Travis Perkins plc “ The largest supplier of building materials in the UK ” Year ended 31 December 2011 1
Highlights of the year • Market weakened through the year, driven by pressure on consumers and public sector cuts • Our outperformance accelerated, with share gains increasing from competitor failures, superior LFL growth and moderate network expansion • Successful integration of BSS, with synergies ahead of target, and completion of ToolStation transaction at year end • Good financial performance with increases in Group revenue, operating profits, earnings, dividend and cash flow 2
Financial overview % movement 2011 % movement proforma Turnover £4,779m 51.6% 4.6% Operating profit (before exceptional items) £313m 31.0% 3.5% Operating margin (before exceptional items) 6.6% (1.3)% 0.0% Adjusted profit before tax (before exceptional items) £297m 36.9% 8.5% Profit before tax (after exceptional items) £270m 37.0% 35.1% Adjusted earnings per share 93.1p 20.6% 10.7% Dividend 20.0p 33.3% Free cash flow £294m 5.8% Net debt £583m 3
Revenue boosted by BSS and strong pricing % £4,779m Trading days (0.3) Volume (Merchanting 3.9%, Retail (4.2)%) 1.3 Price (Merchanting 5.5%, Retail 2.9% & BSS 4.5%) 4.7 Like-for-like 6.0 Merchanting expansion 1.3 £3,153m Retail expansion 0.9 BSS acquisition 43.7 Expansion 45.9 2010 Trading days Volume Price Merchanting Retail BSS 2011 expansion expansion acquisition Total 51.6 4
H2 proforma like-for-like in line with Q2 H1 H2 Full Year (All figures are % change on prior year) 2011 2011 2011 General 10.3 8.4 9.3 Specialist 11.4 7.9 9.6 Merchanting 10.7 8.2 9.4 Retail 0.3 (3.0) (1.3) BSS 3.0* 2.7* 2.9* Group 5.9** 4.1** 5.0** * Excluding major new contract: BSS LFL would be 1.2% for H1, (0.3)% for H2 and 0.5% for 2011 ** Excluding major new contract: Group LFL would have shown H1 LFL as 5.3%, 3.2% for H2 and 4.3% for 2011 5
Positive LFL trends, dampened a little by snow 7 weeks 2012 (All figures are % change on prior year and delivered sales unless stated) General Merchanting 5.4 Specialist Merchanting 3.9 Consumer** [ordered] / delivered [0.9] (3.1) Plumbing & Heating* 0.9 Group * [ordered] / delivered [2.5] 1.8 *Excluding the effect of the major new contract P&H LFL would be (0.9)% and the Group LFL would be 1.1%. **Excludes ToolStation which is non LFL until 2013. Inclusion of ToolStation ’ s own LFL performance would increase the Consumer division ’ s ordered LFL to 2.7%. 6
2011 results by division (in 2011 structure) Merchanting BSS Retail Sales £2,337m 10.9% £1,436m (1.5)% £1,018m 1.5% Profit £196m 0.6% £54m (10.7)% £46m (23.3)% Margin 8.4% (0.4)% 3.8% (0.4)% 4.5% (1.4)% Profit with synergies £202m 9.4% £67m 9.5% £46m (23.3)% Margin with synergies 8.6% (0.2)% 4.6% 0.4% 4.5% (1.4)% People 10,047 4.2% 5,189 4.9% 6,187 2.1% Sites 1,028 4.8% 404 (9.4)% 436 13.0% Productivity 237 3.9% 279 4.3% 180 (1.0)% Note: Consistent with prior year reporting, these figures include £10m of group costs which for 2012 onwards will be shown separately in figures for the new divisions. Figures for the new division structure shown on slides 22-25 do not, therefore, include these group costs. 7
Proforma margin held in line with last year Merchanting Retail Pre BSS BSS Group % % % % % (All numbers are before exceptional items) 2010 operating margin 8.8 5.9 7.8 4.2 6.6 Gross margin (0.8) 1.3 (0.4) 0.1 0.1 Overheads 0.3 (2.7) (0.4) (0.5) (0.6) Property profits 0.1 - 0.1 - 0.1 2011 operating margin before synergies 8.4 4.5 7.1 3.8 6.2 Synergies 0.2 - 0.2 0.8 0.4 2011 operating margin 8.6 4.5 7.3 4.6 6.6 2011 operating profit before 2010 operating profit (£m) synergies (£m) 54.4 60.8 45.5 59.3 184.4 196.2 Merchanting Retail BSS Merchanting Retail BSS 8
Continued overhead expenditure investment in initiatives £3m £8m £1,109m £21m £27m £2m £26m £1,038m Expansion – 2010 Inflation Variable Support for Other Disposals 2011 related to organic growth launch and volume ongoing operating costs 9
Strong free cash flow conversion 2011 2010 (All figures are £'million, unless stated) Operating profit 313 239 Depreciation and amortisation 64 57 Other non-cash movements 15 10 Gain on disposal of property, plant & equipment (18) (11) Movement in working capital 9 48 Replacement capital expenditure (55) (24) Operating cash flow 328 319 Net interest paid (23) (16) Income taxes paid (26) (42) Proceeds from sale of fixed assets 15 17 Free cash flow 294 278 Free cash flow conversion 94% 116% 10
£186m of underlying net debt reduction (All figures are £'million) 2011 2010 Free cash flow 294 278 Dividends (39) (10) Expansion capital expenditure & acquisitions (56) (29) Loan to associates (2) (12) Pension contributions (20) (18) Cash flow 177 209 Non-cash movements 8 (7) Exchange rate movement 1 3 Underlying net debt reduction 186 205 Acquisitions (8) (295) Net debt arising on BSS acquisition - (175) Pension SPV - (35) Sale of business 27 - Bank fees paid (6) - Issue of shares 10 - Exceptional items (18) (7) Net debt at 1 January (774) (467) Reported net debt at 31 December (583) (774) 11
Net debt : EBITDA ratio improved further (1.73x at H1) 2011 2010 (All figures are £'million, unless stated) Tangible fixed assets 563 528 Other fixed assets 2,148 2,157 Net working capital 252 263 Taxation creditors and provisions (237) (202) Net debt (583) (774) Net pension deficit (35) (20) Net assets 2,108 1,952 Key ratios (covenant basis) Adjusted interest cover 15.4x 18.9x Adjusted net debt / EBITDA 1.30x 1.92x Gearing (covenantable net debt) 23.1% 36.0% Working capital : sales (incl. BSS pro-forma) 5.3% 5.8% 12
ToolStation • 2011 Turnover £104m • Net assets £8m • H1 EBIT breakeven • H2 EBIT £1.7m • Working capital to sales 0.7% • Current investment £41m and loan £37m • Future additional investment £75m 13
Guidance • Sales • Emphasis on gross margin • Property profits • Tight cost base • ToolStation and ex-Focus stores • Increased synergy guidance £30m in 2012 • One – offs • Bank refinance • Working capital • Year-end debt 14
New structure Group General Specialist Plumbing and Consumer Merchanting Merchanting Heating 15
General Merchanting - Strong sales overcoming margin pressure Positioning 2011 proforma • Market leader (17% share) • No.1 national rated merchant proposition Sales £1,451m Performance Profit with synergies £165m • Strong sales growth, outperforming the market • Margin with synergies 11.6% Organic development • H2 emphasis on gross margins People 7,478 Focus for 2012 • Sites 629 Continuous improvement of customer proposition • Drive efficiency from Supply Chain investments • Push further category management initiatives Divisional Chairman – Joe Mescall 16
Specialist Merchanting – Deepen our focus to drive performance Positioning 2011 proforma • Businesses in rising No.2 or No.3 positions • No.1 rated propositions in each market Sales £660m Performance Profit with synergies £31m • Strong CCF sales and profit outperformance • Margin with synergies 4.7% Keyline recovered strongly from sector trough • Benchmarx network growth through implants People 1,548 • Successful Buck & Hickman sale Sites 209 Focus for 2012 • Drive sector specialism • Further category management • Divisional Chairman – Arthur Davidson Enhance accuracy of service (e.g. OTIF) 17
Consumer – Driving strong propositions, but weak market Positioning 2011 *proforma • Wickes No.3 • ToolStation and Tile Giant No.2 Sales £1,018m • No.1 rated propositions in each channel Profit with synergies £46m Performance • Margin with synergies 4.5% Sales growth outperforming the market • Strong gross margin People 6,187 • Ex-Focus stores trading well Sites 328 • Restructured Wickes cost base in H2 Focus for 2012 • Expand ToolStation • Divisional Chairman – Jeremy Bird Drive full year sales and profits from ex-Focus stores • Exploit direct sourcing • *Excludes ToolStation Enhance systems e.g. stock auto-replenishment 18
P&H – Creation of the market leader Positioning 2011 proforma • No.1 plumbing & heating merchant • No.1 rated proposition Sales £1,662m Performance • Profit with synergies £81m Strong industrial / commercial performance • Boiler scrappage scheme impact Margin with synergies 4.9% • British Gas contract win 2011 2012 2013 • People 6,168 Synergies (£m): Original forecast 8 12 25 Sites 594 Update at July 2011 15 25 25 Latest view 20 30 30 Focus for 2012 • Divisional Chairman – Paul Tallentire Expand toolhire implants • Harmonise technology with Group IT • Invest in roll-out of new concept bathroom showrooms 19
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