6 August 2024
Dissemination of a Regulatory Announcement that contains
inside information according to REGULATION (EU) No 596/2014
(MAR)
Travis Perkins plc - half year
results for the six months ended 30 June 2024
Good progress on business
improvement actions amidst persistently challenging market
conditions
Maintaining market position in a
challenging trading environment
-
Continuation of trends from H2 2023
with weak demand across the Group’s end markets and commodity price
deflation leading to revenue (4.4)% lower than prior
year
-
Lower volumes and the impact of
price deflation on Merchanting gross margin resulted in adjusted
operating profit of £75m (2023: £112m)
-
Maintained market share and pricing
discipline in Merchanting as focus remains on meeting customers’
needs in tough trading conditions
-
Continued market share gains in
Toolstation UK with operating margin up 130bps
-
Adjusting items of £32m recognised
in the first half (of which £10m is cash) resulted in statutory
operating profit of £38m (2023: £107m)
-
Full year adjusted operating profit
expected to be around £150m inclusive of £(16)m of losses related
to Toolstation France
-
Interim dividend of 5.5 pence per
share (2023: 12.5 pence per share)
Good progress on business
improvement actions
-
A simpler, more
efficient business:
restructuring actions and tighter controls have reduced overheads
by £19m versus prior year with cost inflation absorbed. The Group
is leveraging scale to deliver future savings in distribution and
procurement.
-
Addressing
loss-making activities: on
track to exit Toolstation France by the end of the year; strategic
review of Toolstation Benelux complete with actions in place to
deliver break-even performance in 2025
-
Technology
enablement: Oracle Finance
ERP system went live 1 July 2024
-
Enhanced cash
generation: greater
financial and operational discipline, including lower capital
expenditure, resulted in a cash inflow in H1 of £82m and a
reduction of £81m in net debt before leases. Working capital inflow
of £54m driven largely by stock reduction; targeting further
reduction in H2
New leadership to continue to drive
the transformation of the Group’s operating model
-
New CEO Pete Redfern and new Chair
designate Geoff Drabble to join the Group in September and October
respectively. Both will bring extensive construction sector
experience and listed company expertise.
|
£m (unless otherwise
stated)
|
Note
|
H1 2024
|
H1 2023
|
Change
|
|
Revenue
|
2
|
2,362
|
2,472
|
(4.4)%
|
|
Adjusted operating profit¹
|
18a
|
75
|
112
|
(33.0)%
|
|
Adjusted earnings per share¹
|
10b
|
15.9p
|
30.5p
|
(47.9)%
|
|
Return on capital employed¹
|
18e
|
5.0%
|
8.6%
|
(3.6)ppt
|
|
Net debt / adjusted EBITDA¹
|
18c
|
2.7x
|
2.1x
|
(0.6)x
|
|
Ordinary dividend per share
|
11
|
5.5p
|
12.5p
|
(56.0)%
|
|
Operating profit
|
|
38
|
107
|
(64.5)%
|
|
Profit after tax
|
|
5
|
60
|
(91.7)%
|
|
Basic earnings per share
|
10a
|
2.2p
|
28.6p
|
(92.3)%
|
(1) Alternative performance measures
are used to describe the Group’s performance. Details of
calculations can be found in the notes listed.
Nick Roberts, Chief Executive Officer, commented:
“Trading conditions have remained challenging through the
first half of the year and we have continued to prioritise
delivering for our customers whilst also recognising that a
persistently lower volume environment means that we have to deliver
a simpler, more efficient business. Whilst market conditions have
impacted on our trading margin, we have made good progress on
managing our overhead base and generating cash.
With a new government quickly setting out its plans to reform
planning to deliver more housing and infrastructure, and the
expectation of an easing in macroeconomic conditions, the Group is
focused on ensuring that it is well placed to maximise the benefits
from both a future recovery in demand and the long term requirement
for the UK to expand and decarbonise its housing stock.”
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://travis-perkins-2024-half-year-results.open-exchange.net/
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 6th August 2024, the date
on which it is given. This announcement has not been and will not
be updated to reflect any changes since that date.
Past performance of the shares of Travis Perkins plc cannot
be relied upon as a guide to the future performance of the shares
of Travis Perkins plc.
Summary
The trading environment has remained challenging for the
Group as the key trends from the second half of 2023 - ongoing
macroeconomic and political uncertainty, weak end market demand and
deflation on certain key commodity products - continued through the
first half of 2024. This was reflected in the Group's revenue and
earnings performance during the period and management’s primary
focus has been on driving efficiencies through the transformation
of the Group’s operating model. Alongside disciplined capital
allocation, this will support progressive recovery of profitability
and reduction of leverage.
H1 2024 Performance
The Group delivered revenue of £2,362m, down (4.4)% versus
prior year. The decline in revenue was driven by the Merchanting
segment which experienced a combination of activity across the
construction sector remaining subdued and significant price
deflation, predominantly on commodity products. Toolstation
delivered a solid revenue performance, reflecting further market
share gains as maturity benefits continue to come
through.
Adjusted operating profit of £75m was £(37)m, or (33.0)%,
lower than the first half of 2023. The following key factors
impacted on operating profit during the first half of the
year:
-
£(50)m decline in gross margin of
which £(30)m was driven by lower sales volumes and £(20)m was
attributable to lower Merchanting gross margins, the latter
resulting from a combination of commodity price deflation and
competitive pressures
-
Around £(19)m of overhead
inflation, predominantly on payroll and property costs
-
Restructuring actions delivered a
benefit of £18m in the first half primarily through a reduction in
central and regional overhead
-
£16m reduction in discretionary
spend driven mainly by tighter controls
-
Toolstation Europe losses reduced
by £4m
-
Property profits were £(6)m lower
than prior year.
New leadership will continue to drive the transformation of
the Group’s operating model
The Group recently announced that Pete Redfern has been
appointed as Chief Executive Officer with effect from 16 September
2024 and that Geoff Drabble is appointed as a Non-Executive
Director with effect from 1 October 2024. Geoff has also been
appointed Chair (designate) from the same date and will take up the
position of Chair as soon as his capacity allows.
Pete brings over two decades of leadership, operational and
finance experience in the construction sector, including 14 years
as Group Chief Executive of Taylor Wimpey plc. During his time at
Taylor Wimpey, Pete oversaw the transformation of the company into
one of the largest housebuilders in the UK, and its elevation to
the FTSE 100, restructuring the Group after its merger, building a
strong financial position after the global financial crisis,
refocusing the company on its UK operations and delivering a
strategy that created significant shareholder value through a focus
on organic growth. Alongside his sector experience, Pete also
benefits from a deep understanding of Travis Perkins Group, having
served on the Board as a Non-Executive Director for nine years to
September 2023
Geoff brings unrivalled experience in publicly listed
businesses across the building materials distribution, equipment
hire and tools markets in which the Travis Perkins Group operates,
gained from both executive and non-executive roles.
Geoff is Chair of Ferguson plc, the building materials
distribution business listed on the New York and London Stock
Exchanges, which primarily operates in North America. He is also
currently Chair of DS Smith Plc, the international packaging
company. He was a Non-Executive Director of Howden Joinery Group
plc, the UK’s leading specialist kitchen supplier, from 2015 to
2023, serving latterly as its Senior Independent
Director.
In his executive career, Geoff was Group Chief Executive of
Ashtead Group plc, the FTSE 100 listed international equipment hire
company, from 2006 to 2019 and previously held senior executive
positions in Laird Group plc and Black and Decker
Corp.
Good progress on business
improvement actions
Recognising the significant impact of the macroeconomic
environment on the Group’s profitability, management commenced a
series of actions which will transform the business for the
future.
The first phase of this review, completed in the fourth
quarter of 2023, delivered annualised cost savings of around £35m
for 2024, primarily from a reduction in central and regional
headcount.
In February 2024, 39 standalone Benchmarx branches closed as
part of a review of the strategy of the business. The focus is now
on growing the Benchmarx network through integrated solutions in
new General Merchant branches, which provide a lower cost model
with a more convenient customer journey, whilst optimising the
profitability of the remaining standalone branches.
Work to deliver further structural efficiencies will continue
over the medium term, focused on the following areas:
-
Supply chain
consolidation - reviewing
and optimising the Group's supply chain to deliver greater
economies of scale and efficiencies
-
Technology
enablement - driving
benefits from new technology, starting with the implementation of
the new Oracle Finance system
-
Shared
procurement capability -
consolidating separate procurement functions across businesses to
leverage the buying capability of the Group’s combined
scale
-
Simplifying
Group structures -
streamlining the interactions between businesses to enhance the
customer experience
In the first half of the year, good progress was made in a
number of areas as set out below:
Supply chain
consolidation
-
In order to drive long-term
efficiencies from the investment in the new Toolstation Pineham
distribution centre, the Toolstation Bridgwater distribution centre
was closed and the Toolstation Daventry distribution centre is in
the process of closing down, which is expected to be completed by
September 2024
-
Reflecting the actions taken to
streamline the Benchmarx network, Benchmarx kitchen cabinets are
now being solely assembled at the Group’s Primary Distribution Hub
in Northampton and the Benchmarx assembly facility in South Molton,
Devon has been closed
-
The Group’s timber supply chain has
been consolidated with the closure of the Kings Lynn and Tilbury
timber supply centres
-
A review is underway to explore the
opportunity of lightside range harmonisation across the Group’s
businesses
Technology enablement
On 1 July 2024, the Group successfully implemented a new
cloud-based Oracle Financial ERP system. The project was delivered
by a dedicated cross-functional team and represents a significant
step for the Group in terms of modernising its technology. Oracle
will strengthen financial controls, enable new standardised
processes and enhance stock visibility and reporting, which will
deliver longer term benefits for the Group. As a result of the
system being cloud-based, the Group will also benefit from being
part of Oracle’s upgrade roadmap in the future.
Shared procurement
capability
During the first half, the Group’s commercial function has
been restructured with teams now aligned by product category,
rather than working specifically for a business unit. This has
eliminated duplication, lowered costs and created the opportunity
for the Group to generate synergies through building category
expertise alongside harmonising ranges and trading terms. The
changes also create a central digital and marketing capability
which will deliver scale benefits and enable the development of a
Group-wide customer proposition.
Simplifying Group
structures
The Group continues to review its operating model and
organisational structures to deliver a sustainably more efficient
business with the first stage being the consolidation of the
management teams of CCF and Keyline. This review is now benefiting
from the recent arrival of a new Chief HR Officer and will be a key
focus for the new management team over the next twelve months,
following the arrival of the new Chief Executive.
Capital structure and shareholder returns
Despite a continuation of challenging market conditions, the
Group has made good progress on actions to strengthen the balance
sheet in the first half, with overall net debt reducing by £54m and
net debt before leases reducing by £81m. However, the decline in
operating profit has seen net debt / adjusted EBITDA rising
slightly from year end to 2.7x. Management remain focused on the
following medium-term capital allocation priorities:
-
Returning leverage to the target
range that the Group set out in its Capital Markets Update in 2021
of 1.5 - 2.0x as soon as possible in order to restore an investment
grade credit rating
-
A disciplined approach to capital
allocation, focused on maintaining asset quality and sources of
competitive advantage
-
Improving working capital
management and an ongoing review of loss-making
activities
-
An attractive and sustainable
dividend
Accordingly, the Board is pleased to declare an interim
dividend of 5.5 pence per share which reflects the Group’s policy
to pay a dividend of 30-40% of adjusted earnings, the revised
guidance on adjusted operating profits and the expected benefit of
closing Toolstation France.
Outlook
The Group welcomes the decisive actions being taken by the
new government to encourage more house building and infrastructure
improvements which will promote better trading conditions for
businesses operating in the construction sector. These changes,
coupled with a reduction in interest rates which is now underway,
will lead to an improved financial performance in 2025.
However, these factors will take time to take effect and
therefore the Group remains focused on business improvement actions
to drive efficiencies and enhance cash generation, ensuring that
the benefits from a recovery are fully maximised. Given this
backdrop, the Group is expecting a similar level of demand in the
second half of the year and accordingly expects FY24 adjusted
operating profit will be around £150m, inclusive of £5-10m of
property profits and around £(16)m of losses in Toolstation
France.
The Board remains confident in the long-term fundamentals of
the Group and the end markets in which it operates. Guided by the
recent experienced leadership appointments to the Board, the Group
is clearly focused on creating value for shareholders over the
medium term.
Technical guidance
The Group’s technical guidance for 2024 is as
follows:
-
Expected ETR of around 29% on UK
generated profits
-
Base capital expenditure of around
£80m
-
Property profits of between £5m and
£10m
Adjusting items
There were £32m of adjusting items in the period (2023: nil)
as set out below:
|
|
£m
|
|
Supply chain consolidation
|
15.0
|
|
Group restructuring / procurement centralisation
|
8.9
|
|
Benchmarx closures
|
5.7
|
|
Toolstation France exit
|
2.6
|
|
Total
|
32.2
|
The supply chain consolidation charge relates to the closure
of a number of distribution centres in Toolstation, Benchmarx and
the Group timber supply chain. The costs relate primarily to stock
write-downs.
The restructuring charges relate to actions taken to reduce
central and regional headcount and to centralise the procurement
function.
The charge associated with Benchmarx reflects the costs,
which were primarily related to redundancy, of closing 39
standalone branches in February.
The Toolstation France charge reflects adjustments to stock
provisions and lease liabilities made as a result of the decision
to exit the business, as well as legal costs.
Segmental performance Merchanting
|
|
H1 2024
|
H1 2023
|
Change
|
|
Revenue
|
£1,942m
|
£2,062m
|
(5.8)%
|
|
Adjusted operating profit
|
£91m
|
£130m
|
(30.0)%
|
|
Adjusted operating margin
|
4.7%
|
6.3%
|
(160)bps
|
|
ROCE (12 month rolling)
|
8%
|
12%
|
(4)ppt
|
|
Branch network*
|
725
|
769
|
(44)
|
* 2023 branch network figures for
comparison are taken at 31 December 2023
Note - all figures above exclude
property profits
The Merchanting segment continued to experience challenging
market conditions with revenue down by (5.8)% and adjusted
operating profit reduced by (30.0)% to £91m, reflecting the
pressure on gross margins from commodity price deflation and a
highly competitive market environment driven by a sustained
reduction in trading volumes. Adjusted operating margin reduced by
(160)bps as a result of those lower gross margins. Actions taken on
overheads reduced the Merchanting cost base broadly in line with
revenue.
In a market where demand is well below the long-run average,
the Merchant businesses remain fully focused on maintaining market
share by responding to customers’ needs in a challenging trading
environment. With respect to value-added services, the Group
continued to deliver good sales growth in Hire (+3%) and Managed
Services (+9%).
A (3.6)% reduction in pricing was the primary driver of
revenue decline, being a combination of commodity price deflation
(mainly timber) and more competitive market pricing. Volumes were
down (3.1)% with around (0.6)% of the decline attributed to branch
closures. One extra trading day in the first half provided a
benefit of around 0.9%.
Whilst conditions are set for a pickup in new housebuilding
activity, the domestic RMI market continues to remain weak. The
certainty provided from an earlier than anticipated general
election was welcome but resulted in near-term delays to public
sector activity which is reflected in the first half volume
performance.
47 Merchanting branches were closed in the first half of the
year, 39 of which were Benchmarx standalone branches, with 8
smaller General Merchant branches also closed. The Benchmarx
decision was focused on optimising the Benchmarx branch network,
with the focus on an integrated offer within destination General
Merchant branches. In the case of the General Merchant branches,
these sites were deemed to be poorly located or requiring
significant investment and where trade could be transferred to an
alternative nearby branch.
Whilst recognising the need to adjust the cost base to
reflect market volumes, the Merchanting management teams are highly
cognisant of the need to ensure that the Merchant businesses remain
strongly positioned to benefit from a market recovery. The ability
to operate a national network of high quality assets maintains a
source of competitive advantage for the Group and, to that end,
three new branches were added in the period, two General Merchant
branches in Leeds and Derby and a new CCF branch in
Norwich.
Over the last three years the Group has focused on exiting
smaller, uneconomic branches whilst adding new capacity in target
catchments through larger, more capable destination branches with
integrated services such as Hire and Benchmarx kitchens. The result
of this network strategy is that the Merchant segment has broadly
similar operating capacity to 2021, leaving the Merchant businesses
well-placed to benefit from a recovery in demand whilst offering a
more efficient customer experience.
Toolstation
|
|
H1 2024
|
H1 2023
|
Change
|
|
Revenue
|
£420m
|
£410m
|
2.4%
|
|
Like-for-like growth
|
0.7%
|
5.9%
|
|
|
Adjusted operating profit - UK
|
£14m
|
£9m
|
55.6%
|
|
Adjusted operating profit - Europe
|
£(15)m
|
£(19)m
|
21.1%
|
|
Adjusted operating profit -
Total
|
£(1)m
|
£(10)m
|
90.0%
|
|
Adjusted operating margin
|
(0.3)%
|
(2.4)%
|
210bps
|
|
ROCE (12-month rolling)
|
(1)%
|
(2)%
|
1ppt
|
|
Branch network (UK)*
|
578
|
570
|
8
|
|
Branch network (Europe)*
|
164
|
170
|
(6)
|
* 2023 branch network figures for
comparison are taken at 31 December 2023
Note - all figures above exclude
property profits
UK
Toolstation UK delivered a solid first half performance with
further market share gains in a challenging market environment. UK
sales were up 1.7% which was driven by pricing with volumes broadly
flat. Network expansion continues at a modest pace with 8 new
branches in the first half and around 20 expected for the full
year.
UK Adjusted operating profit grew by 55.6% to £14m, with
operating margin expanding by 130bps to 3.9% driven by improvements
in margin management and the benefits of supply chain
consolidation.
France
Toolstation France saw adjusted losses of £(8)m in the first
half which was slightly ahead of management expectations. The Group
continues to work towards an exit of the business, with this
expected to be completed by the end of 2024. Further exit costs,
resulting in £20-25m of cash outflows, are expected to be incurred
across H2 2024 and 2025, principally relating to redundancy and
branch closure costs.
Benelux
Toolstation Benelux generated losses of £(7)m in the first
half, with trading conditions remaining challenging.
Management has conducted a full strategic review of the
Toolstation Benelux business as a result of increasing trading
losses. The review re-affirmed the long-term potential of the
business and its shorter maturity curve relative to France.
However, it also identified a need to take near-term actions to
reflect challenging market conditions and accelerate the path to
profitability. Those actions are set out below:
-
Closure of branches deemed unlikely
to achieve desired returns with 8 branches closed in the first
half.
-
Reduction in non-branch headcount
of around 15%
-
Purchasing synergies from
membership of a Dutch buying group
It is anticipated that implementation of these actions will
result in the Toolstation Benelux business delivering a break-even
operating profit performance in 2025, and through maturity benefits
thereafter, will grow its contribution to the Group’s
earnings.
Building for the future
The Group continues to make good progress towards developing
a more sustainable business. Key highlights from the first half of
the year are set out below:
Modernising Construction
The Group is working hard to collect
product-level carbon data to both support its customers and improve
management of Scope 3 carbon. 32% of Group products sold are now
covered by high or good quality emission factors (EPDs or ICE
factors) applied at a product level, compared to 11% at the end of
2023. All other sales are covered by good quality
emissions factors at a product sub-category level using
Ecoinvent.
Work continues to increase the use of
product-level emissions factors with CCF currently trialling a
product-carbon reporting tool with their customers.
The Group’s renewables range has been expanded to offer a
full basket of renewables and retrofit products.
Operating Sustainably
The Group is making good progress towards its Scope 1 and 2
carbon targets. Having already
achieved a 33% absolute reduction between 2020 and 2023, the Group
is on track for further 6% reduction in 2024 driven by the
programme to replace diesel forklifts with electric and the
continued rollout of LED’s across the Group’s branch
network.
Sourcing Responsibly
The Group is on track to meet its target for 90% of Group
spend on products for resale to be covered by our supplier
assessment programme
Developing the next
generation
The Group continues to make progress towards its target of
10,000 graduated apprentices by 2030 with the Travis Perkins Group
ranked 38th in the Top 100 Apprenticeship Employers in England for
2024. This award recognises outstanding apprenticeship employers
for their commitment to creating new apprenticeships, promoting
diversity among their apprentices and supporting a high number of
successful completions.
Financial Performance Revenue analysis
The Merchant businesses saw a continuation of trends from the
second half of 2023, with ongoing price deflation, driven by timber
pricing and a more competitive trading environment, and weak market
volumes.
The strength of the Toolstation offer was underlined by
further market share gains and robust pricing pass-through in a
difficult market.
Volume, price and mix analysis
|
|
Merchanting
|
Toolstation
|
Group
|
|
Price and mix
|
(3.6)%
|
2.1%
|
(2.6)%
|
|
Like-for-like volume
|
(2.5)%
|
(1.4)%
|
(2.4)%
|
|
Like-for-like revenue growth /
(decline)
|
(6.1)%
|
0.7%
|
(5.0)%
|
|
Network changes and acquisitions / disposals
|
(0.6)%
|
1.2%
|
(0.2)%
|
|
Trading days
|
0.9%
|
0.5%
|
0.8%
|
|
Total revenue growth /
(decline)
|
(5.8)%
|
2.4%
|
(4.4)%
|
Quarterly revenue analysis
|
|
|
Total revenue
|
Like-for-like revenue
|
|
|
|
2024
|
2023
|
2024
|
2023
|
|
Merchanting
|
Q1
|
(6.0)%
|
(3.2)%
|
(4.2)%
|
(4.2)%
|
|
Q2
|
(5.7)%
|
(5.6)%
|
(7.9)%
|
(5.2)%
|
|
H1
|
(5.8)%
|
(4.5)%
|
(6.1)%
|
(4.8)%
|
|
Toolstation
|
Q1
|
1.2%
|
8.6%
|
(0.9)%
|
4.6%
|
|
Q2
|
3.4%
|
9.7%
|
2.2%
|
7.2%
|
|
H1
|
2.4%
|
9.0%
|
0.7%
|
5.9%
|
|
Total Group
|
Q1
|
(4.9)%
|
(1.5)%
|
(3.7)%
|
(2.9)%
|
|
Q2
|
(4.2)%
|
(3.3)%
|
(6.1)%
|
(3.3)%
|
|
H1
|
(4.4)%
|
(2.5)%
|
(5.0)%
|
(3.2)%
|
Operating profit reconciliation
|
£m
|
H1 2024
|
H1 2023
|
Change
|
|
Merchanting
|
91
|
130
|
(30.0)%
|
|
Toolstation
|
(1)
|
(10)
|
90.0%
|
|
Property
|
3
|
9
|
(66.7)%
|
|
Unallocated costs
|
(18)
|
(17)
|
(5.9)%
|
|
Adjusted operating profit
|
75
|
112
|
(33.0)%
|
|
Amortisation of acquired intangible
assets
|
(5)
|
(5)
|
|
|
Adjusting items
|
(32)
|
-
|
|
|
Operating profit
|
38
|
107
|
|
Property
The Group generated property profits of £3m in the first half
of the year, with £18m of cash proceeds.
Finance charge
Net finance charges were broadly in line with prior year at
£22m (see note 6 for details).
Taxation
The tax charge before adjusting items was £20m (2023: £27m)
giving an adjusted effective tax rate (adjusted ‘ETR’) of 36.6%
(standard rate: 25.0%, 2023 actual: 29.8%). The adjusted ETR rate
is substantially higher than the standard rate due to the effect of
expenses not deductible for tax purposes, the largest item being
unutilised overseas losses. The statutory tax charge for the period
to 30 June 2024 was £11m (2023: £26m) giving an effective tax rate
of 69.8% (2023: 45.6%).
Earnings per share
The Group reported a total profit after tax of £5m (2023:
£60m), resulting in basic earnings per share of 2.2 pence (2023:
28.6 pence). Diluted earnings per share were 2.2 pence (2023: 28.2
pence).
Adjusted profit after tax was £34m (2023: £64m), resulting in
adjusted earnings per share of 15.9 pence (2023: 30.5 pence).
Diluted adjusted earnings per share were 15.7 pence (2023: 30.0
pence).
Cash flow and balance sheet Free cash
flow
|
£m
|
H1 2024
|
H1 2023
|
Change
|
|
Group adjusted operating profit
excluding property profits
|
72
|
103
|
(31)
|
|
Depreciation of PPE and other non-cash movements
|
50
|
46
|
4
|
|
Change in working capital
|
54
|
8
|
46
|
|
Net interest paid (excluding lease interest)
|
(14)
|
(10)
|
(4)
|
|
Interest on lease liabilities
|
(16)
|
(13)
|
(3)
|
|
Tax paid
|
(21)
|
(29)
|
8
|
|
Adjusted operating cash
flow
|
125
|
105
|
20
|
|
Capital
investments
|
|
|
|
|
Capex excluding freehold transactions
|
(29)
|
(49)
|
20
|
|
Proceeds from disposals excluding freehold
transactions
|
-
|
2
|
(2)
|
|
Free cash flow before freehold
transactions
|
96
|
58
|
38
|
The Group delivered free cash flow conversion of 204% in the
year (2023: 105%). Working capital decreased notably year on year
driven by actions to reduce stock holding. The movements in trade
debtors and trade payables broadly offset.
Capital investment
|
£m
|
H1 2024
|
H1 2023
|
|
Strategic
|
10
|
29
|
|
Maintenance
|
15
|
19
|
|
IT
|
4
|
1
|
|
Base capital expenditure
|
29
|
49
|
|
|
|
|
|
Freehold property
|
10
|
7
|
|
Gross capital expenditure
|
39
|
56
|
|
Disposals
|
(18)
|
(35)
|
|
Net capital expenditure
|
21
|
21
|
The Group remains on track to deliver a reduced level of base
capital expenditure in 2024 with around £80m expected for the full
year.
Strategic capex was notably reduced, reflecting both the
Group’s objective of improving free cashflow and the high levels of
spend in prior year, mainly focused on the delivery of the
Toolstation UK distribution centre at Pineham. Spend in the first
half included three new Merchant branches and a modest increase in
the Toolstation network alongside the new Staircraft mouldings
manufacturing facility in Coventry.
Maintenance capex was focused on the maintenance of the fleet
and the Hire asset base. The majority of software and digital
development is expensed directly through the profit and loss
account.
Uses of free cash flow
|
£m
|
H1 2024
|
H1 2023
|
Change
|
|
Free cash flow
|
96
|
58
|
38
|
|
Investments in freehold property
|
(10)
|
(7)
|
(3)
|
|
Disposal proceeds from freehold transactions
|
18
|
33
|
(15)
|
|
Dividends paid
|
(12)
|
(56)
|
44
|
|
Cash payments on adjusting items
|
(13)
|
(2)
|
(11)
|
|
Other
|
3
|
4
|
(1)
|
|
Change in cash / cash
equivalents
|
82
|
30
|
52
|
Cash and cash equivalents increased by £82m in the year,
driven by working capital improvements and disciplined capital
allocation.
Net debt and funding
|
|
30 Jun 2024
|
31 Dec 2023
|
Change
|
Covenant
|
|
Net debt
|
£868m
|
£922m
|
£54m
|
|
|
Net debt / adjusted EBITDA
|
2.7x
|
2.6x
|
(0.1)x
|
<4.0x
|
|
Net debt before leases
|
£233m
|
£314m
|
£81m
|
|
|
Net debt before leases / adjusted EBITDA
|
0.7x
|
0.8x
|
0.1x
|
|
Note - All covenant metrics measured post
IFRS16. Leverage metrics are calculated on a 12-month rolling
basis.
Overall net debt reduced by £54m from year-end, with net debt
before leases reducing by £81m, driven by disciplined cash and
capital expenditure management. Lease commitments increased by £27m
principally due to a £25m investment in the replacement of
inefficient diesel forklifts by new electric models. So far, over
700 diesel forklifts have been replaced as an important part of the
Group’s carbon reduction strategy.
Leverage increased slightly compared to year-end due to a
(9)% reduction in 12-month rolling EBITDA (see note
18(c)).
Funding
As at 30 June 2024, the Group’s
committed funding of £800m comprised:
-
£250m guaranteed notes due February
2026, listed on the London Stock Exchange
-
£75m bilateral bank loan due August
2027
-
A revolving credit facility of
£375m, refinanced in November 2023 and maturing in November
2028
-
£100m of US private placement
notes, maturing in equal tranches in August 2029, August 2030 and
August 2031
As at 30 June 2024, the Group had
undrawn committed facilities of £375m (31 December 2023: £375m) and
deposited cash of £171m (31 December 2023: £102m), giving overall
liquidity headroom of £561m (31 December 2023: £492m).
Principal risks and uncertainties
At a global level significant economic and geopolitical
uncertainty continues to present challenges to the Group’s
operating environment and impacts its risk landscape. Whilst the
decisive result of the UK General Election has delivered some
positive policy outcomes to drive planning reform and boost
housebuilding and infrastructure project output, the potential
impact of these global trends remains highly uncertain and this is
expected to continue throughout the remainder of 2024. The Group
continues to actively manage the challenges presented by
macroeconomic volatility, however we have maintained our view that
the risk trend is increasing.
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 factors 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 these risks remain broadly consistent
with those described on pages 74 to 85 of the 2023 Annual Report
& Accounts. Details are provided for inherent risks relating to
long-term market trends, macroeconomic volatility, managing change,
climate change & carbon reduction, cyber threat & data
security, supply chain resilience, health, safety & wellbeing,
legal compliance and critical asset failure.
The second half of 2024 brings significant change for the
Group, including the appointment of a new CEO and Chair and the
adaptations required to use a new
ERP system. Managing this change effectively will be important to
ensure that the Group can continue to deliver on its strategic
priorities. Accordingly, the trend
for this principal risk area has been updated to
“increasing”.
There are no emerging risks considered significant enough to
report at this time.
Condensed consolidated income statement
|
£m
|
Notes
|
Six months ended
30 June 2024
(unaudited)
|
Six months ended
30 June 2023
(unaudited)
|
Year ended
31 December 2023
(audited)
|
|
Revenue
|
2
|
2,361.7
|
2,472.1
|
4,861.9
|
|
Gross profit
|
|
629.1
|
679.4
|
1,305.1
|
|
Charge for impairment losses for trade receivables
|
|
(6.7)
|
(11.8)
|
(16.8)
|
|
Selling and distribution
|
|
(391.9)
|
(407.8)
|
(835.0)
|
|
Administrative expenses – other
|
|
(159.9)
|
(163.1)
|
(297.1)
|
|
Profit on disposal of properties
|
18(d)
|
2.7
|
9.3
|
15.1
|
|
Other operating income
|
|
1.8
|
6.1
|
9.1
|
|
Adjusted operating profit
|
17(a)
|
75.1
|
112.1
|
180.4
|
|
Amortisation of acquired intangible assets
|
|
(5.2)
|
(5.2)
|
(10.5)
|
|
Adjusting items
|
3
|
(32.2)
|
–
|
(60.0)
|
|
Operating profit
|
|
37.7
|
106.9
|
109.9
|
|
Net finance costs
|
6
|
(22.1)
|
(21.2)
|
(39.9)
|
|
Profit before tax
|
|
15.6
|
85.7
|
70.0
|
|
Tax
|
7
|
(10.9)
|
(25.5)
|
(31.9)
|
|
Profit for the period
|
|
4.7
|
60.2
|
38.1
|
|
Earnings per share
|
|
|
|
|
|
Adjusted basic earnings per share
|
10(b)
|
15.9p
|
30.5p
|
45.7p
|
|
Adjusted diluted earnings per share
|
10(b)
|
15.7p
|
30.0p
|
45.0p
|
|
Basic earnings per share
|
10(a)
|
2.2p
|
28.6p
|
18.1p
|
|
Diluted earnings per share
|
10(a)
|
2.2p
|
28.2p
|
17.8p
|
|
Total dividend declared per share
|
11
|
5.5p
|
12.5p
|
18.0p
|
Condensed consolidated statement of comprehensive
income
|
£m
|
Six months ended
30 June 2024
(unaudited)
|
Six months ended
30 June 2023
(unaudited)
|
Year ended
31 December
2023
(audited)
|
|
Profit for the period
|
4.7
|
60.2
|
38.1
|
|
Items that will not be reclassified
subsequently to profit and loss:
|
|
Actuarial gains/(losses) on defined benefit pension schemes
(note 8)
|
8.5
|
(5.4)
|
(41.0)
|
|
Income taxes relating to other comprehensive
income
|
(2.6)
|
1.4
|
10.2
|
|
Items that may be reclassified
subsequently to profit and loss:
|
|
|
|
|
Foreign exchange differences on retranslation of foreign
operations
|
(3.5)
|
(2.5)
|
(1.2)
|
|
Fair value gains on cash flow hedges
|
1.1
|
3.2
|
(1.4)
|
|
Deferred tax on cash flow hedges
|
(0.3)
|
(0.8)
|
0.4
|
|
Other comprehensive gain/(loss) for the period net of
tax
|
3.2
|
(4.1)
|
(33.0)
|
|
Total comprehensive income for the period
|
7.9
|
56.1
|
5.1
|
All other comprehensive income is attributable to the owners
of the Company.
Condensed consolidated balance sheet
|
£m
|
As at 30 June 2024
(unaudited)
|
As at 30 June 2023 (unaudited)
|
As at 31 December 2023 (audited)
|
|
ASSETS
|
|
|
|
|
Non-current assets
|
|
|
|
|
Goodwill
|
846.7
|
856.8
|
847.9
|
|
Other intangible assets
|
93.3
|
109.5
|
99.9
|
|
Property, plant and equipment
|
835.6
|
831.1
|
848.4
|
|
Right-of-use assets
|
556.0
|
540.2
|
530.4
|
|
Other receivables
|
15.8
|
18.5
|
14.2
|
|
Deferred tax asset
|
17.2
|
16.9
|
18.0
|
|
Derivative financial instruments (note
15)
|
4.2
|
7.5
|
2.9
|
|
Retirement benefit asset (note 8)
|
111.9
|
132.9
|
100.6
|
|
Total non-current assets
|
2,480.7
|
2,513.4
|
2,462.3
|
|
Current assets
|
|
|
|
|
Inventories
|
669.7
|
733.4
|
727.6
|
|
Trade and other receivables
|
746.1
|
816.6
|
689.6
|
|
Tax assets
|
19.5
|
2.8
|
14.5
|
|
Cash and cash equivalents
|
213.6
|
334.5
|
131.5
|
|
Total current assets
|
1,648.9
|
1,887.3
|
1,563.2
|
|
Total assets
|
4,129.6
|
4,400.7
|
4,025.5
|
|
EQUITY AND LIABILITIES
|
|
|
|
|
Capital and reserves
|
|
|
|
|
Share capital
|
23.8
|
23.8
|
23.8
|
|
Share premium account
|
545.6
|
545.6
|
545.6
|
|
Cash flow hedge reserve
|
4.0
|
7.5
|
2.9
|
|
Merger reserve
|
326.5
|
326.5
|
326.5
|
|
Revaluation reserve
|
10.2
|
11.0
|
10.8
|
|
Other reserves
|
1.4
|
1.4
|
1.4
|
|
Own shares
|
(7.9)
|
(16.5)
|
(14.1)
|
|
Foreign exchange reserve
|
4.9
|
7.1
|
8.4
|
|
Retained earnings
|
1,133.2
|
1,202.7
|
1,135.0
|
|
Total equity
|
2,041.7
|
2,109.1
|
2,040.3
|
|
Non-current liabilities
|
|
|
|
|
Interest-bearing loans and borrowings
|
446.6
|
346.7
|
445.1
|
|
Lease liabilities
|
540.2
|
520.0
|
518.8
|
|
Deferred tax liabilities
|
89.8
|
95.4
|
92.8
|
|
Long-term provisions
|
10.5
|
5.2
|
3.8
|
|
Total non-current liabilities
|
1,087.1
|
967.3
|
1,060.5
|
|
Current liabilities
|
|
|
|
|
Interest-bearing loans and
borrowings
|
–
|
261.6
|
–
|
|
Lease liabilities
|
94.9
|
80.3
|
89.6
|
|
Derivative financial instruments (note
14)
|
–
|
0.6
|
0.4
|
|
Trade and other payables
|
874.5
|
956.5
|
795.4
|
|
Short-term provisions
|
31.4
|
25.3
|
39.3
|
|
Total current liabilities
|
1,000.8
|
1,324.3
|
924.7
|
|
Total liabilities
|
2,087.9
|
2,291.6
|
1,985.2
|
|
Total equity and liabilities
|
4,129.6
|
4,400.7
|
4,025.5
|
The interim condensed financial statements of Travis Perkins
plc, registered number 824821, were approved by the Board of
Directors on 5 August 2024 and signed on its behalf by:
|
Nick Roberts
Chief Executive Officer
|
Duncan Cooper
Chief Financial Officer
|
Condensed consolidated statement of changes in equity
|
£m
|
Share capital
|
Share premium
|
Cash flow hedge reserve
|
Merger reserve
|
Revaluation reserve
|
Capital redemption reserve
|
Own shares
|
Foreign exchange
|
Retained earnings
|
Total equity
|
|
At 1 January 2024 (audited)
|
23.8
|
545.6
|
2.9
|
326.5
|
10.8
|
1.4
|
(14.1)
|
8.4
|
1,135.0
|
2,040.3
|
|
Profit for the period
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
4.7
|
4.7
|
|
Other comprehensive income for the period
|
–
|
–
|
1.1
|
–
|
–
|
–
|
–
|
(3.5)
|
5.6
|
3.2
|
|
Total comprehensive income for the period
|
–
|
–
|
1.1
|
–
|
–
|
–
|
–
|
(3.5)
|
10.3
|
7.9
|
|
Dividends paid
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
(11.6)
|
(11.6)
|
|
Own shares movement
|
–
|
–
|
–
|
–
|
–
|
–
|
6.1
|
–
|
(6.1)
|
–
|
|
Sale of own shares
|
–
|
–
|
–
|
–
|
–
|
–
|
0.1
|
–
|
–
|
0.1
|
|
Equity-settled share-based payments
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
5.9
|
5.9
|
|
Exercise of options over non-controlling interest
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
(1.1)
|
(1.1)
|
|
Adjustments in respect of revalued fixed assets
|
–
|
–
|
–
|
–
|
(0.6)
|
–
|
–
|
–
|
0.6
|
–
|
|
Tax on equity-settled share-based payments
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
0.1
|
0.1
|
|
Tax on revalued assets
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
0.1
|
0.1
|
|
At 30 June 2024 (unaudited)
|
23.8
|
545.6
|
4.0
|
326.5
|
10.2
|
1.4
|
(7.9)
|
4.9
|
1,133.2
|
2,041.7
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
£m
|
Share capital
|
Share premium
|
Cash flow hedge reserve
|
Merger reserve
|
Revaluation reserve
|
Capital redemption reserve
|
Own shares
|
Foreign exchange
|
Retained earnings
|
Total equity
|
|
At 1 January 2023 (audited)
|
23.8
|
545.6
|
4.3
|
326.5
|
12.1
|
1.4
|
(34.3)
|
9.6
|
1,213.2
|
2,102.2
|
|
Profit for the period
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
60.2
|
60.2
|
|
Other comprehensive income for the period
|
–
|
–
|
3.2
|
–
|
–
|
–
|
–
|
(2.5)
|
(4.8)
|
(4.1)
|
|
Total comprehensive income for the period
|
–
|
–
|
3.2
|
–
|
–
|
–
|
–
|
(2.5)
|
55.4
|
56.1
|
|
Dividends paid
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
(55.8)
|
(55.8)
|
|
Adjustments in respect of revalued fixed assets
|
–
|
–
|
–
|
–
|
(1.1)
|
–
|
–
|
–
|
1.1
|
–
|
|
Own shares movement
|
–
|
–
|
–
|
–
|
–
|
–
|
17.8
|
–
|
(17.8)
|
–
|
|
Equity-settled share-based payments
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
6.1
|
6.1
|
|
Tax on equity-settled share-based payments
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
0.2
|
0.2
|
|
Tax on revalued assets
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
0.3
|
0.3
|
|
At 30 June 2023 (unaudited)
|
23.8
|
545.6
|
7.5
|
326.5
|
11.0
|
1.4
|
(16.5)
|
7.1
|
1,202.7
|
2,109.1
|
Condensed consolidated statement of changes in equity
(continued)
|
£m
|
Share capital
|
Share premium
|
Cash flow hedge reserve
|
Merger reserve
|
Revaluation reserve
|
Own shares
|
Foreign exchange
|
Capital redemption reserve
|
Retained earnings
|
Total equity
|
|
At 1 January 2023 (audited)
|
23.8
|
545.6
|
4.3
|
326.5
|
12.1
|
(34.3)
|
9.6
|
1.4
|
1,213.2
|
2,102.2
|
|
Profit for the year
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
38.1
|
38.1
|
|
Other comprehensive income for the year
|
–
|
–
|
(1.4)
|
–
|
–
|
–
|
(1.2)
|
–
|
(30.4)
|
(33.0)
|
|
Total comprehensive income for the year
|
–
|
–
|
(1.4)
|
–
|
–
|
–
|
(1.2)
|
–
|
7.7
|
5.1
|
|
Dividends paid
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
(82.1)
|
(82.1)
|
|
Adjustments in respect of revalued fixed assets
|
–
|
–
|
–
|
–
|
(1.3)
|
–
|
–
|
–
|
1.3
|
–
|
|
Own shares movement
|
–
|
–
|
–
|
–
|
–
|
20.2
|
–
|
–
|
(20.2)
|
–
|
|
Equity-settled share-based payments
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
14.6
|
14.6
|
|
Tax on revalued assets
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
0.5
|
0.5
|
|
At 31 December 2023 (audited)
|
23.8
|
545.6
|
2.9
|
326.5
|
10.8
|
(14.1)
|
8.4
|
1.4
|
1,135.0
|
2,040.3
|
Condensed consolidated cash flow statement
|
£m
|
Six months ended
30 June 2024
(unaudited)
|
Six months ended
30 June 2023
(unaudited)
|
Year ended 31 December 2023
(audited)
|
|
Cash flows from operating
activities
|
|
|
|
|
Operating profit
|
37.7
|
106.9
|
109.9
|
|
Adjustments for:
|
|
|
|
|
Depreciation of property, plant and equipment
|
40.1
|
38.2
|
80.3
|
|
Depreciation of right-of-use assets – property
|
42.0
|
41.3
|
81.4
|
|
Depreciation of right-of-use assets – equipment
|
6.3
|
4.6
|
9.7
|
|
Amortisation of other intangibles
|
2.6
|
1.9
|
4.6
|
|
Amortisation of acquisition-related intangibles
|
5.2
|
5.2
|
10.5
|
|
Share-based payments
|
5.9
|
6.1
|
14.6
|
|
Gains on disposal of property, plant and equipment
|
(2.7)
|
(9.3)
|
(15.1)
|
|
Purchase of tool hire assets
|
(3.9)
|
(4.1)
|
(7.8)
|
|
Decrease/(increase) in inventories
|
57.9
|
(5.6)
|
0.2
|
|
(Increase)/decrease in receivables
|
(56.9)
|
(90.4)
|
36.3
|
|
Increase/(decrease) in payables
|
53.2
|
104.3
|
(58.7)
|
|
Adjusting item payments in excess of charge
|
19.4
|
(1.5)
|
49.5
|
|
Cash generated from
operations
|
206.8
|
197.6
|
315.4
|
|
Interest paid and debt arrangement fees
|
(16.0)
|
(12.8)
|
(31.0)
|
|
Interest on lease liabilities
|
(14.9)
|
(12.5)
|
(26.2)
|
|
Income taxes paid
|
(20.8)
|
(29.3)
|
(40.6)
|
|
Net cash inflow from operating
activities
|
155.1
|
143.0
|
217.6
|
|
Cash flows from investing
activities
|
|
|
|
|
Interest received
|
2.4
|
2.7
|
6.0
|
|
Proceeds on disposal of property, plant and
equipment
|
18.8
|
34.8
|
69.1
|
|
Purchase of freehold land and buildings
|
(10.0)
|
(6.4)
|
(33.2)
|
|
Purchase and development of software
|
(2.9)
|
(0.7)
|
(2.9)
|
|
Purchase of property, plant and equipment
|
(22.6)
|
(44.7)
|
(97.9)
|
|
Net cash outflow from investing
activities
|
(14.3)
|
(14.3)
|
(58.9)
|
|
Cash flows from financing
activities
|
|
|
|
|
Sale of own shares
|
0.1
|
–
|
–
|
|
Repayment of lease liabilities
|
(47.2)
|
(39.4)
|
(84.5)
|
|
Payments to pension SPV
|
–
|
(3.8)
|
(3.8)
|
|
Dividends paid
|
(11.6)
|
(55.8)
|
(82.1)
|
|
Proceeds from borrowings
|
–
|
–
|
100.0
|
|
Repayment of bonds
|
–
|
–
|
(180.0)
|
|
Net cash outflow from financing
activities
|
(58.7)
|
(99.0)
|
(250.4)
|
|
Net increase / (decrease) in cash
and cash equivalents
|
82.1
|
29.7
|
(91.7)
|
|
Cash and cash equivalents at the beginning of the
period
|
131.5
|
223.2
|
223.2
|
|
Cash and cash equivalents at the end of the period
|
213.6
|
252.9
|
131.5
|
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 2024 and 30 June 2023 is unaudited.
The June 2024 information has been
reviewed by KPMG LLP, the Group's auditor, and a copy of their
review report appears on pages 41 and 42 of this interim report.
The June 2023 information was also reviewed by KPMG LLP.
The financial information for the year ended 31 December 2023
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 2023, 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 2024 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
2023. The 2023 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, 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 7.
Notes to the interim financial
statements
2.
Revenue
|
£m
|
Six months ended 30 June
2024
|
Six months ended 30 June 2023
|
Year ended 31 December 2023
|
|
Sale of goods
|
2,276.9
|
2,389.7
|
4,693.0
|
|
Sale of services
|
84.8
|
82.4
|
168.9
|
|
|
2,361.7
|
2,472.1
|
4,861.9
|
3.
Adjusting items
|
£m
|
Six months ended 30 June
2024
|
Six months ended 30 June 2023
|
Year ended 31 December 2023
|
|
Adjusting items
|
|
|
|
|
Restructuring
|
23.9
|
–
|
16.8
|
|
Benchmarx branch closures
|
5.7
|
–
|
10.1
|
|
Toolstation France
|
2.6
|
–
|
33.1
|
|
|
32.2
|
–
|
60.0
|
Restructuring
In the second-half of 2023, as part of the Group’s strategy
of simplifying how its businesses interact with each other and in
response to the continued weakness in the construction market, the
Group commenced the restructuring of its commercial and procurement
teams and its supply chain. The 2024 costs associated with this
programme are:
-
£15.0m of costs from the
consolidation of the Group’s supply chain, including £2.1m of
property-related items, £9.2m of stock impairments and £3.7m of
other associated costs. Of these items, £4.0m of stock impairments
and £2.0m of other associated costs relate to the Toolstation UK
business.
-
Redundancy and other associated
costs of £8.9m in respect of procurement centralisation and other
central and regional restructuring.
Costs of £16.8m were incurred in 2023 in respect of the
restructuring activity.
Benchmarx branch closures
A charge of £5.7m has been recognised in respect of the
redundancy and other closure costs for 39 standalone Benchmarx
branches that were closed in February 2024. Costs in respect of the
impairment of assets and the recognition of property-related
provisions for these closures were recognised in 2023.
Toolstation France
impairment
The £2.6m cost relates to adjustments to stock provisions and
lease liabilities made as a result of the planned exit of
Toolstation France, as well as legal and professional costs
incurred in respect of this process. The 2023 charge of £33.1m
arose from the impairment of the right-of-use assets, tangible
fixed assets and goodwill of the Toolstation France cash-generating
unit.
4.
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.
Notes to the interim financial
statements
4. Business
segments (continued) a)
Segment results Six months ended 30 June
2024
|
£m
|
Merchanting
|
Toolstation
|
Unallocated
|
Consolidated
|
|
Revenue
|
1,941.7
|
420.0
|
–
|
2,361.7
|
|
Segment result
|
69.2
|
(13.8)
|
(17.7)
|
37.7
|
|
Amortisation of acquired intangible assets
|
3.8
|
1.4
|
–
|
5.2
|
|
Adjusting items
|
20.9
|
11.3
|
|
32.2
|
|
Adjusted segment result
|
93.9
|
(1.1)
|
(17.7)
|
75.1
|
|
Less property profits
|
(2.7)
|
–
|
–
|
(2.7)
|
|
Adjusted segment result excluding property profits
|
91.2
|
(1.1)
|
(17.7)
|
72.4
|
|
Adjusted segment margin
|
4.8%
|
(0.3)%
|
–
|
3.2%
|
|
Adjusted segment margin excluding property profits
|
4.7%
|
(0.3)%
|
–
|
3.1%
|
Six months ended 30 June 2023
|
£m
|
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%
|
Year ended 31 December
2023
|
£m
|
Merchanting
|
Toolstation
|
Unallocated
|
Consolidated
|
|
Revenue
|
4,035.8
|
826.1
|
–
|
4,861.9
|
|
Segment result
|
198.9
|
(55.6)
|
(33.4)
|
109.9
|
|
Amortisation of acquired intangible assets
|
7.6
|
2.9
|
–
|
10.5
|
|
Adjusting items
|
20.9
|
38.3
|
0.8
|
60.0
|
|
Adjusted segment result
|
227.4
|
(14.4)
|
(32.6)
|
180.4
|
|
Less property profits
|
(15.1)
|
–
|
–
|
(15.1)
|
|
Adjusted segment result excluding property profits
|
212.3
|
(14.4)
|
(32.6)
|
165.3
|
|
Adjusted segment margin
|
5.6%
|
(1.7%)
|
–
|
3.7%
|
|
Adjusted segment margin excluding property profits
|
5.3%
|
(1.7%)
|
–
|
3.4%
|
Notes to the interim financial
statements
4. Business
segments (continued) b)
Segment assets and liabilities
|
£m
|
Six months ended 30 June
2024
|
|
Segment assets
|
|
|
Merchanting
|
2,972.4
|
|
Toolstation
|
748.4
|
|
Unallocated
|
408.8
|
|
Total assets
|
4,129.6
|
|
Segment liabilities
|
|
|
Merchanting
|
(1,167.5)
|
|
Toolstation
|
(364.5)
|
|
Unallocated
|
(555.9)
|
|
Total liabilities
|
(2,087.9)
|
5.
Seasonality
The Group’s trading operations when assessed on a half yearly
basis are mainly unaffected by seasonal factors. In 2023 the period
to 30 June accounted for 50.8% of the Group’s annual
revenue.
Notes to the interim financial
statements
6.
Net finance costs
|
£m
|
Six months ended 30 June
2024
|
Six months ended 30 June 2023
|
Year ended
31 December
2023
|
|
Finance income
|
|
|
|
|
Items in the nature of
interest:
|
|
|
|
|
Interest receivable
|
2.4
|
2.7
|
5.7
|
|
Remeasurement:
|
|
|
|
|
Other finance income – pension scheme
|
2.1
|
3.0
|
6.4
|
|
Net gain on remeasurement of derivatives at fair
value
|
0.6
|
–
|
–
|
|
|
5.1
|
5.7
|
12.1
|
|
Finance costs
|
|
|
|
|
Items in the nature of
interest:
|
|
|
|
|
Interest on lease liabilities – property
|
(13.8)
|
(12.2)
|
(25.3)
|
|
Interest on lease liabilities – equipment
|
(1.1)
|
(0.3)
|
(0.9)
|
|
Interest on bonds and other loans
|
(9.6)
|
(8.7)
|
(20.6)
|
|
Interest on bank facilities and overdrafts
|
(1.1)
|
(2.3)
|
(1.5)
|
|
Pension SPV and other interest
|
(0.6)
|
(1.6)
|
(1.7)
|
|
Other finance costs:
|
|
|
|
|
Amortisation of issue costs of bank loans
|
(0.6)
|
(0.5)
|
(1.5)
|
|
Unwinding of discounts – property provisions
|
–
|
–
|
(0.1)
|
|
Remeasurement:
|
|
|
|
|
Net loss on remeasurement of foreign exchange
|
(0.4)
|
(0.8)
|
(0.2)
|
|
Net loss on remeasurement of derivatives at fair
value
|
–
|
(0.5)
|
(0.2)
|
|
|
(27.2)
|
(26.9)
|
(52.0)
|
|
Net finance costs
|
(22.1)
|
(21.2)
|
(39.9)
|
The Group’s interest cover covenants are calculated using
those items of finance income and finance cost that are in the
nature of interest, including interest on lease liabilities. In
2024 these were £23.8m (2023: £22.4m, full year:
£44.3m).
Notes to the interim financial
statements
7.
Tax
|
£m
|
Six months ended
30 June 2024
|
Six months ended
30 June 2023
|
Year ended
31 December 2023
|
|
Current tax
|
|
|
|
|
– current year
|
15.9
|
27.1
|
33.0
|
|
– prior year
|
–
|
–
|
(6.1)
|
|
Total current tax
|
15.9
|
27.1
|
26.9
|
|
Deferred tax
|
|
|
|
|
– current year
|
(5.0)
|
(1.6)
|
(1.4)
|
|
– prior year
|
–
|
–
|
6.4
|
|
Total deferred tax
|
(5.0)
|
(1.6)
|
5.0
|
|
Total tax charge
|
10.9
|
25.5
|
31.9
|
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 the accounting period beginning 1 January 2024 the Group
is required to comply with the OECD Pillar Two model rules ("Pillar
Two rules") which require the Group to pay a minimum level of tax
on income arising in the jurisdictions in which it
operates.
The Group has applied the mandatory temporary exception to
accounting for deferred taxes arising from the implementation of
the Pillar Two rules. Accordingly, the Group neither recognises nor
discloses information about deferred tax assets and liabilities
related to potential Pillar Two income taxes.
According to the Pillar Two rules, Travis Perkins plc
qualifies as the ultimate parent entity (“UPE”) for Pillar Two
purposes. The UPE will generally be required to pay in the UK a
top-up tax on profits of its subsidiaries that are taxed at an
effective tax rate (determined in accordance with the Pillar Two
rules) of less than 15%. The Group has performed a preliminary
calculation of the “Transitional Safe Harbours” for Pillar Two
purposes ("TSH") based on the accounting data for the first five
months of fiscal year 2024. Based on the assessment performed, most
of the jurisdictions in which the Group operates should benefit
from the TSH and no significant top-up taxes are
expected.
Notes to the interim financial
statements
8.
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
|
£m
|
Six months ended 30 June
2024
|
Six months ended 30 June 2023
|
Year ended
31 December 2023
|
|
At 1 January gross pension asset
|
100.6
|
135.9
|
135.9
|
|
Amounts recognised in
income:
|
|
|
|
|
Current service costs and administration expenses
|
(1.5)
|
(1.0)
|
(2.3)
|
|
Net interest income
|
2.1
|
3.0
|
6.4
|
|
Other movements:
|
|
|
|
|
Contributions from sponsoring companies
|
0.1
|
0.4
|
1.4
|
|
Balance sheet reclassifications
|
2.1
|
–
|
–
|
|
Amounts recognised in other
comprehensive income:
|
|
|
|
|
Foreign exchange
|
–
|
–
|
0.1
|
|
Return on plan assets (excluding amounts in net
interest)
|
(56.6)
|
(49.1)
|
(7.2)
|
|
Actuarial gain arising from changes in demographic
assumptions
|
–
|
–
|
8.6
|
|
Actuarial gain/(loss) arising from changes in financial
assumptions
|
65.1
|
43.7
|
(20.4)
|
|
Actuarial loss arising from experience adjustments
|
–
|
–
|
(21.9)
|
|
Gross pension asset
|
111.9
|
132.9
|
100.6
|
|
Deferred tax
|
(27.8)
|
(33.2)
|
(25.1)
|
|
Net pension asset
|
84.1
|
99.7
|
75.5
|
Notes to the interim financial
statements
8.
Retirement benefit obligations (continued)
In June 2023, the High Court handed down a decision in the
case of Virgin Media Limited v NTL Pension Trustees II Limited and
others relating to the validity of certain historical pension
changes due to the lack of actuarial confirmation required by
law. In July 2024, the Court of
Appeal dismissed the appeal brought by Virgin Media Ltd against
aspects of the June 2023 decision.
The conclusions reached by the court in this case may have
implications for other UK defined benefit
plans. The Company and pension
trustees are currently considering the implications of the case for
the TP DB Scheme and the BSS DB scheme.
The defined benefit obligation has been calculated on the
basis of the pension benefits currently being administered, and at
this stage the directors do not consider it necessary to make any
adjustments as a result of the Virgin Media case.
9.
Share capital
|
|
Allotted
|
|
|
No.
|
£m
|
|
Ordinary shares:
|
|
|
|
At 30 June 2023, 31 December 2023 and 30 June 2024
|
212,509,334
|
23.8
|
10.
Earnings per share a)
Basic and diluted earnings per share
|
|
Six months ended 30 June
2024
|
Six months ended 30 June 2023
|
Year ended
31 December 2023
|
|
Profit attributable to the owners of the parent
(£m)
|
4.7
|
60.2
|
38.1
|
|
Weighted average number of shares in issue
|
210,955,879
|
210,293,714
|
210,530,726
|
|
Dilutive effect of share options
|
3,434,047
|
3,469,107
|
3,616,786
|
|
Weighted average number of shares for diluted earnings per
share
|
214,389,926
|
213,762,821
|
214,147,512
|
|
Earnings per share
|
2.2p
|
28.6p
|
18.1p
|
|
Diluted earnings per share
|
2.2p
|
28.2p
|
17.8p
|
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.
|
£m
|
Six months ended 30
June 2024
|
Six months ended 30
June 2023
|
Year ended
31 December 2023
|
|
Profit attributable to the owners of the parent
|
4.7
|
60.2
|
38.1
|
|
Adjusting items
|
32.2
|
–
|
60.0
|
|
Amortisation of acquired intangible assets
|
5.2
|
5.2
|
10.5
|
|
Tax on amortisation of acquired intangible assets
|
(1.3)
|
(1.3)
|
(2.6)
|
|
Tax on adjusting items
|
(7.2)
|
–
|
(9.7)
|
|
Earnings for adjusted earnings per share
|
33.6
|
64.1
|
96.3
|
|
Adjusted earnings per share
|
15.9p
|
30.5p
|
45.7p
|
|
Adjusted diluted earnings per share
|
15.7p
|
30.0p
|
45.0p
|
Notes to the interim financial
statements
11.
Dividends
Distributions to equity shareholders of £11.6m have been
recognised in the financial statements in the period (2023:
£55.8m). An interim dividend of 5.5p is proposed in respect of the
year ending 31 December 2024. It will be paid on 8 November 2024 to
shareholders on the register at the close of business on 4 October
2024. The shares will be quoted ex-dividend on 3 October
2024.
The Company operates a Dividend Reinvestment Plan, elections
for which must be received by the Company’s registrar by 5.30pm on
18 October 2024.
12.
Borrowings
At the period
end, the Group had the following borrowing facilities
available:
|
£m
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
Drawn facilities:
|
|
|
|
|
£250m sterling bond (due February 2026)
|
250.0
|
250.0
|
250.0
|
|
Senior unsecured notes
|
100.0
|
–
|
100.0
|
|
Term loan
|
75.0
|
75.0
|
75.0
|
|
£180m sterling bond (repaid September 2023)
|
–
|
180.0
|
–
|
|
Overdraft
|
–
|
81.6
|
–
|
|
|
425.0
|
586.6
|
425.0
|
|
Undrawn facilities:
|
|
|
|
|
5-year committed revolving credit facility
|
375.0
|
400.0
|
375.0
|
|
Bank overdraft
|
15.0
|
15.0
|
15.0
|
|
|
390.0
|
415.0
|
390.0
|
The cash and cash equivalent balance includes £4.8m held by
The Cobtree Scottish Limited Partnership, a Group-controlled
special purpose vehicle which provides funding to one of the
Group's pension schemes. These deposits are subject to restrictions
and are therefore not available for general use by other entities
within the Group.
The overdraft balance of £81.6m on 30 June 2023 formed part
of the Group’s notional cash pool and its aggregate cash position
of £252.9m. The Group’s £15.0m overdraft facility and the Group’s
£400.0m revolving credit facility were undrawn as at 30 June
2023.
Notes to the interim financial
statements
13.
Net debt
|
£m
|
Six months ended
30 June 2024
|
Six months ended
30 June 2023
|
Year ended
31 December 2023
|
|
Net debt at 1 January
|
(922.0)
|
(818.5)
|
(818.5)
|
|
Lease-related movements:
|
|
|
|
|
Lease additions
|
(81.1)
|
(128.8)
|
(185.5)
|
|
Disposals of leases
|
7.2
|
1.7
|
5.2
|
|
Repayment of lease liabilities – property
|
55.0
|
47.1
|
100.5
|
|
Repayment of lease liabilities – equipment
|
7.1
|
4.8
|
10.2
|
|
Discount unwind on lease liability
|
(14.9)
|
(12.5)
|
(26.2)
|
|
Other net debt
movements:
|
|
|
|
|
Increase / (decrease) in cash
|
82.1
|
29.7
|
(91.7)
|
|
Finance charges and fees
|
(0.6)
|
(0.6)
|
1.9
|
|
Bond repurchase
|
–
|
–
|
80.0
|
|
Payments to pension SPV
|
–
|
3.8
|
3.7
|
|
Discount unwind on pension SPV liability
|
(0.9)
|
(0.8)
|
(1.6)
|
|
Net debt at 30 June / 31 December
|
(868.1)
|
(874.1)
|
(922.0)
|
|
Less: lease liability
|
635.1
|
600.3
|
608.4
|
|
Net debt before leases
|
(233.0)
|
(273.8)
|
(313.6)
|
Notes to the interim financial
statements
14.
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
During 2022 the Group obtained a 5-year term loan facility
for £75m and at the same time entered into an equal interest rate
swap arrangement to hedge the full variable component of the
interest rate for the life of the instrument. 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 the following hedge
instrument:
|
£m
|
Six months ended
30 June 2024
|
Six months ended
30 June 2023
|
Year ended
31 December 2023
|
|
At 1 January
|
2.2
|
3.2
|
3.2
|
|
Change in fair value of hedging
instrument recognised in OCI
|
1.1
|
3.2
|
(1.4)
|
|
Deferred tax
|
(0.3)
|
(0.8)
|
0.4
|
|
At 30 June / 31 December
|
3.0
|
5.6
|
2.2
|
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
between 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:
|
£m
|
Six months ended
30 June 2024
|
Six months ended
30 June 2023
|
Year ended
31 December 2023
|
|
Carrying amount (non-current assets)
|
4.0
|
7.5
|
2.9
|
|
Notional amount
|
75.0
|
75.0
|
75.0
|
|
Maturity date
|
15 August 2027
|
15 August 2027
|
15 August 2027
|
|
Hedge ratio
|
1:1
|
1:1
|
1:1
|
|
Change in fair value of hedging instruments
|
1.1
|
3.2
|
(1.4)
|
|
Weighted average hedged rate for the year
|
5.19%
|
4.07%
|
4.60%
|
The following amounts were recognised in the Group’s profit
and loss:
|
£m
|
Six months
ended
30 June 2024
|
Six months ended
30 June 2023
|
Year ended
31 December 2023
|
|
Net gain/(loss) on foreign currency forwards not qualifying
as hedges included in other gains/(losses)
|
0.6
|
(0.5)
|
(0.2)
|
Notes to the interim financial
statements
15.
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 discounted
based 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.
|
£m
|
30 June 2024
|
30 June 2023
|
31 December 2023
|
|
Included in non-current
assets
|
|
|
|
|
Level 2 – Interest rate swap
|
4.0
|
7.5
|
2.9
|
|
Included in current
assets
|
|
|
|
|
Level 2 – Foreign currency forward contracts at fair value
through profit and loss
|
0.2
|
–
|
–
|
|
|
4.2
|
7.5
|
2.9
|
|
Included in current
liabilities
|
|
|
|
|
Level 2 – Foreign currency forward contracts at fair value
through profit and loss
|
–
|
(0.6)
|
(0.4)
|
|
|
–
|
(0.6)
|
(0.4)
|
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 £250m of bonds as at 30 June 2024, where
the assessed fair value based on quoted mid-market prices was
£238.1m (31 December 2023: £236.9m).
16.
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
17.
Impairment
Management are required to assess CGUs for impairment where
they believe there are triggers for impairments with respect to the
various CGUs within the group. During the period management
identified that there are possible triggers for impairment with
respect to the Toolstation Benelux CGU and performed an impairment
review as set out below.
Measuring recoverable amounts
The recoverable amount has been determined using a fair value
less cost of disposal (“FVLCOD”) calculation. The valuation is
considered to be level 3 in the fair value hierarchy due to
unobservable inputs used in the valuation.
The key assumptions for the recoverable amount are those
regarding the discount rate, long-term growth rate and sales
growth. Management determined the values of the key financial
assumptions as follows:
-
Pre-tax discount rate: this was
calculated by reference to the weighted average cost of capital
(“WACC”) of the Group and reflected specific risks relating to the
Group’s industries and the countries in which the Toolstation
Benelux CGU operates. The pre-tax discount rate is adjusted for
risks not adjusted for in the cash flow forecasts, including risks
related to the size and industry of the CGU.
-
Long-term growth rate: This is the
weighted average growth rate used to extrapolate cash flows beyond
the budget period. This represents the forecast GDP growth for the
final year considered in available economic forecasts.
The cash flow forecast is derived from the strategic plan
approved by the Board as part of the 2024 strategic review of this
business. The key operating assumption is future average sales
growth. This assumption is set in the context of the store opening
profile and historical data from the Toolstation UK and Toolstation
Europe businesses on the store maturity profile.
At the end of the financial year the recoverable amount of
goodwill and intangible assets with indefinite useful lives in all
segments was in excess of their book value for all CGUs except for
Toolstation France and certain Benchmarx branches discussed in note
3. The Benchmarx branches form part of the Travis Perkins General
Merchant group of CGUs. The value-in-use and FVLCOD calculations
require the use of assumptions.
Key assumptions
|
|
Six months ended
30 June 2024
(unaudited)
|
Year ended
31 December 2023
(audited)
|
|
Pre-tax discount rate
|
11.7%
|
9.5%
|
|
Long-term growth rate
|
1.6%
|
1.6%
|
The recoverable amount calculated in the impairment review of
the Toolstation Benelux CGU exceeded the carrying amount of £126.1m
by £25.4m. Whilst the Directors believe the assumptions are
realistic, there are reasonably possible changes in the key
assumptions that would cause the recoverable amount of the
Toolstation Benelux CGU to be lower than the carrying amount. The
key variables applied to the fair value less cost of disposal
calculations and the value at which the recoverable amount would be
equal to the carrying amount were:
|
|
Assumption
|
Sensitivity
|
|
Pre-tax discount rate
|
11.7%
|
13.2%
|
|
Average sales growth (2024 – 2030)
|
13.8%
|
12.4%
|
|
Operating margin in 2030
|
10.2%
|
8.4%
|
Notes to the interim financial
statements
-
Impairment (continued)
Key assumptions (continued)
The Toolstation Benelux impairment review is not sensitive to
reasonably possible changes to the long-term growth rate. All other
variables have been held equal.
Key estimates over assumptions used in value-in-use
calculations
In testing for impairment, the recoverable amount of goodwill
and intangible assets in the Toolstation Benelux CGU has been
determined by reference to the fair value less cost of disposal of
the CGU grouping. In addition the Directors have made certain
estimates concerning discount rates, future cash flows and the
future development of the business that are consistent with the
2024 strategic review. Whilst the Directors consider the
assumptions to be realistic, should actual results, including those
for future sales growth, be different from expectations, for
instance due to a worsening of the Dutch or Belgian economy, then
it is possible that the value of goodwill and other intangible
assets included in the balance sheet could become materially
impaired. The range of reasonably possible outcomes includes an
impairment charge in respect of the £126.1m carrying value of
assets of up to £18.2m, arising in a scenario where the pre-tax
discount rate is 100bps higher and sales are cumulatively 10% lower
over the period of the modelled cash flows.
18.
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.
|
£m
|
Six months ended
30 June 2024
|
Six months ended
30 June 2023
|
Year ended
31 December 2023
|
|
Operating profit
|
37.7
|
106.9
|
109.9
|
|
Amortisation of acquired intangible assets
|
5.2
|
5.2
|
10.5
|
|
Adjusting items
|
32.2
|
–
|
60.0
|
|
Adjusted operating profit
|
75.1
|
112.1
|
180.4
|
Notes to the interim financial
statements
18.
Non-statutory information (continued)
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.
|
£m
|
Six months ended
30 June 2024
|
Six months ended
30 June 2023
|
Year ended
31 December 2023
|
|
Profit before tax
|
15.6
|
85.7
|
70.0
|
|
Amortisation of acquired intangible assets
|
5.2
|
5.2
|
10.5
|
|
Adjusting items
|
32.2
|
–
|
60.0
|
|
Adjusted profit before tax
|
53.0
|
90.9
|
140.5
|
c)
Net debt to adjusted EBITDA (rolling 12 months)
|
£m
|
30 June 2024
|
30 June 2023
|
31 December 2023
|
|
Operating profit
|
40.7
|
234.3
|
109.9
|
|
Depreciation and amortisation
|
191.3
|
175.7
|
186.5
|
|
EBITDA
|
232.0
|
410.0
|
296.4
|
|
Adjusting items
|
92.2
|
–
|
60.0
|
|
Adjusted EBITDA
|
324.2
|
410.0
|
356.4
|
|
Net debt (note 13)
|
868.1
|
874.1
|
922.0
|
|
Net debt to adjusted EBITDA (rolling 12 months)
|
2.7x
|
2.1x
|
2.6x
|
d)
Free cash flow
|
£m
|
Six months ended
30 June 2024
|
Six months ended
30 June 2023
|
Year ended
31 December 2023
|
|
Adjusted operating profit
|
75.1
|
112.1
|
180.4
|
|
Less: profit on disposal of properties
|
(2.7)
|
(9.3)
|
(15.1)
|
|
Adjusted operating profit excluding property
profit
|
72.4
|
102.8
|
165.3
|
|
Depreciation of property, plant and equipment
|
40.1
|
38.2
|
80.3
|
|
Amortisation of internally-generated intangibles
|
2.6
|
1.9
|
4.6
|
|
Share-based payments
|
5.9
|
6.1
|
14.6
|
|
Movement on working capital
|
54.3
|
8.3
|
(22.2)
|
|
Other net interest paid
|
(13.6)
|
(10.1)
|
(25.0)
|
|
Interest on lease liabilities
|
(14.9)
|
(12.5)
|
(26.2)
|
|
Income tax paid
|
(20.8)
|
(29.3)
|
(40.6)
|
|
Capital expenditure excluding freehold purchases
|
(29.4)
|
(49.5)
|
(108.6)
|
|
Disposal of plant and equipment
|
(0.9)
|
1.6
|
2.0
|
|
Free cash flow
|
95.7
|
57.5
|
44.2
|
Notes to the interim financial
statements
18. Non-statutory
information (continued) e)
Capital ratios i)
Average capital employed (rolling
12 months)
|
£m
|
30 June 2024
|
30 June 2023
|
31 December 2023
|
|
Opening 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
|
|
Opening capital employed
|
2,883.5
|
2,819.5
|
2,818.7
|
|
Closing net assets
|
2,041.7
|
2,109.1
|
2,040.3
|
|
Net pension asset
|
(84.1)
|
(99.7)
|
(75.5)
|
|
Net borrowings
|
868.1
|
874.1
|
922.0
|
|
Closing capital employed
|
2,825.7
|
2,883.5
|
2,886.8
|
|
Average capital employed
|
2,854.6
|
2,851.5
|
2,852.8
|
e) Capital
ratios ii)
Return
on capital employed
|
£m
|
30 June 2024
|
30 June 2023
|
31 December 2023
|
|
Adjusted operating profit (rolling 12 months)
|
143.4
|
244.7
|
180.4
|
|
Average capital employed
|
2,854.6
|
2,851.5
|
2,852.8
|
|
Return on capital employed
|
5.0%
|
8.6%
|
6.3%
|
iii)
Segmental
return on capital employed 12 months ended 30 June
2024
|
£m
|
Merchanting
|
Toolstation
|
Unallocated
|
Consolidated
|
|
Adjusted operating profit (rolling 12 months)
|
182.3
|
(5.5)
|
(33.4)
|
143.4
|
|
Average capital employed
|
2,148.2
|
601.0
|
105.4
|
2,854.6
|
|
Return on capital employed
|
8.5%
|
(0.9)%
|
(31.7)%
|
5.0%
|
12 months ended 30 June 2023
|
£m
|
Merchanting
|
Toolstation
|
Unallocated
|
Consolidated
|
|
Adjusted operating profit (rolling 12 months)
|
287.5
|
(10.6)
|
(32.2)
|
244.7
|
|
Average capital employed
|
2,078.0
|
613.5
|
160.0
|
2,851.5
|
|
Return on capital employed
|
13.8%
|
(1.7)%
|
(20.1)%
|
8.6%
|
Notes to the interim financial
statements
18. Non-statutory
information (continued) e) Capital
ratios (continued) 12 months ended 31 December
2023
|
£m
|
Merchanting
|
Toolstation
|
Unallocated
|
Consolidated
|
|
Adjusted operating profit
|
227.4
|
(14.4)
|
(32.6)
|
180.4
|
|
Average capital employed
|
2,161.8
|
596.2
|
94.8
|
2,852.8
|
|
Return on capital employed
|
10.5%
|
(2.4)%
|
(34.4)%
|
6.3%
|
f)
Like-for-like sales
|
£m
|
Merchanting
|
Toolstation
|
Total
|
|
2023 H1 revenue
|
2,061.7
|
410.4
|
2,472.1
|
|
Network change
|
(31.1)
|
(1.8)
|
(32.9)
|
|
Trading days
|
17.7
|
2.2
|
19.9
|
|
2023 H1 like-for-like
revenue
|
2,048.3
|
410.8
|
2,459.1
|
|
Like-for-like change
|
(106.6)
|
9.2
|
(97.4)
|
|
2024 H1 revenue
|
1,941.7
|
420.0
|
2,361.7
|
|
Network change
|
(18.3)
|
(6.2)
|
(24.5)
|
|
2024 H1 like-for-like
revenue
|
1,923.4
|
413.8
|
2,337.2
|
|
Like-for-like revenue %
|
(6.1%)
|
0.7%
|
(5.0%)
|
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
Financial Reporting, as adopted for use in the UK;
-
The Interim Management Report
includes a fair review of the information required by:
-
DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
-
DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
By order of the Board
Nick Roberts Duncan
Cooper
Chief Executive Officer Chief
Financial Officer
5 August 2024 5 August
2024
INDEPENDENT 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 2024 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 2024 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
5 August
2024
