Travis Perkins plc Travis Perkins plc Financial Results Financial - PowerPoint PPT Presentation

Travis Perkins plc Travis Perkins plc Financial Results Financial Results Year ended 31 December 2005 Year ended 31 December 2005 1

Geoff Cooper Geoff Cooper Chief Executive Chief Executive 2

Highlights Highlights • Merchanting growth sustained • Merchanting growth sustained • Highest margins in retail sector • Highest margins in retail sector • Record rate of network expansion achieved • Record rate of network expansion achieved • Wickes synergies and buying gains achieved • Wickes synergies and buying gains achieved • Strategy to capitalise on considerable UK • Strategy to capitalise on considerable UK growth opportunity growth opportunity • Early signs of a more stable market in 2006 • Early signs of a more stable market in 2006 3

Paul Hampden Smith Paul Hampden Smith Finance Director Finance Director 4

Financial highlights Financial highlights Turnover £2,640.8m +44.4% Turnover £2,640.8m +44.4% Operating profit £268.0m +23.1% Operating profit £268.0m +23.1% Profit before tax £206.7m +0.1% Profit before tax £206.7m +0.1% Free cash flow £226.1m +50.0% Free cash flow £226.1m +50.0% Basic earnings per share 116.8p - 6.1% 6.1% Basic earnings per share 116.8p - Dividend 34.0p +11.5% Dividend 34.0p +11.5% 5

Summary income statement Summary income statement Non- -Wickes Wickes Impact of 2005 2004 Change Non Impact of 2005 2004 Change related Wickes related Wickes £m £m £m £m % £m £m £m £m % Turnover Turnover 1,881.0 1,881.0 759.8 759.8 2,640.8 2,640.8 1,828.6 1,828.6 44.4 % 44.4 % Operating profit 208.3 59.7 268.0 217.7 23.1 % Operating profit 208.3 59.7 268.0 217.7 23.1 % Operating margin 11.1% 7.9% 10.1% 11.9% Operating margin 11.1% 7.9% 10.1% 11.9% Net finance costs finance costs (7.8) (49.8) (57.6) (8.4) Net (7.8) (49.8) (57.6) (8.4) Other finance costs (2.6) (1.1) (3.7) (2.8) Other finance costs (2.6) (1.1) (3.7) (2.8) Profit before tax Profit before tax 197.9 197.9 8.8 8.8 206.7 206.7 206.5 206.5 0.1 % 0.1 % Basic earnings per share Basic earnings per share 116.8p 116.8p 124.4p 124.4p (6.1)% (6.1)% Dividend per ordinary share Dividend per ordinary share 34.0p 34.0p 30.5p 30.5p 11.5 % 11.5 % Dividend cover Dividend cover 3.4x 3.4x 4.1x 4.1x 6

Strong pricing and acquisitional acquisitional growth growth Strong pricing and Trading days Trading days (0.4)% (0.4)% ______________ ______________ £2,640.8m £2,640.8m Volume (5.2)% Volume (5.2)% Price Price 4.3 % 4.3 % ______________ ______________ £1,828.6m £1,828.6m Like- -for for- -like like (0.9)% Like (0.9)% ______________ ______________ Expansion 2004 2.1 % Expansion 2004 2.1 % Expansion 2005 2.0 % Expansion 2005 2.0 % Wickes Wickes 41.6 % 41.6 % ______________ ______________ Expansion 45.7 % Expansion 45.7 % ______________ ______________ 2004 Trading Volume Price 2004 FYE 2005 Wickes 2005 days One-off expansion Total 44.4 % Total 44.4 % ______________ ______________ 7

Trade market stronger than consumer sectors Trade market stronger than consumer sectors Like- -for for- -like, % like, % Total, % Like Total, % (1) Merchant (1) Merchant Generalist Generalist 0.2 0.2 4.7 4.7 Specialist Specialist (2.7) (2.7) (0.4) (0.4) ____________ ____________ ____________ ____________ Total (0.9) 2.9 Total (0.9) 2.9 ____________ ____________ ____________ ____________ (2) Retail (2) Retail Core (6.8) (5.7) Core (6.8) (5.7) Showroom (13.6) (10.9) Showroom (13.6) (10.9) ____________ ____________ ____________ ____________ Total (7.9) (6.6) Total (7.9) (6.6) ____________ ____________ ____________ ____________ Group total (2.6) 44.4 Group total (2.6) 44.4 (1) (1) Per trading day Per trading day (2) 53 weeks to 31 December (2) 53 weeks to 31 December 8

Operating margin impacted by expansion Operating margin impacted by expansion 11.9% 11.9% 2004 margin 11.9 % 2004 margin 11.9 % 10.1% 10.1% Wickes dilution Wickes dilution (1.2)% (1.2)% New openings (0.2)% New openings (0.2)% Trading margin (0.4)% Trading margin (0.4)% Overheads 0 % Overheads 0 % ______________ ______________ 2005 margin 10.1 % 2005 margin 10.1 % ______________ ______________ 2004 Wickes dilution New openings Trading margin 2005 9

Stretched buying gains deliver out- -performance performance Stretched buying gains deliver out 2005 2006 2005 2006 2006 2006 original original target target 2005 2005 target target Initial synergy list Stretched buying 2006 synergy target 2006 stretched gains target 10

Dilution from expansion recovers steadily Dilution from expansion recovers steadily 29.8% 25.5% 25.0% 24.0% 23.8% 21.5% 22.0% 19.8% 14.4% 1998* 1999* 2000* 2001* 2002* 2003* 2004 2005 2005 Merchanting Group Merchanting Group only only Return on average capital employed Return on average capital employed * 1998 * 1998- -2003 2003 – – UK GAAP UK GAAP 11

Higher merchanting productivity per employee Higher merchanting productivity per employee £196k £192k £182k £171k £160k 2001 2002 2003 2004 2005 Year ended 31 December (excluding Wickes) Year ended 31 December (excluding Wickes) 12

Healthy interest cover Healthy interest cover 2005 2004 2005 2004 £m £m £m £m Tangible fixed assets Tangible fixed assets 449.3 449.3 344.9 344.9 Other fixed assets Other fixed assets 1,436.3 1,436.3 304.8 304.8 Net working capital 103.3 195.0 Net working capital 103.3 195.0 Taxation creditors, dividends, provisions & other (148.6) (73.6) Taxation creditors, dividends, provisions & other (148.6) (73.6) Net debt (982.4) (30.7) Net debt (982.4) (30.7) Pension deficit (99.9) (89.8) Pension deficit (99.9) (89.8) ______ ______ ______ ______ Net assets 758.0 650.6 Net assets 758.0 650.6 ______ ______ ______ ______ Key ratios Key ratios Interest cover (times) (UK GAAP basis) 4.9 25.9 Interest cover (times) 4.9 25.9 (UK GAAP basis) Net debt / EBITDA (times) (UK GAAP basis) 2.9 0.1 Net debt / EBITDA (times) 2.9 0.1 (UK GAAP basis) Balance sheet gearing (IFRS basis) 129.6% 4.7% Balance sheet gearing 129.6% 4.7% (IFRS basis) 13

Debt diversified via US private placement Debt diversified via US private placement Before After Amortisation period Before After Amortisation period US PP US PP US PP US PP £m £m £m £m Facility with UK banks Facility with UK banks 1,200 1,200 970 970 2- 2 -5 years 5 years Debt with US banks - 230 Debt with US banks - 230 7 & 10 year non- -amortising amortising 7 & 10 year non ______ ______ ______ ______ Total debt facility 1,200 1,200 Total debt facility 1,200 1,200 Interest rate swaps Interest rate swaps • Fixed interest 37%, Cap & collar 18%, Floating 45% (based on year end r end • Fixed interest 37%, Cap & collar 18%, Floating 45% (based on yea unsecured facilities) unsecured facilities) • All US debt swapped into floating Sterling • All US debt swapped into floating Sterling 14

Decreased pension deficit Decreased pension deficit Travis Perkins Wickes Total Travis Perkins Wickes Total £m £m £m £m £m £m Deficit at 1 January 2005 (128.3) - (128.3) Deficit at 1 January 2005 (128.3) - (128.3) Deficit at date of acquisition - (45.4) (45.4) Deficit at date of acquisition - (45.4) (45.4) Service costs charged to P&L (11.6) - (11.6) Service costs charged to P&L (11.6) - (11.6) Other finance costs (2.6) (1.1) (3.7) Other finance costs (2.6) (1.1) (3.7) Contributions 40.2 3.6 43.8 Contributions 40.2 3.6 43.8 Actuarial gain / (loss) 1.5 0.9 2.4 Actuarial gain / (loss) 1.5 0.9 2.4 ____________ ____________ ____________ ____________ ____________ ____________ Gross deficit at 31 December 2005 (100.8) (42.0) (142.8) Gross deficit at 31 December 2005 (100.8) (42.0) (142.8) Deferred tax asset 30.3 12.6 42.9 Deferred tax asset 30.3 12.6 42.9 ____________ ____________ ____________ ____________ ____________ ____________ Net deficit at 31 December 2005 (70.5) (29.4) (99.9) Net deficit at 31 December 2005 (70.5) (29.4) (99.9) ____________ ____________ ____________ ____________ ____________ ____________ 15

Free cash flow up 50% Free cash flow up 50% Year ended Year ended Year ended Year ended 31 Dec 2005 31 Dec 2004 31 Dec 2005 31 Dec 2004 £m £m £m £m Operating profit 268.0 217.7 Operating profit 268.0 217.7 Depreciation 54.5 33.4 Depreciation 54.5 33.4 Other non- Other non -cash movements cash movements 2.4 2.4 (0.3) (0.3) Gain on disposal of property, plant and equipment Gain on disposal of property, plant and equipment 0.7 0.7 (0.4) (0.4) Movement in working capital 13.7 (1.7) Movement in working capital 13.7 (1.7) __________ __________ __________ __________ Cash flow from operations 339.3 248.7 Cash flow from operations 339.3 248.7 Net interest paid Net interest paid (38.2) (38.2) (8.0) (8.0) Income taxes paid Income taxes paid (47.0) (47.0) (54.2) (54.2) Replacement capital expenditure Replacement capital expenditure (28.0) (28.0) (35.8) (35.8) __________ __________ __________ __________ Free cash flow 226.1 150.7 Free cash flow 226.1 150.7 __________ __________ __________ __________ 16