DJ Travis Perkins: Travis Perkins: Publication of 2019 Annual Report
Travis Perkins (TPK)
Travis Perkins: Travis Perkins: Publication of 2019 Annual Report
03-March-2020 / 15:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Publication of the Annual Report 2019
Further to the release of its results announcement this morning, Travis
Perkins plc (the "Company") announces that it has today published its Annual
Report for the year ended 31 December 2019. The Company's Annual Report 2019
can be viewed on the Company's website - www.travisperkinsplc.co.uk [1]
In accordance with rule 9.6.1 of the Listing Rules, copies of the following
documents have been submitted to the National Storage Mechanism and will
shortly be available for inspection at www.morningstar.co.uk/uk/NSM [2]
- Annual Report and Accounts 2019;
A condensed set of the Company's financial statements and information on
important events that have occurred during the year and their impact on the
financial statements were included in the Company's announcement. That
information together with the information set out below which is extracted
from the Annual Report constitute the requirements of Disclosure and
Transparency Rule ("DTR") 6.3.5 which is to be communicated via a Regulatory
Information Service in unedited full text. This announcement is not a
substitute for reading the full Annual Report. Page and note references in
the text below refer to page numbers in the Annual Report. To view the
preliminary announcement, visit the Company's website:
www.travisperkinsplc.co.uk [1]
Enquiries:
Graeme Barnes
Graeme.barnes@travisperkins.co.uk
+44 (0) 7469 401819
Robin Miller
Ribin.miller@travisperkins.co.uk
+44 (0) 1604 592533
STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES
For the year ended 31 December 2019
The Group's risk management activities continue to be developed to support
management in identifying both threats and opportunities that could
materially impact strategic delivery, performance, compliance and
reputation. The Group operates in markets and an industry which, by their
nature, are subject to a number of inherent risks. In common with most large
organisations the Group is also subject to general commercial, political and
economic risks. The Group is able to mitigate those risks by adopting
different strategies and by maintaining a strong system of internal control
which is routinely tested and assured. However, regardless of the approach
that is taken, the Group must accept a certain level of risk in order to
generate suitable returns for shareholders, and for that reason the risk
management process is closely aligned to the Group's strategy.
Risk management framework
The Board has developed a risk reporting framework that ensures it has
visibility of the Group's key risks, the potential impacts on the Group and
how and to what extent those risks are mitigated. Further details of the
Group's risk management processes and oversight are given in the Corporate
Governance Report on page 75.
The Board undertook an enhanced exercise during 2019 to consider the nature
and level of risk it is prepared to accept to deliver the strategy. Risk
appetite is set across a suite of risk categories directly relevant to the
Group, supported by high-level risk statements which set out the
expectations for the management and control of each category of risk. The
resulting assessment of risk appetite has been set to balance opportunities
for growth and business development in areas of potentially higher risk and
return, whilst prioritising safety and maintaining the Group's reputation,
legal and regulatory compliance and the desired high levels of customer
service and satisfaction.
Principal risks
At least twice a year, the Board and Group Leadership Team formally assess
the Group's principal risks. The table on pages 40 to 51 sets out, in no
particular order, the principal risks that are currently considered by the
Board to be material to the achievement of the Group's objectives, their
potential impacts, mitigating factors and those areas of the businesses'
strategies that are potentially impacted. The inherent risk (before the
operation of mitigating controls) is stated for each risk area together with
an indication of the current trend for that risk.
The nature of risk is that its scope and potential impact will change over
time. As such the list below should not be regarded as a comprehensive
statement of all potential risks and uncertainties that may manifest in the
future. Additional risks and uncertainties that are not presently known to
the Directors, or which are currently deemed immaterial, could also have an
adverse effect on the Group's future operating results, financial condition
or prospects.
Key changes in the year
***********************
The risk environment in which the Group operates does not remain static. As
part of the ongoing risk review process, the Board and Group Leadership
Team: identify new risks for the Group, assess the inherent risk associated
with each principal risk, and determine whether the risk trend facing the
Group is increasing, decreasing or unchanged.
Whilst the risk profile for the Group remains relatively stable relative to
2018, the following key changes were identified in 2019:
- One additional principal risk has been disclosed in relation to IT
systems and infrastructure. This risk previously formed part of the risk
associated with change management and has been separated given the Group's
plans to modernise its IT infrastructure and replace a number of legacy
systems
- The inherent risk associated with business transformation initiatives,
including the IT modernisation programme, has been reassessed as "high" to
reflect the scale of change activities ongoing or planned within the Group
- The inherent risk associated with cyber threats and data security has
been increased to "high" to acknowledge that the continual changes in both
threat sources and the tactics employed by cyber criminals present an
ongoing challenge for all companies, including the Group
Emerging risks
**************
The Board is required to undertake a robust assessment of the emerging risks
that may impact the Group under the 2018 UK Corporate Code, which is
effective from 1 January 2019. In response to this requirement,
consideration of emerging risk has been integrated into the Group's current
risk management practices, which continue to be developed and refined. The
Board regularly considers the latest risk research alongside views on
emerging risks collated from assessments made by the business unit and
functional leadership teams. These risks are monitored but are not currently
assessed as sufficiently material to be considered as principal risks.
The Group is monitoring the potential impact of COVID-19 carefully. The
Group will continue to review the possible impacts on the business and
refine its contingency plans as more information about the epidemic emerges.
Risk workshops are undertaken periodically with the most significant
business units and are structured to consider a number of risk categories,
including "disruption", being the risks that may emerge and impact the
viability of a strategy or business model. The current statement of
principal risks recognises the potential for such disruption in the
competitor and customer landscape, as well as in relation to suppliers.
Category Principal risks Risk trend Inherent risk
External Changing customer High Medium High
and competitor High
landscape
-
Supplier risks
-
Brexit
-
Market conditions
-
Strategic Capital allocation Medium High
-
Change Management Medium
-
Portfolio
management -
Technological IT systems and - High High
infrastructure
-
Cyber threat and
data security
Operational Health and safety Medium
Talent management - Medium Medium
Legal compliance -
-
Key disruptive risks are also identified and mitigated by the Group. None of
them are currently considered to be principal risks
Risk Trend: - Increasing - Decreasing - Unchanged
CHANGING CUSTOMER AND
COMPETITOR LANDSCAPE
INHERENT RISK RISK MITIGATION
RISK: High DESCRIPTION
The Board is
TREND: The Group cognisant of the
Unchanged sells and risks and
distributes opportunities
building presented by the
materials changing customer
STRATEGY: through a and competitor
number of landscape and
channels. The evaluates
number of developments both
Best-in-class outlets and in terms of
services channels where threats and
building opportunities for
materials can the Group.. One
be purchased example of this in
Focus on continues to 2019 is the
trade grow with new decision to pursue
competitors the demerger of
entering the the Wickes
market. These business, and for
Advantaged new entrants the Group to focus
businesses may operate on the service of
business trade rather than
models which retail customers.
differ
(MORE TO FOLLOW) Dow Jones Newswires
March 03, 2020 10:00 ET (15:00 GMT)
IMPACT: significantly
from the
traditional The Group
merchanting, continues to build
Adverse retail and multi-channel
effect online formats capabilities that
from which the complement its
Group existing
currently operations and
on financial operates and enable customers
results may take to transact with
market share. the Group through
channels that best
suit their needs.
Loss of
market share The demerger
of the Wickes
business will The Group is able
change the to use its sites
risk profile flexibly to
of the Group respond to
in the coming changes.
year, as Alternative space
exposure to utilisation models
the retail are possible,
sector is including
reduced. maintaining
smaller stores and
implanting
additional
Customer services into
purchasing existing branches.
habits also During 2019,
continue to Toolstation opened
evolve with an its first high
increasing street store.
percentage of
transactions
for the Group
now The development of
originating new, innovative
online. and competitive
Customers' supply solutions
preference for is a key strength
purchasing of the Group. It
materials works closely with
through a customers and
range of suppliers on a
supply programme of
channels and continuous
not just improvement to
through the enhance the
Group's customer
traditional proposition.
competitors
may adversely
impact the
profitability Pricing strategies
of across the Group
branch-based are regularly
operations and reviewed and
the Group's refined as
overall necessary to
performance. ensure they remain
competitive.
Increasing
price
transparency
could lead to
a perception
that the Group
is less price
competitive
leading to
downward
pressure on
price and
margins.
TALENT MANAGEMENT
INHERENT RISK RISK MITIGATION
RISK: Medium DESCRIPTION
The Group's
TREND: People are key employment
Unchanged to the Group's policies and
success. The practices are kept
ability to under regular
recruit, review. Staff
develop, engagement and
retain and turnover by job
motivate type is reported
suitably regularly to the
STRATEGY: qualified and Group Leadership
experienced Team and the
staff is an Board. A
important Group-wide talent
Best-in-class driver of the and succession
services Group's exercise was
overall undertaken in 2019
performance. and reviewed by
The Group may the Board.
Focus on also be Succession plans
trade exposed to are reviewed
skills annually; the
shortages in process was
certain areas reviewed for 2020
Simplifying which can to ensure that
the Group result in plans are in place
salary cost for the Board,
pressures. senior management
This may be positions and
IMPACT: compounded by other critical
Brexit if roles and to
significant promote the
numbers of EU development of
Adverse citizens diverse and
effect on decide to inclusive
delivery of leave the UK pipelines.
strategy (see also page
47). In
particular,
the The Group's reward
Competitive availability and recognition
disadvantage of suitably systems are
qualified actively managed
commercial to ensure high
drivers is an levels of employee
area of engagement.
ongoing focus Salaries and other
for the Group, benefits are
which is benchmarked
critical to regularly to
the operation ensure that the
of its fleet Group remains
to meet competitive and
customer the Group operates
delivery incentive
expectations. structures to
ensure that
high-performing
colleagues are
The strength adequately
of the Group's rewarded and
customer retained.
proposition is
underpinned by
the quality of
people working A wide range of
throughout the training
Group, programmes are in
particularly place to encourage
in branch and staff development.
other Management
customer-facin development
g roles. Many programmes are
colleagues available to those
have worked identified for
for Travis more senior
Perkins for positions. The
many years, Group's "Learn and
during which Earn"
they have Apprenticeship
gained Programme ("LEAP")
valuable has been in place
product and for a number of
customer years and has a
knowledge and track record of
expertise. successful
delivery of
apprenticeships in
both branch-based
The Group and functional
faces roles.
competition
for the best
people from
other
organisations.
Ensuring the
retention and
development of
colleagues and
that robust
succession
plans exist
for key
positions is
important for
the Group to
ensure it has
the right
skills and
experience to
deliver on its
strategic
objectives.
SUPPLIER RISKS
INHERENT RISK RISK MITIGATION
RISK: Medium DESCRIPTION
Making decent
TREND: The Group returns is one of
Unchanged faces a number the Group's
of supplier cornerstones which
risks in requires it to
relation to treat both
STRATEGY: key customers and
dependencies suppliers fairly.
and The commercial and
relationships, financial teams
Best-in-class overseas have established
services sourcing and strong
disintermediat relationships with
ion, all of the Group's key
which could suppliers and work
Focus on adversely closely with them
trade impact upon to agree contracts
ranging and that are
price. beneficial to both
parties and
Simplifying facilitate
the Group continuity of
The Group is quality materials.
the largest This interaction
customer to a continues as the
Financial number of its Wickes demerger is
strength suppliers. In progressed and
some cases, revised
those contractual
suppliers are arrangements are
large enough put in place.
to cause the
Group
significant
IMPACT: difficulties Where possible,
and disruption contracts exist
if they are with more than one
unable to meet supplier for key
Adverse their supply products, to
effect on obligations reduce the risks
financial due to either of dependency on a
result economic or sole supplier.
operational
factors.
Alternative
Adverse sourcing may The Group has made
effect on be available, a significant
reputation but the investment in its
volumes Far East
required and infrastructure to
(MORE TO FOLLOW) Dow Jones Newswires
March 03, 2020 10:00 ET (15:00 GMT)
© 2020 Dow Jones News
