travis perkins plc · travis perkins 449 15 11 (3) 472 keyline 65 - - - 65 ccf 21 - - - 21 tp...

Travis Perkins plc

Interim Results6 months ended 30 June 2004

1

Tim Stevenson

Chairman

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 2

Financial highlights

Turnover £913.6m +11.9%

Operating profit £109.3m +15.3%

PBT £95.3m +17.9%

Like-for-like free cash flow £85.3m +34.1%

EPS (basic) 56.3p +18.5%

EPS (adjusted) 63.8p +18.6%

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 3

Paul Hampden Smith

Finance Director

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 4

Summary profit and loss account6 months 6 months

30 June 2004 30 June 2003 Change£m £m %

Turnover 913.6 816.6 11.9%

Operating profit 109.3 94.8 15.3%

Goodwill amortisation (8.5) (7.3) Profit on sale of properties - 0.2Net interest payable (3.7) (4.6)Other finance cost (1.8) (2.3)

Profit before tax 95.3 80.8 17.9%

Basic EPS 56.3p 47.5p 18.5%Adjusted EPS 63.8p 53.8p 18.6%Dividend per share 9.5p 7.6p 25.0%

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 5

Turnover

2003 2004

Acquisition 8.4%

Price 2.7%Volume 0.0%Working days 0.8%Like-for-like 3.5%

Total 11.9%

6 months ended 30 June

£816.6m

£913.6m

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 6

Operating profit

2000 2001 2002 2003 2004

Operating margin

H1 9.8% 10.0% 11.4% 11.6% 12.0%

H2 9.4% 10.2% 11.0% 11.2%

Full year 9.6% 10.1% 11.2% 11.4%

£57.6m£62.7m £75.6m

£94.8m£109.3m

6 months ended 30 June

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 7

Operating profit

2003 2004

11.6%

12.0% 2003 11.6 %

Productivity 0.3 % Trading margin 0.3 %Overhead efficiency 0.1 %Jayhard and B&G

dilution (0.3)%______

2004 12.0 %______

6 months ended 30 June

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 8

Return on average capital employed

19.3%21.8%

26.5% 26.3% 27.4%

2000 2001 2002 2003 2004

6 months ended 30 June

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 9

Turnover per employee

2000 2001 2002 2003 2004

£158k £160k £165k£182k

£192k6 months ended 30 June

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 10

Demand mix

Year ended 30 June 2004 (2003)

% of market

RMI

Housing - new

Other - new

56%(56%)

29% (28%)

15% (16%)

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 11

Mix of business

6 months ended 30 June 2004 (2003)

Heavy BuildingMaterialsLightside (incl. P&H)

Timber & ForestProductsToolhire

17.9% (18.9%)

51.0% (54.5%)

30.0% (25.4%)

1.1% (1.2%)

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 12

Sales ratios

6 months ended 30 June 2004 (2003)

Credit 78.3% Cash 21.7%(80.3%) (19.7%)

Yard 81.9% Direct 18.1%(80.8%) (19.2%)

Collected 42.6% Delivered 57.4%(40.9%) (59.1%)

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 13

Geographical distribution of sales

30.0% (30.7%)

16.9% (17.1%)

27.6% (26.6%)25.5% (25.6%)

% of total 2004 6 month sales(% of total 2003 6 month sales)

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 14

Balance sheet

Fixed assets – tangible 310.4 275.0Fixed assets – intangible 285.6 247.8Current assets

Stock 184.4 159.9Debtors 308.6 295.9Properties for resale 0.2 1.1Cash & short term investments 33.9 53.0

Creditors & provisions (376.7 ) (342.9 ) Borrowings (135.7 ) (163.7 )______ ______

610.7 526.1Pension deficit (74.0 ) (103.2 )______ ______ Net assets 536.7 422.9______ ______Gearing 19.0% 26.2%

30 June 2004£m

30 June 2003£m

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 15

Pensions – balance sheet

Expected 30 Jun 2004Return £m

Equities 7.3% 156.0Gilts 4.6% 25.9Corporate bonds 5.1% 25.9

______Total fair value of assets 207.8Actuarial value of liability (313.5)______Deficit in the scheme (105.7)Related deferred tax asset 31.7______Net pension liability (74.0)______

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 16

Pensions – balance sheet

Pension deficit at 1 January (85.1)

Charge to profit and loss account (7.1)

Pension contributions 12.2

Experience 10.8

Taxation (4.8)

______Pension deficit at 30 June (74.0)

______

30 June 2004£m

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 17

Like-for-like free cash flow

Operating profit 109.3 94.8Depreciation 15.5 12.9 Profit on sale of fixed assets (0.3) (0.1)Movement in working capital 9.2 (0.9)______ ______Like-for-like cash flow from operations 133.7 106.7

Interest (3.4) (4.2)Taxation (26.9) (24.9)Replacement capital expenditure (18.1) (14.0)

______ ______Like-for-like free cash flow 85.3 63.6

______ ______

6 months30 June 2004

£m

6 months30 June 2003

£m

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 18

Like-for-like free cash flow

Like-for-like free cash flow 85.3 63.6Adjustment in respect of creditors - 16.6Dividends (19.0) (15.1) Expansion capital expenditure (14.1) (9.7)Acquisition of businesses (21.0) (6.4) Shares issued 0.6 0.8Special pension contributions (5.1) (0.8)

______ ______Increase in cash balances 26.7 49.0Net debt at 1 January (128.5) (159.7)______ ______Net debt at 30 June (101.8) (110.7)Loan notes and other borrowings (135.7) (163.7)

______ ______Cash and short term deposits 33.9 53.0

______ ______

6 months30 June 2004

£m

6 months30 June 2003

£m

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 19

Like-for-like free cash generation

0

10

20

30

40

50

60

70

80

90

2000 2001 2002 2003 2004

£m

Expansion capital expenditure Acquisition spend LFL Free cash flow

6 months ended 30 June

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 20

Net borrowings, gearing & interest cover

0

50

100

150

200

250

Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04

£m

0

10

20

30

40

50

60%

Net borrowings Gearing %

Interestcover 9 9 11 12 18 18 21 21 30

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 21

International Accounting Standards

• IAS 10 – Dividends • IAS 12 – Taxation • IAS 17 – Leases• IAS 40 – Investment properties• IFRS 2 – Share options• IFRS 3 – Goodwill

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 22

Frank McKay

Chief Executive

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 23

Travis Perkins

• Strategy

• Review of operations

• Industry outlook

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 24

Strategic intent

Earnings per share

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 25

Adjusted earnings per share

32.5p35.6p

43.5p

53.8p

63.8p

2000 2001 2002 2003 2004

Growth 9.5% 22.2% 23.7% 18.6%

Compound 5 year growth 21.9%

6 months ended 30 June

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 26

The Way Forward

• Brands

• Market share

• Acquisitions and brownfield openings

• Capital investment

• Continuous improvement

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 27

Products

Dry LiningInsulationPartitionsCeilings

Plumbing &

Heating

Civils

Tool Hire

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 28

Brands

HIRE

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 29

Market share

2000 2001 2002 2003 2004 5 Yr Target

Market share based on company estimates

12.9% 13.0%14.1%

15.5% 16.0%18-20%

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 30

Capital investment

Acquisitions 21.0 6.4Brownfield 3.1 3.0

______ ______Total acquisitions and brownfield spend 24.1 9.4Improvement capex 11.0 6.7

______ ______Expansion capital investment 35.1 16.1Replacement capex 18.1 14.6

______ ______Total capital investment 53.2 30.7

______ ______

Projected full year in excess of £100m including £13m brownfield

6 months30 June 2004

£m

6 months30 June 2003

£m

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 31

Acquisitions & brownfields

Travis Perkins 449 15 11 (3) 472

Keyline 65 - - - 65CCF 21 - - - 21

TP P&H 37 - - - 37

City Plumbing 128 4 5 (6) 131

Total branches 700 19 16 (9) 726

31 Dec Acquisitions BrownfieldsConsolidation 30 Jun2003 2004

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 32

Acquisitions & brownfields

30 Jun Acquisitions BrownfieldsConsolidation 6 Sept2004 2004

Travis Perkins 472 6 4 - 482

Keyline 65 3 - - 68CCF 21 - - - 21

TP P&H 37 - - - 37

City Plumbing 131 - 1 - 132

Total branches 726 9 5 - 740

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 33

Acquisitions & brownfields

£m

H1 2004 turnover of 35 additional branches toJune 2004 9

H2 2004 projected turnover from 49 additionalbranches 31

2005 projected turnover from 49 additionalbranches 25

____Total incremental turnover from 49

additional branches 65____

Total acquisition spend per £ of sales 51p

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 34

Acquisitions & brownfields

At 30 June 2004

Total branches 726

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 35

Acquisitions & brownfields

Additions to 30 June 2004

Travis Perkins 26City Plumbing 9

____Total additions 35

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 36

TP Blackburn

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 37

TP Blackburn

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 38

TP Ludlow

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 39

TP Ludlow

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 40

TP Tamworth

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 41

TP Tamworth

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 42

CPS Weybridge

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 43

CPS Weybridge

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 44

Capital investment

IMPROVEMENTCAPITAL EXPENDITURE

• Property• Transport• Plant & equipment

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 45

Cardiff North – TP & CCF combined site

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 46

Cardiff North – TP & CCF combined site

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 47

Cardiff North – TP & CCF combined site

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 48

TP Northampton

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 49

TP Northampton

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 50

Keyline Milton Keynes

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 51

Keyline Kingswinford

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 52

Capital investment

REPLACEMENTCAPITAL EXPENDITURE

• Property• Transport• Plant & equipment

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 53

Capital investment

£m

0

5

10

15

20

25

30

35

2000 2001 2002 2003 2004

Capital expenditure Depreciation

6 months ended 30 June

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 54

Travis Perkins

Continuous Improvement

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 55

John Carter

MD Operations

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 56

Growth

• Acquisition activity

• Brownfield openings

• Organic development

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 57

Growth

02468

1012141618

2001 H2 2002 H1 2002 H2 2003 H1 2003 H2 2004 H1 2004 H2

Brownfield openings Expected openings

Brownfield site openings

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 58

Growth

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 59

Growth

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 60

IT developments

• PC & system upgrades

• Chip & pin

• Broadband

• Hand-held terminals

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 61

IT developments

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 62

Continuous Improvement

• Timber manufacturing

• Central distribution

• Transport efficiencies

• Innovative storage & handling

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 63

Continuous Improvement

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 64

Continuous Improvement

• Timber manufacturing

• Central distribution

• Transport efficiencies

• Innovative storage & handling

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 65

Continuous Improvement

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 66

Continuous Improvement

• Timber manufacturing

• Central distribution

• Transport efficiencies

• Innovative storage & handling

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 67

Continuous Improvement

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 68

Continuous Improvement

• Timber manufacturing

• Central distribution

• Transport efficiencies

• Innovative storage & handling

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 69

Continuous Improvement

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 70

Continuous Improvement

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 71

Marketing

• Branch launch activity

• Landscaping

• Bathroom showrooms

• Brand awareness

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 72

Marketing

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 73

CCF

• 2003 – a year of rationalisation

• Systems harmonised

• Business restructured

• Internal demand

• Positioned for growth

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 74

Plumbing & Heating

• Management team

• Harmonising systems

• Rationalisation

• Sourcing

• Positioned for growth

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 75

Plumbing & Heating

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 76

Customer service – “Excel”

• Central to our culture

• Refined and enhanced

• Remains a vital component

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 77

Summary

• Growth potential

• Modernising & investing

• Superior productivity

• Best-in-class performance

• Continuous improvement

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 78

Frank McKay

Chief Executive

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 79

Industry outlook

Short term

• Interest rates

• Housing transactions

• New build

Long term• Changing demographics

• Housing stock quality

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 80

Performance

• Cash flow

• Margins

• Return on capital

• Growth

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 81

Tim Stevenson

Chairman

Travis Perkins plc Interim Results – 6 months ended 30 June 2004 82

Travis Perkins plc

Interim Results6 months ended 30 June 2004

83