INTER IN TERIM IM R RESU ESULTS TS. 201 2015 Inte teri rim R Results ts. 20 2015 1
Agen genda Gro roup hi highl hlight hts John C hn Car arter p3 Financi nancial al r review To Tony B Buffin p5 Strat ategy u updat date John C hn Car arter p19 Appe ppendice ndices p31 Inte teri rim R Results ts. 20 2015 2
2015 in interi terim k key ey mes essages ges Co Cont ntinued m ed market et • Strong volume growth and continued outperformance of our markets 1 ou outperfor ormance ce • Pleasing performance across TP, Consumer and Contracts (notably Keyline & CCF) • Focused increase in capex to £131m to drive strong returns Inves esting i ng in n 2 • Continued branch expansion with deep pipeline sustai tainab able growth th • Still only 18 months into the five year plan, lots more work still to do • Majority of our markets remain fragmented Growth th not t mark arket t • Our businesses building on strong structural advantages 3 cons nstrained ned • All businesses investing to further enhance customer propositions Inve In vestin ing t g to drive ive s sustain inable gr growth in in e earnin ings gs and TSR TSR Inte teri rim R Results ts. 20 2015 3
Group oup pe perfor ormance mance hi highl hlight hts Rev even enue e • Continued sales growth outperformance growth h of of 7.8% to 7. £2 £2.9b 9bn 9.0% 0% EBITA • Strong underlying profit growth gr growth (ex ex- Prop operty) y) Capex ex • Investing for long-term growth dou oubled t to o £13 131m 1m LAROCE LA • Strong return on capital main ma intain ined ed at 1 10.5% .5% Div ivid iden end • Dividend growth underpinning TSR growth h of of 20% 0% to o 14.75p .75p Definitions disclosed in Appendix VI Inte teri rim R Results ts. 20 2015 4
FINANC NANCIAL AL REV EVIEW IEW. TONY B Y BUFFIN FFIN Inte teri rim R Results ts. 20 2015 5
Group oup pe perfor ormance mance s summar ummary Year-on Ye on-ye year 15 14 Si Six months e nths ende nded d 30 J June ne H1 2 1 2015 H1 2 1 2014 cha hang nge Revenue £2,943m £2,731m 7.8% th Like ke-fo for-lik like sale sales g s growth 5.7% 5. 10. 0.2% (4. 4.5)ppt ppt Adj djuste sted EBI EBITA £185m £1 £1 £175m 5. 5.7% Adjusted EBITA excluding property profits £182m £167m 9.0% Adjusted profit before tax £167m £162m 3.1% Adjusted net profit after tax £134m £130m 3.1% Free cash flow £156m £189m (17.5)% Adj djuste sted d ear arning nings pe s per shar share 54.2p 53. 3.4p 1.5% 1. Div ivide idends pe nds per shar share 14.75p 12.25p 20.4% .4% Lease ase adj adjuste sted R ROCE 10. 0.5% 10. 0.5% - Lease adjusted net debt £1,824m £1,807m £17m Definitions disclosed in Appendix VI Inte teri rim R Results ts. 20 2015 6
Cont ontinued s sal ales growt wth out h outpe performa mance nce Group rev even enue g e growth • Good volume growth 2.1% 2. £2, 2,943m outperforming our markets (0 (0.3 .3)% )% 6.0% 0% £2,731 31m • Consistent low inflation 7.8 .8% • New branches & businesses H1 2 1 2014 14 Volum ume Price / e / m mix ix Tradi ading ng New ew s sit ites es & H1 2 1 2015 15 contributing 2.1% day days acquis isit itio ions • Good H1 sales growth and LFL sales growth Q1 Q1 Q2 Q2 H1 H1 strong two-year LFL growth 2014 12.7% 8.1% 10.2% 2015 5.1% 6.3% 5.7% 2 y 2 year ar gr growth 18.4% .4% 14.9 4.9% 16. 6.5% 5% Definitions disclosed in Appendix VI Inte teri rim R Results ts. 20 2015 7
Unde nderlying ng op operat ating ng l leverag age mai maint ntai ained Gene Ge neral al Plumbing Plu bing Contr ntracts acts Consu nsumer Gro roup Merchantin hanting & H Heating ating H1 2014 EBITA margin 9.8% 3.6% 6.8% 5.6% 6. 6.4% Gross margin 1.7% 1.0% (1.2)% 0.2% 0.8% 0. Operating costs (1.3)% (1.5)% 0.7% (0.2)% (0 (0.7)% )% H1 2015 EBITA before ∆ in property profits 10.2% 3.1% 6.3% 5.6% 6.5% 6. Property profits (0.8)% - - 0.3% (0 (0.2)% )% H1 2 2015 EBI EBITA mar argin in 9. 9.4% 3.1% 3. 6.3% 6. 5.9% 5. 6. 6.3% • Mix of business growth in Contracts • General Merchanting underlying margins reducing Division margin sustained • Timing of property profits impacting • P&H 2014 result benefitted from one-off reported margin contract and sourcing income Definitions disclosed in Appendix VI Inte teri rim R Results ts. 20 2015 8
Gene neral al M Merchant hanting ng pe perfor ormance mance s summar ummary • Good sales growth from all Six months Si nths ende nded d ∆ 15 14 H1 2 1 2015 H1 2 1 2014 30 J 30 Jun une regions Revenue £979m £908m 7.8% Like-for-like growth 6.7% 14.6% (7.9)ppt • Good cost price management Adj djuste sted EBI d EBITA £92m £92m £89m £8 9m 3.4% .4% and focus on pass-through EBITA margin 9.4% 9.8% (40) bps Underlying EBITA (ex-Property profit) £91m £81m 12.3% • Strong Benchmarx growth Lease ase adj adjuste sted R ROCE 16% 6% 17% 17 - following showroom upgrades • Underlying profit growth – up 12.3% Definitions disclosed in Appendix VI Inte teri rim R Results ts. 20 2015 9
Plumbi umbing ng & & Heat ating pe perfor orman mance ce s summar ummary • Re-segmentation on plan with Si Six months nths ende nded d ∆ 15 14 H1 2 1 2015 H1 2 1 2014 CPS now consistently showing 30 J 30 Jun une Revenue £667m £672m (0.7)% positive like-for-like growth Like-for-like growth (2.9)% 7.4% (10.3)ppt • Improving sales growth Adj djuste sted EBI d EBITA £2 £21m £2 £24m 4m (12.5)% (1 )% throughout the half EBITA margin 3.1% 3.6% (50) bps Underlying EBITA (ex-Property profit £21m £22m (4.5)% & one-off items) • Tough heating market and strong Lease ase adj adjuste sted R ROCE 8% 8% 8% 8% - Q1 comparatives • Primaflow integration progressing well Definitions disclosed in Appendix VI Inte teri rim R Results ts. 20 2015 10 10
Cont ontract acts p perfor ormance mance summar ummary • Both EBITA and ROCE improved Si Six months nths ende nded d ∆ 15 14 H1 2 1 2015 H1 2 1 2014 30 30 J Jun une • Keyline growth remains well Revenue £605m £513m 17.9% ahead of the market Like-for-like growth 13.9% 11.1% 2.8ppt Adj djuste sted EBI d EBITA £38m £3 £35m £3 8.6% 8. • CCF accelerating market share EBITA margin 6.3% 6.8% (50) bps gains Underlying EBITA (ex-Property profit) £38m £35m 8.6% Lease ase adj adjuste sted R ROCE 13 13% 12% 1ppt ppt • Competitive BSS market with later cycle growth Definitions disclosed in Appendix VI Inte teri rim R Results ts. 20 2015 11 11
Cons onsume umer pe perfor ormance mance s summar ummary • Wickes share gains and double- Si Six months nths ende nded d ∆ 15 14 H1 2 1 2015 H1 2 1 2014 30 30 J Jun une digit 2-year LFL Revenue £693m £638m 8.6% • Good underlying profit growth Like-for-like growth 6.5% 6.8% (0.3)ppt Adj djuste sted EBI EBITA £41 41m £36m £3 6m 13. 3.9% • Range review costs of £4m in EBITA margin 5.9% 5.6% 30 bps H1 to continue Underlying EBITA (ex-Property profit) £39m £36m 8.3% Lease ase adj adjuste sted R ROCE 7% 7% 6% 6% 1ppt ppt • New Wickes format trials underway • 18 new Toolstation stores opened in the half Definitions disclosed in Appendix VI Inte teri rim R Results ts. 20 2015 12 12
Str trong & g & susta tain inable le ea earn rnin ings gr growth th • £5m lower property ∆ 15 14 Si Six months e nths ende nded d 30 J June ne H1 2 1 2015 H1 2 1 2014 profits Adjusted EBITA £185m £175m 5.7% • Adverse non-cash Net finance cost £(18)m £(13)m (38.5)% currency MTM charge of Adjusted profit before tax £167m £162m 3.1% Adjusted tax £(33)m £(32)m 3.1% £4m Adj djuste sted pr d profit it af afte ter tax tax £1 £134m 4m £130 30m 3.1% 3. • Confidence to increase interim dividend by over Weighted average shares 247m 244m 1.2% 20% Adj djuste sted ear arning nings pe s per shar share 54.2p 53. 3.4p 1.5% 1. Div ivide idends pe nds per shar share 14.75p 12.25p 20.4% .4% Definitions disclosed in Appendix VI Inte teri rim R Results ts. 20 2015 13 13
Cash f Ca flo low fundin ing in g inves estm tmen ents & & gr growin ing d g div ivid iden end • Cash conversion of £3m £3 £(3 (31)m )m 84% £49m £4 £(2 (26)m )m £1 £185m 5m £(1 (10)m )m • Solid working capital £(1 (14)m )m £156 £1 56m management despite Growth capex £60m Acquisitions £14m Dividends £64m Contracts growth Pension contribution £9m £147m Freeholds £45m • Modest growth in net Use of FCF £192m Financed by debt to fund freeholds Free cash flow £156m Increase in net debt £37m (2014: (2014: £175m) £189m) Adj djusted E d EBI BITA De Depre reciation & & Net p property Working c cap apital al Maint ntena nanc nce Interest Tax Free ee c cash f flow non- no n-cash disp sposa sal CapEx Cap Definitions disclosed in Appendix VI Inte teri rim R Results ts. 20 2015 14 14
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