REG-Travis Perkins PLC : Interim results for the six months ended 30 June 2017 <Origin Href="QuoteRef">TPK.L</Origin>
02/08/2017 07:05
For best results when printing this announcement, please click on link below:
http://pdf.reuters.com/htmlnews/htmlnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20170802:nGNE6zFYds
Travis Perkins plc
Interim results for the six months ended 30 June 2017
Executed well against a challenging market backdrop
£m Note H1 2017 H1 2016 Change
Revenue 3,221 3,113 3.5%
Like-for-like revenue growth ((1)) 14h 2.7% 3.1%
Adjusted operating profit ((1)) 14a 190 194 (2.1)%
Adjusted profit before taxation ((1)) 14b 175 184 (4.9)%
Adjusted earnings per share ((1)) 7b 55.8p 58.4p (4.5)%
Net debt ((1)) 11 377 510
Dividend per share (pence) 8 15.5p 15.25p 1.6%
Lease adjusted ROCE ((1)(2)) 14f 10.6% 10.9% (0.3)ppt
Operating profit 183 186 (1.6)%
Profit before taxation 168 176 (4.5)%
Basic earnings per share (pence) 7a 53.6p 55.7p (3.8)%
((1) )Alternative performance measures are used to provide a guide to
underlying performance and details of the calculations can be found in the
notes listed
((2))LAROCE comparator from 2016 is for the 12 month period ending 31 December
2016 which has been adjusted to exclude from opening capital employed the
impairment to goodwill and other intangible assets written off at 31 December
2016 and already deducted from Capital Employed at that date
Highlights * Revenue grew by 3.5% in the first half of the year, and by 2.7%
on a like-for-like basis
* Adjusted operating profit 2.1% lower at £190m largely due to the
challenging Plumbing & Heating market and recent investments, including in
information systems
* Free cash flow of £188m was generated, with strong cash conversion of 99%
* Net debt of £377m, lower than June 2016 by £133m, and in line with
December 2016
* Interim dividend of 15.5p, an increase of 1.6% reflecting strong cash
performance
John Carter - Chief Executive Officer said:
"We executed our plan well and delivered a solid overall performance in the
first half of 2017 against a challenging market backdrop of pronounced input
cost inflation and market volatility. The robust growth and outperformance in
our Contracts and Consumer divisions build on strong customer propositions and
successful investments in those businesses.
In the first half of the year, the Group made a conscious decision to recover
input cost inflation selectively through disciplined pricing activity. Whilst
this had some impact on trading volume, it enabled us to maintain Group gross
margins and positions the business well for the future.
Today we have announced a comprehensive transformation plan in our Plumbing &
Heating division which is designed to stabilise performance and to create more
options to maximise shareholder value. Whilst we remain cautious on the
macro-economic outlook for the second half, the Group remains focused on
executing the clear plans it has in place which will deliver strong cash
generation and maximise returns."
Enquiries:
Travis Perkins Tulchan Communications
Graeme Barnes David Allchurch
+44 (0) 7469 401819 +44 (0) 207 353 4200
graeme.barnes@travisperkins.co.uk
Cautionary Statement:
This announcement contains "forward-looking statements" with respect to Travis
Perkins' financial condition, results of operations and business and details
of plans and objectives in respect to these items. Forward-looking statements
are sometimes, but not always, identified by their use of a date in the future
or such words as "anticipates", "aims", "due", "could", "may", "will",
"should", "expects", "believes", "seeks", "intends", "plans", "potential",
"reasonably possible", "targets", "goal" or "estimates", and words of similar
meaning. By their very nature forward-looking statements are inherently
unpredictable, speculative and involve risk and uncertainty because they
relate to events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by these forward-looking
statements. These factors include, but are not limited to, the Principal Risks
and Uncertainties disclosed in the Group's Annual Report, changes in the
economies and markets in which the Group operates; changes in the legislative,
regulatory and competition frameworks in which the Group operates; changes in
the capital markets from which the Group raises finance; the impact of legal
or other proceedings against or which affect the Group; and changes in
interest and exchange rates. All forward-looking statements, made in this
announcement or made subsequently, which are attributable to Travis Perkins or
any other member of the Group or persons acting on their behalf are expressly
qualified in their entirety by the factors referred to above. No assurances
can be given that the forward-looking statements in this document will be
realised. Subject to compliance with applicable law and regulations, Travis
Perkins does not intend to update these forward-looking statements and does
not undertake any obligation to do so. Nothing in this document should be
regarded as a profits forecast.
Without prejudice to the above:
(a) neither Travis Perkins plc nor any other member of the Group, nor persons
acting on their behalf shall otherwise have any liability whatsoever for loss
howsoever arising, directly or indirectly, from use of the information
contained within this announcement; and
(b) neither Travis Perkins plc nor any other member of the Group, nor persons
acting on their behalf makes any representation or warranty, express or
implied, as to the accuracy or completeness of the information contained
within this announcement.
This announcement is current as of 2 August 2017, the date on which it is
given. This announcement has not been and will not be updated to reflect any
changes since that date.
Past performance of the shares of Travis Perkins plc cannot be relied upon as
a guide to the future performance of the shares of Travis Perkins plc.
Summary
The first half of 2017 has seen a number of macroeconomic headwinds affect our
business, including weakening housing transactions and consumer confidence, as
well as industry input cost inflation.
Despite the difficult market background, the Group has again demonstrated its
ability to grow, both in absolute and like-for-like terms. The Consumer and
Contracts divisions have continued to demonstrate above market revenue growth,
driven by strong customer propositions and the benefits of recent investments
in the businesses. Both divisions grew sales volumes driving growth in
operating profit.
In the General Merchanting division, a deliberate trading stance was taken
early in the year to recover cost price inflation, caused by both currency
exchange rate volatility and commodity price pressure. At the same time, a new
pricing tool was rolled out across the division. This provides better guidance
to branch colleagues and results in more consistent pricing to customers
whilst enabling the business to maintain gross margins.
The markets served by the Plumbing & Heating division continued to be
particularly challenging. In the contract channel, growth with house builders
was not sufficient to offset the reduction in volumes in social housing and
reduced trade with one of our largest customers. The remaining Plumbing &
Heating businesses, encompassing our local installer, online businesses and
wholesaling operations, delivered growth in revenues following recent actions
to improve the customer propositions. Following the strategic review of the
Plumbing & Heating division, a comprehensive plan has been put in place to
stabilise the business and provide the Group with more options to enhance
shareholder value in the future.
The Group remains focused on disciplined capital management. Net debt remained
in line with the prior year end, and was £133m lower than 30 June 2016.
Whilst there was an expected, seasonal working capital outflow in the first
half, underlying working capital management was encouraging. As planned, given
the uncertain outlook for the Group's end markets, capital expenditure was
lower year-on-year, and the programme to recycle capital invested in property
continued with a sale and leaseback transaction completed in the first half of
the year.
The Group has continued to make focused investments that will drive improving
returns. The expansion of the Toolstation and Benchmarx networks has continued
at pace, and the Wickes store refit programme is generating higher sales and
corresponding returns.
Investment in the Group's merchant systems continued, with construction of the
new system now well underway. The new system will make it easier for customers
to transact with the Group, at the same time making it easier for colleagues
to service customers. It will also provide significantly more data with
greater accuracy, which will enable better decision making.
Plumbing & Heating transformation plan
The Plumbing & Heating division has under-performed in recent years, with
weakening sales and reducing profitability. Both the contract and local
installer markets have been increasingly competitive, with the traditional
national plumbing merchants under pressure from the significant expansion of
online and fixed price multichannel operators and strong local and regional
independents.
In the first half of 2017 the new leadership team has undertaken a
comprehensive strategic review of the business. The resulting plan builds on
the foundations put in place by the 2014 restructuring programme. The
near-term focus is on arresting the decline in profits with actions being
taken to address the issues faced, including a reduction in capacity at all
points in the supply chain. The plan seeks to improve all aspects of the
business and create more options to maximise shareholder value in the future.
By reducing capital employed in the business, the plan is expected to be
broadly cash neutral, whilst the likely income statement charge for the
restructuring will be approximately £30m-40m over the next 12 months.
The key elements of the transformation plan build on some of the successful
work previously undertaken to reduce capacity, acquire a number of digital
businesses and invest in the bathrooms, renewables and spares categories. The
comprehensive and wide-ranging improvement plan covers all of the Plumbing &
Heating businesses and is designed to bring a more customer focused approach
to developing the propositions, as well as driving greater efficiency to
underpin profitability. The main pillars of the plan are:
1. An integrated City Plumbing and PTS branch network: to be run under a
single management team providing customers with more convenience and improved
service. Online brands, where they are valued by customers, will form an
important range extension solution for customers supported by the branch
network.
2. A simplification of the business operating model: the integrated branch
network and online channels will form the core of the business with a number
of the smaller businesses integrated. The wholesale business will increasingly
operate on a standalone basis. These changes will reduce operating costs as
well as provide a more coherent customer proposition.
3. An overhaul of the customer proposition with broader ranges, better
availability, more consistent pricing and online development, alongside
improvements to specialist categories and selective category extension.
4. A dedicated supply chain will be formed to support the P&H business,
decoupled from the group infrastructure, and making better use of the primary
distribution centre in Warrington.
Whilst the trading performance in Plumbing & Heating is expected to continue
to soften in the second half of the year, profitability is expected to
stabilise in 2018.
Outlook
The long term drivers of market growth remain strong, centred on the UK's
requirement for more homes and the structural underinvestment in the repair,
maintenance and improvement of existing dwellings and infrastructure.
Macro-economic data has been weaker in the first half of 2017, and recent lead
indicators, including consumer confidence and housing transactions, have
painted a mixed picture for the near-term performance of the Group's end
markets and this is expected to continue in the second half of 2017.
The Group will continue to focus on executing the clear plans it has in place
whilst ensuring that it responds quickly to any changes in market conditions.
The investments made in recent years leave the Group well positioned for the
future.
Technical guidance
The Group is maintaining the technical guidance for 2017 as issued in March
2017:
* Effective tax rate of around 20%
* Finance charges will be similar to 2016
* Capital expenditure of around £170m - £190m, excluding investment in
freehold property
* Property profits of around £20m
* Progressive dividend policy, underpinned by strong cash generation
Divisional performance
The divisional profit performance in the following section excludes all
property profits which are now shown separately as a Group related activity.
General Merchanting
H1 2017 H1 2016 Change
Total revenue £1,055m £1,045m 1.0%
Like-for-like growth (0.1)%
Adjusted operating profit £97m £100m (3.0)%
Adjusted operating margin 9.2% 9.6% (40)bps
LAROCE* 15% 15% -
Branch network* 851 833 18
*Comparison data from 31 December 2016
Financial performance
Revenue performance in the first half of the year was in line with
expectations, against strong comparators from 2016. The division experienced
significant cost price inflation and executed a disciplined pricing strategy
to recover the impact. This put pressure on trading volumes in the short term,
but has achieved the aim of protecting gross margins.
Adjusted operating profit declined by 3% in the half as operating costs rose
following investment in IT capabilities, extension of the reach of the
heavyside range centre network and the opening of new branches.
Operational highlights
* The roll-out of the new pricing framework continued, including selective
price investment, which has improved the value proposition for customers
without negatively impacting margins.
* Utilisation of the range centres made further progress, with an additional
37 branches served by the delivery network in the first half of 2017, and a
plan for a further c.140 to be added in the second half, extending coverage to
all of England and Wales. Performance is ahead of expectations with a good
uptake of customers making use of access to the extended range of an
additional 6,500 products, driving promising returns.
* Further progress has been made towards an improved multi-channel
proposition. The Travis Perkins transactional website now offers a two hour
click & collect service, and whilst still at an early stage of development,
online sales have been strong.
* Eleven new Benchmarx branches were opened during the half contributing
additional revenue on top of a good like-for-like performance from the
existing network.
Plumbing & Heating
H1 2017 H1 2016 Change
Total revenue £669m £679m (1.5)%
Like-for-like growth (1.2)%
Adjusted operating profit £13m £19m (31.6)%
Adjusted operating margin 1.9% 2.8% (90)bps
LAROCE* 9% 10% (1)ppt
Branch network* 428 439 (11)
*Comparison data from 31 December 2016
Financial performance
Plumbing & Heating revenue reduced by 1.5% in the half and by 1.2% on a
like-for-like basis. Growth in the first quarter was stronger than the second
quarter, as expected, owing to trade customers buying in advance of
manufacturer led cost price increases. Performance reflected the continued
difficult market conditions in the large contract installer market, impacting
PTS, where growth in the new build market was not enough to offset continued
declines in social housing and reduced trade with one of our largest
customers.
City Plumbing showed solid growth in the half, with improving like-for-like
sales. The wholesale business also delivered positive sales growth with an
improving trend through the second quarter.
Operating profit declined in the first half as a result of lower operating
leverage resulting from the decrease in volume in addition to the very
competitive market.
Operational highlights
The focus in the first half of the year has been the establishment of a new
management team under the Group COO and a comprehensive strategic review.
Actions have been taken to stabilise performance and improve the focus on
customers with encouraging early signs. These include:
* Simplified operating, sales and commercial team structures
* Restructured branch manager incentives to reward outstanding performance
* Selectively extended bathroom showroom opening hours to better meet
end-consumer needs, delivering a step up in performance
* Rolling out 1,100 best-selling lines to City Plumbing branches
* An enhanced promotional programme, doubling customer participation in Q2
* Improved digital capabilities, including the launch of a transactional
website for City Plumbing and the upgrade of a number of specialist websites
with improved layouts and search facilities
* Improved customer service and upselling in the wholesale business
Contracts
H1 2017 H1 2016 Change
Total revenue £675m £623m 8.3%
Like-for-like growth 9.1%
Adjusted operating profit £41m £37m 10.8%
Adjusted operating margin 6.1% 5.9% 20bps
LAROCE* 13% 12% 1ppt
Branch network* 168 167 1
*Comparison data from 31 December 2016
Financial performance
The division delivered strong sales growth at 8.3% and 9.1% on a like-for-like
basis. All businesses demonstrated excellent growth, with CCF the stand out
performer.
The division experienced significant input cost inflation in the half. Gross
margin performance in the division was good as all three businesses focused on
pricing activity to recover the input cost inflation. Adjusted operating
margin expanded by 20bps with improvements from operating leverage partially
offset by the shift in sales mix towards CCF and Keyline.
Divisional LAROCE improved from 12% to 13% driven by the maturing of new
branches.
Operational highlights
* The CCF branches opened in late 2015 continue to mature driving sales growth
and operating leverage
* A new sales team structure in CCF ensures that high levels of customer
service are provided across large, medium and smaller customers
* Keyline continued to focus on specific product categories and customer
groups enabling it to provide a customer specified proposition and to continue
to gain market share
* A national administration team was launched to support the BSS network which
has reduced costs and allows branch colleagues to focus on customers
* In April 2017 the Group acquired TF solutions, a ventilation and air
conditioning distributor which adds adjacent product categories to the BSS
business
Consumer
H1 2017 H1 2016 Change
Total revenue £822m £766m 7.3%
Like-for-like growth 4.7%
Adjusted operating profit £45m £44m 2.3%
Adjusted operating margin 5.5% 5.7% (20)bps
LAROCE* 8% 8% -
Branch network* 642 617 25
*Comparison data from 31 December 2016
Financial performance
The division delivered a strong revenue performance with Wickes outperforming
a tough DIY market, and continued strong growth in Toolstation through network
expansion and accelerating like-for-like growth in existing stores.
Despite continuing to invest in value to maintain price leadership in both
Wickes and Toolstation, gross margin was unchanged in the period. Adjusted
operating margins fell by 20bps primarily due to the on-going investments in
store refits and new store openings, together with the Group's increasing
investment to expand Toolstation in Europe.
Operational highlights
Wickes
* The programme to roll out store refits continued in the half with a further
18 completed. These continue to deliver strong growth in sales in both
showroom and core DIY categories with 82 new store formats now in operation
* The Kitchen & Bathroom showroom activity delivered excellent growth in the
first half through its compelling range and targeted promotional activity,
albeit this is expected to moderate in the second half
* Further progress was made to improve the online proposition, with new range
extensions and same-day, one-hour delivery slots
Toolstation
* Toolstation retained its Which? 'Retailer of the Year' award in 2017 and
continued to achieve industry leading TrustPilot scores
* UK network expansion continued at pace, with 19 new stores opened
* Improvements to the digital customer experience, including reducing click &
collect times, extending online only ranges and improving product reviews,
local search, and personalised offers drove a significant step up in sales
growth
* The expansion of the Dutch Toolstation network continued, with an additional
5 stores opened bringing the total to 17, and very encouraging like-for-like
performance. Web sales in France and Germany also grew well and a new website
was launched in Belgium in Q1.
Property
The Group continued to leverage its property portfolio with selected
investment in freeholds combined with a disciplined disposal programme to
realise embedded value in fully developed properties.
The Group invested £23m in new freehold properties and construction in the
half and completed a sale and lease back transaction on a portfolio of eight
properties which realised £38m of cash, and £1m of property profits.
Overall the Group recognised profits on the disposal of properties of £7m (H1
2016: £3m), with a net release of cash after new freehold acquisitions of
£27m.
Financial Performance
Revenue
Group revenue growth was solid in the first half of 2017, with absolute growth
of 3.5%, and 2.7% on a like-for-like basis.
Volume, price and mix analysis
Total revenue General Merchanting Plumbing & Heating Contracts Consumer Group
Volume (2.5)% (4.4)% 4.2% 3.0% (0.2)%
Price and mix 2.4% 3.2% 4.9% 1.7% 2.9%
Like-for-like revenue growth (0.1)% (1.2)% 9.1% 4.7% 2.7%
Network changes 1.1% (0.3)% (1.2)% 2.6% 0.7%
Acquisitions - - 0.4% - 0.1%
Total revenue growth 1.0% (1.5)% 8.3% 7.3% 3.5%
Quarterly like-for-like revenue analysis
Like-for-like revenue growth General Merchanting Plumbing & Heating Contracts Consumer Group
Q1 2017 (0.3)% (1.1)% 12.1% 2.9% 2.7%
Q2 2017 0.3% (1.9)% 6.4% 6.5% 2.7%
Half year 2017 (0.1)% (1.2)% 9.1% 4.7% 2.7%
New branch and net store openings contributed 0.8% to revenue growth. There
were no trading day differences in the first half of 2017 compared to 2016.
Across the Group volumes were broadly flat, with all of the 2.7% like-for-like
growth coming from price increases and mix changes. This was in line with
expectations as the Group's businesses focused on mitigating the impact of
cost price inflation.
Operating profit and margin
£m H1 2017 H1 2016
General Merchanting 97 100 (3.0)%
Plumbing & Heating 13 19 (31.6)%
Contracts 41 37 10.8%
Consumer 45 44 2.3%
Property 7 3 133.3%
Unallocated central costs (13) (9) 44.4%
Adjusted operating profit 190 194 (2.1)%
Amortisation of acquired intangibles (7) (8)
Operating profit 183 186 (1.6)%
Operating profit reduced slightly by 1.6% to £183m (H1 2016: £186m), with
profit before tax declining by 4.5% to £168m due to higher finance charges.
Adjusted operating profit reduced by 2.1% to £190m (H1 2016: £194m). Profit
growth in Contracts, Consumer and through property transactions was offset by
a decline in profits in General Merchanting, the expected decline in Plumbing
& Heating and an increase in unallocated costs as the Group invests in its IT
capabilities.
Adjusted operating margin
General Merchanting Plumbing & Heating Contracts Consumer Group
H1 2016 adjusted operating margin (excluding property profits) 9.6% 2.8% 5.9% 5.7% 6.1%
Change in gross margin 0.0% (1.0)% 0.3% 0.0% 0.1%
Margin impact of change in operating costs (0.4)% 0.1% (0.1)% (0.2)% (0.5)%
H1 2017 adjusted operating margin (excluding property profits) 9.2% 1.9% 6.1% 5.5% 5.7%
The Group's gross margin was maintained in the half through pricing activity
to recover input cost inflation. In Plumbing & Heating, the intense
competitive pricing environment led to a decline in gross margin which was
fully offset, primarily by the Contracts division.
Across the Group operating costs increased in the half, primarily due to the
opening of new branches together with store refits, and investments made in IT
systems.
Finance charge
Net finance charges increased to £16m (2016: £11m). The increase in finance
charges reflects a full half year of interest on the £300m public bond issued
in May 2016, partially offset by lower borrowings on the revolving credit
facility.
Pensions
The Group made £10m (H1 2016: £11m) of cash contributions to its defined
benefit schemes in the first half of the year.
At 30 June 2017, the combined gross accounting deficit for the Group's final
salary pension schemes was £47m (31 December 2016: £127m), which equated to
a net deficit after tax of £38m (31 December 2016: £103m). The reduction in
the deficit was primarily due to strong returns on plan assets, and favourable
changes in demographic assumptions together with a change in gilt yields which
reduced scheme liabilities.
Taxation
The tax charge for the first half of the year was £32.2m (2016: £36.4m), an
effective tax rate of 19.2% (2016: 20.7%). The difference in effective rate
between 2017 and 2016 was due to a lower statutory tax rate and a higher
deferred tax charge on share based payments in 2017.
Earnings per share
Profit after taxation decreased by 2.9% to £135m (H1 2016: £139m) resulting
in basic earnings per share decreasing by 3.8% to 53.6 pence (H1 2016: 55.7
pence). There is no significant difference between basic and diluted basic
earnings per share.
Adjusted profit after tax reduced by 3.3% to £141m (H1 2016: £145m)
resulting in adjusted earnings per share (note 11) decreasing by 4.5% to 55.8
pence (H1 2016: 58.4 pence). There is no significant difference between
adjusted basic and adjusted diluted earnings per share.
Reconciliation of reported to adjusted earnings
H1 2017 H1 2016
Earnings EPS Earnings EPS
Basic earnings and EPS attributable to shareholders £135m 53.6p £139m 55.7p
Amortisation of acquired intangible assets £7m 2.7p £8m 3.3p
Tax on amortisation of acquired intangible assets £(1)m (0.5p) £(2)m (0.6p)
Adjusted earnings and EPS attributable to shareholders £141m 55.8p £145m 58.4p
Dividend
The Group has a progressive dividend policy reflecting the on-going strength
of cash generation by the Group and the continued confidence in the Group's
outlook over the medium term.
The dividend for the half year 2017 of 15.5 pence (H1 2016: 15.25 pence)
results in a 1.6% increase. The interim dividend will be paid on 07 November
2017, at a cash cost of approximately £39m.
Cash flow and balance sheet
Free cash flow
The Group generated strong free cash flow of £188m, at a conversion rate of
99%.
(£m) H1 2017 H1 2016
EBITA 190 194
Depreciation of PPE and other non-cash movements 65 57
Disposal proceeds in excess of property profits 41 2
Change in working capital* (54) (29)
Maintenance capital expenditure (25) (20)
Net interest (2) (12)
Tax paid (27) (27)
Adjusted free cash flow 188 165
One-off tax payment - (42)
Free cash flow 188 123
Underlying cash conversion rate 99% 85%
*2017 Change in net working capital figure excludes £5m in relation to the
development of cloud-based software
On a broadly similar earnings figure, the stronger cash generation was driven
by the sale and lease back transaction, and a shift in the timing of interest
payments on the Group's borrowings to the second half.
Inventories were held broadly flat in the half, improving stock turnover
against higher sales. An increase in trade receivables was partially offset by
growth in trade payables, with both representing the seasonal nature of the
business, and the typically higher working capital requirements in the first
half of the year.
Investment in maintenance capex was £25m, slightly higher than in 2016, and
on track to meet expectations for the full year.
Additional cash payments to the defined benefit pension schemes, above the P&L
charge, were £5m (2016: £7m). The cash cost in the half of utilisation of
exceptional provisions incurred in prior years was £6m.
Capital Investments
In April 2017 the Group acquired TF solutions, a ventilation and air
conditioning distributor that adds adjacent product categories to the BSS
business in the Contracts division. Net cash invested in acquisitions in the
first half of the year was £7m (2016: £4m).
Investments to extend branch networks and further improve propositions in
advantaged businesses continued in the first half of 2017, with £81m invested
in capex, in addition to £23m spent on purchasing and developing freehold
sites to sustain the future pipeline of network expansion.
The network expansion programmes continued in Toolstation and Benchmarx, in
addition to new branches opened in Wickes and Travis Perkins. Three new trade
parks were opened in the period, in Welwyn Garden City, Leicester and South
Shields, with multiple trading fascias sharing a single site, improving sales
density and creating a trade destination.
(£m) H1 2017 H1 2016
Extending leadership New TP / Wickes / Toolstation / CCF / Benchmarx branches 15 13
Benchmarx implants / showrooms / tool hire implants
Investing to grow New Wickes / TP formats 17 20
Distribution centres
Re-engineering and infrastructure build Multi-channel development 24 18
IT infrastructure upgrades
Growth capex 56 51
Freehold property 23 49
Maintenance 25 20
Total capex 104 120
The programme to deliver new systems to support the merchanting businesses has
entered the construction phase. The modernised system will enable branch staff
to provide a better and more efficient service to customers, as well as
providing considerably better data and information to the business. The
programme is on plan, and is due to be piloted in one of the Group's
businesses in H2 2018.
Net debt and funding
Net debt of £377m was in line with 31 December 2016, which is a reduction of
£133m since 30 June 2016.
Lease debt also remained largely unchanged from the end of 2016. Lease
adjusted net debt was therefore also largely unchanged compared with 31
December 2016.
At 30 June 2017, the Group had funding of £1.1bn committed until at least
December 2020.
The Group's credit rating, issued by Standard and Poors, was maintained at BB+
stable following its review in April 2017.
Details of non-statutory disclosures are shown in note 14.
Medium Term Guidance H1 2017 FY 2016 H1 2016
Net debt £377m £378m £510m
Lease debt £1,502m £1,506m £1,484m
Lease adjusted net debt £1,879m £1,884m £1,994m
Lease adjusted gearing 43.4% 45.3% 45.8%
Fixed charge cover 3.5x 3.3x 3.3x 3.3x
LA net debt : EBITDAR 2.5x 2.6x 2.7x 2.9x
The Group has maintained the fixed charge cover ratio of 3.3x. The LA net
debt/EBITDAR ratio reduced further, to 2.6x, very close to the Group's medium
term target.
Return on capital measures
The Group's lease adjusted return on capital employed fell to 10.6% from 10.9%
in December 2016. The fall was primarily due to the lower profits generated
and the additional capital invested in the business over the last 12 months.
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Group have been, and are
expected to remain consistent with those described on pages 37 to 43 of the
2016 Annual Report and Accounts. Details are provided for risks relating to
market conditions, competitive pressures, information technology, colleague
recruitment, retention and succession, supplier dependency and direct
sourcing, defined benefit pension scheme funding, future expansion and funding
liquidity, further business transformation, performance of the Plumbing and
Heating division, Brexit, legislation and corporation tax.
Condensed consolidated income statement
Six months ended 30 Jun 2017 (Unaudited) Six months ended 30 Jun 2016 (Unaudited) Year ended 31 Dec 2016 (Audited)
£m £m £m
Revenue 3,220.8 3,113.3 6,217.2
Operating profit before amortisation and exceptional items 190.2 194.4 409.0
Impairment of assets and other exceptional items - - (292.0)
Amortisation of goodwill and acquired intangible assets (6.9) (8.3) (16.6)
Operating profit 183.3 186.1 100.4
Net finance costs (note 5) (15.7) (10.6) (27.7)
Profit before tax 167.6 175.5 72.7
Tax before exceptional items (32.2) (36.4) (77.1)
Tax on exceptional items - - 18.5
Tax (note 6) (32.2) (36.4) (58.6)
Profit for the period 135.4 139.1 14.1
Attributable to:
Owners of the Company 134.9 138.5 12.7
Non-controlling interests 0.5 0.6 1.4
135.4 139.1 14.1
Earnings per ordinary share (note 7)
Basic 53.6p 55.7p 5.1p
Diluted 53.2p 54.7p 5.0p
Total dividend declared per share (note 8) 15.5p 15.25p 45.0p
All results relate to continuing operations.
Condensed consolidated statement of comprehensive income
Six months ended 30 Jun 2017 (Unaudited) Six months ended 30 Jun 2016 (Unaudited) Year ended 31 Dec 2016 (Audited)
£m £m £m
Profit for the period 135.4 139.1 14.1
Items that will not be reclassified subsequently to profit and loss:
Actuarial gains / (losses) on defined benefit pension schemes 76.8 (2.4) (86.9)
Income taxes relating to items not reclassified (14.5) 0.5 16.5
62.3 (1.9) (70.4)
Items that may be reclassified subsequently to profit and loss:
Cash flow hedges:
Losses arising during the year - - 0.1
Reclassification adjustment for losses included in profit - 0.1 -
Other - 0.1 -
- 0.2 0.1
Other comprehensive income / (loss) for the period 62.3 (1.7) (70.3)
Total comprehensive income / (loss) for the period 197.7 137.4 (56.2)
Attributable to:
Owners of the Company 197.2 136.8 (57.6)
Non-controlling interests 0.5 0.6 1.4
197.7 137.4 (56.2)
Condensed consolidated balance sheet
As at 30 Jun 2017 (Unaudited) As at . 30 Jun 2016 (Unaudited) As at 31 Dec 2016 (Audited)
£m £m £m
ASSETS
Non-current assets
Goodwill 1,536.1 1,741.2 1,528.3
Other intangible assets 368.1 373.3 360.8
Property, plant and equipment 930.8 906.4 929.5
Derivative financial instruments - 19.4 -
Interest in associates 15.6 10.3 11.5
Investments 9.0 8.2 9.1
Other receivables 13.3 - 8.3
Total non-current assets 2,872.9 3,058.8 2,847.5
Current assets
Inventories 767.1 740.1 768.0
Trade and other receivables 1,148.2 1,087.6 1,059.3
Derivative financial instruments 1.5 3.2 1.7
Cash and cash equivalents 245.3 134.1 250.5
Total current assets 2,162.1 1,965.0 2,079.5
Total assets 5,035.0 5,023.8 4,927.0
Condensed consolidated balance sheet (continued)
As at 30 Jun 2017 (Unaudited) £m As at . 30 Jun 2016 (Unaudited) £m As at 31 Dec 2016 (Audited) £m
EQUITY AND LIABILITIES
Capital and reserves
Issued capital 25.1 25.0 25.1
Share premium account 531.6 520.6 528.5
Merger reserve 326.5 326.5 326.5
Revaluation reserve 16.8 18.4 16.8
Hedging reserve - - -
Own shares (9.0) (10.1) (8.7)
Other reserves (4.0) (1.3) -
Retained earnings 1,884.2 1,982.7 1,760.1
Equity attributable to owners of the Company 2,771.2 2,861.8 2.648.3
Non-controlling interests 10.2 6.5 7.3
Total equity 2,781.4 2,868.3 2,655.6
Non-current liabilities
Interest bearing loans and borrowings 618.9 662.0 621.1
Derivative financial instrument 4.0 - -
Retirement benefit obligations (note 4) 46.9 49.1 127.3
Long-term provisions 21.2 7.3 21.2
Deferred tax liabilities 58.2 63.1 45.8
Total non-current liabilities 749.2 781.5 815.4
Current liabilities
Interest bearing loans and borrowings 3.5 1.0 6.9
Trade and other payables 1,395.2 1,277.2 1,348.3
Tax liabilities 51.0 56.5 43.8
Short-term provisions 54.7 39.3 57.0
Total current liabilities 1,504.4 1,374.0 1,456.0
Total liabilities 2,253.6 2,155.5 2,271.4
Total equity and liabilities 5,035.0 5,023.8 4,927.0
The interim condensed financial statements of Travis Perkins plc, registered
number 824821, were approved by the Board of Directors on 1 August 2017 and
signed on its behalf by:
John Carter Alan Williams
Chief Executive Officer Chief Financial Officer
Condensed consolidated statement of changes in equity
Issued share capital Share premium account Merger reserve Revaluation reserve Own shares Other Retained earnings Total equity before non-controlling interest Non-controlling interest Total equity
£m £m £m £m £m £m £m £m £m £m
At 1 January 2017 (Audited) 25.1 528.5 326.5 16.8 (8.7) - 1,760.1 2,648.3 7.3 2,655.6
Profit for the period - - - - - - 134.9 134.9 0.5 135.4
Other comprehensive income for the period net of tax - - - - - - 62.3 62.3 - 62.3
Total comprehensive income for the period - - - - - - 197.2 197.2 0.5 197.7
Dividends - - - - - - (74.6) (74.6) - (74.6)
Issue of share capital - 3.1 - - (8.9) - - (5.8) - (5.8)
Tax on share based payments - - - - - - (0.3) (0.3) - (0.3)
Options on non-controlling interest - - - - - (4.0) - (4.0) - (4.0)
Own shares movement - - - - 8.6 - (8.6) - - -
Arising on acquisition - - - - - - - - 2.4 2.4
Foreign exchange - - - - - - 0.5 0.5 - 0.5
Credit to equity for equity-settled share based payments - - - - - - 9.9 9.9 - 9.9
At 30 June 2017 (Unaudited) 25.1 531.6 326.5 16.8 (9.0) (4.0) 1,884.2 2,771.2 10.2 2,781.4
Condensed consolidated statement of changes in equity (continued)
Issued share capital Share premium account Merger reserve Revaluation reserve Own shares Other Retained earnings Total equity before non-controlling interest Non-controlling interest Total equity
£m £m £m £m £m £m £m £m £m £m
At 1 January 2016 (Audited) 25.0 518.9 326.5 18.4 (15.5) (1.5) 1,918.1 2,789.9 5.9 2,795.8
Profit for the period - - - - - - 138.5 138.5 0.6 139.1
Other comprehensive income/(expense) for the period net of tax - - - - - 0.2 (1.9) (1.7) - (1.7)
Total comprehensive income for the period - - - - - 0.2 136.6 136.8 0.6 137.4
Dividends - - - - - - (72.8) (72.8) - (72.8)
Issue of share capital - 1.7 - - 5.4 - (5.2) 1.9 - 1.9
Tax on share based payments - - - - - - (1.4) (1.4) - (1.4)
Foreign exchange - - - - - - (0.4) (0.4) - (0.4)
Credit to equity for equity-settled share based payments - - - - - - 7.8 7.8 - 7.8
At 30 June 2016 (Unaudited) 25.0 520.6 326.5 18.4 (10.1) (1.3) 1,982.7 2,861.8 6.5 2,868.3
Condensed consolidated statement of changes in equity (continued)
Issued share capital Share premium account Merger reserve Revaluation reserve Own shares Other Retained earnings Total Equity before non-controlling interest Non-controlling interest Total equity
£m £m £m £m £m £m £mRecent news on Travis Perkins
See all newsREG - Travis Perkins PLC - Director Declaration
AnnouncementREG - Travis Perkins PLC - Travis Perkins plc - confirmed CEO appointment
AnnouncementREG - Travis Perkins PLC - Confirmation of Redemption and Cancellation
AnnouncementREG - Travis Perkins PLC - Notice of Redemption and Cancellation of Listing
AnnouncementREG - Travis Perkins PLC - TR1 Notification of Major Holdings
Announcement