Leading partner to
the construction industry
Annual Report and Accounts
2023
What the Group does
Our purpose
Here to help build better communities and enrich lives.
The Group enables customers to build, repair and maintain the buildings and infrastructure that touch all of us, every day.
Contents
Strategic report | Financial statements |
2 Highlights
- Overview
- At a glance
- Chair's statement
- Market overview
- Investment case
- Business model
- Chief Executive's statement
- Strategy
- Key performance indicators (KPIs)
- Sustainability report
- Climate-relatedfinancial disclosure
- Business performance and priorities
- Financial review
- Statement of principal risks and uncertainties
- Non-financialand sustainability information statement
Governance
88 Board of Directors
- Corporate governance report
- Section 172 statement
- Nominations Committee report
- Audit Committee report
- Directors' Remuneration report
- Directors' report
- Directors' statement of responsibilities
- Independent Auditor's report
- Consolidated income statement
- Consolidated statement of comprehensive income
- Consolidated balance sheet
- Consolidated statement of changes in equity
- Consolidated cash flow statement
- Notes to the consolidated financial statements
- Company balance sheet
- Company statement of changes in equity
- Notes to the Company's financial statements
- Five-yearsummary
Other information
- ESG data report (including SASB data)
- Other shareholder information
For more and the latest information please visit the Group's website at: www.travisperkinsplc.co.uk
Travis Perkins plc Annual Report and Accounts 2023
Purpose
Travis Perkins plc is a purpose- driven organisation with its values, commitment to 'Doing the Right Thing' and goal of helping to build better communities and enrich lives, underpinning everything the Group does.
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Markets
The Group's advantaged businesses hold market-leading positions in an attractive £73bn market for construction materials which has long-term structural growth drivers.
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Strategy
Toolstation UK's platform for growth, TF Solutions' category expansion and Managed Services' unique offering to the repairs and maintenance sector illustrate the Group's strategy.
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Strategic report
Governance
Financial statements
Other information
Sustainability
As sustainability continues to grow in importance for stakeholders, the Group is uniquely able to convene the supply chain to collaborate and co-create solutions, influencing and supporting the sustainability changes the construction industry needs.
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Travis Perkins plc Annual Report and Accounts 2023 | 1 |
Highlights
2023
A challenging year in weak market conditions, with the Group driving actions to support profit recovery and enhance cash generation.
Revenue
£4,862m
2022: £4,995m
Dividend per share
18.0p
2022: 39.0p
Net debt/adjusted EBITDA
2.6x
2022: 1.8x
Graduated apprentices
414
2022: 370
Adjusted operating profit
£180m
2022: £295m
Profit after tax
£38m
2022: £192m
Return on capital employed
6.3%
2022: 10.8%
Carbon emissions (kt of CO₂e)
8,004
2022: 8,294
2 Travis Perkins plc Annual Report and Accounts 2023
Protecting market position in challenging conditions
- Progressive downturn in new build housing and private domestic RMI markets leading to Group revenue 2.7% lower than prior year
- Combination of lower volumes, overhead cost inflation and rapid commodity price deflation in H2 resulted in full year adjusted operating profit of £180m (2022: £295m)
- Invested to protect and build market positions with market share gains in both Toolstation and Travis Perkins General Merchant
Transforming the operating model to build a stronger business
- Step change reduction in non-branch cost base delivered with £35m annualised savings
- Working on a plan for a potential exit of Toolstation France; strategic review of options for Toolstation Benelux
- Optimising Benchmarx branch network with focus on integrated offer within destination
- Continued rationalisation of legacy Toolstation UK supply chain, following successful opening of the new Pineham distribution centre
- Delivering profit enhancements through simplification of group structures, lowering supply chain costs and harnessing benefits from new technology
- Operating profit of £110m (2022: £285m) reflects trading performance and adjusting items of £60m recognised in 2023, of which around £16m is cash, related to impairments in Toolstation France and Benchmarx together with restructuring actions
Enhancing cash generation to support future
capital allocation
- Reduced capital expenditure requirements in near term; £80m guidance for 2024
- Review of working capital opportunities underway
- Refinancing completed, supporting robust balance sheet; no funding maturities before 2026
- In line with policy, 2023 proposed full year dividend of 18.0 pence per share (2022: 39.0 pence per share)
Strategic report
Governance
Financial statements
Other information
Travis Perkins plc Annual Report and Accounts 2023 | 3 |
Overview
Purpose
To help build better communities and enrich lives
Ambition
To be the leading partner to the construction industry
Strategy
The Group's strategy is to grow the share of its market-leading businesses by offering customers attractive propositions which mean they spend more with the Group. The Group seeks to elevate customer relationships through the addition of value-added services, solving customer pain points and moving up the value chain. In addition, the Group is deepening its customer relationships by winning a greater share of customer spend through the addition of digital channels, new ranges and relevant offers.
ELEVATING
RELATIONSHIPS
Professional trades | Larger contractors | |
and general builders | and developers | |
Smaller customers who value | Larger and more complex | |
local relationships and who | customers who serve local and | |
serve domestic and light | national markets, often | |
commercial markets for | working in conjunction with | |
mostly RMI work. | other contractors, suppliers | |
and specifiiers to deliver new | ||
build and RMI solutions across | ||
residential, commercial and | ||
infrastructure. | ||
DEEPENING
RELATIONSHIPS
Sustainability priority
Decarbonising the industry
4 Travis Perkins plc Annual Report and Accounts 2023
Building for better | |
Changing the game | Doing the right thing |
Modernising | - Safety and wellbeing |
construction | |
- Colleague voice | |
Sourcing | - Diversity, equity |
responsibly | and inclusion |
Operating | - Reward |
- Charity and community | |
sustainably | - Legal compliance |
Developing the | - Modern slavery and |
next generation | human rights |
Values
The values reflect what matters and how the Group does things.
We care
We give our best to be the best
We're better
together
Delivering shareholder value
Strategic report
Governance
Financial statements
Other information
Travis Perkins plc Annual Report and Accounts 2023 | 5 |
At a glance
Travis Perkins is the largest distributor of building materials in the UK
A trade-focused Group, serving generalist and specialist trades with products and services that are designed to help customers grow their businesses in new and established markets.
Large and varied customer base | Broad geographical spread in the UK | |||
200k | £4.9bn | |||
Trade credit customers | Revenue | |||
Engaged colleagues in the UK and Europe | Evolving branch network | |||
19k | 1,509 | |||
Colleagues | Branches |
The Group's goal is to deliver exceptional customer service from advantaged businesses operating from well-positioned networks in chosen geographies. The Group offers a range of high-quality products and gives customers the choice of a range of channels, fulfilment options and ways to pay.
Geographic split | Product mix | Channel | ||||||||
Collect | 38% | |||||||||
Deliver | 62% | |||||||||
Product mix | ||||||||||
Cash | 28% | |||||||||
South-East | 32% | Heavyside | 48% | |||||||
Credit | 72% | |||||||||
Midlands | 24% | Lightside | 21% | |||||||
North and Scotland | 22% | Plumbing & Heating | 19% | |||||||
Wales and South-West | 19% | Timber | 12% | |||||||
Europe | 3% | |||||||||
6 Travis Perkins plc Annual Report and Accounts 2023
Merchanting
Toolstation
Strategic report
Governance
Financial statements
The market-leading general merchant, offering a destination for heavyside products, complemented by lightside convenience. Serving general trades and specialist contractors with 60% delivered products from 622 national locations. Contains a comprehensive tool
hire offer plus innovative Managed Services solutions.
Distributes insulation and interior building products from 36 branches to contractors throughout Great Britain. CCF supports the construction and renovation of both domestic and commercial buildings with service and specialist knowledge.
Go to page 66 to see more
Market-leading supplier of commercial and industrial heating and cooling solutions, supplying specialist contractors with a wide variety of products from 69 branches and two distribution centres. BSS offers customers a tailored tool hire service and contains TF Solutions, a specialist provider of air-conditioning products and heat pumps.
A civils specialist, Keyline supports housebuilders, groundworkers and infrastructure contractors to build and redevelop facilities which are vital to the nation. Delivering heavy products from 42 branches in a safe and accurate manner, Keyline works as a partner to its specialist customers and is developing new areas of expertise in roads and highways.
Offers customers an innovative lightside proposition. With a wide range of products available in- branch and for next-day delivery, long opening hours, a strong digital offering and a committed customer service ethos, Toolstation is changing the purchasing experience of trade and DIY customers. Toolstation operates from 570 branches across Great Britain and is growing quickly in the Netherlands, Belgium and France.
Go to page 68 to see more
Other information
Travis Perkins plc Annual Report and Accounts 2023 | 7 |
Chair's statement
Distributions to shareholders
In 2021 the Group laid out clear guidance on shareholder returns and I am pleased to reiterate those principles here. The Group will deliver returns to shareholders by:
- Achieving the best earnings number available, given market conditions and in accordance with our values and long-term views.
- Paying out 30-40% of those earnings each year as an ordinary dividend.
- Ensuring that we fund this through strong cash conversion, disciplined capital allocation and remaining within our published leverage targets of 1.5-2 times net debt/EBITDA.
2023 was a challenging year for the Group as a combination of macroeconomic uncertainty, progressively weakening end market demand, sharp deflation on commodity products and overhead inflation made business planning difficult, weighing heavily on the Group's earnings performance during the year. Whilst some good progress has been made against our strategic priorities, management's primary focus is now to drive efficiencies through the transformation of the Group's operating model and prioritise capital allocation to support the recovery of profitability and reduction of leverage in the medium term.
Taking into account all of these factors, I am confident that we are taking the right decisions to drive profit recovery, enhance cash generation and strengthen the business for the long term, and for 2023 the Board recommended a final dividend of 5.5 pence per share (2022: 26.5 pence per share) to give a full year dividend to 18.0 pence per share (2022: 39.0 pence per share), in line with the Group's previously communicated policy.
This reduction reflects the reduction in earnings and the Board's clear commitment to ensuring that the Group swiftly returns leverage to the target range.
Go to page 132 to see more
Dynamics impacting the Group's end markets resulted in 2023 being a difficult year with earnings down notably, but I am confident that we are taking the right decisions to drive profit recovery, enhance cash generation and strengthen the business for the long term.
Jasmine Whitbread
Chair
I ended my statement in the 2022 review with a thought on how it would be very hard to predict the shape of the UK economy in 2023 and what level of recovery, if any, we would see in the construction sector. During the last year we have seen a number of dynamics impacting the Group's end markets that have resulted in 2023 being a difficult period with earnings down notably which is reflected in the Group's share price.
At a macroeconomic level, persistently higher consumer inflation, leading to elevated interest rates has resulted in a pronounced slowdown in the new housebuilding market. In addition, deflationary pressures on commodity products and a sustained slowdown in the domestic RMI market have led to declining revenues throughout the year.
Throughout 2023 the Group's businesses have adapted to address near term trading conditions while continuing to build a stronger business for the future and ensuring that we balance the needs of our investors, customers, suppliers and colleagues. Stronger and more urgent focus on using customer data to help retain and win back customers helped protect and grow our market share, while the modernisation of branches and processes in the Travis Perkins General Merchant contributed to efficiencies.
In September, the Group held a Toolstation UK Capital Markets Update. The update set out the pathway for the Toolstation UK business to deliver £1bn of revenue at a high single digit operating margin by
2027. We shared the Group's confidence in the underlying economic model and the platform we have created for future profitable growth. Toolstation UK is integral to the Group as a highly complementary offer for UK tradespeople with an excellent opportunity to continue to grow share in a large and fragmented market.
People and culture
Our colleagues adapted to changing market conditions, embracing new technology and processes to deliver better customer service. Recognising the importance of a skilled workforce in delivering great customer service and expertise, the Group updated its knowledge, learning, and development offering via a new learning management system called Thrive, complementing its industry-leading apprenticeship programme.
8 Travis Perkins plc Annual Report and Accounts 2023
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Travis Perkins plc published this content on 12 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 March 2024 12:29:03 UTC.