Building for the future - 29 September 2021 - Travis Perkins PLC
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Building for the future 29 September 2021
Chair’s welcome and early perspective
Getting to know the businesses
has revealed many strengths:
• Powerful culture and Growth prospects are healthy
phenomenal colleagues with the market expanding
and our businesses gaining
• Deep customer relationships
share
The Group has proved resilient and
We must capture the
responded well to recent
opportunities that come
challenges
from changes in the industry
Refocused Group provides a firm
foundation for success
Continued execution is key to
driving change, landing our
strategy and delivering for all
our stakeholders
2
Agenda for today
01 WELCOME AND INTRODUCTION
02 OPERATING AND LEADING IN ATTRACTIVE MARKETS
03 LEADING THE EVOLUTION OF THE MERCHANTING MODEL
04 MAXIMISING THE LONG-TERM POTENTIAL OF TOOLSTATION IN THE UK AND EUROPE
LEVERAGING THE POWER OF THE GROUP
• Advancing customer propositions
05 • Aligning technology to propositional development
• Framing our long-term future
06 DELIVERING ATTRACTIVE FINANCIAL OUTCOMES
07 WRAP-UP AND Q&A
3
Agenda for today
01 WELCOME AND INTRODUCTION
Nick Roberts
We have delivered on our 2018 agenda
Our ambition for the Group is clear
Delivery of value to customers and shareholders is at the heart of our strategy
4
01
Having delivered on our 2018 agenda
WELCOME AND INTRODUCTION
Demerged Wickes Improved digital
enablement through
Disposed of Plumbing and TP and Toolstation apps
Heating
Improved the branch
network to deliver better
Disposed of Tile Giant service
Simplify
Strengthened the core
Reduced annualised cost the Group in the general merchant
base by ~£120m
Focus on
Opened ~60 Toolstation
Reset operating model the Trade UK branches per year
Acquired controlling stake
Strengthened the in Toolstation Europe to
Balance Sheet accelerate growth
5
01
We have set our leading ambition
WELCOME AND INTRODUCTION
Construction
is changing
Traditional methods Modern methods
We are Products Services
broadening the
way we work
Branch and phone Integrated digital experiences
Advice on products Value-added design
Collaborative and
Leading stand-alone businesses
customer-focused network
Our ambition
must evolve Leading suppliers of building The leading partner to the
to maintain materials to the trade construction industry
leadership
6
01
An ambition that will add value for
WELCOME AND INTRODUCTION
customers and shareholders
Construction
is changing
Modern methods Better for customers
• Deeper relationships
We are Services • Value-added services
broadening the • Solutions for the future of construction
way we work
Integrated digital experiences • Help to work more sustainably
Value-added design
Collaborative and
customer-focused network Better for Shareholders
• Opens up new avenues for growth
Our ambition • Enhanced margin opportunities
must evolve The leading partner to the • Clear capital allocation priorities
to maintain construction industry
leadership • Sustainable and differentiated business
model
7
02 OPERATING AND LEADING IN ATTRACTIVE MARKETS
Nick Roberts
We operate and lead across sectors of a large and growing market
We are choosing to be an active leader as the market changes
The reshaped Group is uniquely positioned to do well
8
02
The Group operates in a £76bn+ market
OPERATING AND LEADING IN ATTRACTIVE MARKETS
60bn
Other - e.g. Garden
• Market CAGR of
50bn
Electrical 3.4% 2013-2019
• Overall
40bn P&H Bathrooms
construction
Lightside
materials market
30bn
£76bn
Insulation / Drylining / Ceilings
Civils • £60bn
addressable
20bn
Heavyside market for the
Timber
Joinery
Group
10bn Kitchens
Roofing • Businesses are
#1 or #2 in their
£0bn
markets
Addressable Market Travis Perkins Toolstation Keyline CCF BSS
• Significant M&A
and capital inflow
Share of relevant market 14% 6% 18% 28% 34% into the sector
Position in market #1 #2 #1 #2 #1
9
02
Group end market exposure is majority RMI
OPERATING AND LEADING IN ATTRACTIVE MARKETS
Reshaped Group Commercial Total TP
• Dependable end markets
Market Exposure Domestic & Industrial Infrastructure Group Market driven by:
RMI 43% 11% 1% 55% 35% - Housing transactions
New 23% 18% 4% 45% 65% - Consumer confidence
Total 66% 29% 5% 100% 100% - Trade resilience vs Consumer
Domestic RMI Market vs. New Build Sectors - RMI shows lower cyclicality
Growth vs. CAGR 2013 -2019 than new build
20%
• Infrastructure a significant area of
15%
potential for the Group
10%
• Public Sector exposure of 23%
5%
represents an opportunity given
-
Group credentials and ambition
(5%)
(10%)
2013 2014 2015 2016 2017 2018 2019
Housebuilding Infrastructure Commercial & Industrial Domestic RMI
1002
Market fundamentals are strong
OPERATING AND LEADING IN ATTRACTIVE MARKETS
Markets recovering well post the Covid-19 period:
Construction Output Forecast – New Work New Build Repairs, Maintenance
Source: Experian
20%
• Average age of housing and Improvements
10% stock c. 70 years • Robust domestic RMI
-
• Aim to build 300,000 new market as working
(10%)
homes each year: patterns drive relocation
(20%)
- Average shortfall of • Carbon targets mean
(30%)
2019 2020 2021 2022 2023 90,000 per annum substantial investment is
Housebuilding Infrastructure Commercial & Industrial
last 5 years required to upgrade
Construction Output Forecast RMI building stock
Source: Experian - Completed 165,000
15% GB 2019
10%
5%
• Clear government
- intention to increase
(5%) infrastructure spend
(10%)
(15%)
2019 2020 2021 2022 2023
Domestic RMI Non Housing R&M
1102
Market changes are gathering pace
OPERATING AND LEADING IN ATTRACTIVE MARKETS
Macro factors Sector-specific factors
MACRO FACTORS
• Digital and technology • Modern Methods of
progress having Construction (“MMC”) are
significant impact across beginning to change the
Digital ESG
all industries industry
Technical Fulfilment • Customer expectations • Labour and knowledge
Connectivity
CONSTRUCTION are increasing - although scarcity is driving change
SECTOR-SPECIFIC more traditional customer
• Stakeholders are keen
FACTORS interactions still dominate
to improve productivity
Modern Methods • ESG agenda highly
of Construction
relevant to all customers
Labour shortages
and suppliers
Productivity
1202
We are focusing our efforts on
OPERATING AND LEADING IN ATTRACTIVE MARKETS
our relationships with customers
Elevating relationships by the addition of services and new areas of value add
Elevating
relationships
Professional Larger
trades contractors
and general and
builders developers
Deepening
relationships
Deepening relationships to earn a greater share of spend
1302
Market changes are shaping customer needs
OPERATING AND LEADING IN ATTRACTIVE MARKETS
Professional Larger
trades contractors
and general and
builders developers
Macro factors Digital tools formulated around trade needs Integrated technology
Products and services that Products and services that
support decarbonisation support decarbonisation
Technical Digital ESG Fulfilment
Transparent fulfilment Consolidated supply
Connectivity
Construction sector-specific factors Deep heavyside availability Flexible solutions
Accurate delivery capability Design capability
Modern Labour Productivity Convenient lightside collection points Offsite – pre-delivery fabrication
Methods of shortages
Construction Wide range of lightside
Cross-group account management
immediately available
Competitive pricing on lightside,
flexible pricing on heavyside Tailored ranges
Flexible credit Funding solutions
1402
The Group is uniquely placed to respond
OPERATING AND LEADING IN ATTRACTIVE MARKETS
Professional Larger
trades contractors
and general and
builders developers
Macro factors Digital tools formulated around trade needs Integrated
Integrated
technology
supply
Products and services that Products and services that
support decarbonisation support decarbonisation
Technical Digital ESG Fulfilment
Transparent fulfilment Integrated
Consolidated
technology
supply
Connectivity
Construction sector-specific factors Deep heavyside availability Flexible solutions
Accurate delivery capability Design capability
Modern Labour Productivity Convenient lightside collection points Off
Offsite
site -- pre
pre delivery
delivery fabrication
fabrication
Methods of shortages
Construction Wide range of lightside
Cross-group
Cross group account management
immediately available
Competitive pricing on lightside,
flexible pricing on heavyside Tailored ranges
Flexible credit Funding solutions
1502
A tighter Group well positioned to outperform
OPERATING AND LEADING IN ATTRACTIVE MARKETS
Speaking today
Leading businesses
Inspiring leaders
Specialists in their field
Unique network
Significant barriers to entry
Organised to collaborate
1603 LEADING THE EVOLUTION OF THE MERCHANTING MODEL
Kieran Griffin
The TP business is in an excellent position to win share
We are deepening customer relationships to expand share of wallet by mining
our data, driving digital penetration and enhancing our network
We can further elevate our customer relationships by offering value-added
services alongside our products
1703
Travis Perkins supplies a broad
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
range of customers % Revenue
General trades Regional National Public Sector
Broad and specialists contractors contractors and customers
customer and developers housebuilders
demographic
~80% ~5% ~5% ~10%
Timber & Heavyside (Bricks, Blocks, Carcassing, Sheet Materials) ~70%
Range of Lightside (Tools, Consumables, Decorating, P&H) ~20%
materials and
services Hire Equipment ~5%
Benchmarx Kitchens ~5%
Delivered business represents 60% sales Fleet comprises over 1,800 specialist vehicles
Differentiated by our broader exposure to customer and product categories
1803
Travis Perkins is in an excellent position
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
Significant progress made during the Covid-19 period:
Competitive and accessible pricing
More
competitive Local branch empowerment
Commercial deals simplified
Bespoke apprenticeship and colleague training increased
Launch of customer mobile app
More
capable Larger, more capable, branches opened - increased depth of heavyside stock
Delivery management system rolled out
Benchmarx integration
1903
TP has significant growth opportunities
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
More detail in
subsequent slides
Improved network (branch and delivery capability) Managed Services
Hire of equipment Value-added hire
Kitchen design & supply service Elevating Kitchen solutions
relationships
Professional Larger
trades contractors
and general and
builders developers
Deepening
Customer mobile app relationships Systems integration with customers
Competitive pricing Tailored project funding
Ranging to appeal to wider customer groups Innovative supply chain solutions
Underpinned by strengthening data-driven customer insights
2003
Data is driving an enhanced understanding
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
of our customers
Customer segments Detailed insight providing
opportunities for engagement
Professional trades &
Value enhancing opportunities to both
general builders
broaden and deepen relationships
80
Revenue
participation
%
20
Large contractors and developers
2103
Digital journeys developed for
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
customers and colleagues
Better for customers Better for colleagues
Customer app launched Colleague app launched
Trade with TP at a time 106k Improvements to branch
and place convenient to Downloads
operations
customers • Stock counting
• Check stock • Goods receipting
• Order products >2x
App conversion vs
• Pay on account web Enabling better customer
experience
Manage TP Account +25% • Stock accuracy
AOV vs web
• See credit limit • Sales in the yard
• Pay invoices
• Manage credit notes
Significant future digital roadmap
2203
Developing the branch proposition
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
to drive market share gains
Larger, more efficient Where possible,
branches with range utilise sustainable
and delivery products to reduce
advantages carbon footprints
Larger branches
The urban market share provide a safer
opportunity environment for
customers, colleagues
• TP currently under-index
in the top 50 conurbations
and suppliers
• Goal is to grow share by
the deployment of more
capable branches and
a leading digital offer
2303
Enabling development
Network attractive returns on investment
supports
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
proposition enhancement
BEFORE Relocation /
New branches
Redevelopment
Capital requirement
~£1.5m ~£0.7m
per branch
Incremental
revenue per ~£7.0m ~£2.6m
branch at maturity
AFTER
Target ROI 30%+ 30%+
Potential number Up to 50 in Up to 50 in
of projects next 5 years next 5 years
2403
Ambition to grow value-added services
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
Managed • Currently serves public sector domestic RMI market
Services • Long-term commitments to customer contracts
~£200m • Potential to extend to other adjacent markets
Benchmarx • Integrated into TP with 67 implants and 84 stand-alone
Elevating
branches
~£150m
relationships
Professional Larger
• 30% of customers buy kitchens, currently 4% buy them from TP
contractors
• Digital developments will drive customer journey
trades
and general and
builders developers
Deepening
relationships
Hire • 12% of TP customers hire from over 250 branches
• Customers can benefit from product and tool hire at the same time
~£110m • Full range offered to customers through ‘re-hire’ partners
Value-added services are margin accretive
2503
Managed Services is a
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
differentiator for our customers
TP Managed Services is a supply chain and procurement partner delivering
bespoke solutions to customers
Stand-alone managed stores and access
to the wider TP branch network
Multichannel
customer
access with
centralised Remote product access solutions
ordering and
management
solutions
On the road product management
Support
Active catalogue Management Van stock Project tracking Product swaps
services
management information portal management tools
2603
TP General Merchant –
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
Well positioned for success
In an excellent position Performing well and Significant opportunities to
after significant progress taking share in the market drive additional value through
during COVID period deepening relationships
across all customer segments
Digitisation underway, with New branches and relocations Margin accretive value-added
strong results from recent give an opportunity to build services give a sound
developments and an active a branch network that offers foundation to elevate our
roadmap better service to our customer relationships further
customers
2703 LEADING THE EVOLUTION OF THE MERCHANTING MODEL
Frank Elkins
The specialist businesses are market leaders and have delivered excellent
performance and returns
The businesses are well placed to capitalise on the investment required
to make the built environment more energy efficient
Opportunities exist to deliver new growth in adjacent areas of the value chain
2803
Specialist merchants driven by
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
long-term customer partnerships
Internal drywall,
Air conditioning specialist ceilings & insulation
11 branches 36 branches
2017-2019 revenue 2016-2019 revenue
CAGR: ~14% CAGR: ~7%
Civils & drainage specialist
Commercial plumbing 44 branches
& heating solutions 2016-2019 revenue
50 branches CAGR: ~7%
2016-2019 revenue
CAGR: ~3%
2903
The businesses have significant growth potential
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
Branch rollout Robust core residential market
Refrigeration Insulation growth to make
Decarbonisation of heating buildings more sustainable
Technical insulation
Robust core residential market
Robust core markets: Growth in infrastructure
e.g. schools and hospitals Flood attenuation and
Design to Use rainwater harvesting
Core markets + Decarbonisation + Adjacencies + Value-added services
3003
The need to decarbonise creates opportunities
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
Significant investment required across all sectors driven by the need for higher standards
• Domestic spend increasing as Future Homes Standard drives changes to building regulations
Regulatory and EPC ratings require improvement to ~65% of private rented homes1
requirements are
• 57% of commercial rented property will fail to meet 2028 EPC target2
increasing...
• Over £40bn of sustainable investment announced in UK Infrastructure Bank
• Improved building fabric to increase energy efficiency
...driving demand • Insulation, ventilation, air quality and draft proofing are key categories
for new products
• Lower carbon heating sources plus energy capture and storage solutions to reduce
and services...
the use of fossil fuels
...which we are Building Fabric Heating, Ventilation and Air Conditioning
well positioned to
deliver
1 Kamma research 2 Colliers research
3103
TF Solutions offers routes to growth
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
in adjacent markets
A leading provider of air conditioning products to SME installers
operating from 11 c. 10,000 ft2 branches
TODAY
c.£25m revenue at c.8% operating margin
2024 target revenue > £100m
Optimal estate plan Digital proposition Category/channel expansion
~ 30 branches - mix of primary, Enhance digital capabilities through Develop low carbon heating proposition
smaller footprint and implants trading website and mobile-app aimed at commercial and SME market
account management
Cross-selling and up-selling opportunities through BSS and the wider group
Benefits of thoughtful group integration where relevant
3203
Value-added services bring differentiation
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
and margin opportunities
Early project engagement
Design capability
Elevating ESG expertise
relationships
Supply chain solutions
Larger Digital assets (BIM)
contractors
and
developers
Delivery management
Supply chain expertise (FORS Gold)
Deepening
relationships System connectivity
Tool hire
33Design to Use
Case Study
Angela Rushforth
3403
BSS Design to Use -
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
Value-adding customer solutions
Customer Challenges
Advise
• Lack of design capability
• Design inaccuracies
• Optionality for design/ESG solutions Elevating
Design relationships
• Lack of clarity around scope and project integrity
• Lack of product and data interoperability
Order
BSS
• Changing legislation
Today
Fulfil Opportunities to differentiate and add value
Deepening
Support relationships
• Lack of maintenance schedules
• Transition from reactive to planned maintenance
Service • Management of product assets and data
• Golden thread of product
• High cost solutions
3503
BSS Design to Use -
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
Expanding our role in the value chain
Advise
Elevating
Design relationships
Order
BSS
Tomorrow
Fulfil
Deepening
Support relationships
Service
3603
Specialists - further levers to drive value
LEADING THE EVOLUTION OF THE MERCHANTING MODEL
The success of the Group’s specialist merchants As the construction industry changes,
is driven by long-term partnerships developed further opportunities to differentiate and
with customers and suppliers and the capability elevate customer relationships will arise
of our people
The need to decarbonise The capabilities being Differentiating services
will produce opportunities developed in areas such as ESG will add to the financial
which our businesses are are differentiating and allow us performance-enhancing
well positioned to capture to win work in tender situations returns
37MAXIMISING THE LONG-TERM POTENTIAL
04 OF TOOLSTATION IN THE UK AND EUROPE
James Mackenzie and Alan Williams
Toolstation is a brilliant business - offering customers simple, convenient
and multichannel access to products
In the UK, it is well set for growth to £1bn (2024) and beyond
At maturity, it will generate a high single-digit operating margin
The model is portable, with European businesses following a similar route to the UK
3804
A model designed to address customer needs
MAXIMISING THE LONG-TERM POTENTIAL OF TOOLSTATION IN THE UK AND EUROPE
Professional
trades
and general
builders
25,000 products
Key customer needs
Depth and breadth of range 13,000
Available
High availability Digitally-led
next day
proposition
Convenient locations engineered 12,000
to meet Stocked in branch
Certainty and reliability customer
needs
Speed of service
Great value
FAST NATIONWIDE DYNAMIC
in-store service coverage stock
LONG OPENING SMALL, LOW COST BRANCHES UNIFORM
hours (>90pw) with simple fit-out. stock range
3904
Toolstation UK has significantly
MAXIMISING THE LONG-TERM POTENTIAL OF TOOLSTATION IN THE UK AND EUROPE
outperformed the market
Levers of growth
01
Network
Toolstation UK revenue (£m)
• Accelerated branch opening plan, facilitated
2018 > 2020
through smaller footprint branches
CAGR: ~26%
02
Propositional Development
2012 > 2018 563
CAGR: ~17% • 5 minute click and collect
434 • Digital acceleration
354
• 7 day delivery with late cutoff
300 • Trade credit offering
258
226
196
135
165 03
Range Extension
2012 2013 2014 2015 2016 2017 2018 2019 2020 • 10,000 new products
4004
A clear path to reach
MAXIMISING THE LONG-TERM POTENTIAL OF TOOLSTATION IN THE UK AND EUROPE
£1bn of sales by 2024
• Significant market
>£1bn share growth by 2024
~650 branches (~3% pts)
Further network
Toolstation UK revenue (£m) growth
• Further growth
Trade Focus opportunities post
Proposition 2024 to drive revenue
Development CAGR of ~10%
Digital Acceleration
563
>15% • In 2024 ~19% of
434 CAGR the estate will be
354
less than two years
300 old, compared to
226
258 ~27% now.
196
165
135
2012 2013 2014 2015 2016 2017 2018 2019 2020 2024
4104
Future growth comes from four key areas
MAXIMISING THE LONG-TERM POTENTIAL OF TOOLSTATION IN THE UK AND EUROPE
01
Further network growth
• ~60 new branches annually to around 650
• Potential for smaller format branches and collection points
• Blending new delivery capacity with local fulfilment
02
Trade focus
• Enhanced trade propositon 04
• Extended trade ranges Digital
• Maximising convenience for the trade acceleration
03
Proposition development
• Range development to reach 50,000 products
• Enhanced delivery proposition, e.g. last mile and same day
• New value-add services
4204
Digital penetration will accelerate further
MAXIMISING THE LONG-TERM POTENTIAL OF TOOLSTATION IN THE UK AND EUROPE
Digital channels have grown significantly during the Covid-19 period:
Direct New 500,000ft2 DC
Digital sales
participation +30% fulfilment +52% in Northampton
volume
Key levers to further accelerate growth
New mobile app Enhanced digital Loyalty programme Customer Data
experience
4304
Clear line of sight to high single-digit
MAXIMISING THE LONG-TERM POTENTIAL OF TOOLSTATION IN THE UK AND EUROPE
operating margin at maturity
01 02 03
Once mature, branches Recently opened branches Supply chain and back-
generate a contribution benefit from continuous office costs are mainly
margin of >20% improvement and deliver stepped in nature and
enhanced financial represent ~12% of
performance mature sales
In addition, successful smaller Material non-branch costs
Branches reach maturity after
footprints mean more convenient comprise logistics, digital
approximately five years
locations and better returns marketing and support centre
4404
45
MAXIMISING THE LONG-TERM POTENTIAL OF TOOLSTATION IN THE UK AND EUROPE
Toolstation Europe Video04
Toolstation Europe will follow a similar route
MAXIMISING THE LONG-TERM POTENTIAL OF TOOLSTATION IN THE UK AND EUROPE
Over time, expect businesses to be similar to UK in revenue, gross margin and net margin trajectory
Market Size Business Potential
Branches
(€bn) Maturity relative to UK
Today • Expect to break even in next 24 months
66 • Gross margin growth through customer mix and
~€6bn Medium supplier deals
Netherlands Potential L H
• Operating margin driven by gross margin and
150+ operating leverage
Today • Expect to break even in 3-5 years
7
• Continue branch rollout at pace
~€5bn Medium
Belgium Potential L H • Shared warehousing and central costs with NL
100+ will aid move to profitability
Today • Longer-term opportunity but with highest potential
31 • Testing and refining network model and marketing
Equivalent
~€22bn or larger proposition prior to more significant scale-up
France Potential L H
600+ • Investment of €35-40m over next two years
4604
Toolstation offers an
MAXIMISING THE LONG-TERM POTENTIAL OF TOOLSTATION IN THE UK AND EUROPE
exciting prospect for growth
Toolstation UK offers a compelling case:
• Clear route to £1bn+ business
• Drivers of revenue are clear and well understood
• High single-digit margins at maturity
Toolstation Europe is developing well:
• Netherlands and Belgium offering clear route to profitability
• France in earlier phase but has significant potential and is developing well
The model is applicable to other countries and offers
a route to expansion through organic growth
47Break
48LEVERAGING THE POWER OF THE GROUP
• Advancing customer propositions
05 • Aligning technology to propositional development
• Framing our long-term future
Nick Roberts
The Group’s collection of market-leading businesses facilitates the development of
unique customer propositions
Aligning the Group’s technology to customer segments drives value
There is an opportunity to embrace a new agenda for the industry and set the
foundational pillars for the Group’s long term success
4905
Two unique areas to enhance
LEVERAGING THE POWER OF THE GROUP - Advancing customer propositions
customer propositions
Elevating relationships by the addition of
services and new areas of value add
Elevating
relationships
collaboration Innovative solutions
Professional Larger for customers working
to provide better trades contractors
and more convenient and general and with
solutions for trade
builders developers Modern Methods
of Construction
Deepening
relationships
Deepening relationships to earn
a greater share of spend
5005
Leveraging the customer overlap
LEVERAGING THE POWER OF THE GROUP - Advancing customer propositions
TP customer spend ~4% of current TP customer
with fixed-price spend is with Toolstation
lightside merchants
~8% is via other fixed-price merchants
Through leveraging data, cross marketing and enhanced
digital customer journeys, the intention
~30% 340k
TP Customers is to capture a greater share of wallet from our
Trade customers
trade customers
Trade customers
represent 50% of
Toolstation
revenue
Toolstation trade ~9% of current Toolstation
>6m customer spend at trade customer spend is with TP
Active Toolstation general builders’
customers
merchants ~14% is via other general builders’ merchants
5105
To maximise the potential of our
LEVERAGING THE POWER OF THE GROUP - Advancing customer propositions
market-leading businesses
PRODUCT TYPE
Lightside Heavyside
Delivered
FULFILMENT METHOD
5205
Lightside expertise from Toolstation
LEVERAGING THE POWER OF THE GROUP - Advancing customer propositions
already helping TP
PRODUCT TYPE
Lightside Heavyside
• Trial underway with 2,000 Toolstation SKUs
Delivered
live in TPGM digital channels
• Plans to broaden to other categories
FULFILMENT METHOD
• New joint facility for direct lightside fulfilment
under construction
• Leading capability in place in Toolstation with
innovative plans for the future Lease signed on 500,000 sq.ft. premises near
Northampton for direct customer dispatch
• Trials being planned to leverage Toolstation
expertise within TPGM network
5305
Medium-term potential for Toolstation
LEVERAGING THE POWER OF THE GROUP - Advancing customer propositions
to capture heavyside orders
PRODUCT TYPE
Heavyside
• Current capability being upweighted by delivery
management
Delivered
• Delivery only branch in trial
FULFILMENT METHOD
• Further deployment of large scale branches planned
• Flexible options available in future
Future ability to capture demand
for fulfilment by TP
• Existing capability in all branches
• Significant click and collect trials conducted over
Covid period
• Opportunity for significant future innovation
5405
Helping customers navigate a changing industry
LEVERAGING THE POWER OF THE GROUP - Advancing customer propositions
Customer needs Our responses
More efficient use of materials Introduce new solutions to modular builders
Offsite manufacturing reduces waste to ensure that the right materials are available
through automation and maximising when and where required
material utilisation
More efficient use of time Innovate to bring the benefits of MMC to SME
Offsite manufacturing leads to housebuilders - offering best in class design
economies of scale benefits and and build with integrated fulfilment
simplifies installation processes on site
A more sustainable way of working Enhance our integrated customer proposition
Decarbonisation and reduced through the full control of Staircraft
consumption of natural resources
5505
Staircraft adding significant
LEVERAGING THE POWER OF THE GROUP - Advancing customer propositions
capabilities to the Group
Minority share acquired in 2015
Full control effective from Q4 2021
Market-leading proposition for national,
offsite and regional housebuilders.
Fully integrated stair and flooring solutions
Technology led
2015 – 2019 revenue CAGR of ~30%
5605
An intelligent approach to leveraging scale
LEVERAGING THE POWER OF THE GROUP - Advancing customer propositions
Tailored propositions Group advantages
01
Specialist sales force Enhanced customer propositions
02
Flexible combinations of assets
Commercial proposition
03
Alignment and collaboration with suppliers
Dedicated fulfilment capability
04
Technology platforms deployed at scale
Bespoke digital propositions 05
Differentiated capability to shape and lead
on key issues
57LEVERAGING THE POWER OF THE GROUP
• Advancing customer propositions
05 • Aligning technology to propositional development
• Framing our long-term future
Phil Tenney
5805
Aligning technology to customer segments
LEVERAGING THE POWER OF THE GROUP - Aligning technology to propositional development
Smaller Managed
professional trades relationships Approach Benefits
Customer Face to Integrated
Branch Online
proposition face services
Customer Delivery and inventory management
promise and
fulfilment Order management
Merchant Demand forecasting and replenishment
operations Assortment and price management
Back Finance
office HR
Product
Data
Customer
5905
Modern technology delivery methods
LEVERAGING THE POWER OF THE GROUP - Aligning technology to propositional development
are being used
From To
Fewer major programmes More agile products
Capex spend plus depreciation More opex - SaaS payments
Higher risk implementations Lower risk go-live (test and learn)
Lengthy design phases Agile development cadence
A beginning... and an end An ongoing profile of investment
Investment planned in new technology landscape –
Incremental £5-10m on current £30m p.a. run rate
60LEVERAGING THE POWER OF THE GROUP
• Advancing customer propositions
05 • Aligning technology to propositional development
• Framing our long-term future
Emma Rose
6105
Embracing the opportunity to shape our industry
LEVERAGING THE POWER OF THE GROUP - Framing our long-term future
Unique position at the heart
of the industry
Customers
Able to shape the agenda and
lead through example
Colleagues Specifiers
Leadership role provides
competitive advantage
Embracing change is
fundamental to future success
Policy
Experts
makers
Suppliers
6205
Guided by a clear purpose and stretching goals
LEVERAGING THE POWER OF THE GROUP - Framing our long-term future
Group Purpose
We’re here to help build better communities and enrich lives
Group Ambition - Leading Partner to the Construction Industry
Helping to change Decarbonising Developing the
construction our industry next generation
Leading the development Helping the industry to Impact a generation of
of future construction processes decarbonise by using the most young people, enriching their
that enables the industry to build efficient products, supplied lives through work experience,
better, higher quality outputs in a in the most efficient way to skills building and career
safer and more sustainable way produce the right outcomes opportunities
for our communities
Driving strong total shareholder returns
6305
Committed to reducing our environmental impact
LEVERAGING THE POWER OF THE GROUP - Framing our long-term future
Net Zero Carbon
• Decarbonising fleet of over 4,000 vehicles for Scopes 1 and 2 by
• Decarbonising estate of over 1,300 buildings 2035 (80% reduction,
Net Zero Carbon 20% offset)
• Helping customers to select sustainable products
• Training and upskilling colleagues and customers 63% reduction in
Sustainable products • Providing services to support the decarbonisation Scope 3 supply chain
of buildings and the circular economy carbon by 2035,
and services
in line with a 1.5
degree pathway
• Sourcing safe and quality products
• Assessing suppliers to ensure trusted, 100%
sustainable and transparent supply chains certified timber
Responsible sourcing • Sourcing certified timber
6405
Thriving culture, colleagues and communities
LEVERAGING THE POWER OF THE GROUP - Framing our long-term future
sit at the heart of our future success
• Advancing our safety culture through a risk focus Everybody
• Supporting physical, mental and financial wellbeing home safe and well
• Collaborating with the industry to drive change every single day
Safety and wellbeing
• Attracting talent to our business and industry
• Developing colleagues for changing markets 1,000 colleagues on
Apprenticeships
• Ensuring all colleagues have the chance to grow
People development in 2021
500 young people
• Empowering colleagues to drive the agenda
16-24 Kickstart
• Enabling networks
programme
• Educating through training and reverse mentoring
• Improving pay equality
Diversity and inclusion
• Attracting diverse talent
6506 DELIVERING ATTRACTIVE FINANCIAL OUTCOMES
Alan Williams
6606
A compelling investment proposition
DELIVERING ATTRACTIVE FINANCIAL OUTCOMES
01 02 03
Reshaped Group more Actions taken to simplify Well positioned to take
stable and predictable with processes, speed up decision advantage of new market
competitively advantaged, making and address the opportunities and deliver
trade-focused portfolio cost base profitable growth ahead
of our markets
04 05
Strong balance sheet with Scope for enhanced
good cash conversion, shareholder returns over
sufficient to fund investment and above ordinary dividend
requirements
6706
Group well set for medium term outperformance
DELIVERING ATTRACTIVE FINANCIAL OUTCOMES
• Toolstation a growing component of the Group
Revenue Ahead of the market • Opportunities to win share through deeper customer relationships
• Extension into value-added services
Gross • Segmental mix benefit - Toolstation higher gross margin and faster growing
Modest accretion
margin (%) • Maintain overall gross margin percentage in Merchanting
• Segmental mix impact as Toolstation has higher cost to serve
Cost to • Merchanting - focus on gross profit flow through, more flexible cost base
Stable at Group level
serve (%) post June 2020 restructuring
• Addressing fixed cost base from portfolio changes
• Rapid expansion of Toolstation UK and Europe drives improvements
Operating in operating leverage
Modest accretion
margin (%)
• Merchanting operating margins are more stable with modest accretion over time
6806
Strong underlying cash conversion
DELIVERING ATTRACTIVE FINANCIAL OUTCOMES
Continue to build on strong recent performance driven by working capital management
Merchanting working capital as a Investment in network and growth
proportion of sales has been relatively results in lower cash conversion than
stable, driving 80%+ cash conversion merchanting until network matures
2021 reflects a normalised position
post Covid-19
Group cash conversion further supported by completion of restruturing phase
Adjusted EBITA excl. Property Profits
+ depreciation & amortisation (excl. IFRS 16)
1 Cash conversion % = +/- change in working capital Adjusted EBITA excl. Property Profits
- non-freehold capital expenditure
6906
Clear capital allocation priorities aligned to
DELIVERING ATTRACTIVE FINANCIAL OUTCOMES
strategy
Strategic Priorities
Maintenance ~35%
~50%
Toolstation UK & Maintaining
Europe expansion a modern,
sustainable
Capex guidance1 fleet
2022 c. £125m
TPGM network Network
improvements IT estate
Hire portfolio
Selected other investments
~15%
1 Excludes freehold purchases
7006
Value-adding M&A through bolt-on
DELIVERING ATTRACTIVE FINANCIAL OUTCOMES
‘buy and build’ strategy
Elevating
relationships Potential to exploit
the Group’s scale
advantage and
to provide further
opportunities to
elevate or deepen
Deepening
relationships.
relationships
7106
Appreciating property portfolio
DELIVERING ATTRACTIVE FINANCIAL OUTCOMES
releases profit and cash
2010-2021 • Average of c. £40m cash-inflow from property
Market value has grown by over £500m disposals per annum fully funding acquisitions -
NBV has grown by ~£90m despite cash receipts of over £130m with additional inflows expected in 2022-23
Case Study: Cambridge
Up to • 3-acre Cambridge city centre freehold branch
2017 • 15-20% market share
• Opened second 1 ¾ acre freehold site
Portfolio
• Deal done to sell original site
reshaping
• Land acquired for second 2 ½ acre site
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021e
Market Value NBV
Potential to increase market share by 10-20%
Sale fully funds development and realises significant profit
Significant latent value in property portfolio
7206
Highly achievable leverage targets
DELIVERING ATTRACTIVE FINANCIAL OUTCOMES
4.0x • Significant reduction in Group
leverage since 2012 with
3.3x material reduction in 2021
3.0x driven by portfolio actions.
3.0x 2.8x 2.8x 2.8x
2.7x 2.7x 2.7x
Net debt2 / EBITDA1
2.5x • Target leverage of 1.5x - 2.0x
Net debt/EBITDA
2.0x
• 2021 outturn forecast in range of
Target range
1.4x - 1.6x Net debt/EBITDA
1.0x • Expect to operate in the medium
term towards the lower end of
the target range
0.0x
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021e 2022 2023 2024
1 Values for 2018 and earlier are calculated as the ratio of lease-adjusted net debt to EBITDA adjusted for rent (“EBITDAR")
2 Net debt is presented on an IFRS16 basis
7306
Repeatable model focused on delivering
DELIVERING ATTRACTIVE FINANCIAL OUTCOMES
sustainable TSR
Merchanting
leadership and
Toolstation
expansion
driving above Attractive earnings growth
market growth
Strong cash
conversion from
disciplined
working capital Ordinary dividend
Robust balance management
sheet and (30 – 40% FY adj. earnings)
focused
allocation
of capital
Incremental Potential for
cash release additional return
from freehold of surplus capital
property
development
7407 WRAP-UP AND Q&A
Nick Roberts
7507
Summary
WRAP-UP AND Q&A
01 02 03
The construction The Group is well Elevating and
sector is changing, positioned to adapt deepening customer
driven by both macro quickly to these relationships will be key
and sector-specific changing conditions to win
factors
7607
Summary
WRAP-UP AND Q&A
04 05 06
Our businesses all We take our role as We believe our strategy
have clear plans to a leader in the sector will grow earnings and
enable future growth seriously – we will cash which with
and further value can help to create a more disciplined investment,
be added through sustainable will lead to growing
leveraging the power construction industry returns for shareholders
of the Group
7707
We’re here to help build better
WRAP-UP AND Q&A
communities and enrich lives
Purpose
We’re here to help build
We have a differentiated
better communities and enrich lives and clear purpose with a
Ambition stretching ambition
Leading Partner to the Construction Industry
Collaborating to add value Our combination of
market-leading business
adds value to customers
and society
With a business built on
Leading assets and capabilities sound foundations for
future growth
Driving strong total shareholder returns
78Appendix
79The Group Leadership Team
Nick Roberts Alan Williams Frank Elkins Phil Tenney Robin Miller Emma Rose
CEO CFO COO CITO General Counsel and CHRO
Joined 2019 Joined 2017 Joined 2003 Joined 2021 Company Secretary Joined 2020
Experience: Experience: Experience: Experience: Joined 2018 Experience:
Previously President at design, CFO of Greencore PLC, and 30 years merchanting CTDO at Asda and other HR Director at Kerry Foods
Experience:
engineering and project senior Finance roles at experience, previously managing senior IT positions across retail other senior HR roles
General Counsel & Company
management consultancy, Atkins Cadbury PLC director of BSS industrial and banking sectors across leisure and food
Secretary at Dairy Crest Group plc
manufacturing sectors
Martin Meech James Mackenzie Kieran Griffin Angela Rushforth Dean Pinner Catherine Gibson
Group Property Director MD Toolstation MD Travis Perkins MD BSS MD Keyline MD CCF
Joined 2005 Joined 2017 Joined 1995 Joined 2015 Joined 2014 Joined 2015
Experience: Experience: Experience: Experience: Experience: Experience:
Property Director at Dixons, Commercial and Digital Joined the group as a management Managing Director at Over 30 years experience in the Joined the Group from
Halfords and Gateway Director at Screwfix, and trainee, progressed to manage the Ridgeons, and executive independent building merchant Aggregate Industries,
GM Kingfisher Asia group’s specialist businesses BSS, roles at Wolseley and sector to include EH Smith and initially as an Operations
Keyline and CCF Screwfix Shire Building Supplies Director before being
promoted to MD of the
Group’s Toolhire business.
80Group ESG framework
81You can also read
