategic Report and Directors’ Report.

Directors’ Remuneration

In our opinion, the part of the Directors’

Remuneration Report to be audited has been

properly prepared in accordance with the

Companies Act 2006.

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

141RS Group plc Annual Report and Accounts for the year ended 31 March 2023 141

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Independent auditors’ report continued

Corporate governance statement

The Listing Rules require us to review the Directors’

statements in relation to going concern, longer-

term viability and that part of the corporate

governance statement relating to the Company’s

compliance with the provisions of the UK

Corporate Governance Code specified for our

review. Our additional responsibilities with respect

to the corporate governance statement as other

information are described in the Reporting on

other information section of this report.

Based on the work undertaken as part of our audit,

we have concluded that each of the following

elements of the corporate governance statement

is materially consistent with the accounts and

our knowledge obtained during the audit, and

we have nothing material to add or draw attention

to in relation to:

– The Directors’ confirmation that they have

carried out a robust assessment of the emerging

and principal risks;

– The disclosures in the Annual Report that

describe those principal risks, what procedures

are in place to identify emerging risks and an

explanation of how these are being managed

or mitigated;

– The Directors’ statement in the accounts about

whether they considered it appropriate to adopt

the going concern basis of accounting in

preparing them, and their identification of any

material uncertainties to the Group’s and

Company’s ability to continue to do so over a

period of at least twelve months from the date

of approval of the accounts;

– The Directors’ explanation as to their assessment

of the Group’s and Company’s prospects, the

period this assessment covers and why the

period is appropriate; and

– The Directors’ statement as to whether they have

a reasonable expectation that the Company will

be able to continue in operation and meet its

liabilities as they fall due over the period of its

assessment, including any related disclosures

drawing attention to any necessary qualifications

or assumptions.

Our review of the Directors’ statement regarding

the longer-term viability of the Group and

Company was substantially less in scope than an

audit and only consisted of making inquiries and

considering the Directors’ process supporting their

statement; checking that the statement is in

alignment with the relevant provisions of the UK

Corporate Governance Code; and considering

whether the statement is consistent with the

accounts and our knowledge and understanding

of the Group and Company and their environment

obtained in the course of the audit.

In addition, based on the work undertaken as part

of our audit, we have concluded that each of the

following elements of the corporate governance

statement is materially consistent with the

accounts and our knowledge obtained during

the audit:

– The Directors’ statement that they consider

the Annual Report, taken as a whole, is fair,

balanced and understandable, and provides

the information necessary for the members

to assess the Group’s and Company’s position,

performance, business model and strategy;

– The section of the Annual Report that describes

the review of effectiveness of risk management

and internal control systems; and

– The section of the Annual Report describing

the work of the Audit Committee.

We have nothing to report in respect of our

responsibility to report when the Directors’

statement relating to the Company’s compliance

with the Code does not properly disclose a

departure from a relevant provision of the Code

specified under the Listing Rules for review by

the auditors.

Based on our understanding of the Group and

industry, we identified that the principal risks of

non-compliance with laws and regulations related

to Listing Rules of the Financial Conduct Authority

(FCA) and pensions legislations, and we considered

the extent to which non-compliance might have

a material effect on the accounts. We also

considered those laws and regulations that have

a direct impact on the accounts such as the

Companies Act 2006 and the UK and other

relevant tax legislation. We evaluated

management’s incentives and opportunities

for fraudulent manipulation of the accounts

(including the risk of override of controls), and

determined that the principal risks were related

to posting inappropriate journal entries to

manipulate financial results and management bias

in accounting estimates. The Group engagement

team shared this risk assessment with the

component auditors so that they could include

appropriate audit procedures in response to such

risks in their work. Audit procedures performed

by the Group engagement team and/or

component auditors included:

– discussions with management, legal counsel

and the internal audit function, including

consideration of known or suspected instances

of non-compliance with laws and regulations

and fraud;

– assessment of matters reported on the Group’s

whistleblowing helpline and results of

management’s investigation of such matters;

– challenging assumptions made by management

in its significant and other key accounting

estimates in particular in relation to defined

benefit pension scheme liabilities and inventory

obsolescence provisions;

– identifying and testing higher risk journal entries,

in particular any journal entries posted with

unusual account combinations, journals posted

by senior management, or unauthorised users

or super-user access and consolidation journals;

– reviewing internal audit reports and

minutes of meetings with those charged

with governance; and

Responsibilities for the accounts and

the audit

Responsibilities of the Directors for the accounts

As explained more fully in the Statement of

Directors’ Responsibilities, the Directors are

responsible for the preparation of the accounts

in accordance with the applicable framework and

for being satisfied that they give a true and fair

view. The Directors are also responsible for such

internal control as they determine is necessary

to enable the preparation of accounts that are

free from material misstatement, whether due

to fraud or error.

In preparing the accounts, the Directors are

responsible for assessing the Group’s and the

Company’s ability to continue as a going concern,

disclosing, as applicable, matters related to going

concern and using the going concern basis of

accounting unless the Directors either intend to

liquidate the Group or the Company or to cease

operations, or have no realistic alternative but

to do so.

Auditors’ responsibilities for the audit of the accounts

Our objectives are to obtain reasonable assurance

about whether the accounts as a whole are free

from material misstatement, whether due to fraud

or error, and to issue an auditors’ report that

includes our opinion. Reasonable assurance is a

high level of assurance, but is not a guarantee that

an audit conducted in accordance with ISAs (UK)

will always detect a material misstatement when it

exists. Misstatements can arise from fraud or error

and are considered material if, individually or in the

aggregate, they could reasonably be expected to

influence the economic decisions of users taken

on the basis of these accounts.

Irregularities, including fraud, are instances of

non-compliance with laws and regulations. We

design procedures in line with our responsibilities,

outlined above, to detect material misstatements

in respect of irregularities, including fraud.

The extent to which our procedures are capable

of detecting irregularities, including fraud, is

detailed below.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023142

– reviewing accounts disclosures and testing to

supporting documentation to assess compliance

with applicable laws and regulations.

There are inherent limitations in the audit

procedures described above. We are less likely

to become aware of instances of non-compliance

with laws and regulations that are not closely

related to events and transactions reflected in the

accounts. Also, the risk of not detecting a material

misstatement due to fraud is higher than the risk

of not detecting one resulting from error, as

fraud may involve deliberate concealment by,

for example, forgery or intentional

misrepresentations, or through collusion.

Our audit testing might include testing complete

populations of certain transactions and balances,

possibly using data auditing techniques. However,

it typically involves selecting a limited number

of items for testing, rather than testing complete

populations. We will often seek to target particular

items for testing based on their size or risk

characteristics. In other cases, we will use audit

sampling to enable us to draw a conclusion about

the population from which the sample is selected.

A further description of our responsibilities for

the audit of the accounts is located on the FRC’s

website at: www.frc.org.uk/auditorsresponsibilities.

This description forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been

prepared for and only for the Company’s members

as a body in accordance with Chapter 3 of Part 16

of the Companies Act 2006 and for no other

purpose. We do not, in giving these opinions,

accept or assume responsibility for any other

purpose or to any other person to whom this

report is shown or into whose hands it may

come save where expressly agreed by our prior

consent in writing.

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required

to report to you if, in our opinion:

– we have not obtained all the information and

explanations we require for our audit; or

– adequate accounting records have not been

kept by the Company, or returns adequate for

our audit have not been received from branches

not visited by us; or

– certain disclosures of Directors’ remuneration

specified by law are not made; or

– the Company accounts and the part of the

Directors’ Remuneration Report to be audited

are not in agreement with the accounting

records and returns.

We have no exceptions to report arising

from this responsibility.

Appointment

Following the recommendation of the Audit

Committee, we were appointed by the members

on 11 August 2014 to audit the accounts for

the year ended 31 March 2015 and subsequent

financial periods. The period of total uninterrupted

engagement is 9 years, covering the years ended

31 March 2015 to 31 March 2023.

Other matter

As required by the Financial Conduct Authority

Disclosure Guidance and Transparency

Rule 4.1.14R, these accounts form part of

the ESEF-prepared annual financial report filed

on the National Storage Mechanism of the

Financial Conduct Authority in accordance with

the ESEF Regulatory Technical Standard (ESEF RTS).

This auditors’ report provides no assurance over

whether the annual financial report has been

prepared using the single electronic format

specified in the ESEF RTS.

Sandeep Dhillon (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

London

23 May 2023

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

143RS Group plc Annual Report and Accounts for the year ended 31 March 2023 143

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts

GROUP INCOME STATEMENT GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 March 2023 For the year ended 31 March 2023

144 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

Notes

2023

2022

£m

Revenue

2,3,4

2,982.3

2,553.7

Cost of sales

(1,630.1)

(1,425.8)

Gross profit

1,352.2

1,127.9

Distribution and marketing expenses

(889.5)

(755.6)

Administrative expenses

(79.7)

(63.5)

Operating profit

2,3,5

383.0

308.8

Finance income

2.0

1.0

Finance costs

(14.2)

(8.1)

Share of profit of joint venture

0.7

0.5

Profit before tax

371.5

302.2

Income tax expense

(86.7)

(72.2)

Profit for the year attributable to owners of the Company

284.8

230.0

Earnings per share attributable to owners of the Company

Basic

60.4p

48.9p

Diluted

60.2p

48.6p

The Notes on pages 148 to 186 form part of these Group accounts.

Notes

2023

2022

£m

Profit for the year

284.8

230.0

Other comprehensive income

Items that will not be reclassified subsequently to the

income statement

Remeasurement of retirement benefit obligations

(34.2)

21.8

Related income tax

7.9

(0.9)

(26.3)

20.9

Items that may be reclassified subsequently to the

income statement

Foreign exchange translation differences of joint venture

(0.1)

0.1

Foreign exchange translation differences

43.1

21.9

Fair value gain / (loss) on net investment hedges

5.4

(0.1)

Movement in cash flow hedges

3.9

1.4

Related income tax

(0.7)

(0.3)

51.6

23.0

Other comprehensive income for the year

25.3

43.9

Total comprehensive income for the year attributable to

owners of the Company

310.1

273.9

The Notes on pages 148 to 186 form part of these Group accounts.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023144

Group accounts continued

GROUP BALANCE SHEET

As at 31 March 2023

Company number: 647788

145 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

Notes

2023

2022

£m

Non-current assets

Intangible assets

704.8

473.3

Property, plant and equipment

186.3

177.3

Right-of-use assets

46.9

45.8

Investment in joint venture

1.5

Other receivables

6.5

3.0

Retirement benefit net assets

0.8

0.3

Deferred tax assets

6.9

4.9

Total non-current assets

953.7

706.1

Current assets

Inventories

616.3

529.5

Trade and other receivables

692.0

594.3

Cash and cash equivalents – cash and short-term deposits

260.3

257.9

Interest rate swaps

–

0.1

Other derivative assets

1.8

1.4

Current income tax receivables

19.9

11.9

Total current assets

1,590.3

1,395.1

Total assets

2,544.0

2,101.2

Current liabilities

Trade and other payables

(658.9)

(584.1)

Cash and cash equivalents – bank overdrafts

(139.8)

(99.5)

Lease liabilities

15,21

(14.6)

(16.7)

Interest rate swaps

–

(0.2)

Other derivative liabilities

(1.7)

(3.2)

Provisions

(1.8)

(2.6)

Current income tax liabilities

(22.1)

(19.9)

Total current liabilities

(838.9)

(726.2)

Notes

2023

2022

£m

Non-current liabilities

Other payables

(9.3)

(6.9)

Retirement benefit obligations

(37.2)

(12.7)

Borrowings

(184.6)

(151.7)

Lease liabilities

15,21

(34.3)

(32.0)

Provisions

(4.7)

(2.8)

Deferred tax liabilities

(90.1)

(60.4)

Total non-current liabilities

(360.2)

(266.5)

Total liabilities

(1,199.1)

(992.7)

Net assets

1,344.9

1,108.5

Equity

Share capital and share premium

283.3

278.5

Own shares held by Employee Benefit Trust (EBT)

(2.2)

(3.0)

Other reserves

108.8

60.2

Retained earnings

954.3

772.8

Equity attributable to owners of the Company

1,344.2

1,108.5

Non-controlling interests

0.7

–

Total equity

1,344.9

1,108.5

The Notes on pages 148 to 186 form part of these Group accounts.

These Group accounts were approved by the Board of Directors on 23 May 2023 and signed on its

behalf by:

Rona Fairhead Simon Pryce

Chair Chief Executive Officer

145RS Group plc Annual Report and Accounts for the year ended 31 March 2023 145

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

GROUP CASH FLOW STATEMENT

For the year ended 31 March 2023

146 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

Notes

2023

2022

£m

Cash flows from operating activities

Profit before tax

371.5

302.2

Depreciation and amortisation

64.6

63.7

Impairment of intangible assets

7.1

–

Loss on disposal of non-current assets

4.4

2.4

Equity-settled share-based payments

7,8

14.2

9.9

Net finance costs

12.2

7.1

Share of profit of and dividends received from joint venture

(0.1)

(0.3)

Increase in inventories

(44.3)

(102.1)

Increase in trade and other receivables

(37.8)

(96.5)

Increase in trade and other payables

33.2

103.8

Decrease in provisions

(1.4)

(1.7)

Defined benefit retirement contributions in excess of charge

(10.6)

(21.4)

Cash generated from operations

413.0

267.1

Interest received

2.0

1.0

Interest paid

(14.6)

(8.0)

Income tax paid

(93.9)

(57.1)

Net cash from operating activities

306.5

203.0

Cash flows from investing activities

Acquisition of businesses

(237.2)

2.2

Cash and cash equivalents acquired with businesses

12.7

–

Total cash impact on acquisition of businesses

(224.5)

2.2

Purchase of intangible assets

(27.5)

(24.8)

Purchase of property, plant and equipment

(18.6)

(17.7)

Proceeds on sale of property, plant and equipment

0.1

–

Net cash used in investing activities

(270.5)

(40.3)

Notes

2023

2022

£m

Cash flows from financing activities

Proceeds from the issue of share capital

4.8

3.0

Purchase of own shares by EBT

(2.1)

(2.9)

Loans drawn down

83.2

–

Loans repaid

(58.1)

(0.7)

Payment of lease liabilities

(18.8)

(17.8)

Dividends paid

(88.6)

(76.2)

Net cash used in financing activities

(79.6)

(94.6)

Net (decrease) / increase in cash and cash equivalents

(43.6)

68.1

Cash and cash equivalents at the beginning of the year

158.4

86.4

Effect of exchange rate changes

5.7

3.9

Cash and cash equivalents at the end of the year

120.5

158.4

The Notes on pages 148 to 186 form part of these Group accounts.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023146

Group accounts continued

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2023

147 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

Attributable to owners of the Company

Share capital and

share premium

(Note 25)

Own shares held

by EBT

Other reserves

(Note 26)

Retained earnings

Total

Non-controlling

interests

Total equity

£m

At 1 April 2021

275.5

(1.5)

37.6

587.8

899.4

–

899.4

Profit for the year

–

230.0

–

230.0

Remeasurement of retirement benefit obligations

–

21.8

–

21.8

Foreign exchange translation differences

–

21.9

–

21.9

–

21.9

Movement in cash flow hedges

–

1.4

–

1.4

–

1.4

Tax on other comprehensive income (Note 10)

–

(0.3)

(0.9)

(1.2)

–

(1.2)

Total comprehensive income

–

23.0

250.9

273.9

–

273.9

Cash flow hedging gains transferred to inventories

–

(0.5)

–

(0.5)

–

(0.5)

Tax on cash flow hedging gains transferred to inventories

–

0.1

–

0.1

–

0.1

Dividends (Note 12)

–

(76.2)

–

(76.2)

Equity-settled share-based payments (Notes 7 and 8)

–

9.9

–

9.9

Settlement of share awards

3.0

1.4

–

(1.4)

3.0

–

3.0

Purchase of own shares by EBT

–

(2.9)

–

(2.9)

–

(2.9)

Tax on equity-settled share-based payments

–

1.8

–

1.8

At 31 March 2022

278.5

(3.0)

60.2

772.8

1,108.5

–

1,108.5

Profit for the year

–

284.8

–

284.8

Remeasurement of retirement benefit obligations

–

(34.2)

–

(34.2)

Foreign exchange translation differences

–

48.4

–

48.4

–

48.4

Movement in cash flow hedges

–

3.9

–

3.9

–

3.9

Tax on other comprehensive income (Note 10)

–

(0.7)

7.9

7.2

–

7.2

Total comprehensive income

–

51.6

258.5

310.1

–

310.1

Cash flow hedging gains transferred to inventories

–

(3.7)

–

(3.7)

–

(3.7)

Tax on cash flow hedging gains transferred to inventories

–

0.7

–

0.7

–

0.7

Dividends (Note 12)

–

(88.6)

–

(88.6)

Equity-settled share-based payments (Notes 7 and 8)

–

14.2

–

14.2

Settlement of share awards

4.8

2.9

–

(2.9)

4.8

–

4.8

Purchase of own shares by EBT

–

(2.1)

–

(2.1)

–

(2.1)

Tax on equity-settled share-based payments

–

1.0

–

1.0

Sale of subsidiary’s shares to non-controlling interests (Note 28)

–

(0.7)

0.7

–

At 31 March 2023

283.3

(2.2)

108.8

954.3

1,344.2

0.7

1,344.9

The Notes on pages 148 to 186 form part of these Group accounts.

147RS Group plc Annual Report and Accounts for the year ended 31 March 2023 147

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS

For the year ended 31 March 2023

148 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

1 Basis of preparation

RS Group plc (the Company) is a public limited company registered in England and Wales and listed

on the London Stock Exchange.

The Group accounts for the year ended 31 March 2023 are presented in sterling and rounded to

£0.1 million. They are prepared in accordance with UK-adopted international accounting standards

(UK IAS) and the requirements of the Companies Act 2006.

The Group accounts have been prepared on a going concern basis (see the going concern statement

on page 47) under the historical cost convention, modified by the revaluation of retirement benefit

obligations and certain financial assets and liabilities (including derivative financial instruments) as

explained in the relevant notes. The principal accounting policies have been applied consistently

unless otherwise stated.

Basis of consolidation

The Group accounts comprise the results, assets and liabilities of the Company and all its subsidiaries

(together referred to as the Group) and include the Employee Benefit Trust (EBT) and the Group’s

interest in a joint venture. Subsidiaries are entities controlled by the Company. The joint venture is

accounted for using the equity method of accounting.

The results of businesses acquired in the year are consolidated from the effective date of acquisition.

The net assets of businesses acquired are incorporated in the Group accounts at their fair values at

the date of acquisition.

Intra-group transactions and balances are eliminated in preparing the Group accounts and no profit

or loss is recognised on intra-group transactions. Unrealised gains or losses arising from transactions

with the joint venture are eliminated to the extent of the Group’s interest in the entity.

Estimates and judgements

The preparation of accounts in accordance with UK IAS requires the Group to make judgements and

estimates that affect the application of accounting policies and reported amounts of assets and

liabilities, income and expenses. Except for judgements involved in estimations, no judgements have

been made in the process of applying the Group’s accounting policies that have had a significant effect

on the amounts recognised in the accounts. The judgements involved in estimations take account of

the longer-term impacts of climate change and environmental regulations and the current global

economic and geopolitical uncertainties.

Significant estimates are those that have a significant risk of resulting in a material adjustment to the

carrying amounts of the Group’s assets and liabilities within the next year. The significant estimates

made in preparing the accounts were in relation to retirement benefit obligations and further details

on the application of these estimates can be found in Note 9. While not significant estimates, the

Group also focuses on estimates made in relation to inventories (Note 17), the fair values on

acquisition of businesses (Note 28) and the review of intangibles and other assets for impairment

(Notes 13 and 22). Further details are provided in the relevant notes.

Actual results in the longer term may differ from these estimates.

Foreign currency

Foreign currency transactions

Transactions in foreign currencies are recorded using the rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are

retranslated at the rate ruling at that date and the gains and losses on translation are recognised in

operating profit. Non-monetary assets and liabilities that are measured in terms of historical cost in a

foreign currency are translated using the rate at the date of the transaction. Non-monetary assets and

liabilities denominated in foreign currencies that are stated at fair value are translated at the rate

ruling at the date the fair value was determined.

Translation of foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on

acquisition, are translated at exchange rates ruling at the balance sheet date. The income statement

and cash flows of foreign operations are translated at the average rate for the period.

Standards and interpretations adopted in the year

No accounting standards, amendments or revisions to existing standards or interpretations have

become effective which have a material impact on the reported results or financial position of the

Group.

Standards or interpretations issued but not yet applied

The Group does not consider that any standards or interpretations issued but not yet applicable will

have a significant impact on the accounts.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023148

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

149 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

2 Segmental reporting

The Group’s operating segments comprise three regions: EMEA, Americas and Asia Pacific. Their principal activities are described on pages 37 to 39. The operating segments’ performance is assessed on

revenue and adjusted operating profit on a monthly basis by the chief operating decision maker, who is the Chief Executive Officer. Inter-segment pricing is determined on an arm’s length basis, comprising

sales of product at cost and a handling charge included within distribution and marketing expenses.

Year ended 31 March 2023

EMEA

Americas

Asia Pacific

Group

£m

Revenue from external customers

1,768.5

945.5

268.3

2,982.3

Segmental operating profit

275.8

148.5

38.4

462.7

Central costs

(60.5)

Adjusted operating profit

402.2

Amortisation and impairment of

acquired intangibles

(16.6)

Acquisition-related items (Note 3)

(2.6)

Operating profit

383.0

Net finance costs

(12.2)

Share of profit of joint venture

0.7

Profit before tax

371.5

Segmental capital expenditure

34.9

7.1

0.4

42.4

Central costs

–

Capital expenditure

42.4

Segmental depreciation

and amortisation

34.7

11.9

3.2

49.8

Central costs

1.5

Amortisation of acquired intangibles

13.3

Depreciation and amortisation

64.6

Year ended 31 March 2022

EMEA

Americas

Asia Pacific

Grou p

£m

Revenue from external customers

1,579.5

718.7

255.5

2,553. 7

Segmental operating profit

243.7

99.3

29.3

372. 3

Central costs

(51. 9)

Adjusted operating profit

320. 4

Amortisation of acquired intangibles

(11. 6)

Operating profit

308. 8

Net finance costs

(7. 1)

Share of profit of joint venture

0. 5

Profit before tax

302. 2

Segmental capital expenditure

36.6

8.8

0.1

45. 5

Central costs

–

Capital expenditure

45. 5

Segmental depreciation

and amortisation

38.0

9.6

3.0

50. 6

Central costs

1. 5

Amortisation of acquired intangibles

11. 6

Depreciation and amortisation

63.7

149RS Group plc Annual Report and Accounts for the year ended 31 March 2023 149

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

150 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

2 Segmental reporting continued

Disaggregation of revenue

In the table below, revenue is disaggregated by sales channels and also by own-brand products or

other product and service solutions. The Group’s largest own-brand is RS PRO. With the growing focus

on value-creating service solutions, a new differentiating economic characteristic is now whether it is a

service solution or not and so this has been added to the table. £2,901.2 million of revenue is recognised

at a point in time (2021/22: £2,483.9 million) and £81.1 million over time (2021/22: £69.8 million).

Sales channel

EMEA

Americas

Asia Pacific

Group

£m

Year ended 31 March 2023

Web

893.8

304.3

121.2

1,319.3

eProcurement and other digital

417.3

100.5

39.6

557.4

Digital

1,311.1

404.8

160.8

1,876.7

Offline

457.4

540.7

107.5

1,105.6

Group

1,768.5

945.5

268.3

2,982.3

Year ended 31 March 2022

Web

781.7

241.8

121.8

1,145.3

eProcurement and other digital

344.6

69.8

33.9

448.3

Digital

1,126.3

311.6

155.7

1,593.6

Offline

453.2

407.1

99.8

960.1

Group

1,579.5

718.7

255.5

2,553.7

Own-brand / other products and service solutions

EMEA

Americas

Asia Pacific

Group

£m

Year ended 31 March 2023

Own-brand product and service solutions

360.2

7.1

37.2

404.5

Other product and service solutions

1,279.3

713.9

221.5

2,214.7

Group

1,579.5

718.7

255.5

2,553.7

Service solutions / other

EMEA

Americas

Asia Pacific

Group

£m

Year ended 31 March 2023

Service solutions

519.3

166.0

48.7

734.0

Other

1,249.2

779.5

219.6

2,248.3

Group

1,768.5

945.5

268.3

2,982.3

Year ended 31 March 2022

Service solutions

430.3

123.8

33.9

588.0

Other

1,149.2

594.9

221.6

1,965.7

Group

1,579.5

718.7

255.5

2,553.7

Revenue and non-current assets by geographical location

In the table below, revenue is based on the location of the Group operation where the sales originated

and non-current assets are based on the location of the assets. Non-current assets exclude interest

rate swaps, other financial instruments, retirement benefit net assets and deferred tax assets.

Revenue

Non-current assets

2023

2022

2023

2022

£m

UK (country of domicile)

713.2

646.7

216.8

232.9

852.8

672.7

394.3

378.5

France

323.1

285.5

11.6

9.1

Germany

208.2

190.5

61.3

59.5

Italy

128.6

116.9

4.3

5.0

Mexico

46.5

–

231.5

–

Rest of world

709.9

641.4

20.0

14.8

Group

2,982.3

2,553.7

939.8

699.8

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023150

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

151 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

3 Alternative Performance Measures (APMs)

The Group uses a number of APMs in addition to those measures reported in accordance with UK IAS. Such APMs are not defined terms under UK IAS and are not intended to be a substitute for any UK IAS

measure. The Directors believe that the APMs are important when assessing the underlying financial and operating performance of the Group. The APMs are used internally for performance analysis and in

employee incentive arrangements, as well as in discussions with the investment analyst community.

The APMs improve the comparability of information between reporting periods by adjusting for factors such as fluctuations in foreign exchange rates, number of trading days and items, such as reorganisation

costs, that are substantial in scope and impact and do not form part of operational or management activities that the Directors would consider part of underlying performance. The Directors also believe that

excluding recent acquisitions and acquisition-related items aid comparison of the underlying performance between reporting periods and between businesses with similar assets that were internally generated.

Adjusted profit measures

These are the equivalent UK IAS measures adjusted to exclude 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, where relevant, associated tax effects. Adjusted profit before tax is a performance measure for the annual

bonus and the all employee Long Term Incentive Plan (LTIP) called the RS YAY! Award. Adjusted earnings per share is a performance measure for the LTIP and Journey to Greatness (J2G) LTIP Award. Adjusted

operating profit conversion, adjusted operating profit margin and adjusted earnings per share are financial key performance indicators (KPIs) which are used to measure the Group’s progress in delivering the

successful implementation of its strategy and monitor and drive its performance.

Operating costs

Operating profit

margin

Operating profit

conversion

Profit

before tax

Profit

for the year

Basic earnings

per share

Diluted earnings

per share

£m

Year ended 31 March 2023

Reported

(969.2)

383.0

12.8%

28.3%

371.5

284.8

60.4p

60.2p

Amortisation and impairment of acquired intangibles

16.6

13.3

2.8p

Acquisition-related items

2.6

2.1

0.4p

Adjusted

(950.0)

402.2

13.5%

29.7%

390.7

300.2

63.6p

63.4p

Year ended 31 March 2022

Reported

(819.1)

308.8

12.1%

27.4%

302.2

230.0

48.9p

48.6p

Amortisation of acquired intangibles

11.6

11.5

2.4p

Adjusted

(807.5)

320.4

12.5%

28.4%

313.8

241.5

51.3p

51.0p

1. Operating costs are distribution and marketing expenses plus administrative expenses.

2. Operating profit margin is operating profit expressed as a percentage of revenue.

3. Operating profit conversion is operating profit expressed as a percentage of gross profit.

Acquisition-related items comprise transaction costs directly attributable to the acquisition of businesses and any deferred consideration payments relating to the retention of former owners of acquired businesses.

151RS Group plc Annual Report and Accounts for the year ended 31 March 2023 151

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

152 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

3 Alternative Performance Measures (APMs) continued

Like-for-like revenue and profit measures

Like-for-like revenue and profit measures are adjusted to exclude the effects of changes in exchange

rates on translation of overseas profits. They exclude acquisitions in the relevant years until they have

been owned for a year, at which point they start to be included in both the current and comparative

years for the same number of months. These measures enable management and investors to track

more easily, and consistently, the underlying performance of the business.

The principal exchange rates applied in preparing the Group accounts and in calculating the following

like-for-like measures are:

2023

2022

Average

Closing

Average

Closing

US dollar

1.206

1.239

1.366

1.313

Euro

1.158

1.137

1.176

1.183

Like-for-like revenue change

Like-for-like revenue change is also adjusted to eliminate the impact of trading days year on year. It is

calculated by comparing the revenue of the base business for the current year with the prior year

converted at the current year’s average exchange rates and pro-rated for the same number of trading

days as the current year. It is a performance measure for the annual bonus and a financial KPI.

£m

Revenue for 2022

2,553.7

Effect of exchange rates

116.6

Effect of trading days

(10.6)

Revenue for 2022 at 2023 rates and trading days

2,659.7

2023

Group

Less:

acquisitions

owned

<1 year

2023

base

business

2022

2022 at

2023 rates and

trading days

Like-for-like

change

£m

EMEA

1,768.5

–

1,768.5

1,579.5

1,581.3

12%

Americas

945.5

46.9

898.6

718.7

813.2

11%

Asia Pacific

268.3

7.1

261.2

255.5

265.2

(2)%

Revenue

2,982.3

54.0

2,928.3

2,553.7

2,659.7

10%

Gross margin and like-for-like gross margin change

Gross margin is gross profit divided by revenue. Like-for-like change in gross margin is calculated by

taking the difference between gross margin for the base business for the current year and gross

margin for the prior year with revenue and gross profit converted at the current year’s average

exchange rates.

2023

Group

Less:

acquisitions

owned

<1 year

2023

base

business

2022

2022 at

2023 rates

Like-for-lik e

chang e

£m

Revenue

2,982.3

54.0

2,928.3

2,553.7

2,670.3

Gross profit

1,352.2

15.1

1,337.1

1,127.9

1,172.8

Gross margin

45.3%

28.0%

45.7%

44.2%

43.9%

1.8 pt s

Like-for-like profit change

Like-for-like change in profit is calculated by comparing the base business for the current year with th e

prior year converted at the current year’s average exchange rates.

2023

Group

Less:

acquisitions

owned

<1 year

2023

base

business

2022

2022 at

2023 rates

Like-for-lik e

chang e

£m

Segmental operating profit

EMEA

275.8

–

275.8

243.7

246.8

12%

Americas

148.5

3.3

145.2

99.3

113.3

28%

Asia Pacific

38.4

0.6

37.8

29.3

30.9

22%

Segmental operating profit

462.7

3.9

458.8

372.3

391.0

17%

Central costs

(60.5)

–

(60.5)

(51.9)

(52.5)

15%

Adjusted operating profit

402.2

3.9

398.3

320.4

338.5

18%

Adjusted profit before tax

390.7

3.5

387.2

313.8

331.2

17%

Adjusted earnings per share

63.6p

0.4p

63.2p

51.3p

54.4p

16%

Adjusted diluted earnings

per share

63.4p

0.4p

63.0p

51.0p

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023152

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

153 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

3 Alternative Performance Measures (APMs) continued

Adjusted free cash flow and adjusted operating cash flow conversion

Adjusted free cash flow is net cash from operating activities less purchases of intangible assets,

property, plant and equipment plus any proceeds on sale of intangible assets, property, plant and

equipment, adjusted for the impact of substantial reorganisation and acquisition-related items cash

flows and is a performance measure for the annual bonus.

Adjusted operating cash flow is adjusted free cash flow before income tax and net interest paid.

Adjusted operating cash flow conversion is adjusted operating cash flow expressed as a percentage

of adjusted operating profit and is a financial KPI.

2023

2022

£m

Net cash from operating activities

306.5

203.0

Purchase of intangible assets

(27.5)

(24.8)

Purchase of property, plant and equipment

(18.6)

(17.7)

Proceeds on sale of property, plant and equipment

0.1

–

Add back: impact of substantial reorganisation cash flows

0.5

2.4

Add back: impact of acquisition-related items cash flows

2.6

–

Adjusted free cash flow

263.6

162.9

Add back: income tax paid

93.9

57.1

Add back: net interest paid

12.6

7.0

Adjusted operating cash flow

370.1

227.0

Adjusted operating profit

402.2

320.4

Adjusted operating cash flow conversion

92.0%

70.8%

Earnings before interest, tax, depreciation and amortisation (EBITDA) and net debt to

adjusted EBITDA

EBITDA is operating profit excluding depreciation and amortisation. Net debt to adjusted EBITDA

(one of the Group’s debt covenants) is the ratio of net debt to EBITDA excluding impairment of

intangible assets arising on acquisition of businesses, acquisition-related items, substantial

reorganisation costs, substantial asset write-downs and one-off pension credits or costs.

2023

2022

£m

Operating profit

383.0

308.8

Add back: depreciation and amortisation

64.6

63.7

EBITDA

447.6

372.5

Add back: impairment of acquired intangibles

3.3

–

Add back: acquisition-related items

2.6

–

Adjusted EBITDA

453.5

372.5

Net debt (Note 21)

113.0

42.1

Net debt to adjusted EBITDA

0.2x

0.1x

Earnings before interest, tax and amortisation (EBITA) and EBITA to interest

EBITA is adjusted EBITDA after depreciation. EBITA to interest (one of the Group’s debt covenants) is

the ratio of EBITA to finance costs including capitalised interest less finance income.

2023

2022

£m

Adjusted EBITDA

453.5

372.5

Less: depreciation

(36.2)

(33.5)

EBITA

417.3

339.0

Finance costs

14.2

8.1

Less: finance income

(2.0)

(1.0)

Add back: capitalised interest

–

0.5

Interest (per debt covenants)

12.2

7.6

EBITA to interest

34.2x

44.6x

153RS Group plc Annual Report and Accounts for the year ended 31 March 2023 153

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

154 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

3 Alternative Performance Measures (APMs) continued

Return on capital employed (ROCE)

ROCE is adjusted operating profit expressed as a percentage of monthly average net assets excluding

net debt and retirement benefit obligations and is an underpin for the LTIP and J2G LTIP Award and a

financial KPI.

2023

2022

£m

Average net assets

1,258.0

982.8

Add back: average net debt

25.6

82.7

Add back: average retirement benefit net (assets) / obligations

24.1

49.3

Average capital employed

1,307.7

1,114.8

Adjusted operating profit

402.2

320.4

ROCE

30.8%

28.7%

Working capital as a percentage of revenue

Working capital is inventories, current trade and other receivables and current trade and other

payables.

2023

2022

£m

Inventories

616.3

529.5

Current trade and other receivables

692.0

594.3

Current trade and other payables

(658.9)

(584.1)

Working capital

649.4

539.7

Revenue

2,982.3

2,553.7

Working capital as a percentage of revenue

21.8%

21.1%

Inventory turn

Inventory turn is cost of sales divided by inventories.

2023

2022

£m

Cost of sales

1,630.1

1,425.8

Inventories

616.3

529.5

Inventory turn

2.6

2.7

Ratio of capital expenditure to depreciation

Ratio of capital expenditure to depreciation is capital expenditure divided by depreciation and

amortisation excluding amortisation of acquired intangibles and depreciation of right-of-use assets.

2023

2022

£m

Depreciation and amortisation

64.6

63.7

Less: amortisation of acquired intangibles

(13.3)

(11.6)

Less: depreciation of right-of-use assets

(18.3)

(17.7)

Adjusted depreciation and amortisation

33.0

34.4

Capital expenditure

42.4

45.5

Ratio of capital expenditure to depreciation

1.3 times

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023154

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

155 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

4 Revenue recognition

Revenue from the sale of goods is recognised in the income statement when control of the goods has

transferred, which in most countries is contractually on delivery to the customer but in a few countries

is contractually on collection from the Group’s distribution centre by the delivery company. When the

Group arranges the delivery of goods where control has transferred on collection, the customer is

invoiced an amount to cover the cost of freight and this is included in revenue over time as the goods

are shipped. Customers are invoiced on dispatch of the goods. Revenue is measured with reference

to the amount invoiced to the customer, net of any immediate discounts applicable to the order.

Obligations for retrospective customer volume discounts are calculated by estimating the expected

discount percentage that will be achieved for the contractual period using historical data adjusted for

current experience and applying that percentage to actual qualifying sales. When a customer has a

right to return goods purchased, the Group estimates the obligation for the expected value of the

refunds using recent experience. Obligations for both retrospective customer volume discounts

and the expected value of refunds for returns are deducted from the revenue recognised when the

goods are sold and included in other payables on the balance sheet and at 31 March 2023 were

£18.1 million (2021/22: £15.0 million).

Revenue from the fees charged to customers for the provision of outsourced services is recognised

either over time based on time elapsed for monthly management charges or when the related

products are delivered for other management charges. Invoices are raised monthly for monthly

management charges or when the invoices for the related products are invoiced for other

management charges, normally on a weekly or monthly basis. The Group acts as an agent in relation

to the products sourced for its customers under these outsourcing arrangements and so does not

recognise the value of these products in revenue or cost of sales. Revenue is measured with reference

to the amount invoiced to the customer for management charges. Income earned from suppliers for

access to the Group’s online procurement portals is recognised either over time based on time

elapsed for subscription fees or as their products are delivered to the Group’s customers for licence

fees. Invoices are raised monthly, quarterly or annually in advance for subscription fees depending on

contractual terms. Credit notes for licence fee income are received from suppliers depending on

contractual terms with the least frequent being annual.

Revenue from the sale of calibration services is recognised when control of the services has

transferred, which is upon delivery to the customer of the items which have been calibrated.

Customers are invoiced on dispatch of the calibrated items. Revenue is measured with reference to

the amount invoiced to the customer.

All revenue is recognised net of sales taxes and all payment terms are based on commercially

reasonable terms for the respective markets and no element of financing is deemed present.

Remaining performance obligations (unsatisfied or partially unsatisfied) at the year end all relate to

customer contracts that have an original expected duration of not more than one year or are invoiced

based on time incurred. Therefore, as permitted under International Financial Reporting Standard (IFRS)

15 ‘Revenue from Contracts with Customers’, the transaction price allocated to these remaining

performance obligations is not disclosed.

5 Cost of sales and operating profit

Cost of sales comprises the cost of goods delivered to customers and the write-down of inventories

to net realisable value.

When a customer has a right to return goods, the Group estimates the expected value of the

goods that are likely to be returned based on historical experience and the expected gross margin.

It recognises an asset in other receivables for the right to recover these goods and deducts this from

cost of sales when the goods are sold.

The Group receives rebates from certain suppliers relating mainly to the volume of purchases made in

a specified time period. These rebates are recognised as a reduction in cost of sales to the extent that

the inventories purchased from the supplier and eligible for rebates have been sold in the year.

Rebates on purchases that remain in inventories are deducted from the cost of inventories, thus

reducing cost of sales in the income statement in the period in which the inventories are expensed.

The Group recognises the rebate only where there is evidence of a binding arrangement with the

supplier, the amount can be estimated reliably and receipt is probable. The Group estimates whether

the supplier rebates relate to products already sold or remaining in inventories, based on inventory

turns. When estimating the value of supplier rebates earned but not yet received, the Group makes

assumptions about the likely volume of eligible purchases to be made over the remaining rebate

period. As at 31 March 2023, the Group has £4.2 million (2021/22: £4.5 million) of supplier rebates

recognised within trade and other receivables.

155RS Group plc Annual Report and Accounts for the year ended 31 March 2023 155

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

156 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

5 Cost of sales and operating profit continued

Operating profit is stated after charging / (crediting):

2023

2022

£m

Fees payable to the Company’s Auditors for the audit of the Company

and Group accounts

0.9

0.7

Fees payable to the Company’s Auditors and their associates for other

services:

Audit of the Company’s subsidiaries

2.0

1.3

Audit-related assurance services

0.1

Total fees payable to the Company’s Auditors and their associates

3.0

2.1

Depreciation of property, plant and equipment

17.9

15.8

Amortisation of intangible assets included in:

Distribution and marketing expenses

15.1

18.6

Administrative expenses

13.3

11.6

Amortisation of government grants

(0.1)

Loss on foreign exchange

5.7

5.9

Net losses / (gains) on forward foreign exchange contracts classified

as fair value through profit or loss

5.2

(1.0)

Loss on disposal of intangible assets

4.4

2.1

Loss on disposal of property, plant and equipment

–

0.3

6 Finance income and costs

Finance costs that are directly attributable to the construction of an asset that necessarily takes a

substantial period of time to get ready for its intended use are capitalised as part of the cost of that

asset. Interest on financial assets and liabilities measured at amortised cost and on lease liabilities is

calculated using the effective interest method and recognised in the income statement as incurred.

Invoice finance charges relate to costs incurred when the Group makes use of its customers’ supplier

invoice financing options where this is commercially and administratively attractive. These options are

used for some outsourced services customers, including where they give the Group access to the

customers’ invoice portals to simplify the invoice query reconciliation process and so speed up the

receipt of payments.

2023

2022

£m

Finance income

Interest income on financial assets measured at amortised cost

1.8

0.4

Interest income on interest rate swaps

0.2

0.6

Finance income

2.0

1.0

Finance costs

Interest expense on financial liabilities measured at amortised cost

(9.5)

(6.6)

Interest expense on lease liabilities

(1.1)

(0.9)

Interest expense on interest rate swaps

(0.7)

–

Interest on uncertain income tax positions

(0.2)

Invoice finance charges

(2.7)

(0.4)

Finance costs

(14.2)

(8.1)

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023156

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

157 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

7 Employees

Average number of employees

2023

2022

Management and administration

1,351

1,430

Distribution and marketing

6,467

5,953

7,818

7,383

Employment costs

2023

2022

£m

Wages and salaries

385.9

317.3

Social security costs

50.7

40.3

Share-based payments – equity-settled (Note 8)

14.2

9.9

Share-based payments – cash-settled (Note 8)

1.3

3.7

Defined contribution retirement benefit costs (Note 9)

19.5

17.1

Defined benefit retirement benefit costs (Note 9)

3.5

4.3

475.1

392.6

Termination benefits

3.9

3.2

Total

479.0

395.8

Information on the Directors’ remuneration is given in the Directors’ Remuneration Report on pages 112

to 132.

8 Share-based payments

The Group operates share-based payment schemes which are the LTIPs, the Deferred Share Bonus

Plan (DSBP) and the Savings-Related Share Option Scheme (SAYE).

Equity-settled share-based payments are measured at fair value at the grant date, calculated using

an appropriate option pricing model. The fair value is expensed in the income statement with a

corresponding increase in equity on a straight-line basis over the period that employees become

unconditionally entitled to the awards. The income statement charge is adjusted to reflect expected

and actual levels of vesting associated with non-market performance related criteria.

Cash-settled share-based payments are measured at fair value at the balance sheet date, taking into

account the estimated number of awards that will actually vest and the relative completion of the

vesting period. This fair value is included in liabilities and changes in the value of these liabilities are

recognised in the income statement.

The EBT established to administer the schemes owns shares in the Company which are shown

in equity.

LTIPs – equity settled and cash settled

The Group’s active LTIPs are granted under the 2019 LTIP, the 2022 LTIP, the J2G LTIP Award and the

RS YAY! Award. Under these LTIPs, awards are made to plan participants subject to service conditions

and performance conditions. Some of the awards are equity settled and some are cash settled. At the

vesting date the award will either vest, in full or in part, or expire depending on the outcome of the

performance conditions. All awards have £nil exercise price and receive accrued dividends on

settlement.

Those awards made under the 2019 LTIP in 2019/20 (vested in June 2022), 2020/21 and 2021/22 are

normally subject to a market performance condition based on total shareholder return (TSR) of the

Group versus a defined comparator group (see the Directors’ Remuneration Report for details) and a

non-market performance condition based on cumulative growth in adjusted earnings per share (EPS)

over the vesting period with a ROCE underpin.

Awards under the 2022 LTIP are normally subject to a market performance condition based on TSR

of the Group versus a defined comparator group (see the Directors’ Remuneration Report for details)

and a non-market performance condition based on the adjusted EPS compound annual growth rate

(CAGR) over the vesting period with a ROCE underpin.

Awards under the J2G LTIP Award to senior management are subject to non-market performance

conditions based on the adjusted EPS CAGR over the vesting period and a scorecard of key

performance indicators directly linked to The RS Way scorecard, with a ROCE underpin.

157RS Group plc Annual Report and Accounts for the year ended 31 March 2023 157

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

158 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

8 Share-based payments continued

Awards under the RS YAY! Award to all other employees are subject to a non-market performance

condition based on adjusted profit before tax CAGR over the vesting period.

The fair values of equity-settled LTIP awards were calculated at the grant date using the assumptions

below, with the fair value of those subject to market performance conditions calculated using a Monte

Carlo model.

2023

2022

Grant date

December

2022

July

2022

December

2021

June

2021

Market performance conditions

Awards granted

77,792

777,686

35,159

568,179

Fair value at grant date

471p

626p

608p

586p

Assumptions used:

Share price

921p

979p

1,168p

1,017p

Expected volatility

32.8%

32.4%

30.4%

31.5%

Expected life

2 years

7 months

3 years

2 years

5 months

3 years

Risk-free interest rate

3.36%

1.75%

0.51%

0.19%

Other conditions

Awards granted

243,911

4,009,281

54,117

568,179

Fair value at grant date

921p

979p

1,168p

1,017p

Expected volatility was estimated based on the historical volatility of the Company’s shares over the

most recent period commensurate to the expected life of the award. The risk-free interest rate

represents the yield, at the grant date, of UK government bonds with duration commensurate to the

expected life of the award.

The fair values of cash-settled LTIP awards at 31 March 2023 were:

Awards

granted

Fair value

November 2020 – Other conditions

1,147

914p

November 2020 – Market performance conditions

1,147

–p

June 2021 – Other conditions

4,393

914p

June 2021 – Market performance conditions

4,393

–p

July 2022 – Other conditions

12,000

–p

December 2022 – Other conditions

1,300

–p

The movements in the LTIP awards (equity and cash settled) were:

2023

2022

Number of

awards

Number of

awards

Outstanding at 1 April

3,940,677

3,888,385

Forfeited during the year

(1,293,879)

(116,794)

Expired during the year

(789,203)

(463,084)

Exercised during the year

(676,822)

(602,250)

Granted during the year

5,121,970

1,234,420

Outstanding at 31 March

6,302,743

3,940,677

DSBP – equity settled

Under the DSBP, one-third of the total bonus earned by plan participants is awarded as shares and

vests after two years, normally subject to the continued employment of the participant within the

Group. There are no other performance conditions. The participants receive accrued dividends on

vesting. Deferred share awards relating to the bonus for the year ended 31 March 2023 are expected

to be awarded in June 2023. The fair value of the shares awarded during the year was 1,005p

(2021/22: 1,011p) per share award which was the share price at the date of award.

The movements in the DSBP awards were:

2023

2022

Number of

awards

Number of

awards

Outstanding at 1 April

259,570

247,103

Forfeited during the year

(17,766)

–

Exercised during the year

(189,422)

(110,595)

Granted during the year

171,803

123,062

Outstanding at 31 March

224,185

259,570

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023158

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

159 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

8 Share-based payments continued

SAYE – equity settled and cash settled

The SAYE scheme is available to the majority of employees of the Group employed at the time that the

invitation period commences. The UK element is equity settled and the overseas element is cash settled.

The option price is based on the average market price of the Company’s shares over the three days

prior to the offer, discounted by 20%. The option exercise conditions are the employee’s continued

employment for a three-year period and the maintenance of employee’s regular monthly savings. Failure

of either of these conditions is normally deemed a forfeiture of the option. Employees may subscribe to

the three-year or five-year savings period. Under the UK element, at the end of the savings period, the

employee has six months to either exercise their options to purchase the shares at the agreed price or

withdraw their savings with accrued interest. Under the overseas element, at the end of the savings

period, the employee has six months to either exercise their options to receive cash equal to the

difference between the market price and the option price or withdraw their savings with accrued interest.

There are no market conditions attached to the vesting of the options.

The fair value of equity-settled SAYE options was calculated at the grant date using a Black-Scholes model,

with the assumptions below.

2023

2022

3 year

5 year

Grant date

December 2022

September 2021

Options granted

1,300,316

544,216

83,697

Fair value at grant date

325p

349p

372p

Assumptions used:

Share price

944p

1,108p

Exercise price

715p

824p

Expected volatility

32.6%

31.5%

30.3%

Expected option life

3 years

5 years

Expected dividend yield

1.71%

1.44%

Risk-free interest rate

3.16%

0.30%

0.42%

Expected volatility was estimated based on the historical volatility of the Company’s shares over the

most recent three-year or five-year period as appropriate. Expected dividend yield was the annual

dividend yield as at the grant date. The risk-free interest rate was the yield, at the grant date,

of three-year or five-year (as applicable) UK government bonds.

The fair values of cash-settled SAYE options at 31 March 2023 are shown below and were calculated

using a Black-Scholes model, using a share price of 914p, expected dividend yield of 1.86% and

additional assumptions below.

Options

granted

Fair value

Exercise

price

Expected

volatility

Expected

remaining

option life

Risk-free

interest

rate

5 year June 2018

35,052

354p

563p

29.5%

0.5 years

3.99%

5 year September 2019

99,256

475p

439p

32.5%

1.5 years

3.42%

3 year September 2020

389,066

345p

573p

29.5%

0.5 years

3.99%

5 year September 2020

19,798

369p

573p

28.8%

2.5 years

3.52%

3 year September 2021

222,284

195p

824p

32.5%

1.5 years

3.42%

5 year September 2021

11,939

259p

824p

32.4%

3.5 years

3.37%

3 year December 2022

518,735

308p

715p

29.7%

2.8 years

3.52%

Expected volatility is estimated based on the historical volatility of the Company’s shares over the

most recent period commensurate to the expected remaining life of the option. Expected dividend

yield is the annual dividend yield as at the year end. The risk-free interest rate is the yield, at the year

end, of UK government bonds with duration commensurate to the expected remaining life of the option.

The movements in and weighted average exercise price of the SAYE options (equity and

cash settled) were:

2023

2022

Weighted

average

exercise

price

Number of

options

Weighted

average

exercise

price

Number of

options

Outstanding at 1 April

564p

3,850,612

496p

4,255,490

Forfeited during the year

594p

(154,098)

513p

(254,408)

Expired during the year

729p

(147,083)

538p

(272,929)

Exercised during the year

442p

(1,312,146)

497p

(739,677)

Granted during the year

715p

1,819,051

824p

862,136

Outstanding at 31 March

662p

4,056,336

564p

3,850,612

Exercisable at 31 March

438p

171,214

497p

6,669

159RS Group plc Annual Report and Accounts for the year ended 31 March 2023 159

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

160 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

8 Share-based payments continued

SAYE options outstanding at the year end were:

2023

2022

Option prices:

£2.00-£2.99

1,310

£4.00-£4.99

488,139

1,817,577

£5.00-£5.99

1,090,103

1,203,013

£7.00-£7.99

1,778,421

–

£8.00-£8.99

698,363

828,712

4,056,336

3,850,612

Weighted average remaining contractual life (in years)

1.91

1.63

Weighted average share price during period of exercise

954p

1,097p

9 Retirement benefit obligations

For defined benefit schemes, the surplus or deficit recognised in the balance sheet is the difference

between the fair value of the scheme assets and the present value of the obligations at the balance

sheet date. The present value of the obligations is calculated by independent actuaries using the

projected unit credit method. It is determined by discounting estimated future cash outflows using a

discount rate reflecting yields on high-quality corporate bonds with terms approximating the terms of

the related obligation. The operating profit charge comprises the current service cost, net interest

cost, past service costs, administrative expenses, curtailment gains and losses and settlement gains

and losses. The net interest cost is based on the discount rate at the beginning of the year,

contributions paid in and the surplus or deficit during the year. Past service costs and curtailment

gains and losses are recognised at the earlier of when the scheme amendment or curtailment occurs

and when any related reorganisation costs or termination benefits are recognised. Settlement gains

and losses are recognised when the settlement occurs. Remeasurements, representing returns on

scheme assets excluding amounts included in interest and actuarial gains and losses arising from

changes in demographic and financial assumptions and experience adjustments, are recognised in

other comprehensive income.

The Group’s largest defined benefit pension scheme is in the UK, providing benefits based on final

pensionable pay for eligible employees who joined on or before 1 April 2003. The scheme is

administered by a corporate trustee and the funds are independent of the Group’s finances.

The Group also has defined benefit pension schemes in Germany and the Republic of Ireland, which

are closed to both new members and accruals for future service, and defined benefit retirement

indemnity schemes in France and Italy.

For defined contribution schemes, the costs are charged to operating profit as they fall due.

The Group has defined contribution schemes in the UK, Australia, North America, Germany and the

Republic of Ireland. The Group contributes to government schemes in France, Italy, Scandinavia and

Asia and these are defined contribution schemes. The Group also makes payments to employees’

personal pensions in the UK when their employing company does not provide defined benefit or

defined contribution schemes.

Regulatory framework and governance

The UK scheme, the RS Group Pension Scheme (formerly Electrocomponents Group Pension Scheme),

is a registered scheme established under trust law and, as such, is subject to UK pension, tax and

trust legislation. It is managed by a corporate trustee, RS Group Pension Trustees Limited (formerly

Electrocomponents Pension Trustees Limited) (the Trustee). The Trustee includes representatives

appointed by both the Company and members. Although the Company bears the financial cost of the

scheme, the Trustee directors are responsible for the overall management of the scheme including

compliance with applicable regulations and legislation. The Trustee directors are required by law to

act in the interest of all relevant beneficiaries and to set certain policies, to manage the day-to-day

administration of the benefits and to set the scheme investment strategy in consultation with

the Company.

UK pensions are regulated by the Pensions Regulator whose statutory objectives and regulatory

powers are described on its website: www.thepensionsregulator.gov.uk.

Deficit position and funding

The rules of the RS Group Pension Scheme give the Trustee powers to wind up the scheme, which it

may exercise if the Trustee is aware that the assets of the scheme are insufficient to meet its liabilities.

Although the scheme was in deficit on a statutory funding basis at 31 March 2022, the Trustee and the

Company agreed a plan to eliminate the deficit over time and the Trustee has confirmed that it has no

current intention to exercise its power to wind up the scheme.

The funding of the UK scheme is assessed using assumptions in accordance with the advice of

independent actuaries. These assumptions may be different to those used for the accounting

valuation. The last triennial funding valuation was carried out as at 31 March 2022 and showed a

deficit of £36.4 million on a statutory technical provisions basis. Under the associated recovery plan,

the Group agreed to make deficit contributions of £11.1 million per annum with the aim that the

scheme will be fully funded on a statutory technical provisions basis by 30 September 2025.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023160

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

161 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

9 Retirement benefit obligations continued

Based on the UK scheme’s rules, the Group does not have an unconditional right to any surplus that

may arise on the scheme and so IFRIC 14 applies. At 31 March 2023, the defined benefit net asset has

been restricted to £nil (2021/22: £nil) and an additional liability of £26.2 million (2021/22: £nil) has been

recognised which is equal to the present value of the agreed future deficit contributions under the

recovery plan.

Based on the funding position as at 31 March 2023, in the year ending 31 March 2024 the Group

expects to pay £13.2 million of contributions to the UK scheme, including £11.1 million of deficit

contribution payments, and £0.5 million to the other defined benefit schemes.

Investment strategy and risk exposure

The defined benefit schemes expose the Group to actuarial risks such as longevity, interest rate,

inflation and investment risks. The approach for managing the UK scheme’s risks is set out below.

Interest rate risk

The Trustee has set a benchmark for total investment in bonds (government and corporate), interest rate

swaps, inflation swaps, gilt repurchase agreements and cash as part of its matching asset portfolio

(comprising the qualifying investor alternative investment fund (QIAIF), a bespoke pooled structure in

which the scheme is the sole investor). Under this strategy, if gilt yields fall, the value of the investments

within the matching asset portfolio will rise to help match the increase in the valuation of the liabilities

arising from a fall in the discount rate, which is derived from gilt yields. Similarly, if gilt yields rise, the value

of the matching asset portfolio will fall, as will the valuation of the liabilities because of an increase in the

discount rate.

Inflation risk

The scheme holds index-linked gilts, inflation swaps and repurchase agreements to manage against

inflation risk associated with pension liability increases.

Longevity risk

Prudent mortality assumptions are used that appropriately allow for future improvements in life

expectancy. These assumptions are reviewed on a regular basis to ensure they remain appropriate.

The Trustee uses the Club Vita Service to provide a better estimate of the mortality rates of the

scheme’s membership than the standard tables. With effect from 1 June 2008, the scheme introduced

a mortality risk sharing mechanism whereby members’ benefits for pensionable service after that

date will be reduced if the life expectancy of the scheme’s members increases more quickly than

a pre-determined rate.

Assumptions

Financial assumptions

The principal assumptions used to determine the defined benefit obligations were:

2023

2022

Other

Discount rate

4.90%

3.66%

2.80%

1.79%

Rate of increase in pensionable salaries

Nil

1.04%

Nil

3.10%

Rate of RPI inflation

3.30%

2.34%

3.80%

2.03%

Rate of CPI inflation

2.80%

2.34%

3.20%

2.03%

Rate of pension increases

RPI inflation capped at 5.0% p.a.

3.05%

n/a

3.35%

n/a

RPI inflation capped at 2.5% p.a.

2.05%

n/a

2.15%

n/a

Life expectancy assumptions

Based upon the demographics of scheme members, the weighted average life expectancy

assumptions used to determine the UK defined benefit obligations were:

2023

2022

Years

Member aged 65 (current life expectancy) – male

21.9

22.4

Member aged 65 (current life expectancy) – female

23.3

23.8

Member aged 45 (life expectancy at aged 65) – male

23.3

22.9

Member aged 45 (life expectancy at aged 65) – female

25.8

25.1

At 31 March 2023, the weighted average duration of the UK defined benefit obligation was 14 years

(2021/22: 18 years).

Sensitivity analysis of the impact of changes in key assumptions

The calculations of the defined benefit obligations are sensitive to the assumptions used.

The sensitivity analysis below is based on a change in the assumption on the UK scheme while holdin g

all other assumptions constant; in practice changes in some of the assumptions may be correlated.

A change would have the following increase / (decrease) on the UK defined benefit obligations as at

31 March 2023:

Increase in

assumption

Decrease in

assumption

£m

Effect on obligation of a 0.5 pts change to the assumed discount rate

(25.9)

28.9

Effect on obligation of a 0.1 pts change in the assumed inflation rate

4.9

(4.8)

Effect on obligation of a change of one year in assumed life expectancy

11.1

(11.1 )

161RS Group plc Annual Report and Accounts for the year ended 31 March 2023 161

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

162 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

9 Retirement benefit obligations

continued

Income statement

The net charge / (credit) recognised in operating profit for retirement benefit obligations was:

2023

2022

Other

Total

Other

Total

£m

Current service cost

2.0

0.3

2.3

2.5

0.3

2.8

Past service cost

–

(0.1)

Interest expense on obligation

15.4

0.3

15.7

12.7

0.2

12.9

Interest income on scheme assets

(16.3)

(0.1)

(16.4)

(12.0)

(0.1)

(12.1)

Interest expense on asset ceiling / onerous liability

0.7

–

0.7

–

Administrative expenses

1.2

–

1.2

0.8

–

0.8

Total charge for defined benefit schemes

3.0

0.5

3.5

4.0

0.3

4.3

Total charge for defined contribution schemes and personal pensions

8.9

10.6

19.5

8.4

8.7

17.1

Balance sheet

The amounts included in the balance sheet arising from the Group’s assets / (obligations) in respect of its defined benefit schemes was:

2023

2022

Other

Total

Other

Total

£m

Fair value of scheme assets

425.4

6.6

432.0

585.7

7.6

593.3

Present value of defined benefit obligations

(390.5)

(16.8)

(407.3)

(560.8)

(20.0)

(580.8)

Effect of asset ceiling / onerous liability

(61.1)

–

(61.1)

(24.9)

–

(24.9)

Retirement benefit obligations

(26.2)

(10.2)

(36.4)

–

(12.4)

Amount recognised on the balance sheet – liability

(26.2)

(11.0)

(37.2)

–

(12.7)

Amount recognised on the balance sheet – asset

–

0.8

–

0.3

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023162

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

163 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

9 Retirement benefit obligations continued

The other defined benefit schemes were:

2023

2022

Fair value of

scheme assets

Present value of

defined benefit

obligations

Retirement

benefit

obligations

Fair value of

scheme assets

Present value of

defined benefit

obligations

Retirement

benefit

obligations

£m

Germany’s defined benefit pension scheme

–

(7.1)

–

(8.5)

Republic of Ireland’s defined benefit pension scheme

6.6

(5.8)

0.8

7.6

(7.3)

0.3

France’s defined benefit retirement indemnity scheme

–

(3.0)

–

(3.2)

Italy’s defined benefit retirement indemnity scheme

–

(0.9)

–

(1.0)

Other

6.6

(16.8)

(10.2)

7.6

(20.0)

(12.4)

Movements in the present value of the defined benefit obligations in the year were:

2023

2022

Other

Total

Other

Total

£m

At 1 April

560.8

20.0

580.8

614.0

22.6

636.6

Current service cost

2.0

0.3

2.3

2.5

0.3

2.8

Past service cost

–

(0.1)

Interest expense

15.4

0.3

15.7

12.7

0.2

12.9

Insurance premiums for risk benefits

–

(0.1)

–

(0.1)

Effect of changes in demographic assumptions

(17.8)

0.3

(17.5)

–

Effect of changes in financial assumptions

(176.1)

(4.9)

(181.0)

(54.0)

(1.7)

(55.7)

Effect of experience adjustments

24.3

0.7

25.0

3.1

(0.6)

2.5

Benefits paid

(18.1)

(0.6)

(18.7)

(17.4)

(0.5)

(17.9)

Exchange differences

–

0.7

–

(0.2)

At 31 March

390.5

16.8

407.3

560.8

20.0

580.8

Of the UK scheme’s present value of the defined benefit obligations, £33.8 million (2021/22: £66.0 million) relates to active members, £153.3 million (2021/22: £240.0 million) to vested deferred members and

£203.3 million (2021/22: £254.8 million) to retirees.

163RS Group plc Annual Report and Accounts for the year ended 31 March 2023 163

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

164 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

9 Retirement benefit obligations continued

Movements in the fair value of the schemes’ assets in the year were:

2023

2022

Other

Total

Other

Total

£m

At 1 April

585.7

7.6

593.3

572.8

8.1

580.9

Interest income

16.3

0.1

16.4

12.0

0.1

12.1

Return on scheme assets (excluding interest income)

(170.7)

(1.5)

(172.2)

(6.1)

(0.4)

(6.5)

Contributions by company

13.4

0.7

14.1

25.3

0.4

25.7

Benefits paid

(18.1)

(0.6)

(18.7)

(17.4)

(0.5)

(17.9)

Administrative expenses

(1.2)

–

(1.2)

(0.8)

–

(0.8)

Insurance premiums for risk benefits

–

(0.1)

–

(0.1)

Exchange differences

–

0.3

–

(0.1)

At 31 March

425.4

6.6

432.0

585.7

7.6

593.3

The fair values of the schemes’ assets were:

2023

2022

Other

Total

Other

Total

£m

QIAIF (liability driven investment and credit portfolio of quoted assets)

281.4

–

281.4

400.0

–

400.0

Quoted equities

–

2.4

–

2.5

Quoted debt instruments

63.1

4.1

67.2

94.0

5.1

99.1

Unquoted debt instruments

80.1

–

80.1

91.5

–

91.5

Cash

0.8

0.1

0.9

0.2

–

0.2

Total market value of scheme assets

425.4

6.6

432.0

585.7

7.6

593.3

The defined benefit schemes do not invest in the Company and no property or other assets owned by the schemes are used by the Group.

The fair values of the unquoted debt instruments are determined by the fund managers using quoted prices for similar assets or other valuation techniques where all the inputs are directly observable

or indirectly observable from market data.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023164

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

165 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

9 Retirement benefit obligations continued

Movements in the effect of asset ceiling / onerous liability were:

2023

2022

Other

Total

Other

Total

£m

At 1 April

24.9

–

24.9

–

Interest expense

0.7

–

0.7

–

Change in asset ceiling / onerous liability (excluding interest expense)

35.5

–

35.5

24.9

–

24.9

At 31 March

61.1

–

61.1

24.9

–

24.9

10 Taxation

Current and deferred tax are recognised in the income statement, except when they relate to items

recognised directly in equity when the related tax is also recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or

substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of

previous years.

The Group recognises deferred tax assets and liabilities based on estimates of future taxable income

and recoverability. Deferred tax is provided using the balance sheet liability method, providing for

temporary differences between the carrying amounts of assets and liabilities for financial reporting

purposes and the amounts used for taxation purposes.

The amount of deferred tax provided is calculated using tax rates enacted or substantively enacted at

the balance sheet date that are expected to apply when the deferred tax asset is realised or the

deferred tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that

future taxable profits will be available against which these temporary differences can be utilised.

No deferred tax liabilities are recognised on the initial recognition of goodwill. However, when goodwill

arises in a jurisdiction where it is deductible in determining taxable profit, the amortisation for tax

purposes of goodwill creates a taxable temporary difference and this resulting deferred tax liability

is recognised.

The Group recognises a current tax provision when the Group has a present obligation as a result of

a past event, and it is considered probable that there will be a future outflow of funds. As an

international business, the Group is exposed to the income tax laws of the large number of jurisdictions

in which it operates. These laws are complex and subject to different interpretations by taxpayers and

tax authorities. The assessment of uncertain tax positions is subjective. It is based on the Group’s

interpretation of country-specific tax law and its application and interaction, on previous experience

and on management’s professional judgement supported by external advisors where necessary.

The Group estimates a provision for uncertain tax positions by making judgements about the position

likely to be taken by each tax authority. Where it is considered probable that the tax authority will

accept the tax treatment used, or expected to be used, in the income tax return, the accounts reflect

the treatment in the return. Where it is not considered probable that the tax authority will accept the

tax treatment, the tax amounts in the accounts reflect that uncertainty using either the most likely

amount or the expected value amount depending on which method is expected to reflect the

resolution of that uncertainty better.

Provisions for uncertain tax positions are included within current tax liabilities. The Group’s uncertain

tax positions principally relate to cross-border transfer pricing. As at 31 March 2023, the total value of

these tax provisions was £10.6 million (2021/22: £8.3 million). It is possible that the amounts paid will

be different from the amounts provided but this is not expected to be material.

Tax expense / (income) recognised in the income statement

2023

2022

£m

Current tax

Current tax on profits for the year

89.5

72.4

Adjustments for prior years

(0.6)

Total current tax

88.9

71.8

Deferred tax

Origination and reversal of temporary differences

(2.4)

(4.5)

Changes in tax rates and laws

(0.5)

4.9

Adjustments for prior years

0.7

–

Total deferred tax

(2.2)

0.4

Income tax expense

86.7

72.2

165RS Group plc Annual Report and Accounts for the year ended 31 March 2023 165

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

166 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

10 Taxation continued

The income tax expense for the year can be reconciled to the profit per the income statement

as follows:

2023

2022

£m

Profit before tax

371.5

302.2

Expected tax charge at UK corporation tax rate of 19% (2022: 19%)

70.6

57.4

Recurring items

Differences in overseas corporation tax rates

12.3

8.7

Impact of tax losses

(0.2)

(0.6)

Items not taxable for tax purposes

(1.2)

(0.8)

Items not deductible for tax purposes

4.1

1.9

Other local taxes suffered overseas

1.0

0.9

Non-recurring items

Changes in tax rates and laws

(0.5)

4.9

Movement in uncertain tax provisions in current year

1.7

1.6

Movement in uncertain tax provisions for prior years

(1.2)

Prior year adjustments

0.1

(0.6)

86.7

72.2

The Group’s effective tax rate reflects the impact of higher tax rates in overseas jurisdictions where th e

Group earns profit. Based on current business plans, the mix of profits is not expected to change

significantly in the future.

In May 2021, the UK government enacted a change in the UK corporation tax rate from 19% to 25%

effective from 1 April 2023 and so the UK deferred tax balances have been calculated at the new rate.

In December 2021, the Organisation for Economic Co-operation and Development (OECD) issued

model rules for a new global minimum tax framework (Pillar Two) and various governments around

the world have issued, or are in the process of issuing, legislation on this. In the UK, the government

released draft legislation on Pillar Two in July 2022 and updated it in March 2023. The Group is in the

process of assessing the full impact of this, however it is not expected to have a material impact.

Tax expense / (income) recognised directly in other comprehensive income

2023

2022

£m

Relating to remeasurement of retirement benefit obligations

(7.9)

0.9

Relating to movement in cash flow hedges

0.7

0.3

(7.2)

1.2

Movement in deferred tax assets and liabilities

Intangible assets

(excluding

goodwill), leases

and property,

plant and

equipment

Goodwill

Retirement

benefit

obligations

Employee benefits

Tax losses

Other

Net tax

(liabilities) / assets

£m

At 1 April 2021

(25.0)

(45.8)

10.7

6.0

3.7

2.4

(48.0)

Credit / (charge) to income

0.7

(0.1)

(3.3)

2.9

(0.7)

0.1

(0.4)

Recognised directly in equity

–

(5.2)

0.8

–

(0.2)

(4.6)

Translation differences

(0.6)

(2.3)

–

0.2

–

0.2

(2.5)

At 31 March 2022

(24.9)

(48.2)

2.2

9.9

3.0

2.5

(55.5)

Acquisitions (Note 28)

(32.2)

–

1.6

(30.6)

Credit / (charge) to income

0.4

(0.1)

0.6

2.5

(0.2)

(1.0)

2.2

Recognised directly in equity

–

5.8

(0.5)

–

5.3

Translation differences

(2.1)

(2.9)

0.1

–

0.2

(4.6)

At 31 March 2023

(58.8)

(51.2)

8.7

12.0

2.8

3.3

(83.2)

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023166

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

167 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

10 Taxation continued

Analysed in the balance sheet as:

2023

2022

£m

Deferred tax assets

6.9

4.9

Deferred tax liabilities

(90.1)

(60.4)

(83.2)

(55.5)

A deferred tax asset has been recognised for tax losses where current projections show that sufficient

taxable profits will arise in the near future against which these losses may be offset. A deferred tax

asset has not been recognised in respect of carry-forward tax losses where recoverability is uncertain

totalling £0.7 million (2021/22: £1.6 million) which carries no expiry date.

11 Earnings per share

Basic earnings per share is calculated by dividing the profit for the year attributable to owners of the

Company by the weighted average number of shares in issue during the year excluding shares held by

the EBT.

Diluted earnings per share is calculated by adjusting the weighted average number of shares

to assume the conversion of all potentially dilutive ordinary shares. The share-based payment

schemes which result in the issue of shares at a value below the market price of the shares are

potentially dilutive.

2023

2022

Number

Weighted average number of shares

471,717,928

470,552,792

Dilutive effect of share-based payments

1,194,205

2,669,271

Diluted weighted average number of shares

472,912,133

473,222,063

Basic earnings per share

60.4p

48.9p

Diluted earnings per share

60.2p

48.6p

12 Dividends

2023

2022

£m

Final dividend for the year ended 31 March 2022 – 11.6p (2021: 9.8p)

54.6

46.1

Interim dividend for the year ended 31 March 2023 – 7.2p (2022: 6.4p)

34.0

30.1

88.6

76.2

The trustees of the EBT have waived their right to receive dividends and this rounds to £nil (2021/22: £nil).

A proposed final dividend for the year ended 31 March 2023 of 13.7p is subject to approval by

shareholders at the Annual General Meeting on 13 July 2023 and the estimated amount to be paid of

£64.7 million has not been included as a liability in these accounts.

13 Intangible assets

Goodwill represents the excess of the fair value of the consideration of an acquisition over the fair

value attributed to the net assets acquired (including contingent liabilities). Goodwill is not amortised

but is reviewed annually for impairment. Acquisition-related costs are charged to the income

statement as incurred.

Intangible assets excluding goodwill are stated at cost, or fair value at the date of acquisition, less

accumulated amortisation and any provisions for impairment. Residual value is reassessed annually.

Expenditure on internally generated goodwill and brands is recognised in the income statement as an

expense as incurred. Amortisation is calculated to write off the cost on a straight-line basis over the

following useful lives (and the corresponding annual rates) from the date the assets are first available

for use: software 2 – 11 years (9% – 50%); development expenditure 3 years (33%); brand 10 years

(10%); customer contracts, relationships and distribution agreements 4 – 15.5 years (6% – 25%); and

acquired research 3 years (33%).

167RS Group plc Annual Report and Accounts for the year ended 31 March 2023 167

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

168 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

13 Intangible assets continued

Goodwill

Software

Development

expenditure

Brand

Customer

contracts,

relationships and

distribution

agreements

Acquired research

Total

£m

Cost

At 1 April 2021

317.6

322.0

1.8

4.0

85.1

1.1

731.6

Additions – internally generated

–

7.0

–

7.0

Additions – other

–

17.7

–

17.7

Disposals

–

(22.2)

–

(22.2 )

Translation differences

12.9

1.7

–

1.2

–

15.8

At 31 March 2022

330.5

326.2

1.8

4.0

86.3

1.1

749.9

Acquisitions (Note 28)

111.8

–

107.8

–

219.6

Additions – internally generated

–

10.8

–

10.8

Additions – other

–

14.6

–

14.6

Disposals

–

(10.2)

–

(4.0)

–

(14.2 )

Reclassifications

–

(0.6)

–

(0.6)

Translation differences

21.0

2.7

–

5.7

–

29.4

At 31 March 2023

463.3

343.5

1.8

–

199.8

1.1

1,009.5

Amortisation

At 1 April 2021

–

250.8

0.1

14.1

0.1

265.2

Charge for the year

–

18.8

0.6

0.4

10.0

0.4

30.2

Disposals

–

(20.1)

–

(20.1 )

Translation differences

–

1.2

–

0.1

–

1.3

At 31 March 2022

–

250.7

0.7

0.5

24.2

0.5

276.6

Charge for the year

–

14.5

0.7

0.2

12.7

0.3

28.4

Impairment losses

–

3.8

–

3.3

–

7.1

Disposals

–

(5.8)

–

(4.0)

–

(9.8)

Translation differences

–

2.1

–

0.3

–

2.4

At 31 March 2023

–

265.3

1.4

–

37.2

0.8

304.7

Net book value

At 31 March 2023

463.3

78.2

0.4

–

162.6

0.3

704.8

At 31 March 2022

330.5

75.5

1.1

3.5

62.1

0.6

473.3

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023168

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

169 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

13 Intangible assets continued

As at 31 March 2023, the cost and accumulated amortisation of internally generated intangible assets

included in software were £68.5 million and £41.9 million (2021/22 restated: £57.2 million and

£35.4 million) respectively. All development expenditure is internally generated.

At 31 March 2023, there were no material individual software assets (2021/22: none). Material

individual customer contracts, relationships and distribution agreements are from the acquisitions

of IESA, Synovos and Risoul with net book values of £19.8 million, £18.6 million and £108.0 million

respectively (2021/22: £24.2 million, £21.2 million and £nil) and remaining useful lives of 2 to 5 years,

5 years and 2 to 15 years respectively.

Goodwill is allocated at acquisition to the cash generating units (CGUs) that are expected to benefit

from the synergies arising as a result of the acquisition, with £410.2 million (2021/22: £280.7 million)

relating to the Americas CGU, £49.7 million (2021/22: £49.8 million) relating to the EMEA CGU and

£3.4 million (2021/22: £nil) relating to the Asia Pacific CGU.

The Group reviews its intangible assets regularly to assess if there are any indications the assets may

be impaired. In addition, goodwill and any other intangible assets that are not yet being amortised are

subject to annual impairment reviews.

An impairment loss is recognised whenever the carrying amount of an asset or its CGU exceeds its

recoverable amount. The recoverable amount is calculated as the higher of fair value less costs of

disposal and value in use. For an asset that does not generate largely independent cash flows, the

recoverable amount is determined for the CGU to which the asset belongs.

As a result of the rebranding of Needlers to RS Safety Solutions effective from 1 November 2022, the

net book value of the Needlers brand acquired in December 2020 was impaired by £3.3 million and

then written off. This impairment is included in amortisation and impairment of acquired intangibles.

The software impairments relate to software that is not being used and are included in distribution

and marketing expenses in EMEA.

For the goodwill impairment reviews, the recoverable amount of the CGUs is based on value-in-use

calculations, which use cash flow projections based on the Group’s annual targets and strategic plan

which cover the next five years. When the strategic plan was prepared it took into account expected

increases in costs of products and overheads including those related to climate change as well as

expected benefits from the introduction of the Group’s more sustainable product range and ESG

solutions business. The strategic plan is also used as the basis for the viability statement. Judgements

made are for the main assumptions used in determining the revenue and gross margin growth rates.

These are determined using internal forecasts based upon historical growth rates and future

medium-term plans which consider and are consistent with relevant macroeconomic indicators.

The cash flows from the strategic plan are extrapolated using the relevant long-term growth rate for

the CGU and discounted at the Group’s externally sourced pre-tax weighted average cost of capital

(including lease liabilities) adjusted for the estimated tax cash flows and risk applicable for the CGU to

estimate cash flow projections. These cash flow projections are adjusted to take account of the likely

future capital expenditure costs of meeting our climate change commitments consistent with the

Group’s climate scenario analysis of physical and transition risk impacts conducted for the Task Force

on Climate-related Financial Disclosures (TCFD).

For the Americas CGU, the long-term growth rate is 1.8% (2021/22: 1.7%) which is consistent with the

market estimate of long-term average growth rates for the product and service solutions providers

industries and does not exceed expected long-term GDP growth for Americas. The nominal pre-tax

discount rate is 11.6% (2021/22: 6.4%).

For the EMEA CGU, the long-term growth rate is 1.7% (2021/22: 1.5%) which is consistent with the

market estimate of long-term average growth rates for the product and service solutions providers

industries and does not exceed expected long-term GDP growth for EMEA. The nominal pre-tax

discount rate is 11.6% (2021/22: 8.3%).

For the Asia Pacific CGU, the long-term growth rate is 2.0% which is consistent with the market

estimate of long-term average growth rates for the product and service solutions providers industries

and does not exceed expected long-term GDP growth for Asia Pacific. The nominal pre-tax discount

rate is 16.3%.

There is significant headroom between the carrying amount and the value in use of the

CGUs (over 100%), therefore the Directors believe that currently all reasonably likely changes in

the key assumptions referred to above would not give rise to an impairment charge.

14 Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any provisions

for impairment after taking account of any impact of the Group’s strategy related to climate change.

The cost of self-constructed assets includes the cost of materials, direct labour and certain

direct overheads.

No depreciation has been charged on freehold land. Other assets are depreciated to residual value,

which is reassessed annually, on a straight-line basis over the following useful lives (and the

corresponding annual rates): freehold buildings and improvements to leasehold buildings

50 years (2%) (or the lease term if shorter); plant and machinery 5 – 20 years (5% – 20%); and

computer equipment 3 – 5 years (20% – 33%). This reassessment includes consideration of the

Group’s climate scenario analysis of physical and transition risk impacts conducted for the TCFD.

169RS Group plc Annual Report and Accounts for the year ended 31 March 2023 169

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

170 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

14 Property, plant and equipment

continued

Land

and buildings

Plant

and machinery

Computer

equipment

Total

£m

Cost

At 1 April 2021

150.7

208.8

82.0

441.5

Additions

3.7

16.1

1.0

20.8

Disposals

(0.5)

(21.2)

(22.2)

Translation differences

1.7

0.6

4.0

At 31 March 2022

155.6

226.1

62.4

444.1

Acquisitions

1.5

1.0

0.4

2.9

Additions

1.8

10.9

4.3

17.0

Disposals

–

(0.7)

(2.3)

(3.0)

Reclassifications

–

(0.1)

0.7

0.6

Translation differences

4.8

4.6

1.5

10.9

At 31 March 2023

163.7

241.8

67.0

472.5

Depreciation

At 1 April 2021

53.0

144.5

73.8

271.3

Charge for the year

3.2

8.2

4.4

15.8

Disposals

(0.5)

(20.9)

(21.9)

Translation differences

0.3

0.7

0.6

1.6

At 31 March 2022

56.0

152.9

57.9

266.8

Charge for the year

3.6

10.3

4.0

17.9

Disposals

–

(0.6)

(2.3)

(2.9)

Translation differences

1.2

1.9

1.3

4.4

At 31 March 2023

60.8

164.5

60.9

286.2

Net book value

At 31 March 2023

102.9

77.3

6.1

186.3

At 31 March 2022

99.6

73.2

4.5

177.3

Included above are £2.2 million of property, plant and equipment under construction at

31 March 2023 (2021/22: £8.8 million).

Finance costs capitalised were £nil (2021/22: £0.5 million calculated using a capitalisation rate of 2.2%).

15 Leases

The Group assesses at the inception of a contract whether the contract is, or contains, a lease.

Where it conveys the right to control the use of an identified asset for a period of time in exchange

for consideration, the contract is deemed to be, or to include, a lease. The Group leases various

properties, plant and machinery, computer equipment and vehicles typically for periods between

2 and 20 years. Where a contract includes a vehicle lease, the Group has elected to account for the

non-lease components as part of the lease. Extension and termination options are included in some

leases. Where the Group determines, at the commencement date of each lease, that it is reasonably

certain to exercise an option to extend the lease or not to exercise an option to terminate the lease,

the additional period is included within the lease term.

Leases are recognised on the balance sheet at their commencement date as a liability representing

the present value of the future lease payments not yet paid and a right-of-use asset reflecting the

future benefit to the Group generated by using the underlying asset. The discount on the lease liability

is calculated using the Group’s incremental borrowing rate, as rates implicit in the Group’s leases

cannot be readily determined, and is charged to finance costs in the income statement as it unwinds.

The Group’s incremental borrowing rate is adjusted to take account of the country risk, lease term and

start date for each lease. Fixed payments less any lease incentives receivable, in-substance fixed

payments and variable payments based on an index or rate form part of the lease liability. Variable

payments which are not based on an index or rate are expensed when the event that triggers the

payment occurs.

The right-of-use asset is stated at cost less accumulated depreciation and any provisions for

impairment. Initially the cost of the right-of-use asset comprises the initial amount of the lease

liability adjusted for any lease payments made at or before commencement of the lease less any

lease incentives received, plus any direct costs incurred and an estimate of the cost to restore the

underlying asset. The right-of-use asset is depreciated on a straight-line basis over the lease term

(or useful life of the asset, if shorter), which is reassessed as the underlying facts and circumstances

of the lease change.

The Group has elected to not recognise the lease liability and right-of-use asset in respect of

short-term leases and leases of low-value assets on the balance sheet. Short-term leases and leases of

low-value assets are expensed in the income statement on a straight-line basis over the lease term.

The lease liability is remeasured when there is a change in the future lease payments or if the Group

changes its assessment of whether it will exercise an extension or termination option. When the lease

liability is remeasured in this way, a corresponding adjustment is made to the carrying value of the

right-of-use asset. If the carrying value of the right-of-use asset is reduced to zero, any further

reductions are recognised in the income statement.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023170

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

171 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

15 Leases continued

The amounts recognised relating to leases were:

2023

2022

£m

Right-of-use assets

Buildings

39.5

33.8

Plant and machinery

0.2

0.3

Computer equipment

1.3

6.4

Vehicles

5.9

5.3

Right-of-use assets

46.9

45.8

Lease liabilities

Current

14.6

16.7

Non-current

34.3

32.0

Lease liabilities

48.9

48.7

Depreciation charge for right-of-use assets

Buildings

10.1

9.2

Plant and machinery

0.3

0.4

Computer equipment

5.2

5.4

Vehicles

2.7

Depreciation charge for right-of-use assets

18.3

17.7

Additions to right-of-use assets

Right-of-use assets acquired with businesses

10.0

–

Other additions to right-of-use assets

6.3

2.8

Additions to right-of-use assets

16.3

2.8

2023

2022

£m

Total cash outflow for leases

Included in cash flows from operating activities:

Interest expense

1.1

0.9

Expense relating to short-term leases

1.0

0.8

Expense relating to leases of low-value assets, excluding short-term

leases of low-value assets

0.5

Expense relating to variable lease payments not included in

measurement of lease liabilities

0.6

Included in cash flows from financing activities:

Payment of lease liabilities

18.8

17.8

Total cash outflow for leases

22.0

20.6

The contractual maturity analysis of lease liabilities is included in liquidity risk in Note 22.

16 Investment in joint venture

The Group’s share of the post-tax profit of its joint venture is included in profit before tax. The investment

in the joint venture is carried in the Group balance sheet at historical cost plus post-acquisition changes

in the Group’s share of the joint venture’s net assets. The Group owns 50% of the share capital of

RS Components & Controls (India) Limited, its joint venture.

2023

2022

£m

At 1 April

1.5

1.1

Group’s share of profit for the year

0.7

0.5

Group’s share of other comprehensive (expense) / income

(0.1)

0.1

Group’s share of total comprehensive income

0.6

Dividends

(0.6)

(0.2)

At 31 March

1.5

171RS Group plc Annual Report and Accounts for the year ended 31 March 2023 171

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

172 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

17 Inventories

Inventories are valued at the lower of cost and net realisable value. Cost is calculated on a weighted

average basis and for finished goods and goods for resale includes attributable overheads.

The Group estimates the net realisable value of inventories in order to determine the value of any

provision required. In this estimation judgements, including any impact of obsolescence including that

related to regulatory changes due to amongst other things climate change, are made in relation to the

number of years of sales there are in inventories of each product and the value recoverable from

those inventories. The Group bases its estimates on recent historical experience and knowledge of the

products on hand.

2023

2022

£m

Raw materials and consumables

96.6

66.4

Finished goods and goods for resale

563.4

492.8

Gross inventories

660.0

559.2

Inventory provisions

(43.7)

(29.7)

Net inventories

616.3

529.5

£33.0 million was recognised as an expense relating to the write-down of inventories to net realisable

value (2021/22: £7.7 million).

If the numbers of each product sold in a year decreased leading to an increase of one year in the

number of years of sales there are in inventory, inventory provisions would increase by £3.0 million

(2021/22: £1.5 million). A reduction in the value recoverable leading to an increase in provision rates of

10 percentage points per product, up to a maximum of 100% provision per product, would increase

the inventory provisions by £2.0 million (2021/22: £1.2 million). Therefore, currently the Group does

not expect any reasonably likely changes, including regulatory changes and the current global

economic and geopolitical uncertainties, to have a material impact on the net realisable value

of inventories.

18 Trade and other receivables

2023

2022

£m

Current

Gross trade receivables

621.0

535.8

Impairment allowance (Note 22)

(12.6)

(9.1)

Net trade receivables

608.4

526.7

Amounts owed by joint venture

2.8

2.1

Prepayments

36.1

27.3

Other taxation and social security

6.3

1.8

Contract assets

1.8

2.9

Other receivables

36.6

33.5

Current trade and other receivables

692.0

594.3

Non-current

Prepayments

0.3

0.7

Other taxation and social security

–

1.2

Other receivables

6.2

1.1

Non-current other receivables

6.5

3.0

Contract assets relate mainly to licence fee income and are where the Group has performed its part of

the contract but is yet to receive the credit note for licence fee income from suppliers or raise the

invoice for other contracts with customers.

Other receivables include £20.7 million (2021/22: £19.8 million) for amounts yet to be invoiced to

customers related to product sales where the Group acts as an agent (Note 4).

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023172

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

173 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

19 Trade and other payables

2023

2022

£m

Current

Trade payables

398.5

377.3

Other taxation and social security

42.4

19.7

Government grants

0.1

Cash-settled share-based payment liability

2.0

3.2

Accruals

180.6

150.4

Contract liabilities

7.6

8.2

Other payables (including estimated obligations for customer volume

discounts and refunds – Note 4)

27.7

25.2

Current trade and other payables

658.9

584.1

Non-current

Government grants

2.3

2.5

Cash-settled share-based payment liability

2.8

2.6

Other employee benefits

3.5

1.8

Accruals

0.7

–

Non-current other payables

9.3

6.9

Contract liabilities are where the Group has received payment but is yet to perform its part of the

contract.

Government grants related to expenditure on property, plant and equipment are credited to the

income statement at the same rate as the depreciation on the asset to which the grant relates.

The Group offers a supply chain finance facility to its suppliers. It is primarily provided to enable

working capital improvement through the extension of supplier payment terms and gives the

suppliers the option to protect their own working capital position from the impact of this extension.

The substance of the contractual terms with the bank providing the financing does not differ to the

terms under the supplier contracts and there are no changes to the invoice terms and therefore the

amount owed to the bank of £13.5 million (2021/22: £10.7 million) is included in trade payables.

Related cash flows are included in cash generated from operations.

20 Financial instruments

The Group uses derivative financial instruments, principally forward foreign exchange contacts and

occasionally currency swaps and interest rate swaps, to cover its exposure to foreign exchange and

interest rate risks arising from operational and financing activities.

In accordance with its treasury policies, the Group designates the majority of its derivative financial

instruments as cash flow hedges, fair value hedges or net investment hedges. The Group does not

hold or issue derivative financial instruments for trading purposes.

Derivatives are recognised at fair value. Derivative financial instruments that do not qualify for cash

flow hedge or net investment hedge accounting are classified as measured at fair value through profit

or loss and changes in their fair values are recognised in the income statement as they arise.

Cash flow hedge accounting

The Group uses derivative financial instruments, namely forward foreign exchange contracts, to hedge

variability in cash flows of a recognised asset or liability, or a highly probable forecast transaction.

The effective part of any gain or loss on the derivative financial instrument is recognised in other

comprehensive income, while any ineffective part is recognised immediately in the income statement.

When the hedged item subsequently results in the recognition of a non-financial asset or liability

(e.g. inventories) the associated cumulative gain or loss recognised in the hedging reserve is

transferred to the initial carrying amount of the asset or liability. When the hedged item subsequently

results in the recognition of a financial asset or liability, the associated cumulative gain or loss that was

recognised in other comprehensive income is reclassified from equity to the income statement in the

same period that the hedged item affects the income statement.

When a hedging instrument expires or is sold, terminated or exercised, or the Group revokes

designation of the hedge relationship as it no longer meets the Group’s risk management objective

but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point

remains in equity and is reclassified from equity when the transaction occurs in accordance with the

above policy. If the hedged transaction is no longer expected to take place, the cumulative unrealised

gain or loss recognised in equity is reclassified to the income statement.

The fair value of forward foreign exchange contracts is the difference between their discounted

contractual forward price and their current forward price.

Fair value hedge accounting

The Group used derivative financial instruments, namely interest rate swaps, to hedge exposure to

interest rate risks arising from financing activities. The fair value of the swaps was the market value of

the swaps at the balance sheet date, taking into account prevailing interest rates. Changes in fair values

of derivatives designated as fair value hedges and changes in fair value of the related hedged items

were recognised directly in the income statement. These interest rate swaps matured during the year.

173RS Group plc Annual Report and Accounts for the year ended 31 March 2023 173

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

174 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

20 Financial instruments continued

Net investment hedge accounting

The portion of the gain or loss on an instrument used to hedge a net investment in a foreign operatio n

that is determined to be an effective hedge is recognised in other comprehensive income. The

ineffective portion is recognised immediately in the income statement. Amounts taken to other

comprehensive income are reclassified from equity to the income statement when the foreign

operations are sold or liquidated.

Other financial instruments

All other financial instruments are initially recognised at fair value plus transaction costs. Initial fair

value is generally the transaction price. Subsequent measurement is as follows:

– Borrowings are measured at amortised cost unless they are designated as being fair value hedged,

in which case they are remeasured for the fair value changes in respect of the hedged risk with these

changes recognised in the income statement.

– All other financial assets, including current receivables, are measured at amortised cost less any

impairment allowances.

– All other financial liabilities, including current payables, are measured at amortised cost.

Other derivatives

2023

2022

Current

assets

Current

liabilities

Current

assets

Current

liabilities

£m

Forward foreign exchange contracts designated as

cash flow hedges (principal amount £112.4 million

(2021/22: £148.9 million))

1.1

(1.4)

1.2

(1.9)

Forward foreign exchange contracts classified as fair

value through profit or loss

0.7

(0.3)

0.2

(1.3)

Other derivatives

1.8

(1.7)

1.4

(3.2)

Fair values

Under IFRS 7 ‘Financial Instruments: Disclosures’, fair values are measured using a hierarchy where the

inputs are:

– Level 1 – quoted prices in active markets for identical assets or liabilities

– Level 2 – not Level 1 but are observable for that asset or liability either directly or indirectly

– Level 3 – not based on observable market data (unobservable)

The other derivatives listed above, the interest rate swaps and the fair value of the private placement

loan notes they are hedging are measured at fair value using Level 2 inputs. These are estimated by

discounting the future contractual cash flows using appropriate market-sourced data at the balance

sheet date.

For all financial assets and liabilities, fair value approximates the carrying amounts in the balance sheet

except for the following:

2023

2022

Carrying

amounts

Fair

value

Carrying

amounts

Fair

value

£m

Non-current private placement loan notes

(160.4)

(147.7)

(151.7)

(144.8)

The fair values are calculated using Level 2 inputs by discounting future cash flows to net present

values using prevailing interest rate curves and the Group’s credit margin.

Netting arrangements for financial instruments

The Group operates a number of cash pooling arrangements to provide the benefits of settling

interest on a net basis. The balances on these accounts do not meet the criteria for offsetting and so

are not presented on a net basis in the balance sheet. Where a legal right of offset exists, these are

shown in the table below along with any financial instruments which can be netted under master

netting arrangements.

Gross and net

amounts in

balance sheet

Financial

instruments not

offset

Net amounts

£m

At 31 March 2023

Cash and cash equivalents – cash and short-term deposits

260.3

(135.2)

125.1

Other derivative assets

1.8

(1.0)

0.8

Cash and cash equivalents – bank overdrafts

(139.8)

135.2

(4.6)

Other derivative liabilities

(1.7)

1.0

(0.7)

At 31 March 2022

Interest rate swap assets

0.1

(0.1)

–

Cash and cash equivalents – cash and short-term deposits

257.9

(95.5)

162.4

Other derivative assets

1.4

(1.4)

–

Interest rate swaps liabilities

(0.2)

–

(0.2)

Cash and cash equivalents – bank overdrafts

(99.5)

95.5

(4.0)

Other derivative liabilities

(3.2)

1.5

(1.7)

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023174

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

175 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

21 Net debt

Net debt comprises cash and cash equivalents, borrowings, interest rate swaps and lease liabilities.

Cash and cash equivalents comprise cash in hand and in current accounts, overnight deposits and

short-term deposits net of overdrafts with qualifying financial institutions. Borrowings represent loans

from qualifying financial institutions.

2023

2022

£m

Cash and short-term deposits

260.3

257.9

Bank overdrafts

(139.8)

(99.5)

Cash and cash equivalents

120.5

158.4

2023

2022

£m

Non-current borrowings

Unsecured private placement loan notes repayable after more than

five years

(80.0)

(75.5)

Unsecured private placement loan notes repayable from four to five years

–

(76.2)

Unsecured private placement loan notes repayable from three to four years

(80.4)

–

Unsecured sustainability-linked loan repayable from four to five years

(24.2)

–

Non-current borrowings

(184.6)

(151.7)

Total borrowings

(184.6)

(151.7)

Current interest rate swaps designated as fair value hedges – assets

–

0.1

Current interest rate swaps designated as fair value hedges – liabilities

–

(0.2)

Cash and cash equivalents

120.5

158.4

Non-current lease liabilities

(34.3)

(32.0)

Current lease liabilities

(14.6)

(16.7)

Net debt

(113.0)

(42.1)

The amount borrowed under the sustainability-linked loan facility was repaid in April 2023.

The interest rate swaps were designated as fair value hedges and swapped US$50 million of private

placement loan notes from fixed rate US dollars at 3.37% into floating rate US dollars at US$ LIBOR

plus 191 basis points to December 2022 and US$35 million of private placement loan notes from fixed

rate US dollars at 3.58% into floating rate US dollars at US$ LIBOR plus 277 basis points to March

2023. Further details of these swaps and the hedged items are:

2023

2022

Interest

rate swaps

Private

placement

loan notes

hedged

Interest rate

swaps

Private

placement

loan notes

hedged

£m

Carrying amount of liability

–

(0.1)

(64.6)

Accumulated fair value adjustments (loss) / gain

–

(0.1)

0.1

Gain / (loss) in fair value in year

0.1

(0.1)

(1.2)

1.2

Movements in net debt were:

Borrowings

Lease

liabilities

Total

liabilities

from

financing

activities

Interest

rates swaps

Cash and

cash

equivalents

Net debt

£m

Net debt at 1 April 2021

(148.0)

(61.5)

(209.5)

1.1

86.4

(122.0)

Cash flows

0.7

17.8

18.5

–

68.1

86.6

New leases

–

(2.8)

–

(2.8)

Lease modifications

–

(2.1)

–

(2.1)

Disposal of leases

–

0.2

–

0.2

Gain / (loss) in fair value in year

1.2

–

1.2

(1.2)

–

Translation differences

(5.6)

(0.3)

(5.9)

–

3.9

(2.0)

Net debt at 31 March 2022

(151.7)

(48.7)

(200.4)

(0.1)

158.4

(42.1)

Cash flows

(25.1)

18.8

(6.3)

–

(43.6)

(49.9)

Acquired with businesses

–

(9.8)

–

(9.8)

New leases

–

(6.3)

–

(6.3)

Lease modifications

–

(2.4)

–

(2.4)

Disposal of leases

–

0.3

–

0.3

(Loss) / gain in fair value in year

(0.1)

–

(0.1)

0.1

–

Translation differences

(7.7)

(0.8)

(8.5)

–

5.7

(2.8)

Net debt at 31 March 2023

(184.6)

(48.9)

(233.5)

–

120.5

(113.0)

175RS Group plc Annual Report and Accounts for the year ended 31 March 2023 175

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

176 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

22 Financial risk management

The principal financial risks to which the Group is exposed are those of credit, liquidity and market.

Market risk includes foreign currency transaction risk and interest rate risk. Each of these is managed

in accordance with Board-approved policies.

Credit risk

The Group is exposed to credit risk on financial assets such as cash deposits, derivative instruments

and trade and other receivables.

The amounts in the balance sheet represent the maximum credit risk exposure at the balance sheet

date. There were no significant concentrations of credit risk at the balance sheet date, as exposure is

spread over a large number of counterparties, customers and geographic locations. The Group has

reviewed its credit risk again carefully this year due to the current global economic and geopolitical

uncertainties and the Group does not believe it has materially altered during the year.

For cash deposits and derivative instruments, the Group identifies counterparties of suitable

creditworthiness based on ratings assigned by international credit-rating agencies and has

procedures to ensure that only these parties are used, that exposure limits are set based on the

external credit ratings and that these limits are not exceeded. The impairment losses on these

are immaterial.

For trade and other receivables, all operating companies have credit policies and monitor their credit

exposure on an ongoing basis. Each operating company performs credit evaluations on all customers

seeking credit over a certain amount. For countries with no local operating company presence,

export credit limits are set and monitored on a country basis monthly by the Treasury Committee.

The impairment losses on contract assets, amounts owed by joint venture and other receivables

are immaterial.

The impairment allowance for trade receivables is measured at an amount equal to lifetime expected

credit losses. Trade receivables have been grouped based on shared credit risk characteristics and

the number of days from date of invoice. The expected loss rates are based on the payment profile

of sales over a 36-month period from 1 April 2019 and the corresponding historical credit losses

experienced within this period calculated as the trade receivables from this period that have not been

paid by the year end. The historical loss rates are adjusted to reflect current and forward-looking

information on macroeconomic factors affecting the ability of the customers to settle the receivables.

On that basis, the impairment allowance for trade receivables was determined as follows:

2023

2022

Expected

loss rate

Gross

carrying

amount

Loss

allowance

Expected

loss rate

Gross

carrying

amount

Loss

allowance

£m

0-30 days from date of invoice

0.9%

366.0

3.4

0.6%

358.3

2.2

31-60 days from date of invoice

1.3%

162.4

2.1

0.9%

117.4

1.1

61-90 days from date of invoice

2.1%

42.6

0.9

2.1%

28.6

0.6

91-120 days from date of invoice

2.9%

17.5

0.5

3.3%

12.0

0.4

Over 120 days from date

of invoice

17.5%

32.5

5.7

24.6%

19.5

4.8

Total

621.0

12.6

535.8

9.1

The ageing of net trade receivables at the reporting date was:

2023

2022

£m

Not past due

483.7

437.9

Past due 0-30 days

73.5

59.9

Past due 31-60 days

17.4

10.1

Past due 61-120 days

13.0

8.2

Past due over 120 days

20.8

10.6

Total

608.4

526.7

The movement in the impairment allowance for trade receivables was as follows:

2023

2022

£m

At 1 April

(9.1)

(7.4)

Acquisitions

(2.1)

–

Net remeasurement of impairment allowance

(1.4)

(1.7)

At 31 March

(12.6)

(9.1)

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023176

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

177 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

22 Financial risk management continued

Trade receivables are written off when there is no reasonable expectation of recovery, for example when

a customer enters liquidation or the Group agrees with the customer to write off an outstanding invoice.

The Group continues to limit its exposure by maintaining tight credit policies, including short payment

terms and low credit limits for new customers and seeking payment commitments for overdue balances

before releasing new orders to existing customers. Historically, the Group has generally experienced very

low levels of trade receivables not being recovered, including those significantly past due, and this was

also the case during 2022/23. However, with the continued global economic and geopolitical

uncertainties, the Group remains cautious about its exposure and so has reviewed carefully, and

maintained at a higher level, its expected loss rates for those markets and industries that are

most affected.

At 31 March 2023, the largest trade receivable balance was £12.0 million (2021/22: £8.7 million), of which

£10.1 million has been received since the year end. The maximum exposure with a single bank for

deposits was £26.0 million (2021/22: £51.3 million) and the largest mark to market exposure for derivative

financial instruments to a single bank was £0.7 million (2021/22: £0.1 million). The Group also occasionally

uses money market funds to invest surplus cash thereby diversifying credit risk and at 31 March 2023 its

exposure to these funds was £nil (2021/22: £nil).

Liquidity risk

The Group’s key priority is to ensure that it can meet its liabilities as they fall due. The Group ensures

this by having sufficient committed debt facilities in place to meet its anticipated funding

requirements. The Group’s forecast funding requirements and its committed debt facilities are

reported to and monitored by the Treasury Committee monthly.

During the year, the Group refinanced its £300.0 million sustainability-linked loan facility to a five-year

£400.0 million sustainability-linked loan facility on broadly unchanged rates. Therefore, as at

31 March 2023, the Group had the following committed debt finance in place:

– Private placement loan notes of €18 million with a maturity of October 2026, US$80 million with a

maturity of December 2026, €13 million with a maturity of October 2029, US$35 million with a

maturity of March 2030 and US$50 million with a maturity of October 2031.

– A £400.0 million sustainability-linked loan facility, with a lender option accordion of up to a further

£100.0 million, which has a maturity of October 2027 with an option for the Group to extend for up

to two further one-year terms subject to individual lender approval. It is linked to the Group’s most

material ESG actions of the reduction of direct Scope 1 and 2 CO

e emissions, packaging intensity

and percentage of management that are women. Meeting these annual ESG actions means a margin

benefit of up to 2.5 basis points, while missing these ESG actions would mean paying a margin

premium of up to 2.5 basis points. Amounts borrowed under this facility are borrowed for fixed

amounts of time after which they can be repaid or rolled up to a maximum of the facility maturity.

As at 31 March 2023, the Group had £375.8 million (2021/22: £300.0 million) of available undrawn

committed debt facilities in respect of which all conditions precedent had been met.

The Group also uses bank overdrafts, uncommitted short-term money market loans, cash and

short-term investments. The main purpose of these financial instruments is to manage the Group’s

day-to-day funding and liquidity requirements.

177RS Group plc Annual Report and Accounts for the year ended 31 March 2023 177

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

178 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

22 Financial risk management continued

The contractual maturities of financial liabilities, including contractual future interest payments were:

Carrying

amounts

Contractual

cash flows

Within 1 year

1-2 years

2-3 years

3-4 years

After 4 years

£m

Derivative financial liabilities

Inflows for forward foreign exchange contracts

86.1

87.0

–

Outflows for forward foreign exchange contracts

(87.8)

–

Forward foreign exchange contracts

(1.7)

(0.8)

–

Non-derivative financial liabilities

Sustainability-linked loan

(24.2)

(24.3)

–

Private placement loan notes

(160.4)

(191.3)

(5.0)

(85.4)

(90.9 )

Lease liabilities

(48.9)

(57.4)

(16.1)

(11.7)

(8.7)

(6.6)

(14.3 )

Bank overdrafts

(139.8)

–

Trade payables, other payables and accruals

(533.0)

(532.3)

(0.7)

–

At 31 March 2023

(908.0)

(946.6)

(718.3)

(17.4)

(13.7)

(92.0)

(105.2 )

Carrying

amounts

Contractual

cash flows

Within 1 year

1-2 years

2-3 years

3-4 years

After 4 years

£m

Derivative financial liabilities

Inflows for forward foreign exchange contracts

133.9

133.6

–

Outflows for forward foreign exchange contracts

(137.1)

–

Forward foreign exchange contracts

(3.2)

(3.5)

–

Non-derivative financial liabilities

Private placement loan notes

(151.7)

(185.6)

(4.7)

(166.8 )

Lease liabilities

(48.7)

(50.7)

(17.7)

(11.4)

(7.3)

(5.7)

(8.6)

Bank overdrafts

(99.5)

–

Trade payables, other payables and accruals

(500.2)

–

At 31 March 2022

(803.3)

(839.5)

(625.6)

(16.1)

(12.0)

(10.4)

(175.4 )

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023178

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

179 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

22 Financial risk management continued

Market risk – foreign currency transaction risk

The Group is exposed to foreign currency transaction risk as it has operating companies with payables

and receivables in currencies other than their functional currency. The Group also has foreign currency

translation risk resulting from investment in foreign subsidiaries and foreign currency debt which is

mainly in US dollars with some euros.

Hedging of currency exposures during periods when operating companies cannot easily change their

selling prices is implemented in order to shelter the forecast gross profit during those periods. In this

way the impacts of currency fluctuations can be smoothed until selling prices can be changed in the

light of movements in exchange rates. The hedges are enacted through forward foreign exchange

contracts entered into by Group Treasury in appropriate currencies with fixed terms of between three

and seven months based on trading projections provided by the operating companies. The Group’s

largest exposures relate to euros and US dollars.

In addition, specific cash flows relating to material transactions in currencies other than the functional

currency of the local business are hedged when the commitment is made.

The Group classifies forward foreign exchange contracts as hedging instruments against forecast

receivables / payables and designates the forward element of these contracts as cash flow hedges for

accounting purposes on a 1:1 basis which means the fair value movement in the hedged item is equal

and opposite to the fair value movement in the hedging instrument. The forecast cash flows are

expected to occur evenly throughout the forecast period from the year end, which is between three

and seven months, and will affect the income statement in the period in which they occur or the

inventories are sold. The average forward prices of the outstanding forward foreign exchange

contracts are €1.13:£1 and US$1.21:£1.

Foreign currency transaction exposures, and the hedges in place to mitigate them, are monitored

monthly by the Treasury Committee. The Group does not believe its foreign currency transaction risk

has altered materially during the year. Ineffectiveness may arise if actual foreign currency transactions

are lower than the trading projections.

The Group has designated the US$165.0 million private placement loan notes (2021/22: US$3.6 million

of those maturing in December 2026), with a carrying amount of £133.2 million (2021/22: £2.8 million),

as hedges of US$165.0 million (2021/22: US$3.6 million) of net investments in its US subsidiaries.

These hedges are expected to remain highly effective as the change in the value of the net assets of

the US subsidiaries hedged is always exactly offset by the related change in the fair value of the private

placement loan notes. No other foreign currency translation exposures are explicitly hedged although

local currency debt is used where economically and fiscally efficient in the financing of subsidiaries and

this provides a degree of natural hedging. Guidelines are in place to manage the currency mix of the

Group’s net debt. The Group does not believe its foreign currency translation risk has altered

materially during the year. The balance in the cumulative translation reserve relating to the

US$165.0 million net investment hedge is a gain of £3.7 million with a further loss of £36.7 million

relating to previous net investment hedging relationships.

Borrowings are analysed by currency as:

Unsecured

bank overdrafts

Sustainability-

linked loan

Unsecured

private placement

loan notes

Total

£m

At 31 March 2023

Sterling

(125.0)

–

(125.0)

US dollar

(3.4)

(24.2)

(133.2)

(160.8)

Euro

–

(27.2)

Canadian dollar

(9.7)

–

(9.7)

Other

(1.7)

–

(1.7)

Total borrowings

(139.8)

(24.2)

(160.4)

(324.4)

At 31 March 2022

Sterling

(78.8)

–

(78.8)

US dollar

(3.0)

–

(125.5)

(128.5)

Euro

(8.4)

–

(26.2)

(34.6)

Canadian dollar

(8.3)

–

(8.3 )

Other

(1.0)

–

(1.0 )

Total borrowings

(99.5)

–

(151.7)

(251.2)

179RS Group plc Annual Report and Accounts for the year ended 31 March 2023 179

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

180 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

22 Financial risk management continued

Market risk – interest rate risk

The Group has relatively high interest cover. The Group does not have any outstanding interest rate

swaps currently, as those that swapped certain of the US dollar private placement loan notes

from fixed to floating rates matured during the year (Note 21). The Group’s policy dictates regular

monitoring of interest rate exposure with a view to taking suitable actions should exposure reach

certain levels. The Group does not believe its interest rate risk has materially altered during the year.

As at 31 March 2023 (and 31 March 2022), the Group had US$165 million and €31 million of private

placement loan notes at fixed interest rates (2021/22: US$85 million swapped into floating interest

rates). All other borrowings were at variable rates. At 31 March 2023, 49% (2021/22: 35%) of the

Group’s gross borrowings excluding lease liabilities (total borrowings plus bank overdrafts) was at

fixed rates, with surplus cash deposited at variable rates.

Sensitivity analysis of exposure to interest rates and foreign exchange rates

The sensitivity analysis is based on the following:

– Change of one percentage point in market interest rates affecting all variable rate elements of

financial instruments.

– Change of 5% in euro and US dollar exchange rates affecting the fair value of derivative

financial instruments designated as hedging instruments and other financial assets and liabilities.

The transactional foreign exchange effect in equity due to net investment hedges included below

would be offset in full by the translation of the US and European subsidiaries.

2023

2022

Impact on

income

statement

gain / (loss)

Impact on

equity

gain / (loss)

Impact on

income

statement

gain / (loss)

Impact on

equity

gain / (loss)

£m

One percentage point increase in interest rates

1.0

–

0.7

–

5% weakening of the euro

1.6

0.5

2.3

0.6

5% weakening of the US dollar

(6.3)

4.3

(0.1)

(2.3)

A corresponding decrease in interest rates or strengthening of exchange rates would result in an

equal and opposite effect to the amounts above.

Capital management

The Board’s policy is to maintain a strong capital base always, with an appropriate debt to equity mix,

to ensure investor, creditor and market confidence and to support the future development of the

business. The Board monitors ROCE, which the Group defines as adjusted operating profit as a

percentage of monthly average net assets excluding net debt and retirement benefit obligations,

and the level of dividends to ordinary shareholders.

The Group seeks to raise debt from a variety of sources and with a variety of maturities. As at

31 March 2023, the Group had a £400 million sustainability-linked loan, with an accordion of up to a

further £100 million, which has a maturity of October 2027 with an option for the Group to extend for

up to two further one-year terms subject to individual lender approval; and private placement loan

notes of €18 million with a maturity of October 2026, US$80 million with a maturity of December 2026,

€13 million with a maturity of October 2029, US$35 million with a maturity of March 2030 and

US$50 million with a maturity of October 2031.

The Group’s debt covenants are net debt to adjusted EBITDA to be less than 3.25 times and EBITA to

interest to be greater than 3 times. At the year end the Group comfortably met these covenants with

net debt to adjusted EBITDA of 0.2x (2021/22: 0.1x) and EBITA to interest of 34.2x (2021/22: 44.6x).

There were no significant changes in the Group’s approach to capital management during the year.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023180

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

181 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

23 Provisions and contingent liabilities

Provisions are recognised when the Group has a present obligation as a result of a past event and

a reasonable estimate can be made of a probable adverse outcome. Otherwise, material contingent

liabilities are disclosed unless the transfer of economic benefits is remote.

Reorganisation

provision

Penalties and

interest on

uncertain

income tax

provision

Dilapidation

provision

Total

£m

At 1 April 2022

3.4

1.6

0.4

5.4

Acquisitions (Note 28)

–

2.1

–

2.1

Additions

0.4

0.2

–

0.6

Utilised

(1.5)

–

(1.5)

Released

(0.3)

–

(0.3)

Translation differences

0.1

–

0.2

At 31 March 2023

2.1

4.0

0.4

6.5

Analysed in the balance sheet as:

2023

2022

£m

Current

1.8

2.6

Non-current

4.7

2.8

6.5

5.4

The reorganisation provision is expected to be fully spent by March 2027 and the dilapidation

provision is expected to be fully utilised by March 2028.

At 31 March 2023, there were no material contingent liabilities (2021/22: none).

24 Capital commitments

As at 31 March 2023, the Group is contractually committed to, but has not provided for, future

capital expenditure of £3.5 million (2021/22: £1.1 million) for property, plant and equipment and

£2.1 million (2021/22: £5.5 million) for intangible assets.

25 Share capital and share premium

Number of

Share capital

Share premium

Total

£m

Issued and fully paid ordinary shares of 10p each:

At 1 April 2021

469,943,362

47.0

228.5

275.5

Issues to settle employee share awards

1,078,660

0.1

2.9

3.0

At 31 March 2022

471,022,022

47.1

231.4

278.5

Issues to settle employee share awards

1,762,387

0.2

4.6

4.8

At 31 March 2023

472,784,409

47.3

236.0

283.3

The EBT buys shares on the open market and holds them in trust for employees participating

in the Group’s share-based payment schemes. At 31 March 2023, the EBT held 336,084 shares

(2021/22: 315,768 shares) which had not yet vested unconditionally with employees.

26 Other reserves

Hedging

reserve

Cumulative

translation reserve

Total

£m

At 1 April 2021

(1.4)

39.0

37.6

Foreign exchange translation differences

–

22.0

Fair value loss on net investment hedges

–

(0.1)

Cash flow hedging losses taken to equity

(1.2)

–

(1.2)

Cash flow hedging losses transferred to income statement

2.6

–

2.6

Tax on other comprehensive income (Note 10)

(0.3)

–

(0.3)

Total comprehensive income

1.1

21.9

23.0

Cash flow hedging gains transferred to inventories

(0.5)

–

(0.5)

Tax on cash flow hedging gains transferred to inventories

0.1

–

0.1

At 31 March 2022

(0.7)

60.9

60.2

Foreign exchange translation differences

–

43.0

Fair value gain on net investment hedges

–

5.4

Cash flow hedging gains taken to equity

3.9

–

3.9

Tax on other comprehensive income (Note 10)

(0.7)

–

(0.7)

Total comprehensive income

3.2

48.4

51.6

Cash flow hedging gains transferred to inventories

(3.7)

–

(3.7)

Tax on cash flow hedging gains transferred to inventories

0.7

–

0.7

At 31 March 2023

(0.5)

109.3

108.8

181RS Group plc Annual Report and Accounts for the year ended 31 March 2023 181

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

182 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

27 Related parties

The Group’s joint venture (Note 16) is a related party and during the year, the Group

made sales of £4.5 million (2021/22: £3.3 million) to the joint venture, and a balance of

£2.8 million (2021/22: £2.1 million) was outstanding at the year end.

The Group’s pension schemes are related parties and the Group’s transactions with them are

disclosed in Note 9. Transactions and balances between the Company and its subsidiaries have been

eliminated on consolidation.

The key management personnel of the Group are the Directors and the Senior Management Team,

whose compensation was:

2023

2022

£m

Short-term employee benefits

12.0

Post-employment benefits

0.2

Termination benefits

1.8

0.2

Share-based payments

8.1

5.9

22.1

18.3

28 Acquisitions

On 30 June 2022 the Group acquired 100% of the issued share capital of domnick hunter-RL (Thailand)

Co., Ltd. (DH), a leading distributor and service provider of major air compression, purification and

filtration products in Thailand. DH accelerates development of the Group’s service solutions offer in

Asia Pacific. The goodwill is attributable to the synergies which are expected to arise from

opportunities to cross-sell product and service solution ranges. As part of the transaction, immediately

following the acquisition, the Group sold 51% of its shares in Electrocomponents Holdings (Thailand)

Limited, an intermediate holding company of DH, for £nil (THB 1.5 million). This resulted in a 13.26%

non-controlling interest in DH as the Group still controls Electrocomponents Holdings (Thailand)

Limited and DH. DH is included in Asia Pacific.

On 3 January 2023 the Group acquired 100% of the issued share capital of Risoul y Cia, S.A. de C.V.

and its subsidiaries (Risoul), a leading distributor of industrial and automation product and service

solutions in Mexico. Risoul expands the Group’s geographic reach, extends targeted product

adjacencies and accelerates development of the Group’s offer in Mexico. The goodwill is attributable

to the synergies which are expected to arise from combining Risoul’s established presence in Mexico

with the Group’s range of complementary and ancillary products, including the Group’s own-brand

RS PRO. We will develop Risoul’s digital presence by leveraging the Group’s digital expertise. Risoul is

included in Americas.

The fair value of the net assets acquired, consideration paid and goodwill arising, plus transaction

costs and contribution to the Group’s results since acquisition were:

Risoul

Total

£m

Intangible assets – customer contracts and relationships and

distribution agreements

1.9

105.9

107.8

Property, plant and equipment

1.1

1.8

2.9

Right-of-use assets

0.6

9.4

10.0

Inventories

2.6

27.1

29.7

Current trade and other receivables

3.3

36.4

39.7

Cash and cash equivalents – cash and short-term deposits

1.2

11.5

12.7

Current trade and other payables

(8.3)

(27.3)

(35.6 )

Current lease liabilities

(0.1)

(0.9)

(1.0 )

Non-current lease liabilities

(0.3)

(8.5)

(8.8 )

Non-current other payables

(0.8)

–

(0.8 )

Non-current other provisions

(0.4)

(1.7)

(2.1 )

Current income tax liabilities

(0.4)

(2.5)

(2.9 )

Deferred tax liabilities

(0.4)

(30.2)

(30.6 )

Net assets acquired

–

121.0

Indemnification assets (included in non-current other receivables)

0.7

4.0

4.7

Goodwill

3.4

108.4

111.8

Consideration paid – cash

3.6

233.6

237.2

Consideration refundable – accrued, due on agreement of

completion accounts

–

(0.2)

(0.2 )

Contingent consideration payable – accrued

0.5

–

0.5

Acquisition-related costs charged to administrative expenses:

In 2022/23

–

2.6

In 2021/22

0.2

1.1

1.3

Revenue since acquisition

7.1

46.9

54.0

Profit after tax since acquisition

–

0.8

Trade and other receivables:

Gross contractual amounts receivable

3.8

38.0

41.8

Estimate of amounts not expected to be collected

0.5

1.6

2.1

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023182

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

183 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

28 Acquisitions continued

The contingent consideration payable on acquisition of DH is due 12 months after the completion date

with a range of outcomes from £nil to £0.5 million and is based on revenue growth.

The indemnification assets relate to uncertain tax provisions for which the Group has contractual

indemnifications from the sellers and have been measured on the same basis, with a range of

outcomes from £nil to the amount recognised for each acquisition.

The goodwill arising on all acquisitions completed during the year will not be deductible for tax

purposes. The fair values of tax balances and other related assets / liabilities for Risoul are provisional

while the Group continues to assess the liabilities acquired.

If the acquisitions had occurred on 1 April 2022, the Group’s revenue and profit for the year ended

31 March 2023 would have been £3,118.1 million and £306.0 million respectively.

29 Related undertakings

A full list of related undertakings (comprising subsidiaries and a joint venture) is set out below.

All subsidiaries are wholly owned except where indicated below and operate within their countries of

incorporation. Those companies marked with an asterisk (*) are indirectly held by the Company.

Name and registered address of undertaking

Country of

incorporation

Class of

share held

Provider of product and service solutions for designers, builders

and maintainers of industrial equipment and operations

RS Components Pty Limited*

25, Pavesi Street, Smithfield, Sydney NSW 2164, Australia

Australia

Ordinary

RS Components Handelsgesellschaft m.b.H*

Albrechtser Straße 11, 3950, Gmünd, Austria

Austria

Share of equity

RS Integrated Supply Belgium*

Louizalaan 65/11, 1050 Elsene

Belgium

Ordinary

RS Americas (Canada), Inc.*

1155 Lola Street, Unit 6, Ottawa, ON, K1K 4C1

Canada

Common

RS Integrated Supply Canada Corp.*

600-1741 Lower Waters Street, Halifax NS B3J 0J2, Canada

Canada

Common

RS Group Limitada (DBA – RS Limitada)*

Av. Eduardo Frei Montalva, 6001-71 Conchali, Santiago, Chile

Chile

Ordinary

RS Components Limited*

Suite 1601, Level 16, Tower 1, Kowloon Commerce Centre,

51 Kwai Cheong Road, Kwai Chung, Hong Kong

China

Ordinary

RS Components (Shanghai) Company Limited*

Unit 501, Floor 5, Building C, The New Bund World Trade Center Phase II,

No.3, Lane 227, Dong Yu Road, Pudong Shanghai, China

China

Ordinary

Name and registered address of undertaking

Country of

incorporation

Class of

share held

RS Components A/S*

Nattergalevej 6, 2400, København NV, Denmark

Denmark

Ordinary

Risoul Dominicana S.R.L*

Autopista Duarte KM 17, Calle Los Almejos, Palma Enana No 13, Nave 1,

Villa Linda, Palmarejito, Santo Domingo Oeste, Dominican Republic

Dominican

Republic

Ordinary

RS Components SAS*

Rue Norman King, 60000, Beauvais, France

France

Ordinary

RS Integrated Supply France*

Rue Norman King BF 453, F-60031 Beauvais Cedex, France

France

Ordinary

RS Integrated Supply Deutschland GmbH*

Bleibtreustr. 21, 10623, Berlin, Germany

Germany Ordinary

RS Components GmbH*

Mainzer Landstraße 180, 60327, Frankfurt, Germany

Germany

Ordinary

RS Integrated Supply Hungary Korlátolt Felelősségű Társaság*

1062, 1-3. Tower A, 6th floor, Budapest

Hungary

Ordinary

RS Components & Controls (India) Limited*†

222 Okhla Industrial Estate, New Delhi, India

India

Ordinary

RS Components S.r.l.*

Sesto san Giovanni, Viale Thomas Alva Edison, 110, 20099, MI, Italy

Italy

Ordinary

RS Integrated Supply Italy S.r.l.*

Sesto san Giovanni, Viale Thomas Alva Edison, 110, 20099, MI, Italy

Italy

Ordinary

RS Components KK*

West Tower 12F, Yokohama Business Park, 134 Godocho, Hodogaya,

Yokohama, Kanagawa, 240-0005, Japan

Japan

Ordinary

RS Components Sdn. Bhd.*

Suite 9D, Level 9, Menara Ansar, 65 Jalan Trus, Johor Bahru, 80000,

Johor, Malaysia

Malaysia

Ordinary

Allied Electronics & Automation S. de R.L. de C.V.*

Avenida Circunvalación Agustin Yalez N° 2613 Int. 1A 105,

Colonia Arcos Vallarta Sur, Guadalajara Jalisco, 44500 Mexico

Mexico

Ordinary

Risoul y Cia, S.A. de C.V.*

Avenida Sendero Divisorio 400, Residencia Casa Bella,

San Nicolas de los Garza, Nuevo Leon, 66428, Mexico

Mexico

Ordinary

Storeroom Solutions Mexico, S. de R.L. de C.V.*

Florencia 57 P, 3 Juarez Distritio Federal, 06600, Mexico

Mexico

Ordinary

Liscombe B.V.*

Jarmuiden 56 a, 1046 AE, Amsterdam, Netherlands

Netherlands

Ordinary

RS Components B.V.*

Bingerweg 19, 2031 AZ Haarlem, Netherlands

Netherlands

Ordinary

183RS Group plc Annual Report and Accounts for the year ended 31 March 2023 183

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

184 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

29 Related undertakings continued

Name and registered address of undertaking

Country of

incorporation

Class of

share held

RS Integrated Supply Netherlands B.V.*

Bingerweg 19, 2031 AZ Haarlem, Netherlands

Netherlands

Ordinary

RS Components Limited*

KPMG, 18 Viaduct Harbour Avenue, Auckland, 1010, New Zealand

New Zealand

Ordinary

RS Components AS*

10. etg., Fredrik Selmers vei 6, Oslo, 0663, Norway

Norway

Ordinary

RS Components Corporation*

21st Floor Multinational Bancorporation Centre, 6805 Ayala Avenue,

Makati City, Philippines

Philippines

Common and

preference

RS Components sp. z.o.o.*

Ul. Domaniewska 48, 02-672, Warszawa, Poland

Poland

Ordinary

RS Integrated Supply Poland Sp. z.o.o.*

Ul. Domaniewska 48, 02-672, Warszawa, Poland

Poland

Ordinary

Radionics Limited*

Glenview Industrial Estate, Herberton Road, Rialto, Dublin 12, Ireland

Republic of

Ireland

Ordinary

RS Integrated Supply Ireland Limited*

Glenview Industrial Estate, Herberton Road, Rialto, Dublin 12, Ireland

Republic of

Ireland

Ordinary

Synovos Ireland Limited*

70 Sir John Rogerson’s Quay, Dublin 2, Ireland

Republic of

Ireland

Ordinary

RS Components Pte Ltd*

112 Robinson Road, #05-01, 068902, Singapore

Singapore

Ordinary

RS Integrated Supply Singapore Pte. Ltd.*

10 Ubi Crescent, #06-18 Ubi Techpark, 408564, Singapore

Singapore

Ordinary

Synovos Singapore Pte. Ltd.*

1 Marina Boulevard, #28-00, One Marina Boulevard, 018989, Singapore

Singapore

Ordinary

RS Integrated Supply Slovakia s.r.o.*

Lazaretská 8, Bratislava- mestská časť Staré Mesto, 811 09, Slovakia

Slovakia

Ordinary

Amidata S.A.U.*

Avenida de Bruselas 6, Alcobendas, 28108, Madrid, Spain

Spain

Ordinary

Risoul Iberica SA*

08402 – Granollers, calle Girona, numero 85, Barcelona, Spain

Spain

Ordinary

RS Components AB*

Fabriksgatan 7, 3v, 412 50 Gotborg, Sweden

Sweden

Ordinary

RS Integrated Supply Sweden AB*

Drottninggatan 96, 113 60, Stockholm, Sweden

Sweden

Ordinary

domnick hunter-RL (Thailand) Co., Ltd.* (86.74%)

No. 99/1-3, Naradhiwas Rajanagarindra Road, Chong Nonsi,

Yan Nawa, Bangkok

Thailand

Ordinary

Name and registered address of undertaking

Country of

incorporation

Class of

share held

RS Components Co., Ltd*

GMM Grammy Place, Room No. 1901-1904, Floor 19, No. 50,

Sukhumvit 21 (Asoke), Klongtoey Nua, Wattana, Bangkok, 10110, Thailand

Thailand

Ordinary

IESA A & D Limited*

IESA Works Daten Park, Birchwood, Warrington, Cheshire, WA3 6UT, UK

Ordinary

John Liscombe Limited*

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary and

preference

Needlers Limited*

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary and

preference

OKdo Technology Limited*

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

UK Ordinary

RS Components Limited

Birchington Road, Weldon, Corby, Northamptonshire, NN17 9RS, UK

Ordinary

RS Integrated Supply UK Limited*

IESA Works Daten Park, Birchwood, Warrington, Cheshire, WA3 6UT, UK

Ordinary

MRO Distribution, Inc.*

Two Radnor Corporate Center, Suite 400, Radnor,

PA 19087, United States

United States

of America

Common

New DEAM, LLC*

Two Radnor Corporate Center, Suite 400, Radnor,

PA 19087, United States

United States

of America

Common

RS Americas, Inc*

7151 Jack Newell Blvd S., Fort Worth, TX 76118, United States

United States

of America

Common

RS Integrated Supply Puerto Rico LLC*

Two Radnor Corporate Center, Suite 400, Radnor,

PA 19087, United States

United States

of America

Common

RS Integrated Supply US Inc.*

Two Radnor Corporate Center, Suite 400, Radnor,

PA 19087, United States

United States

of America

Common

Holding, Financing and Management Companies

Electrocomponents Limited

Suite 1601, Level 16, Tower 1, Kowloon Commerce Centre,

51 Kwai Cheong Road, Kwai Chung, Hong Kong

China

Ordinary

RS Components Business Services (Foshan) Limited*

22nd Floor, Glory International Financial Center, No.25, Ronghe Road,

Guicheng, Nanhai District, Foshan, Guangdong, 528200, China

China

Ordinary

Electrocomponents France SARL*

Rue Norman King, 60000, Beauvais, France

France

Ordinary

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023184

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

185 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

29 Related undertakings continued

Name and registered address of undertaking

Country of

incorporation

Class of

share held

Bodenfeld Immobilien GmbH*

Mainzer Landstraße 180, 60327, Frankfurt, Germany

Germany

Ordinary

Electrocomponents Jersey Finance Unlimited*

44 Esplanade, St Helier, JE4 9WG Jersey

Jersey

Common

Synovos Netherlands C.V.*

Two Radnor Corporate Center, Suite 400, Radnor,

PA 19087, United States

Netherlands

Partnership

Electrocomponents Holdings (Thailand) Limited* (49.00%)

GMM Grammy Place, Room No. 1901-1904, Floor 19, No. 50,

Sukhumvit 21 (Asoke), Klongtoey Nua, Wattana, Bangkok, 10110, Thailand

Thailand

Ordinary

Electrocomponents Newco (Thailand) Limited* (86.73%)

GMM Grammy Place, Room No. 1901-1904, Floor 19, No. 50,

Sukhumvit 21 (Asoke), Klongtoey Nua, Wattana, Bangkok, 10110, Thailand

Thailand

Ordinary

Electrocomponents (Thailand) Limited* (73.99%)

GMM Grammy Place, Room No. 1901-1904, Floor 19, No. 50,

Sukhumvit 21 (Asoke), Klongtoey Nua, Wattana, Bangkok, 10110, Thailand

Thailand

Ordinary

Electrocomponents Finance Limited

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

UK Ordinary

Electrocomponents Overseas Limited

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary

Electrocomponents US Finance Limited*

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary

IESA A & D Holdings Limited*

IESA Works Daten Park, Birchwood, Warrington, Cheshire, WA3 6UT, UK

Ordinary

IESA Holdings Limited*

IESA Works Daten Park, Birchwood, Warrington, Cheshire, WA3 6UT, UK

Ordinary

Needlers Holdings Limited*

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary and

preference

RS Components Holdings Limited*

Ordinary

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

RS Group International Holdings Limited

Ordinary

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

RS Group Pension Trustees Limited

Ordinary

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Electrocomponents, Inc*

7151 Jack Newell Blvd S., Fort Worth, TX 76118, United States

United States

of America

Common and

preference

Name and registered address of undertaking

Country of

incorporation

Class of

share held

Electrocomponents North America, Inc.*

7151 Jack Newell Blvd S., Fort Worth, TX 76118, United States

United States

of America

Common

Electrocomponents North America LLC*

7151 Jack Newell Blvd S., Fort Worth, TX 76118, United States

United States

of America

Common

Electrocomponents (US), Inc.*

7151 Jack Newell Blvd S., Fort Worth, TX 76118, United States

United States

of America

Common

Electrocomponents US LLC*

7151 Jack Newell Blvd S., Fort Worth, TX 76118, United States

United States

of America

Common

Synovos International, Inc.*

Two Radnor Corporate Center, Suite 400, Radnor,

PA 19087, United States

United States

of America

Common

Not currently trading

RS Components (Proprietary) Limited*

20 Indianapolis Street, Kyalami Business Park, Kyalami Midrand, Gauteng,

1684, South Africa

South Africa

Ordinary

Risoul (Trinidad and Tobago) Limited*

Nunez & Co, Level 2, Invaders Bay Tower, Invaders Bay,

Off Audrey Jeffers Highway, Port of Spain, Trinidad and Tobago

Trinidad and

Tobago

Ordinary

B & W (Hygiene Services) Company Limited*

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary

Electrocomponents Limited

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary

Electro-Leasing Limited

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary

Electro Lighting Group Limited

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary

Electromail Limited

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary

IESA Limited

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary

Monition Limited*

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary

Radiospares Limited

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary

RS Components International Limited

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary

185RS Group plc Annual Report and Accounts for the year ended 31 March 2023 185

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Group accounts continued

NOTES TO THE GROUP ACCOUNTS CONTINUED

For the year ended 31 March 2023

186 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

29 Related undertakings continued

Name and registered address of undertaking

Country of

incorporation

Class of

share held

RS Limited

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary

RS Supplies Limited

Fifth Floor, Two Pancras Square, London N1C 4AG, UK

Ordinary

† Note 16 provides details about the Company’s interest in the joint venture.

RS Components Limited (UK), RS Components B.V. (Netherlands) and RS Components GmbH

(Germany) export to most countries where the Group does not have a trading company and operate

branch offices in South Africa, Belgium, Switzerland, the Philippines and China (Taiwan).

30 Post balance sheet events

On 27 April 2023 the Group announced that it had reached agreement to acquire Distrelec B.V.

(Distrelec), a high-service, digital-led distributor of industrial and MRO products for a consideration of

€365 million on a cash-free and debt-free basis. Completion is expected to be by the end of July 2023

as it is subject to regulatory clearances in Germany, Austria and Italy. The acquisition will be financed

from the Group’s existing resources and the addition of an approved new three-year acquisition term

loan facility of €150 million.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023186

Company Accounts

COMPANY BALANCE SHEET COMPANY STATEMENT OF CHANGES IN EQUITY

As at 31 March 2023 For the year ended 31 March 2023

187 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

Notes

2023

2022

£m

Fixed assets

Tangible assets

15.7

16.4

Investments in subsidiaries

491.2

343.0

Total fixed assets

506.9

359.4

Current assets

Debtors: amounts falling due after more than one year

2.2

1.8

Debtors: amounts falling due within one year

995.7

837.2

Cash at bank and in hand

171.3

170.8

Total current assets

1,169.2

1,009.8

Creditors: amounts falling due within one year

(512.0)

(308.6)

Net current assets

657.2

701.2

Total assets less current liabilities

1,164.1

1,060.6

Creditors: amounts falling due after more than one year

(185.6)

(153.0)

Net assets

978.5

907.6

Capital and reserves

Share capital

47.3

47.1

Share premium account

236.0

231.4

Own shares held by Employee Benefit Trust (EBT)

(2.2)

(3.0)

Profit and loss account (including profit for the year of

£142.5 million (2021/22: £59.2 million))

697.4

632.1

Total equity

978.5

907.6

The Company accounts on pages 187 to 191 were approved by the Board of Directors on 23 May 2023

and were signed on its behalf by:

Rona Fairhead Simon Pryce

Chair Chief Executive Officer

RS Group plc

Company number: 647788

Share capital

premium

account

Own shares

held by EBT

Profit and

loss account

Total

£m

At 1 April 2021

47.0

228.5

(1.5)

640.2

914.2

Profit and total comprehensive income

for the year

–

59.2

Dividends (Note 16)

–

(76.2)

Equity-settled share-based payments (Note 5)

–

9.9

Settlement of share awards (Note 16)

0.1

2.9

1.4

(1.4)

3.0

Purchase of own shares by EBT (Note 16)

–

(2.9)

–

(2.9)

Tax on equity-settled share-based payments

–

0.4

At 31 March 2022

47.1

231.4

(3.0)

632.1

907.6

Profit and total comprehensive income

for the year

–

142.5

Dividends (Note 16)

–

(88.6)

Equity-settled share-based payments (Note 5)

–

14.2

Settlement of share awards (Note 16)

0.2

4.6

2.9

(2.9)

4.8

Purchase of own shares by EBT (Note 16)

–

(2.1)

–

(2.1)

Tax on equity-settled share-based payments

–

0.1

At 31 March 2023

47.3

236.0

(2.2)

697.4

978.5

187RS Group plc Annual Report and Accounts for the year ended 31 March 2023 187

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Company Accounts continued

NOTES TO THE COMPANY ACCOUNTS

For the year ended 31 March 2023

188 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

1 General information

RS Group plc (the Company) is the parent company of the RS Group and is included in the

consolidated accounts of RS Group plc (the Group accounts). The Company is a public limited company

and is incorporated, registered and domiciled in England and Wales. The address of its registered

office is Fifth Floor, Two Pancras Square, London N1C 4AG, UK.

2 Statement of compliance

The individual accounts of the Company have been prepared in compliance with United Kingdom

Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard

applicable in the UK and Republic of Ireland’ (FRS 102), and the Companies Act 2006.

3 Basis of preparation

These are the Company’s separate accounts and have been prepared on a going concern basis, under

the historical cost convention, as modified by the recognition of certain financial assets and liabilities

measured at fair value through profit and loss. They are presented in sterling and rounded to the

nearest £0.1 million. The principal accounting policies have been applied consistently unless otherwise

stated.

The preparation of accounts under FRS 102 requires the Company to make judgements, estimates

and assumptions that affect the application of accounting policies and reported amounts of assets

and liabilities, income and expenses. There are no areas involving a higher degree of judgement

or complexity, or areas where assumptions and estimates are significant that are included in

these accounts.

Under section 408 of the Companies Act 2006 the Company is exempt from the requirement to

present its own profit and loss account.

The Company has taken advantage of the following disclosure exemptions available under FRS 102:

i. preparation of a cash flow statement

ii. financial instrument disclosures

iii. share-based payment disclosures

iv. key management personnel compensation disclosure

Transactions in foreign currencies are recorded using the rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are

retranslated at the rate ruling at that date and the gains and losses on translation are recognised in

profit or loss.

4 Employees

Average number of employees

2023

2022

Management and administration

Aggregate employment costs

2023

2022

£m

Wages and salaries

8.0

8.2

Social security costs

1.9

0.9

Share-based payments – equity-settled (Note 5)

3.8

2.8

Share-based payments – cash-settled

(0.2)

0.7

Defined contribution retirement benefit costs (Note 6)

0.3

13.8

12.9

Termination benefits

1.4

–

Total

15.2

12.9

Information on the Directors’ remuneration is in the Directors’ Remuneration Report on pages 112

to 132.

The numbers and costs above are for employees who work for the Company. There are a number of

Group employees whose contracts of employment are with the Company but who actually work in its

subsidiaries and perform no services directly for the Company. These employees are not included above.

5 Share-based payments

The Company operates a number of share-based payment schemes for employees of the Group,

details of which are in Note 8 of the Group accounts. Certain of the Company’s employees participate

in the equity-settled LTIPs, DSBP and equity-settled SAYE which grant rights to the Company’s own

equity instruments and hence are accounted for as equity-settled share-based payments.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023188

Company Accounts continued

NOTES TO THE COMPANY ACCOUNTS CONTINUED

For the year ended 31 March 2023

189 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

6 Post-employment benefits

Employees of the Company may be members of the Group’s UK pension schemes.

Defined benefit scheme

There is no agreement or stated policy for charging the net defined benefit cost for the scheme to

the individual Group entities. Both the Company and RS Components Limited, the main UK trading

subsidiary of the Company, are the sponsoring employers. The majority of the scheme members work

for RS Components Limited and so it accounts for the UK scheme as a defined benefit scheme in its

accounts. The Company recognises a cost equal to its contributions.

Details of the UK defined benefit scheme is in Note 9 of the Group accounts.

Defined contribution scheme

Contributions to the defined contribution scheme are expensed as they fall due.

7 Tangible assets

Tangible assets are stated at cost (or deemed cost for the freehold warehouse facility which is

occupied by a wholly-owned subsidiary) less accumulated depreciation and any provisions for

impairment. Cost includes the original purchase price, costs directly attributable to bringing the asset

to its working condition for its intended use and any dismantling and restoration costs.

No depreciation has been charged on land. Other assets are depreciated to residual value on a

straight-line basis over the following useful lives: investment property (freehold warehouse facility

occupied by wholly-owned subsidiary) 50 years; leasehold improvements 10 years; plant and

machinery 10 years; and computer equipment 5 years.

Investment

property

Leasehold

improvements

Plant and

machinery

Computer

equipment

Total

£m

Cost

At 1 April 2022 and 31 March 2023

18.2

1.2

9.2

0.8

29.4

Depreciation

At 1 April 2022

2.5

0.5

9.2

0.8

13.0

Charged in the year

0.5

0.2

0.7

At 31 March 2023

3.0

0.7

9.2

0.8

13.7

Net book value

At 31 March 2023

15.2

0.5

–

15.7

At 31 March 2022

15.7

0.7

–

16.4

8 Investments in subsidiaries

Investments in subsidiaries including long-term loans are carried at the lower of cost and expected

recoverable amount. Impairments are recognised in the profit and loss account.

The expense relating to share-based payments that grant rights to the Company’s equity instruments

to employees of other Group companies is treated as an increase in investments with the

corresponding credit taken directly to reserves. In the year ended 31 March 2023, this amounted to

£10.4 million (2021/22: £7.2 million).

Loans

Total

£m

Cost

At 1 April 2022

217.5

141.3

358.8

Additions

10.4

135.7

146.1

Loans repaid

–

(3.0)

Translation differences

–

5.1

At 31 March 2023

227.9

279.1

507.0

Impairments

At 1 April 2022 and 31 March 2023

0.4

15.4

15.8

Net book value

At 31 March 2023

227.5

263.7

491.2

At 31 March 2022

217.1

125.9

343.0

A list of the Company’s related undertakings is in Note 29 to the Group accounts.

189RS Group plc Annual Report and Accounts for the year ended 31 March 2023 189

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Company Accounts continued

NOTES TO THE COMPANY ACCOUNTS CONTINUED

For the year ended 31 March 2023

190 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

9 Financial instruments

Basic financial instruments

Basic financial assets, including cash and bank balances and amounts owed by subsidiary

undertakings, are initially recognised at transaction price and then subsequently at amortised cost less

any provision for impairment.

Basic financial liabilities, including accruals, other creditors, bank overdrafts and loans, private

placement loan notes and amounts owed to subsidiary undertakings, are initially recognised at

transaction price and then subsequently at amortised cost.

Derivative financial instruments and hedging activities

The Company has elected to adopt the recognition and measurement provisions of IAS 39 (as adopted

in the UK) and the disclosure provisions of FRS 102 in respect of financial instruments.

The Company uses derivative financial instruments to cover its exposure to foreign exchange and

interest rate risks arising from operational and financing activities. It principally employs forward

foreign exchange contracts to hedge against changes in exchange rates on behalf of its operating

subsidiaries and these subsidiaries apply cash flow hedging where appropriate. In addition, the

Company used interest rate swaps to hedge exposure to interest rate risks arising from financing

activities. In accordance with its treasury policies, the Company does not hold or issue derivative

financial instruments for trading purposes.

All the Company’s derivatives are measured at fair value with changes in the fair values recognised in

profit or loss.

The interest rate swaps which swapped US dollar fixed rate private placement loan notes into floating

US dollars matured during the year and, in line with the Company’s risk management policies, had

been designated as fair value hedges. The fair value of the swaps was the market value of the swaps at

the balance sheet date, taking into account prevailing interest rates. Changes in the fair values of the

swaps and changes in fair value of the related hedged items were recognised directly in profit or loss.

10 Debtors

2023

2022

£m

Amounts falling due within one year:

Amounts owed by subsidiary undertakings

988.1

829.7

Interest rate swaps (Note 9)

–

0.1

Other derivative assets

3.4

4.7

Prepayments

4.2

2.7

Debtors: amounts falling due within one year

995.7

837.2

Amounts falling due after more than one year:

Deferred tax asset (Note 13)

2.2

1.8

Debtors: amounts falling due after more than one year

2.2

1.8

Amounts owed by subsidiary undertakings are unsecured, bear interest at market rates and are

repayable on demand or at specified dates within the next 12 months.

11 Creditors: amounts falling due within one year

2023

2022

£m

Amounts owed to subsidiary undertakings

363.8

209.0

Bank overdrafts

134.0

85.9

Interest rate swaps (Note 9)

–

0.2

Other derivative liabilities

3.4

4.7

Accruals

10.3

8.2

Other creditors

0.2

Cash-settled share-based payment liability

0.3

0.4

512.0

308.6

Amounts owed to subsidiary undertakings are unsecured, bear interest at market rates and are

repayable on demand or at specified dates within the next 12 months.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023190

Company Accounts continued

NOTES TO THE COMPANY ACCOUNTS CONTINUED

For the year ended 31 March 2023

191 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

12 Creditors: amounts falling due after more than one year

2023

2022

£m

Unsecured private placement loan notes repayable after more than

five years

80.0

75.5

Unsecured private placement loan notes repayable from four to five years

–

76.2

Unsecured private placement loan notes repayable from three to four years

80.4

–

Unsecured sustainability-linked loan repayable from four to five years

24.2

–

Other creditors

0.7

0.9

Cash-settled share-based payment liability

0.3

0.4

185.6

153.0

Details of the US dollar private placement loan notes and sustainability-linked loan are in Notes 20 to

22 of the Group accounts.

13 Deferred tax

The charge or credit for taxation is based on the taxable profit or loss for the year and takes into account

taxation deferred because of timing differences. Deferred tax is recognised, without discounting, in

respect of all timing differences between the treatment of certain items for taxation and accounting

purposes.

Deferred tax assets are attributable to the following:

2023

2022

£m

Equity-settled share-based payments

2.1

1.7

Other

0.1

Deferred tax asset (Note 10)

2.2

1.8

There are no unused tax losses or unused tax credits.

14 Operating lease commitments

Future minimum amounts payable under non-cancellable operating leases are:

2023

2022

£m

Within one year

1.2

From one to five years

4.0

4.9

After five years

–

0.3

5.2

6.4

15 Contingent liabilities

The Company enters into financial guarantee contracts to guarantee the indebtedness of certain

other companies within the Group. The Company treats the guarantee contracts as a contingent

liability until such time as it becomes probable that the Company will be required to make a payment

under the guarantee.

Guarantees exist in respect of bank facilities available to certain subsidiaries, up to a maximum of

£81.4 million (2021/22: £77.5 million), of which £9.3 million (2021/22: £9.5 million) had been drawn

down at the end of the year.

16 Capital and reserves and dividends

Details of the Company’s share capital, share premium account, EBT and dividends paid to

shareholders are in Notes 12 and 25 of the Group accounts.

The Company has sufficient distributable reserves to pay dividends for a number of years and is also

able to increase its distributable reserves further by receiving distributions from its subsidiaries.

191RS Group plc Annual Report and Accounts for the year ended 31 March 2023 191

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

Five Year Record

FIVE YEAR RECORD

Year ended 31 March

192 RS Group plc Annual Report and Accounts for the year ended 31 March 2023

Summary income statements and related metrics

2023

2022

2021

2020

2019

£m

Revenue

2,982.3

2,553.7

2,002.7

1,953.8

1,884.4

Operating profit

383.0

308.8

167.2

205.3

201.0

Add back: amortisation and impairment

of acquired intangibles

16.6

11.6

7.0

5.4

4.4

Add back: acquisition-related items

2.6

–

2.9

–

Add back: substantial reorganisation costs,

substantial asset write-downs and one-off

pension cost

–

11.2

10.0

14.9

Adjusted operating profit

402.2

320.4

188.3

220.7

220.3

Net finance costs

(12.2)

(7.1)

(6.8)

(5.9)

(6.1)

Share of profit of joint venture

0.7

0.5

0.2

0.3

Adjusted profit before tax

390.7

313.8

181.7

215.0

214.5

Amortisation and impairment of acquired

intangibles

(16.6)

(11.6)

(7.0)

(5.4)

(4.4)

Acquisition-related items

(2.6)

–

(2.9)

–

Substantial reorganisation costs, substantial

asset write-downs and one-off pension cost

–

(11.2)

(10.0)

(14.9)

Profit before tax

371.5

302.2

160.6

199.6

195.2

Income tax expense

(86.7)

(72.2)

(35.1)

(44.9)

(47.1)

Profit for the year attributable to owners

of the Company

284.8

230.0

125.5

154.7

148.1

Earnings per share

60.4p

48.9p

27.7p

34.7p

33.4p

Adjusted earnings per share

63.6p

51.3p

31.3p

37.7p

37.0p

Dividend per share

20.9p

18.0p

15.9p

15.4p

14.8p

Summary balance sheets and other metrics

2023

2022

2021

2020

2019

restated

£m

Non-current assets

953.7

706.1

711.0

573.4

463.4

Current assets

1,590.3

1,395.1

1,134.8

1,044.3

935.9

Current liabilities

(838.9)

(726.2)

(631.8)

(570.4)

(487.5)

Non-current liabilities

(360.2)

(266.5)

(314.6)

(327.4)

(322.5)

Net assets

1,344.9

1,108.5

899.4

719.9

589.3

Add back: net debt

113.0

42.1

122.0

189.8

122.4

Add back: retirement benefit net assets /

obligations

36.4

12.4

55.7

55.8

83.6

Capital employed

1,494.3

1,163.0

1,077.1

965.5

795.3

Return on capital employed (ROCE)

30.8%

28.7%

19.4%

24.0%

29.5%

Adjusted free cash flow

263.6

162.9

145.4

80.9

84.5

Average number of employees

7,818

7,383

6,806

7,044

6,603

Share price at 31 March

914.0p

1,084.0p

993.0p

516.2p

561.8p

1. An additional interim dividend for the year ended 31 March 2020 of 9.5p, to replace the deferred final dividend, was paid on

18 December 2020. This is included in the 2019/20 dividend per share amount.

2. ROCE for the years ended 31 March 2020 and before were updated in 2020/21 to be based on monthly average capital employed.

3. Restated in 2021/22 for measurement period adjustments for prior year acquisitions.

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023192

Shareholder information

REGISTERED OFFICE,

FINANCIAL CALENDAR

AND ADVISORS

Be scam smart

Investment scams are designed to look like

genuine investments.

Spot the warning signs

Have you been:

– Contacted out of the blue?

– Promised tempting returns and told the

investment is safe?

– Called repeatedly?

– Told the offer is only available for a limited time?

If so, you might have been contacted by fraudsters.

Avoid investment fraud

Reject cold calls

If you have received unsolicited contact about

an investment opportunity, the chances are it is

a high-risk investment or a scam. You should treat

the call with extreme caution. The safest thing to

do is to hang up.

Check the FCA Warning List

The FCA Warning List is a list of firms and

individuals we know are operating without

our authorisation.

Get impartial advice

Think about getting impartial financial advice

before you hand over any money. Seek advice from

someone unconnected to the firm that has

approached you.

Your shareholder reference number (SRN) is

required to access your shareholding. This can be

found at the top of your welcome letter or share

certificate. Alternatively, you can obtain your SRN

by contacting Computershare on the number

given above.

Dividend reinvestment plan (DRIP)

Should you wish to reinvest your dividends in the

Company, you can take advantage of our DRIP.

It will allow you to use your cash dividend to buy

more RS Group shares in the market. You will

need to complete a DRIP application form and

return it to Computershare. This can be found,

together with plan terms and conditions, at

www.investorcentre.co.uk or in the Shareholder

Information section of our website under FAQs.

Alternatively, please contact Computershare on

the number given above, and details and a form

will be sent to you.

Share price information

The latest information on the RS Group plc share

price is available on our corporate website:

rsgroup.com

Registered office

RS Group plc

Fifth Floor

Two Pancras Square

London N1C 4AG

United Kingdom

Tel: +44 (0)20 7239 8400

rsgroup.com

Registered number: 647788

Registered in England and Wales

Shareholder services

Registrar

If you have any questions about your shareholding

in the Company, please contact our Registrar:

Computershare Investor Services PLC

The Pavilions, Bridgwater Road, Bristol BS99 6ZZ

Tel: 0370 703 0199

www.investorcentre.co.uk/contactus

Investor Centre

To access online information about your

shareholding visit www.investorcentre.co.uk.

Through the Investor Centre you can:

– Update member details and address changes

– Update dividend bank mandate instructions

and review dividend payment history

– Register to receive Company

communications electronically

Report a scam

If you suspect that you have been approached

by fraudsters please tell the FCA using the

reporting form at

www.fca.org.uk/consumers/report-scam-us.

You can also call the FCA Consumer Helpline on

0800 111 6768.

If you have lost money to investment fraud, you

should report it to Action Fraud on 0300 123 2040

or online at www.actionfraud.police.uk

Find out more at www.fca.org.uk/scamsmart

Remember: if it sounds too good to be true, it

probably is!

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

193RS Group plc Annual Report and Accounts for the year ended 31 March 2023 193

Shareholder information continued

Financial calendar

Announcement of results

The results of the Group are normally published

at the following times:

– Half-year results for the six months ending

30 September in mid-November

– Preliminary announcement for the year ending

31 March in late May

– Annual Report and Accounts for the year ending

31 March in mid-June

Dividend payments

Our current policy is to normally make dividend

payments at the following times:

– Interim dividend in January

– Final dividend in July

Contacts

Auditors

PricewaterhouseCoopers LLP

1 Embankment Place

London WC2N 6RH

Financial public relation advisors

Teneo

85 Fleet Street

London EC4Y 1AE

Financial advisors

Citigroup

Citigroup Centre

33 Canada Square

London E14 5LB

Rothschild & Co

New Court

St Swithin’s Lane

London EC4N 8AL

Registrar and transfer office

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol

BS99 6ZZ

Solicitors

Allen & Overy LLP

One Bishops Square

London E1 6AD

Stockbrokers

HSBC Bank Plc

Level 2, 8 Canada Square

London E14 5HQ

Numis Securities Limited

The London Stock Exchange

10 Paternoster Square

London EC4M 7LT

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023194

LOCATIONS

Principal locations

EMEA

Austria

at.rs-online.com

Belgium

benl.rs-online.com

Czech Republic

cz.rs-online.com

Denmark

dk.rs-online.com

France

fr.rs-online.com

Germany

de.rs-online.com

Hungary

hu.rs-online.com

Republic of Ireland

ie.rs-online.com

Italy

it.rs-online.com

Netherlands

nl.rs-online.com

Norway

no.rs-online.com

Poland

pl.rs-online.com

Portugal

pt.rs-online.com

South Africa

za.rs-online.com

Spain

es.rs-online.com

Sweden

se.rs-online.com

Switzerland

ch.rs-online.com

United Kingdom

uk.rs-online.com

rs-integratedsupply.

com

okdo.com

Americas

Canada

ca.rs-online.com

Chile

cl-en.rs-online.com

Mexico

risoul.com.mx

mx-en.rs-online.com

us.rs-online.com

rs-integratedsupply.

com

Asia Pacific

Australia

au.rs-online.com

China

rsonline.cn

twen.rs-online.com

India

in.rsdelivers.com

Japan

jp.rs-online.com

Malaysia

my.rs-online.com

New Zealand

nz.rs-online.com

Philippines

ph.rs-online.com

Singapore

sg.rs-online.com

South Korea

kr.rs-online.com

Thailand

th.rs-online.com

Get more online

Latest shareholder information

– Share price

– Corporate governance

– Analyst consensus estimates

– Updates via email

Archive information

– Financial results

– Annual Reports

– Company news

– Video library

For more information and the latest news visit: rsgroup.com

STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS OTHER INFORMATION

195RS Group plc Annual Report and Accounts for the year ended 31 March 2023 195

GLOSSARY

OF TERMS

AGM Annual general meeting

B2B Business to business

B2C Business to customer

BEIS Department of Business, Energy & Industrial Strategy

(from February 2023, the Department for Business

and Trade)

CAGR Compound annual growth rate

CEO Chief Executive Officer

CFO Chief Financial Officer

CISO Chief Information Security and Compliance Officer

e Carbon dioxide equivalent

CoE Centre of Expertise

CSRD Corporate Sustainability Reporting Directive

D&I Diversity and inclusion

DC Distribution centre

DJSI Dow Jones Sustainability Indices

DSBP Deferred share bonus plan

DTAM Distributor total addressable market

EMD Environmental management dashboard

EPS Earnings per share

ERG Employee resource groups

ESG Environmental, social and governance

EU European Union

EV Electric vehicles

EWB Engineers Without Borders-International

FCA Financial Conduct Authority

FRC Financial Reporting Council

FRS Financial Reporting Standard

GSBS Global Shared Business Services

GHG Greenhouse gas

IAS International accounting standards

ICFR Internal controls over financial reporting

IFRS International Financial Reporting Standard

IoT Internet of things

ISSB International Sustainability Standards Board

J2G Journey to Greatness

KPIs Key performance indicators

LGBTQ+ Lesbian, gay, bisexual, transgender, queer and others

LTIP Long term incentive plan

M&A Mergers and acquisitions

MRO Maintenance, repair and operations

NPI New product introduction

NPS Net Promoter Score

OEM Original equipment manufacturer

ORE Offshore Renewable Energy

OTTP On time to promise

PBT Profit before tax

PPE Personal protective equipment

PwC PricewaterhouseCoopers LLP

ROCE Return on capital employed

RS YAY! RS YAY! all employee share award

SAYE Save as you earn

SBC Single-board computing

SBT Science-based targets

SBTi Science Based Targets initiative

SEO Search engine optimisation

SID Senior Independent Director

SLL Sustainability-linked loan

SMT Senior Management Team

STEM Science, technology, engineering and maths

TCFD Task Force on Climate-related Financial Disclosures

The Code UK Corporate Governance Code

TPT UK Transition Plan Taskforce

TSR Total shareholder return

TWMP The Washing Machine Project

UK IAS UK-adopted international accounting standards

UNGC United Nations Global Compact

UN SDGs United Nations sustainable development goals

RS Group plcAnnual Report and Accounts for the year ended 31 March 2023196

197RS Group plc Annual Report and Accounts for the year ended 31 March 2023 197

Printed by Park Communications on FSC

certified paper. This document is printed on

paper from sustainable sources. This publication has been manufactured using 100%

offshore wind electricity sourced from UK wind and 99% of any waste associated

with this production will be recycled and the remaining 1% used to generate energy. It

is both recyclable and biodegradable. The FSC

label on this product ensures

responsible use of the world’s forest resources

Designed and produced by

RS Group plc

Fifth Floor

Two Pancras Square

London N1C 4AG

United Kingdom

Tel: +44 (0)20 7239 8400

rsgroup.com