Travis Perkins (TPK)
Travis Perkins: Half year results for the six months ended 30 June 2023
01-Aug-2023 / 07:00 GMT/BST
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Travis Perkins plc, a leading partner to the construction industry, announces its half year results for the six months
ended 30 June 2023
Focused on balancing near-term trading performance with long-term strategic delivery in challenging market conditions
Financial Highlights
-- Revenue of GBP2,472m down (2.5)% and adjusted operating profit of GBP112m down (31)% reflecting weak market
volumes in private domestic RMI and new build housing
-- Adjusted earnings per share of 30.5p down (41)% resulting from lower trading profit, phasing of property
profits and the increase in the UK corporation tax rate
-- Strong cash conversion at 105% driven by tight working capital management
-- Lease-adjusted leverage (net debt / EBITDA) of 2.1x due to lower earnings and increased lease
commitments. Net debt before leases reduced by GBP32m during the half.
-- Interim dividend maintained at 12.5 pence per share reflecting the Group's robust balance sheet and
confidence in the medium term outlook
-- As previously guided, full year adjusted operating profit expected to be around GBP240m
Operational Highlights
-- Merchanting saw resilient demand across commercial, industrial, infrastructure and public sector markets.
However, performance was impacted by significant weakness in new build housing and private domestic RMI markets
with revenue down (4.5)% overall and operating profit (23.5)% lower due to high operational gearing.
-- Toolstation delivered market share gains, with revenue up 9.0%, driven by network maturity benefits and
focus on enhancing the trade customer proposition. Operating profit was broadly in line with prior year reflecting
investment in network and infrastructure to support future growth.
-- Toolstation UK's new partly-automated 500,000 ft2 distribution centre in Pineham, Northamptonshire, which
will drive long term operational efficiencies, is on track to open in Q3. The Group will be holding an investor
event, focused on Toolstation UK, at Pineham on 28 September 2023.
-- Proactive cost actions and continued cost discipline ensured that overhead inflation was mitigated
-- Further progress on building a sustainable business with primary focus on decarbonisation
GBPm (unless otherwise stated) Note H1 2023 H1 2022 Change
Revenue 2 2,472 2,535 (2.5)%
Adjusted operating profit[1] 16(a) 112 163 (31.3)%
Adjusted earnings per share1 9(b) 30.5p 51.6p (40.9)%
Adjusted ROCE excluding property profits1 16(e) 8.1% 11.8% (3.7)ppt
Net debt before leases[2] 12 274 306 32
Net debt / adjusted EBITDA1 16(c) 2.1x 1.8x (0.3)x
Ordinary dividend per share 10 12.5p 12.5p -
Operating profit 107 157 (31.8)%
Total profit after tax 60 106 (43.4)%
Basic earnings per share 9(a) 28.6p 49.7p (42.5)%
Nick Roberts, Chief Executive Officer, commented:
"Market conditions have been challenging, which is reflected in
both our first half performance and our outlook for the balance of
the year. The Group remains focused on striking the appropriate
balance between seeking to protect shorter term profitability,
delivering our strategic objectives and being well placed to
benefit when market conditions improve.
Given the market backdrop, we are relentlessly focused on
meeting our customers' needs in core categories and supporting our
local branch managers to grow share of wallet, particularly with
general builder and professional trade customers, by making it
simpler and easier to transact with us through our digital channels
and in our branches.
I am pleased with the continued progress we are making on the
development of value-added services, as shown in the growth of
Managed Services and Hire, and also with the market share gains
coming through in Toolstation.
Whilst near-term trading is expected to remain difficult, we
continue to work to position the Group to benefit from the long
term structural drivers in our end markets. The opportunities
presented by the requirement to decarbonise the UK's built
environment and address the shortage of both private and social
housing remain significant and our unique portfolio of businesses,
coupled with the development of innovative solutions for our
customers, will enable the Group to deliver long term growth and
create value for shareholders."
Analyst Presentation
Management are hosting a results presentation at 8.30am. For
details of the event please contact the Travis Perkins Investor
Relations team as below. The presentation will also be available
via a listen-only webcast - please register at the following
link:
https://stream.brrmedia.co.uk/broadcast/64aea0e0cb2b3e5befbad72f
Enquiries:
Travis Perkins FGS Global
Matt Worster Faeth Birch / Jenny Davey / James Gray
+44 (0) 7990 088548 +44 (0) 207 251 3801
matt.worster@travisperkins.co.uk TravisPerkins@fgsglobal.com
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 and as updated in this statement, 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 the 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 1st August 2023, 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
It has been a challenging first half for the Group with consumer
inflation proving more persistent than anticipated which has
resulted in sharply rising interest rates. This has led to a
notable reduction in housing transactions, in both the new-build
and secondary markets, and homeowners reducing expenditure on
renovation projects. In contrast, the Group continues to see a
resilient performance across its other end markets - namely
commercial, industrial, infrastructure and the public sector. With
uncertainty remaining as to how long these challenges will
continue, the Group has sought to balance near-term profitability
and investment in the long-term drivers of competitive advantage
that underpin the Group's ambition to become the leading partner to
the construction industry.
Business performance
The Group saw revenues down (2.5)% in the period, driven
primarily by the impact of significantly lower volumes in the new
build housing and private domestic RMI markets on the Merchanting
business. Toolstation delivered a good revenue performance,
reflecting continued momentum in the business and maturity benefits
from network expansion across both the UK and Europe.
Pricing remained elevated through the first quarter but has
moderated since, driven by the roll off of prior year manufacturer
increases and deflation in commodity products. Correspondingly,
year-on-year volumes have seen an improving trend into the second
quarter after a weak start to the year. Overhead inflation has
remained high, principally due to rising staff costs, but has been
well controlled due to actions taken in late 2022 and ongoing cost
discipline. As a result of these factors, and with property profits
being weighted towards the first half in the prior year, adjusted
operating profit of GBP112m was down (31)%.
Whilst the Group is focused on continually refining the
near-term trading approach to reflect changes in market conditions
and competitive dynamics, investment also continues in strategy
execution to both deepen and elevate relationships with customers.
Long term investments, including new merchant destination branches
and the new Toolstation UK distribution centre, continue as
planned. The Group also continues to implement digital enhancements
to improve efficiency and to develop innovative future solutions
for customers such as its well-received WholeHouse offering,
launched in March 2023.
Key to elevating relationships with customers is the development
of value-added services and the Group has made good progress in
this area with strong growth in both Hire and Managed Services, the
integration and development of Staircraft and the adaptation of the
Benchmarx offer to serve larger customers alongside smaller
specialist kitchen fitters.
The Group has balanced supporting colleagues at a difficult time
with adjusting the cost base to reflect market conditions. The
Group made a "cost of living" payment in January 2023 (at a cost of
GBP8m) to over 17,000 colleagues (c. 95% of the workforce) and in
April 2023 awarded a pay rise of around 6% on average with those on
lower incomes receiving a larger award, balanced by a lower award
for senior executives. With an objective of mitigating cost
increases in the current year, the Group took proactive steps to
reduce the cost base at the end of 2022, resulting in annualised
savings of GBP25m, and will make additional savings by flexing
volume related costs.
A key part of the Group's long term strategy is to invest in
technology to create solutions that simplify processes for branch
teams and save customers time. Given the current environment, the
focus of this strategy is on operational efficiency and the Group
has implemented several new initiatives including the introduction
of handheld terminals in the General Merchant, which removes the
need for paper invoicing and notably speeds up the customer
journey.
Capital structure and shareholder returns
The Group's balance sheet remains in good health with net debt
before leases reducing to GBP274m (31 December 2022: GBP306m). On
an IFRS16 basis, operating leverage (rolling 12 month net debt /
EBITDA) of 2.1x is slightly above the guided range of 1.5x - 2.0x.
This metric has increased by 0.3x compared to 31 December 2022 as a
result of the reduction in EBITDA and an increase in lease
liabilities driven primarily by the inclusion of the Toolstation
distribution centre in Pineham.
The Board has declared an unchanged interim dividend of 12.5
pence per share, reflecting the Group's robust financial position
and confidence in the medium term outlook. The dividend will be
paid on 10 November 2023 to shareholders on the register at the
close of business on 6 October 2023. The Company's shares will go
ex-dividend on 5 October 2023. The Company operates a Dividend
Reinvestment Plan, elections for which must be received by the
Company's registrar by 5.30pm on 20 October 2023.
Outlook
With the outlook for the UK macroeconomic environment remaining
challenging, notably with respect to the impact of higher interest
rates on the new-build and secondary housing markets, the Group
expects demand to remain subdued into the second half in the new
build housing and private RMI markets.
Demand in the Group's other end markets remains resilient with
well-funded long-term projects across the commercial and
infrastructure sectors, robust demand for industrial RMI and a
significant backlog of work being addressed across the public
sector, particularly in social housing, education and
healthcare.
At a Group level, revenues are expected to remain in low single
digit decline through the second half with pricing in low single
digit growth and volumes in mid single digit decline. As previously
guided, the Group expects to deliver a full year adjusted operating
profit of around GBP240m. Segmental performance Merchanting
H1 2023 H1 2022 Change
Revenue GBP2,062m GBP2,159m (4.5)%
Adjusted operating profit* GBP130m GBP170m (23.5)%
Adjusted operating margin* 6.3% 7.9% (160)bps
ROCE (12 month rolling)* 12% 16% (4)ppt
Branch network** 769 767 2
* Excluding property profits
** 2022 branch network figures for comparison are taken at 31
December 2022
The Merchanting segment was impacted by reduced demand in the
new build housing and private domestic RMI markets with revenue
down by (4.5)% and operating profit down (23.5)% to GBP130m. Price
inflation in the half was still elevated compared to the long-run
average but has moderated through the period as prior year
increases have rolled off and the Merchant businesses have seen
deflation on commodity products, primarily on timber.
Merchanting gross margin was solid and cost actions mitigated
inflationary overhead increases during the first half. However,
operating margin reduced by (160)bps due to the impact of lower
volumes on a predominantly fixed cost base.
The Private domestic RMI market (35% of Merchanting revenue)
remained challenging throughout the half with notably fewer
secondary housing transactions and homeowners' budgets squeezed by
inflation and rising mortgage costs. Whilst the General Merchant
experienced resilient demand across larger contractors and
developers, the professional trade and general builder segment was
weaker.
The General Merchant team are relentlessly focused on
demonstrating the value and convenience of the customer proposition
for this key segment. This targeted approach, combining data on
customer behaviour with local insight, will involve sharper focus
on gateway categories, such as timber, and working closely with our
suppliers to bring the best deals to our customers through our
omni-channel offer.
The private domestic new-build market (19% of Merchanting
revenue) saw substantial volume decline as the impact of rapidly
rising mortgage rates quickly reduced new housing starts. This was
more pronounced amongst the national housebuilders, with regional
housebuilders remaining more active, but the impact was nonetheless
significant on CCF, Keyline and Staircraft.
Despite these challenges, CCF was able to deliver a resilient
performance with revenue growth driven by disciplined pass through
of manufacturer price increases, whilst Staircraft saw good profit
growth resulting from improvements in margin management. Staircraft
is investing in a new c. 170,000 ft2 facility in Coventry to enable
the business to significantly increase capacity with the first
output from the new factory expected in the first half of 2024.
The commercial and industrial market (22% of Merchanting
revenue) saw continued solid demand in the first half which enabled
BSS to deliver a robust performance. TF Solutions continues to gain
market share with two new branches added and revenue up 28%.
The public sector market (24% of Merchanting revenue) remains
strong with a pipeline of well-funded projects across the
infrastructure segment and a large backlog of work on social
housing and public assets. This strength is reflected in the
performance of the Group's Managed Services business, with revenue
increasing by 7% in the first half, and has helped Keyline to
partially offset the impact of notably lower new housing
starts.
The Group's strategy of developing value-added services, enabled
by destination branches in the General Merchant, continues to
progress well. Alongside Managed Services, Hire is also performing
strongly with revenue growth of 6% in the first half and now 34%
ahead of 2019. Since 2020, the Group has invested in seventeen new,
expanded or relocated destination branches with these branches
delivering a revenue and profit performance ahead of investment
appraisal targets and significantly ahead of the 2018-19 cohort.
The Group continues to invest in the future pipeline with six more
sites due to open in the second half including Tamworth, Cambridge
and Epsom. Toolstation
H1 2023 H1 2022 Change
Revenue GBP410m GBP376m 9.0%
Like-for-like growth 5.9% (10.6)%
Adjusted operating profit* GBP(10)m GBP(8)m (25.0)%
Adjusted operating margin* (2.4)% (2.2)% (20)bps
ROCE (12-month rolling)* (2)% 1% (3)ppt
Branch network (UK)** 562 563 (1)
Branch network (Europe)** 166 158 8
* Excluding property profits
** 2022 branch network figures for comparison are taken at 31
December 2022
Memo:
UK adjusted operating profit GBP9m GBP7m 28.6%
Toolstation delivered a solid performance in the first half with
revenue growth of 9.0% as the business continued to gain market
share across both the UK and Europe driven by network maturity
benefits and further enhancements to the trade customer
proposition. UK revenue increased by 7.7%, with like-for-like sales
up 5.4%, while the European business increased revenue by
19.2%.
In the UK, operating profit improved to GBP9m although operating
margin remains around 3%, reflecting both the recent significant
investment in the network and infrastructure alongside c. GBP7m of
costs in the period related to the dual running and start-up of the
new c. 500,000 ft2 partly-automated Pineham distribution centre
alongside existing distribution facilities. With Pineham due to
open in Q3, the Bridgwater distribution centre will close in the
autumn as part of a longer-term strategy to drive distribution
efficiency which, alongside the maturity benefits from the network
rollout, will take the business towards a high single-digit
operating margin.
Having created substantial new capacity via the opening of 163
new branches in the UK during 2020-22, the focus for 2023 is on
driving growth in those immature branches alongside the delivery of
the new distribution centre. The rollout of UK branches will resume
in 2024.
In Europe, Toolstation also saw market share gains from the
maturity of new space. In Benelux, where 5 new branches were added
to take the total to 118, sales were up 9%. France saw the addition
of 3 new branches, taking the total to 48 and delivered 42% sales
growth.
Toolstation Europe overall made a loss of GBP(19)m in H1,
reflecting primarily the immaturity of the branch network, which
has doubled in the last 30 months, and the full impact of the
second Netherlands distribution centre opened in 2022. Losses are
expected to narrow in the second half as the Netherlands progresses
towards break-even point. Toolstation investor update
The Group will be holding an update for investors and sell-side
analysts on 28 September 2023 at the new Toolstation distribution
centre in Pineham, Northamptonshire. The event will be focused on
Toolstation UK and will provide an opportunity to meet with the new
UK management team. Central costs
Central costs were lower year-on-year at GBP17m reflecting
benefits from restructuring actions at the end of 2022. Property
transactions
Property profits in the first half of GBP9m were primarily
generated from the sale of closed or relocated properties. These
profits were GBP12m lower than prior year which included the sale
of a substantial General Merchant site in central Cambridge. In
addition to these individual site sales, a sale-and-leaseback
package of seven sites was completed in April 2023, generating
GBP23m of proceeds at a yield below 6%. Property profits for the
full year are expected to be GBP15-20m. Financial Performance
Revenue analysis Volume, price and mix analysis
Merchanting Toolstation Group
Volume (10.3)% 2.7% (8.4)%
Price and mix 5.8% 6.3% 5.9%
Total revenue growth (4.5)% 9.0% (2.5)%
Network changes and acquisitions / disposals 0.4% (3.1)% (0.1)%
Trading days (0.7)% 0.0% (0.6)%
Like-for-like revenue growth (4.8)% 5.9% (3.2)%
Over the first half as a whole pricing remains above the
long-run average but has moderated through the period, particularly
in Merchanting. This has been driven by deflation on commodity
products, notably on timber. Merchanting volume trend improved as
the half progressed.
Toolstation saw good volume growth as network maturity benefits
in the UK and new space in Europe delivered market share gains.
Quarterly revenue analysis
Total Revenue Like-for-like revenue
2023 2022 2023 2022
Q1 (3.2)% 17.9% (4.2)% 15.3%
Merchanting Q2 (5.6)% 9.2% (5.2)% 8.5%
H1 (4.5)% 13.3% (4.8)% 11.7%
Q1 8.6% (6.0)% 4.6% (11.9)%
Toolstation Q2 9.7% (3.2)% 7.2% (9.2)%
H1 9.0% (4.6)% 5.9% (10.6)%
Q1 (1.5)% 13.6% (2.9)% 10.5%
Total Group Q2 (3.3)% 7.1% (3.3)% 5.6%
H1 (2.5)% 10.3% (3.2)% 7.9%
Note - there was one extra trading day in both Q1 and H1 2023
compared to 2022 in the Merchanting segment
At a Group level, like-for-like sales were similar in both the
first and second quarters. In the Merchanting business
like-for-like sales weakened slightly into Q2 as the moderation in
pricing was not fully offset by improving volume trends. Total
sales in Merchanting in Q2 were lower than like-for-like sales by
(0.4)% due to the impact of branch closures at the end of 2022.
This impact was masked in Q1 by the extra trading day.
Toolstation saw an acceleration of like-for-like sales growth
into the second quarter, demonstrating the momentum in the
business. Total revenue was 3.1% higher than like-for-like revenue
in the half, reflecting the impact of new space in both the UK and
Europe. Operating profit and margin
GBPm H1 2023 H1 2022 Change
Merchanting 130 170 (23.5)%
Toolstation (10) (8) (25.0)%
Property 9 21 (57.1)%
Unallocated costs (17) (20) 15.0%
Adjusted operating profit 112 163 (31.3)%
Amortisation of acquired intangible assets (5) (6)
Operating profit 107 157
Group adjusted operating profit of GBP112m was GBP(51)m lower
than H1 2022 driven by the weaker trading performance in the
Merchant business and the phasing of property profits in the prior
year.
There were no adjusting items in either current or prior year.
Finance charge
Net finance charges, shown in note 5, were in line with prior
year at GBP21.2m (2022: GBP20.8m). Taxation
The tax charge for the period to 30 June 2023 is GBP25.5m (2022:
GBP30.5m) giving an adjusted effective tax rate of 29.8% (statutory
rate 23.5%, 2022 actual 21.6%). The adjusted ETR is higher than the
statutory rate due to the impact of unrecognised tax losses in
Toolstation Europe, expenses not deductible for tax purposes (such
as depreciation of property) and deferred tax movements associated
with the share-based payments charge. Earnings per share
The Group reported a statutory profit after tax of GBP60m (2022:
GBP106m) resulting in basic earnings per share of 28.6 pence (2022:
49.7 pence). Diluted earnings per share were 28.2 pence (2022: 49.2
pence).
Adjusted profit after tax was GBP64m (2022: GBP110m) resulting
in adjusted earnings per share (note 9(b)) of 30.5 pence (2022:
51.6 pence). Cash flow and balance sheet Free cash flow
GBPm H1 2023 H1 2022 Change
Group adjusted operating profit excluding property profits 103 142 (39)
Depreciation of PPE and other non-cash movements 46 44 2
Change in working capital 8 (115) 123
Net interest paid (excluding lease interest) (10) (18) 8
Interest on lease liabilities (13) (11) (2)
Tax paid (29) (37) 8
Adjusted operating cash flow 105 5 100
Capital investments
Capex excluding freehold transactions (49) (52) 3
Proceeds from disposals excluding freehold transactions 2 2 -
Free cash flow before freehold transactions 58 (45) 103
The first half saw a significant free cash inflow as cash was
well managed during a difficult trading period with working capital
being tightly controlled. In the prior year, the working capital
outflow was predominantly a result of exceptionally high levels of
inflation on the debtor book with customer credit limits extended
to reflect the sharply rising cost of materials.
Capital investment
GBPm H1 2023 H1 2022
Strategic 29 34
Maintenance 19 15
IT 1 3
Base capital expenditure 49 52
Freehold property 7 17
Gross capital expenditure 56 69
Disposals (35) (4)
Net capital expenditure 21 65
Base capex overall was around 20% below the medium-term plan as
strategic investment was tailored to reflect market conditions.
Toolstation expansion in the UK has been paused with the management
team focused on the delivery of the new UK distribution centre,
while European expansion also slowed. Strategic capex was therefore
focused on the Toolstation distribution centre, new Staircraft
facility and upgrading the network in the General Merchant
including a new branch in Witney, Oxfordshire and preliminary works
on six new branches due to open in the second half.
Maintenance capex was in line with prior year and remains
focused on the upgrade of the fleet to support achievement of the
Group's decarbonisation objectives and drive efficiencies whilst
the majority of software and digital development is now expensed
directly through the profit and loss account. Guidance for full
year base capex is maintained at GBP100m.
Uses of free cash flow
H1 2023 H1 2022 Change
Free cash flow (GBPm) 58 (45) 103
Investments in freehold property (7) (17) 10
Disposal proceeds from freehold transactions 33 4 29
Dividends paid (56) (56) -
Net purchase / sale of own shares - (168) 168
Cash payments on adjusting items (2) (5) 3
Repayment of bonds - (120) 120
Other 4 (8) 12
Change in cash / cash equivalents 30 (415) 445
There was a net cash inflow of GBP30m in the first half. The
prior year included the completion of the share buyback programme
using the proceeds from the sale of the Plumbing & Heating
businesses and also the early redemption of GBP120m of bonds
maturing in 2023. Net debt and funding
30 Jun 2023 31 Dec 2022 Change Covenant*
Net debt GBP874m GBP819m GBP(55)m
Net debt / adjusted EBITDA 2.1x 1.8x (0.3)x <4.0x
Net debt before leases GBP274m GBP306m GBP32m
Net debt before leases / adjusted EBITDA** 0.8x 0.6x (0.2)x
* The Group has economically-equivalent covenants on a current
GAAP basis and on a pre-IFRS 16 - Leases basis
** Ratio calculated using adjusted EBITDA excluding right-of-use
asset depreciation.
Net debt before leases reduced by GBP32m from 31 December 2022
to GBP274m due to a net cash inflow in the first half driven by a
strong working capital performance. Overall net debt increased by
GBP55m due to an increase of GBP87m in lease debt resulting
primarily from the long-term leases for the new Toolstation
distribution centre and Staircraft's new manufacturing facility, as
well as the sale-and-leaseback transaction in April 2023. With
EBITDA (rolling 12 months) falling from GBP454m to GBP410m this
increased the leverage ratio to 2.1x, slightly above the guided
range (1.5x to 2.0x).
Funding
As at 30 June 2023, the Group's committed funding of GBP905m
comprised:
-- GBP180m guaranteed notes due September 2023, listed on the
London Stock Exchange
-- GBP250m guaranteed notes due February 2026, listed on the
London Stock Exchange
-- GBP75m bilateral bank loan due August 2027
-- A revolving credit facility of GBP400m, refinanced in January
2019, of which GBP54m matures in January 2024and the remaining
GBP346m matures in April 2025
As at 30 June 2023, the Group had undrawn committed facilities
of GBP400m (31 December 2022: GBP400m) and deposited cash of
GBP221m (31 December 2022: GBP194m), giving overall liquidity
headroom of GBP621m.
On 15 June 2023, the Group signed an agreement to issue GBP100m
of US private placement notes to a group of five investors. The
funding date for these notes is 23 August 2023, with the intention
of using the proceeds to repay upcoming debt maturities. The notes
are denominated in sterling and are split over three tranches, with
GBP34m maturing in August 2029, GBP33m maturing in August 2030, and
GBP33m maturing in August 2031.
The Group's credit rating from Fitch Ratings was affirmed at
BBB- with stable outlook following a review in October 2022.
Building a sustainable business
The Group has continued to make good progress against its
Science Based Targets initiative ('SBTi') accredited, 1.5
degree-aligned carbon reduction targets. Earlier this year, the
Group confirmed that decarbonisation of the industry was the main
strategic sustainability priority in response to its most recent
stakeholder materiality assessment. As a result, efforts are
focused on ensuring the Group is upskilling its workforce and at
the forefront of driving sustainability in its operations and
supply chain to optimise its product and service offering for
customers.
Set out below are more details of the Group's progress in its
key focus areas:
Accelerated decarbonisation of the Group's fleet
The Group has continued to expand the use of HVO (Hydrotreated
Vegetable Oil) as a low carbon fuel in its fleet. Following last
year's successful trial, which resulted in higher carbon savings
than anticipated (92% vs target of 90%) in the Group's Travis
Perkins, Keyline, BSS and CCF businesses, HVO has now been expanded
to 40 sites to supply over 240 vehicles, saving more than 1.3m
litres of diesel per annum.
In July the Group also started to take delivery of its new
electric forklift trucks as part of Project Switch - the largest
programme of its kind - which will see up to 1,100 diesel powered
forklift trucks across the Group being replaced with electric
alternatives by mid-2024 (eight years ahead of schedule), saving
6,600 tonnes of carbon a year.
Accelerated decarbonisation of the Group's buildings
As part of a new initiative, the Group has installed electric
vehicle (EV) chargers for colleagues and visitors, and continued
its LED roll out programme across its branch network. The Group has
also identified key locations to test a range of low carbon
technologies to gain insight into the most efficient renewable
energy technologies, such as air source heat pumps and solar
panels, suited to decarbonise our estate of over 1,400
buildings.
This new technology is then rolled out to all new branches, such
as the recently opened Travis Perkins branch in Witney,
Oxfordshire, where solar panels, electric forklift trucks, EV
charging points and a heat pump are helping to keep the carbon
footprint of the branch to a minimum.
Growing a skilled and future ready workforce
The Group is constantly evolving its award winning
apprenticeship offering to ensure the next generation of workers
have the skills required to meet the demands of the future - across
a wide spectrum of topics including supporting customers to achieve
net zero and enhancing digital capabilities. To date 1,341
apprentices have graduated and in May the Office for Standards in
Education, Children?s Services and Skills (Ofsted) awarded the
Group a 'good' Ofsted rating in all aspects of its apprenticeship
programme offering. The regulator noted the benefit learners
received from a curriculum "covering topics such as energy
efficiency in new-build homes and plans to retrofit existing
housing stock" in order to meet the skills shortage and
decarbonisation challenges faced by the business and the industry
more widely.
To further support the revolution that is needed to retrofit the
existing built environment with lower carbon solutions, the Group
is also working with The Retrofit Academy, a not for profit
organisation, to develop the expertise required to deliver
high-quality retrofit at scale. Customer teams from Travis Perkins
Managed Services, CCF and support functions have completed their
level 2 "Understanding Retrofit" qualification.
Improved carbon data for customer deliveries
The Group's specialist insulation, drywall and suspended ceiling
product distributor, CCF, has launched a new carbon reporting trial
service for customers. This provides information on the carbon
emissions relating to the delivery of products to site, and is part
of the Group's commitment to help customers decarbonise and operate
more sustainably.
Once trials are completed and data accuracy verified, this
reporting solution will also incorporate the embodied carbon of
products in order to give insight and transparency to customers,
and enable customers and end users to make better informed
decarbonisation choices.
Development of more sustainable products and services for
customers
The Travis Perkins General Merchant business has launched
WholeHouse; a new digital platform, which simplifies the
traditionally complex process of planning, costing and building new
homes to the click of a button. This service aims to help customers
navigate an increasingly complex construction landscape with new
legislation and decarbonisation targets, and to build better, more
sustainable homes quickly and safely, but still keep control over
the creative design elements, saving time and money.
To support the retrofitting of homes, which is vital to achieve
the UK's climate change goals, the Group is supporting The National
Retrofit Hub, to amplify industry collaboration and enable best
practice sharing.
The Group is further convening the industry to drive change
through a National House Builders Forum, where customers and
suppliers are working collaboratively to address the shared
challenges associated with decarbonisation.
Principal risks and uncertainties
As the Group continues to navigate heightened uncertainty in the
external environment, regular consideration of the risk landscape
and the effectiveness of monitoring and mitigating activities is
undertaken, to build the Group's resilience and support delivery of
its strategic objectives.
In their latest review of the principal risks and uncertainties
facing the Group, the Directors have considered internal and
external factors that are currently influencing the risk set and
the extent to which these change their assessment of the scale of
the risk, and the expected risk trend for the remainder of the
financial year. The key risks facing the Group, and the underlying
drivers of those risks, remain broadly consistent with those
described on pages 75 to 81 of the 2022 Annual Report and Accounts.
Details are provided for inherent risks relating to long-term
market trends, macroeconomic volatility, supply chain resilience,
managing change, climate change & carbon reduction, cyber
threat & data security, health, safety & wellbeing, legal
compliance and critical asset failure.
The Group is actively managing the challenges already presented
by macroeconomic volatility. This remains in the principal risk
set, with an increasing risk trend, given that the ongoing impact
and duration of macroeconomic factors remains highly uncertain.
Following the latest review, the Directors no longer consider
the risk trend in relation to supply chain resilience to be
increasing albeit the inherent risk remains high. The Group has a
good track record of navigating through supply challenges and its
well established programme of stock monitoring, supplier engagement
and independent testing helps to ensure a continuous supply of
quality materials. Sourcing options for key materials are regularly
evaluated and, where possible, the Group seeks to engage with more
than one supplier where materials are sourced from more complex
supply chains outside of the UK.
In terms of emerging risks, the potential for an escalation of
the war in Ukraine continues to be monitored. The Group continues
to ensure compliance with sanctions and that timber purchases are
from certified sources and do not include timber from Russia or
Belarus. In the event that hostilities escalate in Europe, sourcing
and supply could be impacted, so the situation is closely
monitored. There are no other emerging risks considered significant
enough to report at this time. Condensed consolidated income
statement
Six months ended Six months ended Year ended
GBPm Notes 30 June 2023 30 June 2022 31 December 2022
(unaudited) (unaudited) (audited)
Revenue 2 2,472.1 2,534.5 4,994.8
Adjusted operating profit 16(a) 112.1 162.7 295.3
Amortisation of acquired intangible assets (5.2) (5.3) (10.5)
Operating profit 106.9 157.4 284.8
Net finance costs 5 (21.2) (20.8) (39.8)
Profit before tax 85.7 136.6 245.0
Tax 6 (25.5) (30.5) (52.8)
Profit for the period 60.2 106.1 192.2
Earnings per share
Adjusted basic earnings per share 9(b) 30.5 51.6p 94.6p
Basic earnings per share 9(a) 28.6 49.7p 90.8p
Diluted earnings per share 9(a) 28.2 49.2p 89.2p
Total dividend declared per share 10 12.5p 12.5p 39.0p Condensed consolidated statement of comprehensive income
Six months ended Six months ended Year ended
GBPm 30 June 2023 30 June 2022 31 December
(unaudited) (unaudited) 2022
(audited)
Profit for the period 60.2 106.1 192.2
Items that will not be reclassified subsequently to profit and loss:
Actuarial (losses) / gains on defined benefit pension schemes (note 7) (5.4) 4.2 (145.3)
Income taxes relating to other comprehensive income 1.4 (0.8) 36.3
Items that may be reclassified subsequently to profit and loss:
Foreign exchange differences on retranslation of foreign operations (2.5) - 5.5
Fair value gains on cash flow hedges 3.2 - 4.3
Deferred tax on cash flow hedges (0.8) - (1.1)
Other comprehensive (loss) / gain for the period net of tax (4.1) 3.4 (100.3)
Total comprehensive income for the period 56.1 109.5 91.9
All other comprehensive income is attributable to the owners of
the Company. Condensed consolidated balance sheet
GBPm As at 30 June 2023 As at 30 June 2022 As at 31 December 2022
(unaudited) (unaudited) (audited)
ASSETS
Non-current assets
Goodwill 856.8 855.2 859.0
Other intangible assets 109.5 122.7 115.9
Property, plant and equipment 831.1 819.6 847.3
Right-of-use assets 540.2 433.1 451.7
Other receivables 18.5 24.0 17.2
Deferred tax asset 16.9 15.8 15.0
Derivative financial instruments 7.5 - 4.3
(note 14)
Retirement benefit asset (note 7) 132.9 282.5 135.9
Total non-current assets 2,513.4 2,552.9 2,446.3
Current assets
Inventories 733.4 763.0 727.8
Derivative financial instruments - 1.3 -
(note 14)
Trade and other receivables 816.6 847.4 725.9
Tax assets 2.8 7.4 0.7
Cash and cash equivalents 334.5 44.5 235.7
Total current assets 1,887.3 1,663.6 1,690.1
Total assets 4,400.7 4,216.5 4,136.4
EQUITY AND LIABILITIES
Capital and reserves
Share capital (note 8) 23.8 23.8 23.8
Share premium account 545.6 545.6 545.6
Cash flow hedge reserve 7.5 - 4.3
Merger reserve 326.5 326.5 326.5
Revaluation reserve 11.0 10.5 12.1
Other reserves 1.4 1.4 1.4
Own shares (16.5) (44.3) (34.3)
Foreign exchange reserve 7.1 4.1 9.6
Retained earnings 1,202.7 1,262.2 1,213.2
Total equity 2,109.1 2,129.8 2,102.2
Non-current liabilities
Interest-bearing loans and 346.7 453.2 349.1
borrowings
Lease liabilities 520.0 421.3 438.3
Deferred tax liabilities 95.4 146.2 96.0
Long-term provisions 5.2 - 4.9
Total non-current liabilities 967.3 1,020.7 888.3
Current liabilities
Interest-bearing loans and 261.6 - 192.5
borrowings
Lease liabilities 80.3 71.6 74.3
Derivative financial instruments 0.6 - 0.2
(note 14)
Trade and other payables 956.5 960.5 852.4
Short-term provisions 25.3 33.9 26.5
Total current liabilities 1,324.3 1,066.0 1,145.9
Total liabilities 2,291.6 2,086.7 2,034.2
Total equity and liabilities 4,400.7 4,216.5 4,136.4
The interim condensed financial statements of Travis Perkins
plc, registered number 824821, were approved by the Board of
Directors on 31 July 2023 and signed on its behalf by:
Nick Roberts Alan Williams
Chief Executive Officer Chief Financial Officer Condensed consolidated statement of changes in equity
Cash flow Own Own
GBPm Share Share hedge Merger Revaluation Other shares shares Foreign Retained Total
capital premium reserve reserve reserve reserves - - ESOT exchange earnings equity
treasury
At 1 January 2023 23.8 545.6 4.3 326.5 12.1 1.4 - (34.3) 9.6 1,213.2 2,102.2
(audited)
Profit for the period - - - - - - - - - 60.2 60.2
Other comprehensive - - 3.2 - - - - - (2.5) (4.8) (4.1)
income for the period
Total comprehensive - - 3.2 - - - - - (2.5) 55.4 56.1
income for the period
Dividends paid - - - - - - - - - (55.8) (55.8)
Adjustments in
respect of revalued - - - - (1.1) - - - - 1.1 -
fixed assets
Own shares movement - - - - - - - 17.8 - (17.8) -
Equity-settled - - - - - - - - - 6.1 6.1
share-based payments
Tax on equity-settled - - - - - - - - - 0.2 0.2
share-based payments
Tax on revalued - - - - - - - - - 0.3 0.3
assets
At 30 June 2023 23.8 545.6 7.5 326.5 11.0 1.4 - (16.5) 7.1 1,202.7 2,109.1
(unaudited)
Cash Own shares Own shares
GBPm Share Share flow Merger Revaluation Other - - Foreign Retained Total
capital premium hedge reserve reserve reserves treasury ESOT exchange earnings equity
reserve
At 1 January 2022 25.2 545.6 - 326.5 10.5 - (53.8) (7.6) 4.1 1,387.3 2,237.8
(audited)
Income for the - - - - - - - - - 106.1 106.1
period
Other
comprehensive - - - - - - - - - 3.4 3.4
loss for the
period
Total
comprehensive - - - - - - - - - 109.5 109.5
income for the
period
Dividends paid - - - - - - - - - (55.5) (55.5)
Shares purchased
in share buyback - - - - - - (125.2) - - - (125.2)
and held as
treasury shares
Shares purchased
in share buyback - - - - - - - (46.6) - - (46.6)
and held as own
shares by ESOT
Sale of own - - - - - - - 3.7 - - 3.7
shares
Own shares - - - - - - - 6.2 - (6.2) -
movement
Cancelled shares (1.4) - - - - 1.4 179.0 - - (179.0) -
Equity-settled
share-based - - - - - - - - - 7.7 7.7
payments, net of
tax
Tax on
equity-settled - - - - - - - - - (1.6) (1.6)
share-based
payments
At 30 June 2022 23.8 545.6 - 326.5 10.5 1.4 - (44.3) 4.1 1,262.2 2,129.8
(unaudited) Condensed consolidated statement of changes in equity (continued)
Cash Own Own
GBPm Share Share flow Merger Revaluation shares shares Foreign Other Retained Total
capital premium hedge reserve reserve - - ESOT exchange reserves earnings equity
reserve treasury
At 1 January 2022 25.2 545.6 - 326.5 10.5 (53.8) (7.6) 4.1 - 1,387.3 2,237.8
(audited)
Profit for the year - - - - - - - - - 192.2 192.2
Other comprehensive - - 4.3 - - - - 5.5 - (110.1) (100.3)
income for the year
Total comprehensive - - 4.3 - - - - 5.5 - 82.1 91.9
income for the year
Dividends paid - - - - - - - - - (81.7) (81.7)
Adjustments in respect
of revalued fixed - - - - (1.1) - - - - 1.1 -
assets
Shares purchased in
share buyback and held - - - - - (125.5) - - - - (125.5)
as treasury shares
Shares purchased in
share buyback and held - - - - - - (46.6) - - - (46.6)
as own shares by ESOT
Sale of own shares - - - - - - 3.8 - - 3.8
-
Own shares movement - - - - - - 16.1 - - (16.1) -
Cancelled shares (1.4) - - - - 179.3 - - 1.4 (179.3) -
Equity-settled - - - - - - - - - 17.0 17.0
share-based payments
Tax on equity-settled - - - - - - - - - (2.3) (2.3)
share-based payments
Tax on revalued assets - - - - 2.7 - - - - 5.1 7.8
At 31 December 2022 23.8 546.5 4.3 326.5 12.1 - (34.3) 9.6 1.4 1,213.2 2,102.2
(audited) Condensed consolidated cash flow statement
Six months ended Six months ended
Year ended 31 December 2022
GBPm 30 June 2023 30 June 2022
(audited)
(unaudited) (unaudited)
Cash flows from operating activities
Operating profit 106.9 157.4 284.8
Adjustments for:
Depreciation of property, plant and equipment 38.2 32.8 73.6
Depreciation of right-of-use assets - property 41.3 38.6 70.3
Depreciation of right-of-use assets - equipment 4.6 5.2 8.7
Amortisation of other intangibles 1.9 3.2 6.5
Amortisation of acquisition-related intangibles 5.2 5.3 10.5
Share-based payments 6.1 7.7 17.0
Gains on disposal of property, plant and equipment (9.3) (20.8) (25.3)
Purchase of tool hire assets (4.1) (4.4) (8.9)
Increase in inventories (5.6) (38.6) (3.4)
Increase in receivables (90.4) (140.7) (19.2)
Increase / (decrease) in payables 104.3 63.8 (53.9)
Adjusting item payments in excess of charge (1.5) (5.0) (7.2)
Cash generated from operations 197.6 104.5 353.5
Interest paid and debt arrangement fees (12.8) (18.5) (18.3)
Interest on lease liabilities (12.5) (10.7) (21.5)
Income taxes paid (29.3) (36.6) (57.6)
Net cash inflow from operating activities 143.0 38.7 256.1
Cash flows from investing activities
Interest received 2.7 0.5 1.4
Proceeds on disposal of property, plant and equipment 34.8 5.7 22.5
Purchase and development of software (0.7) (3.0) (7.0)
Purchases of freehold land and buildings (6.4) (16.7) (38.0)
Purchases of property, plant and equipment (44.7) (44.9) (94.1)
Net cash outflow from investing activities (14.3) (58.4) (115.2)
Cash flows from financing activities
Shares purchased in share buyback - (171.8) (172.1)
Repayment of lease liabilities (39.4) (48.3) (78.8)
Payments to pension SPV (3.8) (3.7) (3.7)
Sale of own shares - 3.7 3.8
Dividends paid (55.8) (55.5) (81.7)
Proceeds from borrowings - - 75.0
Repayment of bonds - (120.0) (120.0)
Net cash outflow from financing activities (99.0) (395.6) (377.5)
Net increase / (decrease) in cash and cash equivalents 29.7 (415.3) (236.6)
Cash and cash equivalents at the beginning of the period 223.2 459.8 459.8
Cash and cash equivalents at the end of the period 252.9 44.5 223.2 Notes to the interim financial statements 1. General information and accounting policies
The interim financial statements have been prepared on the
historical cost basis, except that certain financial instruments
including derivative instruments and plan assets of defined benefit
pension schemes are stated at their fair value. The condensed
interim financial statements include the accounts of the Company
and all its subsidiaries ("the Group"). Basis of preparation
The financial information for the six months ended 30 June 2023
and 30 June 2022 is unaudited. The June 2023 information has been
reviewed by KPMG LLP, the Group's auditor, and a copy of their
review report appears on pages 36 and 37 of this interim
report. The June 2022 information was also reviewed by KPMG
LLP.
The financial information for the year ended 31 December 2022
does not constitute statutory accounts as defined in section 435 of
the Companies Act 2006. A copy of the statutory accounts for the
year ended 31 December 2022, as prepared in accordance with
UK-adopted international accounting standards, has been delivered
to the Registrar of Companies. The auditor's report on those
accounts was not qualified, did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying the report and did not contain statements under
section 498(2) or (3) of the Companies Act 2006.
The unaudited interim financial statements for the six months
ended 30 June 2023 have been prepared in accordance with IAS 34 -
Interim Financial Reporting, as adopted for use in the UK, and have
been prepared on the basis of IFRS.
The annual financial statements of the Group are prepared in
accordance with UK-adopted international accounting standards. As
required by the Disclosure and Transparency Rules of the Financial
Conduct Authority, the condensed set of financial statements has
been prepared applying the accounting policies and presentation
that were applied in the preparation of the Company's published
consolidated financial statements for the year ended 31 December
2022. The 2022 full-year financial statements are available on the
Travis Perkins website (www.travisperkinsplc.co.uk).
The Directors are currently of the opinion that the Group's
forecasts and projections show that the Group should be able to
operate within its current facilities and comply with its banking
covenants. The Group is however exposed to a number of significant
risks and uncertainties, which could affect the Group's ability to
meet management's projections.
The Directors believe that the Group has the flexibility to
react to changing market conditions and is adequately placed to
manage its business risks successfully. The Group has undertaken a
detailed going concern assessment, reviewing its current and
projected financial performance and position, including current
assets and liabilities, debt maturity profile including the GBP180m
bond due in September 2023, future commitments and forecast cash
flows. The downside scenarios tested, outlining the impact of
severe but plausible adverse scenarios based on a severe recession
and housing market weakness, show that there is sufficient headroom
for liquidity and covenant compliance purposes for at least the
next 12 months from the date of approval of these financial
statements. For this reason the interim financial statements have
been prepared on a going concern basis. The going concern
assessment is not sensitive to estimates on inflation. New and
amended standards adopted by the Group
There are no new or amended standards applicable for the current
reporting period, except for International Tax Reform - Pillar Two
Model Rules (Amendments to IAS 12) which was endorsed by the UK
Endorsement Board on 19 July 2023. The impact of this amendment is
discussed in note 6.
Notes to the interim financial statements 2. Revenue
GBPm Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December 2022
Sale of goods 2,389.7 2,457.1 4,836.0
Sale of services 82.4 77.4 158.8
2,472.1 2,534.5 4,994.8 3. Business segments
The operating segments are identified on the basis of internal
reports about components of the Group that are regularly reviewed
by the Chief Operating Decision Maker ("CODM"), which is considered
to be the Board, to assess performance and allocate capital.
Both operating segments sell building materials to a wide range
of customers, none of which are dominant, and operate predominantly
in the United Kingdom.
Segment result represents the result of each segment without
allocation of certain central costs, finance costs and tax.
Adjusted segment result is the result of each segment before
adjusting items and property profits. Unallocated segment assets
and liabilities comprise financial instruments, current and
deferred tax, cash, borrowings and pension scheme assets and
liabilities. a) Segment results Six months ended 30 June 2023
GBPm Merchanting Toolstation Unallocated Consolidated
Revenue 2,061.7 410.4 - 2,472.1
Segment result 135.2 (11.4) (16.9) 106.9
Amortisation of acquired intangible assets 3.8 1.4 - 5.2
Adjusted segment result 139.0 (10.0) (16.9) 112.1
Less property profits (9.3) - - (9.3)
Adjusted segment result excluding property profits 129.7 (10.0) (16.9) 102.8
Adjusted segment margin 6.7% (2.4)% - 4.5%
Adjusted segment margin excluding property profits 6.3% (2.4)% - 4.2%
Notes to the interim financial statements 3. Business segments
(continued) a) Segment results (continued) Six months ended 30 June
2022
GBPm Merchanting Toolstation Unallocated Consolidated
Revenue 2,158.6 375.9 - 2,534.5
Segment result 186.6 (9.8) (19.4) 157.4
Amortisation of acquired intangible assets 3.8 1.5 - 5.3
Adjusted segment result 190.4 (8.3) (19.4) 162.7
Less property profits (20.8) - - (20.8)
Adjusted segment result excluding property profits 169.6 (8.3) (19.4) 141.9
Adjusted segment margin 8.8% (2.2%) - 6.4%
Adjusted segment margin excluding property profits 7.9% (2.2%) - 5.6% Year ended 31 December 2022
GBPm Merchanting Toolstation Unallocated Consolidated
Revenue 4,219.8 775.0 - 4,994.8
Segment result 331.3 (11.8) (34.7) 284.8
Amortisation of acquired intangible assets 7.6 2.9 - 10.5
Adjusted segment result 338.9 (8.9) (34.7) 295.3
Less property profits (25.3) - - (25.3)
Adjusted segment result excluding property profits 313.6 (8.9) (34.7) 270.0
Adjusted segment margin 8.0% (1.1%) - 5.9%
Adjusted segment margin excluding property profits 7.4% (1.1%) - 5.4% b) Segment assets and liabilities
GBPm 30 June 2023
Segment assets
Merchanting 3,063.7
Toolstation 785.9
Unallocated 551.1
Total assets 4,400.7
Segment liabilities
Merchanting (1,230.7)
Toolstation (360.8)
Unallocated (700.1)
Total liabilities (2,291.6)
Notes to the interim financial statements 4. Seasonality
The Group's trading operations when assessed on a half yearly
basis are mainly unaffected by seasonal factors. In 2022 the period
to 30 June accounted for 50.8% of the Group's annual revenue. 5.
Net finance costs
Six months ended 30 Year ended
Six months ended 30 June 2023 June 2022 31 December
GBPm 2022
Finance income
Items in the nature of interest:
Interest receivable 2.7 0.7 1.8
Other finance income - pension scheme 3.0 2.6 5.3
Remeasurement:
Net gain on remeasurement of foreign exchange - 0.7 2.1
Net gain on remeasurement of derivatives at fair value - 1.1 -
5.7 5.1 9.2
Finance costs
Items in the nature of interest:
Interest on lease liabilities - property (12.2) (10.6) (21.2)
Interest on lease liabilities - equipment (0.3) (0.1) (0.3)
Interest on sterling bonds (8.7) (12.7) (21.5)
Interest on other loans and overdrafts (2.3) (0.4) (2.1)
Pension SPV and other interest (1.6) (1.4) (1.7)
Other finance costs:
Amortisation of issue costs of bank loans (0.5) (0.6) (1.5)
Unwinding of discounts - property provisions - (0.1) (0.4)
Remeasurement:
Net loss on remeasurement of foreign exchange (0.8) - -
Net loss on remeasurement of derivatives at fair value (0.5) - (0.3)
(26.9) (25.9) (49.0)
Net finance costs (21.2) (20.8) (39.8)
Notes to the interim financial statements 6. Tax
Six months ended Six months ended Year ended
GBPm 30 June 2023 30 June 2022 31 December 2022
Current tax
- current year 27.1 29.2 56.2
- prior year - - 1.4
Total current tax 27.1 29.2 57.6
Deferred tax
- current year (1.6) 1.3 (2.5)
- prior year - - (2.3)
Total deferred tax (1.6) 1.3 (4.8)
Total tax charge 25.5 30.5 52.8
Tax for the interim period is charged on profit before tax,
based on the best estimate of the corporate tax rate for the full
financial year on a country-by-country basis.
For accounting periods beginning after 31 December 2023 the
Group will be required to comply with the OECD Pillar Two model
rules which will require the Group to pay a minimal level of tax on
income arising in the jurisdictions in which it operates. The
Group's current analysis of these rules and their application in
jurisdictions relevant to the Group indicate that no material
additional tax liability will arise. The Group has applied the
mandatory temporary exception to the accounting for deferred taxes
arising from the implementation of the Pillar Two model rules.
Notes to the interim financial statements 7. Retirement benefit
obligations (a) Defined benefit pension schemes
The Group has a number of historical defined benefit pension
schemes, all of which are closed to new members and future
accruals. The Group operates four final salary schemes being The
Travis Perkins Pensions and Dependants' Benefit Scheme ("the TP DB
scheme"), the BSS Defined Benefit Scheme ("the BSS DB Scheme"), the
immaterial Platinum pension scheme and the immaterial BSS Ireland
Defined Benefit Scheme. (b) Balance sheet position and movements
during the year
Six months ended 30 June Six months ended 30 June Year ended
GBPm 2023 2022 31 December
2022
At 1 January gross pension asset 135.9 275.8 275.8
Amounts recognised in income:
Current service costs and administration expenses (1.0) (0.5) (1.7)
Net interest income 3.0 2.6 5.3
Other movements:
Contributions from sponsoring companies 0.4 0.4 1.5
Amounts recognised in other comprehensive income:
Foreign exchange - - 0.3
Return on plan assets (excluding amounts in net (49.1) (399.0) (628.6)
interest)
Actuarial gain arising from changes in demographic - - 7.5
assumptions
Actuarial gains arising from changes in financial 43.7 403.2 550.6
assumptions
Actuarial gain arising from experience adjustments - - (74.8)
Gross pension asset 132.9 282.5 135.9
Deferred tax (33.2) (70.7) (33.9)
Net pension asset 99.7 211.8 102.0
Notes to the interim financial statements 8. Share capital
Allotted
No. GBPm
Ordinary shares:
At 1 January 2022 225,025,926 25.2
Cancellation of share capital (12,516,592) (1.4)
At 1 January 2023 and 30 June 2023 212,509,334 23.8 9. Earnings per share a) Basic and diluted earnings per share
Year ended
Six months ended 30 June Six months ended 30 June
2023 2022 31 December
2022
Profit attributable to the owners of the parent (GBPm) 60.2 106.1 192.2
Weighted average number of shares in issue 210,293,714 213,513,168 211,630,413
Dilutive effect of share options 3,469,107 2,098,812 3,789,212
Weighted average number of shares for diluted earnings 213,762,821 215,611,980 215,419,625
per share
Earnings per share 28.6p 49.7p 90.8p
Diluted earnings per share 28.2p 49.2p 89.2p b) Adjusted earnings per share
Adjusted earnings per share are calculated by excluding the
effects of the amortisation of acquired intangible assets,
adjusting items and discontinued operations from earnings.
Six months ended 30 June Six months ended 30 June Year ended
GBPm 2023 2022 31 December
2022
Profit attributable to the owners of the 60.2 106.1 192.2
parent
Amortisation of acquired intangible assets 5.2 5.3 10.5
Tax on amortisation of acquired intangible (1.3) (1.3) (2.6)
assets
Earnings for adjusted earnings per share 64.1 110.1 200.1
Adjusted earnings per share 30.5p 51.6p 94.6p
Adjusted diluted earnings per share 30.0p 51.1p 92.9p
Notes to the interim financial statements 10. Dividends
GBP55.8m has been recognised in the financial statements as
distributions to equity shareholders in the period (2022:
GBP55.5m). An interim dividend of 12.5p is proposed in respect of
the year ending 31 December 2023. It will be paid on 10 November
2023 to shareholders on the register at the close of business on 6
October 2023. The shares will be quoted ex-dividend on 5 October
2023. 11. Borrowings
At the period end, the Group had the following borrowing
facilities available:
30 June 30 June 31 December
2023 2022 2022
GBPm
Drawn facilities:
GBP250m sterling bond (due February 2026) 250.0 250.0 250.0
GBP300m sterling bond (due September 2023) 180.0 180.0 180.0
Term loan 75.0 - 75.0
Overdraft 81.6 - 12.5
586.6 430.0 517.5
Undrawn facilities:
5-year committed revolving credit facility 400.0 400.0 400.0
Bank overdraft 15.0 15.0 15.0
415.0 415.0 415.0
The overdraft balance of GBP81.6m forms part of the Group's
notional cash pool and its aggregate cash position of GBP252.9m.
The Group's GBP15.0m overdraft facility and the Group's GBP400.0m
revolving credit facility were undrawn as at 30 June 2023.
On 15 June 2023, the Group signed an agreement to issue GBP100m
of US private placement notes to a group of five investors. The
funding date for these notes is 23 August 2023 and the proceeds
will be used to repay upcoming debt maturities. The notes are
denominated in sterling and are split over three tranches, with
GBP34m maturing in August 2029, GBP33m maturing in August 2030 and
GBP33m maturing in August 2031.
The Group's GBP400m banking facility with a syndicate of banks
was extended in 2020, with GBP54m maturing in January 2024 and the
remaining GBP346m maturing in April 2025.
Notes to the interim financial statements 12. Net debt
Six months ended Six months ended Year ended
GBPm
30 June 2023 30 June 2022 31 December 2022
Net debt at 1 January (818.5) (604.6) (604.6)
Lease-related movements:
Lease additions (128.8) (47.6) (114.7)
Disposals of leases 1.7 6.3 12.5
Repayment of lease liabilities - property 47.1 41.7 86.9
Repayment of lease liabilities - equipment 4.8 6.6 13.4
Discount unwind on lease liability (12.5) (10.7) (21.5)
Other net debt movements:
Increase / (decrease) in cash 29.7 (415.3) (236.6)
Cash flows from debt (0.1) 0.6 (75.0)
Finance charges movement (0.5) (1.2) (0.6)
Amortisation of swap receipt - - (0.1)
Bond repurchase - 120.0 120.0
Payments to pension SPV liability 3.8 3.7 3.7
Discount unwind on pension SPV liability (0.8) (1.0) (1.9)
Net debt at 30 June / 31 December (874.1) (901.5) (818.5)
Less: lease liability 600.3 492.9 512.6
Net debt before leases (273.8) (408.6) (305.9)
Notes to the interim financial statements 13. Financial risk
management
The overall aim of the Group's financial risk management
policies is to minimise potential adverse effects on financial
performance and net assets. The Group manages the principal
financial and treasury risks within a framework of policies and
operating parameters reviewed and approved annually by the Board of
Directors. The Group does not enter into speculative transactions.
Derivatives
In August 2022 the Group obtained a 5-year term loan facility
for GBP75m and at the same time entered into an equal interest rate
swap arrangement to hedge the interest rate. For 2022 through to
2025, the Board of Directors has decided to maintain a ratio of
fixed and floating rate net debt at 1:1. The risk management
objective is to hedge against the fair value of the variable
interest rate element of the loan facility. The interest rate swap
is a derivative measured at fair value and is designated in the
hedging relationship in its entirety, therefore the hedging
instrument is eligible for hedge accounting.
The Group's hedging reserve relates to its interest rate
swaps:
GBPm Cash flow hedge reserve
At 1 January and 30 June 2022 -
Change in fair value of hedging instrument recognised in OCI 4.3
Deferred tax (1.1)
At 31 December 2022 3.2
Change in fair value of hedging instrument recognised in OCI 3.2
Deferred tax (0.8)
At 30 June 2023 5.6
Notes to the interim financial statements
13. Financial risk management (continued)
Hedge effectiveness for the interest rate swap was determined at
the inception of the swap arrangement and through prospective
effectiveness assessments, to ensure that an economic relationship
exists between the loan facility and the interest rate swap. As
both the loan and interest rate swap have the same critical terms,
with the value, term and payment timings aligned, there is no
portion of the hedge which is considered to be ineffective.
Swaps currently in place cover approximately 100% of the
variable term loan principal outstanding. The fixed interest rate
of the swap is 2.673%. The interest rate of the term loan consists
of a variable element based on the Sterling Overnight Index Average
("SONIA") and a margin of 1.8% - 2.4%. The swap contracts require
settlement of the net interest receivable or payable every 6 months
and coincides with the dates on which payment is due on the
underlying term loan.
The effects of the interest rate swaps of the Group's financial
position and performance are as follows:
GBPm Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
Carrying amount (non-current assets) 7.5 - 4.3
Notional amount 75.0 - 75.0
Maturity date 15 August 2027 - 15 August 2027
Hedge ratio 1:1 - 1:1
Change in fair value of hedging instruments 3.2 - 4.3
Weighted average hedged rate for the year 4.07% - 2.43%
The following amounts were recognised in the Group's profit and
loss:
Six months Six months Year ended
GBPm ended ended 31 December
30 June 30 June 2022 2022
2023
Net loss on foreign currency forwards not qualifying as hedges included in (0.5) - (0.3)
other gains/(losses)
Notes to the interim financial statements 14. Financial
instruments
The fair values of financial assets and financial liabilities
are determined as follows:
-- Foreign currency forward contracts are measured using quoted
forward exchange rates.
-- Interest rate swaps are measured at the present value of
future cash flows, estimated and discountedbased on the applicable
yield curves derived from quoted interest rates.
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into levels 1 to 3 based on the degree to which
the fair value is observable.
There were no transfers between levels during the year. There
are no non-recurring fair value measurements.
GBPm 30 June 2023 30 June 2022 31 December
2022
Included in non-current assets
Level 2 - Interest rate swap 7.5 - 4.3
Included in current assets
Level 2 - Foreign currency forward contracts at fair value through profit and - 1.3 -
loss
7.5 1.3 4.3
Included in current liabilities
Level 2 - Foreign currency forward contracts at fair value through profit and (0.6) (0.4) (0.2)
loss
(0.6) (0.4) (0.2)
The Group also has a number of financial instruments which are
not measured at fair value in the balance sheet. For the majority
of these instruments, the fair values are not materially different
from their carrying amounts. Significant differences were
identified for the Group's GBP430m of bonds as at 30 June 2023,
where the assessed fair value based on quoted mid-market prices was
GBP403.4m (31 December 2022: fair value of GBP399.6m for GBP430m of
bonds). 15. Related party transactions
The Group has related party relationships with its subsidiaries
and with its Directors. Transactions between Group companies, which
are related parties, have been eliminated on consolidation and are
not disclosed in this note. There have been no related party
transactions with Directors other than in respect of
remuneration.
Notes to the interim financial statements 16. Non-statutory
information
Alternative performance measures ("APMs") are used to describe
the Group's performance. These are not recognised under IFRS or
other generally accepted accounting principles. The Board focuses
on these measures when assessing ongoing trading and they
facilitate meaningful year-on-year comparisons and hence provide
useful information to shareholders. APMs are defined in this note
and reconciled to the closest GAAP measure. a) Adjusted operating
profit
Adjusted operating profit is calculated by excluding the effects
of amortisation of acquired intangible assets and adjusting items
from operating profit.
GBPm Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
Operating profit 106.9 157.4 284.8
Amortisation of acquired intangible assets 5.2 5.3 10.5
Adjusted operating profit 112.1 162.7 295.3 b) Adjusted profit before tax
Adjusted profit before tax is calculated by excluding the
effects of amortisation of acquired intangible assets and adjusting
items from profit before tax.
Six months ended Six months ended Year ended
GBPm
30 June 2023 30 June 2022 31 December 2022
Profit before tax 85.7 136.6 245.0
Amortisation of acquired intangible assets 5.2 5.3 10.5
Adjusted profit before tax 90.9 141.9 255.5 c) Net debt to adjusted EBITDA (rolling 12 months)
GBPm 30 June 2023 30 June 2022 31 December 2022
Operating profit 234.3 338.6 284.8
Depreciation and amortisation 175.7 172.5 169.6
EBITDA 410.0 511.1 454.4
Adjusting items - 1.8 -
Adjusted EBITDA 410.0 512.9 454.4
Net debt (note 12) 874.1 901.5 818.5
Net debt to adjusted EBITDA (rolling 12 months) 2.1x 1.8x 1.8x
Notes to the interim financial statements
16. Non-statutory information (continued) d) Free cash flow
Six months ended 30 Six months Year ended
GBPm June 2023 ended 30 31 December 2022
June 2022
Adjusted operating profit 112.1 162.7 295.3
Less: profit on disposal of properties (9.3) (20.8) (25.3)
Adjusted operating profit excluding property profit 102.8 141.9 270.0
Depreciation of property, plant and equipment 38.2 32.8 73.6
Amortisation of internally-generated intangibles 1.9 3.2 6.5
Share-based payments 6.1 7.7 17.0
Movement on working capital 8.3 (115.5) (76.5)
Other net interest paid (10.1) (18.0) (16.9)
Interest on lease liabilities (12.5) (10.7) (21.5)
Income tax paid (29.3) (36.6) (57.6)
Capital expenditure excluding freehold purchases (49.5) (52.3) (110.0)
Disposal of plant and equipment 1.6 2.2 10.1
Free cash flow 57.5 (45.3) 94.7 e) Capital ratios i) Average capital employed in continuing operations (rolling 12 months)
GBPm 30 June 2023 30 June 2022 31 December 2022
Opening net assets 2,129.8 2,100.4 2,237.8
Net pension asset (211.8) (145.0) (207.0)
Net borrowings 901.5 617.1 604.6
Less: net assets of discontinued operations - (250.3) -
Less: net borrowings of discontinued operations - (89.0) -
Opening capital employed 2,819.5 2,233.2 2,635.4
Closing net assets 2,109.1 2,129.8 2,102.2
Net pension asset (99.7) (211.8) (102.0)
Net borrowings 874.1 901.5 818.5
Closing capital employed 2,883.5 2,819.5 2,818.7
Average capital employed 2,851.5 2,526.4 2,727.1
Notes to the interim financial statements 16. Non-statutory
information (continued) e) Capital ratios (continued) ii) Return on
capital employed (rolling 12 months)
GBPm 30 June 2023 30 June 2022 31 December 2022
Adjusted operating profit (rolling 12 months) 244.7 351.7 295.3
Average capital employed 2,851.5 2,526.4 2,727.1
Return on capital employed 8.6% 13.9% 10.8% f) Like-for-like sales
GBPm Merchanting Toolstation Total
2022 H1 revenue 2,158.6 375.9 2,534.5
Network change (22.5) (1.8) (24.3)
Trading days 15.9 - 15.9
2022 H1 like-for-like revenue 2,152.0 374.1 2,526.1
Like-for-like change (103.0) 22.2 (80.8)
Network change 12.7 14.1 26.8
2023 H1 revenue 2,061.7 410.4 2,472.1
Like-for-like revenue % (4.8%) 5.9% (3.2%)
Like-for-like sales are a measure of underlying sales
performance for two successive periods. Branches contribute to
like-for-like sales once they have been trading for more than 12
months. Revenue included in like-for-like sales is for the
equivalent times in both years. When branches close, revenue is
excluded from the prior year figures for the months equivalent to
the post closure period in the current year. RESPONSIBILITY
STATEMENT
We confirm that to the best of our knowledge:
-- The condensed set of financial statements has been prepared
in accordance with IAS 34 - Interim FinancialReporting, as adopted
for use in the UK;
-- The Interim Management Report includes a fair review of the
information required by: a. DTR 4.2.7R of the Disclosure and
Transparency Rules, being an indication of important events that
haveoccurred during the first six months of the financial year and
their impact on the condensed set of financialstatements; and a
description of the principal risks and uncertainties for the
remaining six months of the year;and b. DTR 4.2.8R of the
Disclosure and Transparency Rules, being related party transactions
that have takenplace in the first six months of the current
financial year and that have materially affected the
financialposition or performance of the entity during that period;
and any changes in the related party transactionsdescribed in the
last annual report that could do so.
By order of the Board
Nick Roberts Alan Williams
Chief Executive Officer Chief Financial Officer
31 July 2023 31 July 2023 INDEPENT REVIEW REPORT TO TRAVIS
PERKINS PLC Conclusion
We have been engaged by Travis Perkins plc "the Company" to
review the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2023 which
comprises the condensed consolidated income statement, condensed
consolidated statement of comprehensive income, condensed
consolidated balance sheet, condensed consolidated statement of
changes in equity, condensed consolidated cash flow statement and
the related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2023 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting as adopted for use in the
UK and the Disclosure Guidance and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA"). Basis for
conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity ("ISRE (UK) 2410") issued for use in the UK. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. We
read the other information contained in the half-yearly financial
report and consider whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed
set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention that causes us to believe that the directors have
inappropriately adopted the going concern basis of accounting, or
that the directors have identified material uncertainties relating
to going concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the Group to cease to continue as a going
concern, and the above conclusions are not a guarantee that the
Group will continue in operation. Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with UK-adopted international
accounting standards.
The directors are responsible for preparing the condensed set of
financial statements included in the half-yearly financial report
in accordance with IAS 34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the
directors are responsible for assessing the Group'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 to cease operations, or have no realistic alternative but
to do so. Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review. Our conclusion, including our
conclusions relating to going concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion section of this report. The purpose of our review
work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
James Tracey
for and on behalf of KPMG LLP
Chartered Accountants
One Snowhill
Snow Hill Queensway
Birmingham
B4 6GH
31 July 2023
-----------------------------------------------------------------------------------------------------------------------
[1] Alternative performance measures are used to provide a guide
to underlying performance. Details of calculations can be found in
the notes listed.
[2] Comparative figure as at 31 December 2022.
-----------------------------------------------------------------------------------------------------------------------
Dissemination of a Regulatory Announcement, transmitted by EQS
Group. The issuer is solely responsible for the content of this
announcement.
-----------------------------------------------------------------------------------------------------------------------
ISIN: GB00BK9RKT01
Category Code: IR
TIDM: TPK
LEI Code: 2138001I27OUBAF22K83
OAM Categories: 1.2. Half yearly financial reports and audit reports/limited reviews
Sequence No.: 261355
EQS News ID: 1692449
End of Announcement EQS News Service
=------------------------------------------------------------------------------------
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August 01, 2023 02:00 ET (06:00 GMT)
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