Travis Perkins: Interim results for the six months ended 30 June 2019: Good strategic progress underpinned by strong trading performance

Travis Perkins (TPK) 
Travis Perkins: Interim results for the six months ended 30 June 2019: Good strategic 
progress underpinned by strong trading performance 
 
31-Jul-2019 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement that contains inside information according to 
REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
Travis Perkins plc 
 
Interim results for the six months ended 30 June 2019 
 
Good strategic progress underpinned by strong trading performance 
 
GBPm                Note H1 2019     H1 2018    H1 2018 Change vs. 
                                                      illustrati 
                                                              ve 
                                                      comparativ 
                               Restated(1) IFRS 16(2)         es 
Revenue                  2,771       2,591      2,591       6.9% 
Like-for-like             8.0%        0.2%       0.2%     7.8ppt 
revenue growth(3) 
Adjusted           17a     195         156        170      14.7% 
operating 
profit(3) 
Adjusted earnings   8b   50.1p       46.3p      41.8p      19.9% 
per share(3) 
ROCE(3)            17f    9.8%       10.5%       9.0%     0.8ppt 
Covenant net        13   (414)       (409) 
debt(3) 
Dividend per         9   15.5p       15.5p 
share 
Operating profit            64       (104) 
/ (loss) 
Total profit /              12       (148) 
(loss) after tax 
Basic earnings      8a    6.9p     (57.2)p 
per share 
 
(1) All figures except for profit after tax restated to exclude the Plumbing & Heating 
division, which has been presented as a discontinuing operation 
 
(2) Figures adjusted on a non-statutory illustrative basis for IFRS 16 - Leases as 
previously reported in May 2019 
 
(3) Alternative performance measures are used to provide a guide to underlying performance. 
Details of calculations can be found in the notes listed 
 
Financial highlights 
 
· Continuing Group revenue increased by 6.9%, and by 8.0% on a like-for-like basis, 
primarily driven by volume growth 
 
· Continuing Group adjusted operating profit increased by 14.7% to GBP195m 
 
· Strong performance across the Group - positive trading in Merchanting demonstrating 
share gains, a strong recovery in Wickes and continued excellent growth in Toolstation 
 
· Adjusting items of GBP127m including a GBP111m asset write off relating to the ERP 
replacement programme 
 
Strategic progress 
 
· Merchant businesses benefitting from simplification and more empowered branch managers 
 
· Process to divest the P&H business ongoing, classified as an asset held for sale 
 
· Decision to demerge Wickes reflecting the Group's focus on advantaged trade businesses 
and the simplification of the Group 
 
· Cost actions delivering improved financial performance 
 
John Carter, Chief Executive Officer, commented: 
 
"I am delighted with the progress the Group has made in executing the strategy set out at 
the capital markets event in December 2018; to focus on our advantaged trade businesses and 
to simplify the Group. The P&H sales process is well underway, and we are today announcing 
our intention to demerge Wickes as a separate business. 
 
This strategic progress has been underpinned by a strong trading period in the first half 
of 2019 albeit against softer trading conditions in H1 2018. Our trade merchanting 
businesses have outperformed their markets, through continued focus on delivering excellent 
customer service, and benefitting from the leaner, lower cost organisation now in place. 
Toolstation continues to deliver excellent growth through proposition improvements and 
network expansion. Wickes has delivered a strong turnaround in volume and profit 
performance, with gains in both core DIY and through the Kitchen & Bathroom showroom. 
 
Whilst our underlying markets remain subdued, the self-help initiatives underway are 
supporting an encouraging improvement in performance and provide a strong platform to drive 
sustainable growth ahead of our markets in the medium term. Despite a cautious outlook for 
the near-term, the Group remains confident in making progress across the year as a whole." 
 
Enquiries: 
 
Travis Perkins                      Tulchan Communications 
Graeme Barnes                       David Allchurch 
[phone]                 [phone] 
[e-mail] 
 
Zak Newmark 
[phone] 
[e-mail] 
 
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, 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 31 July 2019, 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 Group has reported its H1 2019 interim results on the following basis: 
 
· The Plumbing & Heating business has been classified as a discontinuing operation due to 
progress with the ongoing sale process. 
 
· The Group is reporting its accounts under IFRS 16 - Leases for the first time, which 
treats all lease obligations as debt, leading to changes in the income statement and 
balance sheet. Illustrative comparatives have been presented as if IFRS 16 were in place 
in 2018. 
 
The Group has had a good start to the year, with revenue of the continuing Group increasing 
 by 6.9% to GBP2,771m, and by 8.0% on a like-for-like basis. Adjusted operating profits, 
  excluding property profits, grew by 18.1% to GBP189m (H1 2018: GBP160m), which reflects 
positive trading in the merchant businesses and a strong recovery in Wickes. Toolstation 
continued to demonstrate excellent sales growth performance, as ongoing investment 
positions the business well for future profit and cash flow growth. Further progress was 
made towards the Group's cost reduction targets, with achieved savings broadly offsetting 
the inflation in the overhead cost base. 
 
The Group continues to generate good cash flow. The Group has changed its definition of 
free cash flow so that it better reflects the operating cash generation of the business as 
it now excludes all freehold property transactions but includes both maintenance and 
 investment capital expenditure. The Group generated GBP40m of free cash flow in the first 
 half of the year, up from GBP21m on the same basis in the first half of 2018. This was 
achieved despite a significant step up in working capital in the first half as the Group 
increased inventory levels in anticipation of the UK's potential exit from the EU in the 
spring. This elevated level has been maintained given the delay to the UK's expected 
departure from the EU. 
 
Adjusted earnings per share (EPS) increased by 19.9% to 50.1p (H1 2018 illustrative 
comparative: 41.8p), driven by the stronger adjusted operating profit generation and a 
lower deferred tax charge in H1 2019. 
 
The Board has declared an interim dividend of 15.5p (2018: 15.5p). 
 
Merchanting ERP programme 
 
The Group announced a delay to its Merchant ERP replacement programme in December 2018 as 
this programme has continued to face significant challenges. As a result, the Group is 
considering whether to implement the various elements of an ERP system as separate items, 
after modernising the Group's core IT architecture. 
 

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