Regulatory Story
Go to market news section View chart   Print
Travis Perkins PLC  -  TPK   

Half-year report - Travis Perkins plc Interim results for the six months ended 30 June 2018

Released 07:00 31-Jul-2018

Half-year report - Travis Perkins plc Interim results for the six months ended 30 June 2018

Travis Perkins plc

Interim results for the six months ended 30 June 2018

Trade focused businesses performing well, significant challenges in DIY market

£mNoteH1 2018H1 2017Change
Revenue 3,3643,2214.4%
Like-for-like revenue growth(1) 4.2%2.7% 
Adjusted operating profit(1)16a179190(5.8)%
Adjusted operating profit excluding property profits(1) 162183(11.5)%
Adjusted profit before taxation(1)16b167175(4.6)%
Adjusted earnings per share(1)8b53.5p55.8p(4.1)%
Net debt(1)13(461)(377)£(84)m
Dividend per share  (pence)915.5p15.5p-
Lease adjusted ROCE(2)16f10.1%11.2%(1.1)ppt
     
Adjusting items2(286)- 
Operating (loss)/profit (112)183 
(Loss)/Profit before taxation (123)168 
Basic (loss)/earnings per share (pence)8a(59.8)p53.6p 

(1) Alternative performance measures are used to provide a guide to underlying performance and details of the calculations can be found in the notes listed

(2) Lease adjusted ROCE restated for H1 2017 to adjust for the £246m write off of goodwill in Wickes in H1 2018

Highlights

John Carter – Chief Executive Officer said:

“Our trade focused businesses in General Merchanting, Contracts, Toolstation and Plumbing & Heating achieved good sales growth despite experiencing a volatile first half. These businesses exited the period with encouraging momentum and, supported by a continued focus on cost, they remain on track to deliver modest profit growth for the full year.

Our consumer-focused business, Wickes, has had a far more challenging period as weaker consumer spending trends, combined with a difficult competitive environment, have held back profitability. Consequently, the Wickes team is executing a significant cost reduction programme. Whilst these savings will help drive improved profitability through the second half of the year, Wickes’ profits will be lower than previously expected.

Against a backdrop of changing market conditions which are expected to continue for the foreseeable future, the Group has commenced a comprehensive review of its business, with a view to driving stronger performance and enhanced value for shareholders in the medium term.”

Enquiries:

Travis Perkins Tulchan Communications
Graeme Barnes David Allchurch
+44 (0) 7469 401819 +44 (0) 207 353 4200
graeme.barnes@travisperkins.co.uk  
   
Zak Newmark  
+44 (0) 7384 432560  
zak.newmark@travisperkins.co.uk  

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 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 2018, 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 achieved good overall sales growth of 4.4% to £3,364m in the first half of 2018, with like-for-like sales growth of 4.2%. Group adjusted operating profits, excluding property profits, declined by 11.5% to £162m, in part reflecting a change to the overall sales mix between businesses, with very strong growth in Plumbing & Heating, and a significant decline in Wickes. In addition, and as expected, overhead cost inflation in General Merchanting was concentrated in the first half of the year, with the benefits from cost reduction activities weighted to the second half.

Given the current mixed market outlook, the Group continues to focus on achieving a good balance between tightly controlling the cost base and maximising efficiency, whilst maintaining the strong trading propositions put in place in recent years. This balance is flexed for different businesses across the Group depending on end market conditions and potential future growth.

The Group’s cash conversion was lower in H1 2018 than in recent periods, at 72%, due to phasing of working capital flows which are expected to reverse in the second half of the year. This had a corresponding impact on net debt which rose by £119m since December 2017, which is also expected to reverse through H2 2018.

The Board has declared a 15.5 pence per share interim dividend, unchanged from 2017.

Outlook

The long-term drivers of market growth remain favourable, centred on the UK’s requirement for more homes and the underinvestment in the repair, maintenance and improvement (RMI) of existing dwellings and infrastructure. The mixed backdrop of market lead indicators has, however, continued since the beginning of 2018, with mortgage approvals and housing transactions broadly flat, inconsistent house price growth across the UK, depressed consumer confidence and continued pressure on wider retail sales figures across many UK consumer facing markets.

These factors make it difficult to accurately forecast market volumes in the near-term, although recent trends would indicate that the trade markets are performing more consistently than consumer markets, with UK DIY the most challenged, with weak demand for big ticket purchases in particular. At this stage, the Group sees no evidence to suggest a change to the current market environment through the remainder of 2018.

Assuming that current market conditions persist for the balance of the year, expectations for the trade businesses remain unchanged for 2018. Given the first half performance in Wickes in a challenging DIY market, the Group now anticipates that 2018 EBITA will be in the lower half of the range of analyst expectations.

*As at 30 July 2018 the range of market expectations for full-year 2018 Group EBITA was £360m to £390m.

Business and operational review

Against a backdrop of changing market conditions which are expected to continue for the foreseeable future, the Group has commenced a comprehensive review of its business, with a view to driving stronger performance and enhanced value for shareholders over the medium term. The review will focus on defining a simplified Group structure aligned more closely with its core customer base. An update on the conclusions from the review will be provided at a capital markets day in early December.

Technical guidance

The Group’s technical guidance for 2018 is as follows:

Divisional Review

The Group’s trade focused businesses in General Merchanting, Contracts, Toolstation and the Plumbing & Heating division, performed well despite volatility in trading conditions through the first half of 2018. The six month period can be split into three distinct time periods. In January and February, performance was encouraging, with both sales volumes and recovery of input cost inflation in line with expectations. The extended period of poor weather through March and April had a significant impact on the Group’s end markets, with trade customers unable to work on projects, although this period did provide a mild boost to the Plumbing & Heating division.

In May and June, the trade-focused businesses showed a significant recovery in sales, and demonstrated encouraging momentum into the second half of the year. Whilst market trends remain difficult to read, the recent trading performance underpins the Group’s confidence in expectations for H2 2018.  

General Merchanting

 H1 2018H1 2017Change
Total revenue£1,065m£1,055m0.9%
Like-for-like growth  0.6%
Adjusted operating profit excluding property£86m£97m(11.3)%
Adjusted operating margin excluding property8.1%9.2%(110)bps
LAROCE*12%14%(2)ppt
Branch network*843850(7)

* Comparison data from 31 December 2017

The General Merchanting division began the year well with good recovery of input cost inflation, before a difficult period in March and April during a sustained period of inclement weather. Sales recovered in May and June, with volume growth primarily driven by extended range sales through the heavyside range centre network, growth in online sales and strong performance in Tool Hire and Managed Services.

Gross margin percentage returned to the level of H1 2017, following the successful recovery of input cost inflation, particularly in core categories such as timber, and tight control of category pricing throughout the half.

Adjusted operating profits declined reflecting a higher overhead cost base in the business. This was due to the expected step-up in costs associated with the heavyside range centre network extension to cover all of England and Wales, as well as inflation on rent, rates and salaries that came into effect very early in the year.

In response to the higher cost base, as previously announced in March 2018, a significant cost action plan was put in place across the division, focussing on maximising efficiency across the business, optimising asset utilisation and tightly managing the overall branch network. These cost reduction activities are expected to deliver benefits of approximately £10m heavily weighted to the second half of 2018 with more to come in 2019.

Plumbing & Heating

 H1 2018H1 2017Change
Total revenue£774m£669m15.7%
Like-for-like growth  19.8%
Adjusted operating profit excluding property£20m£13m53.8%
Adjusted operating margin excluding property2.6%1.9%70bps
LAROCE*13%11%2ppt
Branch network*388391(3)

* Comparison data from 31 December 2017

The Plumbing & Heating transformation programme continues to drive strong results, with like-for-like sales growth of 20% in the half, exceeding expectations. Volume growth has come through all three parts of the business, the online channels, the branch network and the lower-margin wholesale business, particularly in boilers. Encouragingly, this pace of growth was maintained throughout the second quarter. Momentum remains positive into the second half of the year, and there are further opportunities to improve performance through better customer engagement and category extensions, although comparators will become more challenging as the business cycles the start of the improvement plan in 2017.

The division is also benefitting from the substantial reduction in the overhead cost base carried out as part of the restructuring process in 2017.

Contracts

 H1 2018H1 2017Change
Total revenue£718m£675m6.4%
Like-for-like growth  5.1%
Adjusted operating profit excluding property profits £43m£41m4.9%
Adjusted operating margin excluding property profits6.0%6.1%(10)bps
LAROCE*14%14%-
Branch network*165169(4)

* Comparison data from 31 December 2017

The businesses in the Contracts division continue to perform strongly, growing ahead of their end markets and taking market share. After a slow start to the year, mainly owing to delayed activity on large construction projects, like-for-like growth rates accelerated throughout the first half, reaching 9.5% for Q2.

Adjusted operating profit grew in line with sales, with a modest decline in gross margin driven by the mix of deliveries direct from manufacturer offset by better operating leverage. Actions to drive efficiency through the branch network remain a key priority, including rationalisation of the branch network – 5 Keyline branches were closed, consolidated or switched to the Travis Perkins brand with over 90% of sales retained within the business.

In BSS a programme is underway to streamline processes ahead of the first roll out of the new Merchanting ERP system in early 2019.

CCF performed well in the period.

Consumer

 H1 2018H1 2017Change
Total revenue£807m£822m(1.8)%
Like-for-like growth  (4.2)%
Adjusted operating profit excluding property profits£29m£45m(35.6)%
Adjusted operating margin excluding property profits3.6%5.5%(190)bps
LAROCE*7%7%-
Branch network*69666630

* Comparison data from 31 December 2017

Toolstation

The sales trend in Toolstation through the first half of the year was similar to the other trade focussed businesses, with a good start to the year, a weak period in March and April, and strong recovery thereafter. Even with the disruptive backdrop, Toolstation achieved another strong performance with total sales growth of 17.6%, and 10.7% on a like-for-like basis.

Sales growth was driven by the continued growth of the store network in the UK, with 22 new stores opened in the half taking the total network to 317. The rollout will continue at pace in the second half. Improvements to the proposition are also driving higher sales density, with front-of-counter consumables, range improvements focused on trade customers and additional online range extension and the roll out of “drop-ship” delivery direct from suppliers.

As expected, adjusted operating profits in Toolstation were modestly lower because of the level of expansionary cost investment in the business. Opening of new stores and the construction of a third distribution centre, increasing capacity to support 500 stores will benefit future sales and profit growth.

The expansion of the Toolstation Europe network continued with further stores in the Netherlands and an extension of the trial in France, with encouraging sales results.

Wickes

As highlighted at the time of our Q1 2018 trading update, the UK DIY market continues to be challenging, and was badly affected by the inclement weather in March and April. Wickes did not recover as strongly as the trade focused businesses, with consumer sentiment remaining subdued. Whilst core DIY sales recovered modestly, helped by the business’s exposure to small trade customers, K&B showroom sales have proven to be weaker, which has significantly impacted sales and profitability.

Wickes’ sales declined by 5.8% in the first half of the year, and by 7.7% on a like-for-like basis. Gross margin was diluted as input cost inflation could not be recovered through pricing due to competitive pressures and an adverse sales mix in the period. Adjusted operating profit declined by £14m. As described in note 2 and 12, the Group has recognised an impairment of £246m in relation to goodwill.

In response to the challenging market conditions, the Wickes team has implemented a comprehensive cost reduction plan, building on the activities carried out in Q4 2017. As a direct consequence of these actions the overhead cost base was £9m lower in H1 2018 compared to H1 2017, with further benefits to be realised in the second half of the year which are expected to underpin an improved profit trend. Shrinkage has been reduced by 25% by applying an end-to-end focus on the supply chain, branch staffing levels are being carefully controlled to match trading volumes, and a significant restructuring was carried out in the head office functions in May, reducing headcount by a third.

Central costs

Unallocated central costs rose by £3m to £16m for the half, in line with the expectations for the full year. Growth was driven primarily by the investments the Group is making in IT capabilities and digital platforms, in particular the Group’s new ERP system for the Merchant businesses.

Property

The Group continues to recycle its freehold property portfolio to provide the best trading locations for its businesses, whilst managing the level of capital allocated to owning and developing freehold sites.

Eight new freehold sites were purchased in H1 2018 at an investment of £36m, with a further £5m of construction costs to develop sites ready for trading. These investments were fully funded in the half by property disposals of £51m, which also generated property profits of £17m.

Financial Performance

Revenue

Group revenue grew by 4.4% in the first half of the year, and by 4.2% on a like-for-like basis with the main drivers being good growth in the Plumbing & Heating and Contracts divisions, partially offset by continuing challenges for the Wickes business.

Volume, price and mix analysis

Total revenueGeneral MerchantingPlumbing & HeatingContractsConsumerGroup
Volume(2.3)%16.5%(0.9)%(6.1)%0.8%
Price and mix2.9%3.3%6.0%1.9%3.4%
Like-for-like revenue growth0.6%19.8%5.1%(4.2)%4.2%
Network expansion and acquisitions0.3%(4.1)%1.2%2.3%0.2%
Trading days-----
Total revenue growth0.9%15.7%6.3%(1.9)%4.4%

Quarterly like-for-like revenue analysis (see note 16h)

Like-for-like revenue growthGeneral MerchantingPlumbing & HeatingContractsConsumerGroup
Q1 2018(1.3)%19.7%0.9%(4.6)%3.0%
Q2 20183.0%20.1%9.5%(3.1)%5.9%
H1 20180.6%19.8%5.1%(4.2)%4.2%

New branch and store openings net of closures contributed 0.2% to revenue growth with the expansion of the Toolstation network offset by the branch closures in P&H in 2017. There was no difference in the number of trading days in 2018 compared to 2017.

The Group maintained a focus on recovering cost price inflation in the first half of 2018, with overall price inflation across the Group of approximately 3%, with the highest increases in the Contracts division where commodity price inflation has had the most concentrated impact.

Operating profit and margin

£mH1 2018H1 2017 
General Merchanting8697(11.3)%
Plumbing & Heating201353.8%
Contracts43414.9%
Consumer2945(35.6)%
Property177142.9%
Unallocated costs(16)(13)23.1%
Adjusted operating profit179190(5.8)%
Amortisation of acquired intangibles(5)(7) 
Impairment of Wickes goodwill(246)- 
Other adjusting items(40)- 
Operating (loss)/profit(112)183 

Adjusting items recognised in the period included:

Adjusted operating margin

 General MerchantingPlumbing & HeatingContractsConsumerGroup
H1 2017 adjusted operating margin (excluding property profits)9.2%1.9%6.1%5.5%5.7%
Change in gross margin0.0%(0.8)%(0.3)%(2.7)%(1.5)%
Margin impact of change in operating costs(1.1)%1.5%0.2%0.8%0.6%
H1 2018 adjusted operating margin (excluding property profits)8.1%2.6%6.0%3.6%4.8%

The reduction in Group gross margins reflects the change in sales mix across the business, with strong growth in lower margin Plumbing & Heating sales offsetting weakness in higher margin Wickes sales, particularly Kitchens and Bathrooms. Operating costs were carefully controlled, with significant year-on-year improvements in Plumbing & Heating and Consumer, and with the operating cost base in General Merchanting expected to benefit from cost reduction activities in the second half of the year.

Finance charge

Net finance charges, shown in note 6, were £10m (2017: £16m). Interest costs on borrowings were unchanged from 2017 at £11m, with the majority of the Group’s debt covered by the two publically traded bonds on fixed interest coupons.

The impact of marking-to-market currency forward contracts which remained outstanding at 30 June 2018 was to reduce the net finance charge by £3.2m (the 2017 impact was to increase the net finance charge by £0.2m). These contracts are used to hedge commercial currency transactions.

Taxation

The total tax charge for the half year period, excluding the effect of adjusting items, was £32m (2017: £32m), which represents an effective rate of 19.7% (2017: 19.2%). This is slightly higher than the standard rate of corporation tax for the year of 19.0% (2017: 19.25%) applicable to profits in the United Kingdom because the effective rate is inflated by the fall in share price during 2018 which has reduced the benefit of the deferred tax asset held on share options, and resulted in a charge to the income statement.

The impairment of £246m of goodwill held against the Wickes business has no impact on the current tax charge.

Earnings per share

Reported earnings per share returned a loss of 59.8p per share for H1 2018 (2017 earnings per share: 53.6p), primarily due to the £246m write off of goodwill in Wickes.

Adjusted earnings per share reduced by 4.1% to 53.5p (2017: 55.8p).

Reconciliation of reported to adjusted earnings

 H1 2018H1 2017
 EarningsEPSEarningsEPS
Basic earnings and EPS attributable to shareholders£(149)m(59.8p)£135m53.6p
     
Adjusting items  --
Plumbing & Heating division transformation£35m13.8p  
Wickes restructuring£10m4.1p  
Pension curtailment gain£(5)m(1.9p)  
Impairment of Wickes goodwill£246m98.9p--
     
Amortisation of acquired intangibles£5m1.8p£7m2.7p
Tax on amortisation of acquired intangibles£(1)m(0.4p)£(1)m(0.5p)
Tax on adjusting items£(8)m(3.0p)--
Effect of reduction in corporation tax on deferred tax----
Adjusted earnings and EPS attributable to shareholders£133m53.5p£141m55.8p

Dividend

The Group’s dividend pay-out is underpinned by the on-going strength of cash generation and continued confidence in the Group’s outlook over the medium term. The interim dividend will be held unchanged in 2018 at 15.50 pence (H1 2017: 15.50 pence) and will be paid on 09 November 2018, at a cash cost of approximately £39m.

Cash flow and balance sheet

Free cash flow

The Group generated free cash flow of £128m, at a conversion rate of 72%.

(£m)H1 2018H1 2017
EBITA179190
Depreciation of PPE and other non-cash movements6965
Disposal proceeds in excess of property profits3441
Change in working capital*(100)(54)
Maintenance capital expenditure(25)(25)
Net interest(1)(2)
Tax paid(28)(27)
Free cash flow128188
Underlying cash conversion rate72%99%

*H1 2018 Change in net working capital figure excludes £7m in relation to the development of cloud-based software (H1 2017: £5m)

On a modestly lower earnings figure, the free cash flow generation of £128m was impacted by a higher working capital out flow in the half. This is expected to reverse in the second half of the year.

The main driver of the significant increase in trade receivables was the timing of sales during the half. With strong sales growth in May and June, and around 80% of the Group’s sales made via customer credit accounts, the phasing of cash receipts is expected to be Q3 weighted.

Inventories were broadly flat compared with December 2017, improving stock turnover on modestly higher sales, and reflecting significant cost price inflation. The Group’s trade payables position grew in the first half of the year, broadly in line with the growth in Group sales.

Maintenance capex, which primarily reflects the purchase and maintenance of specialist fleet vehicles, was £25m, unchanged from 2017 and in line with the Group’s expectations. The Group’s interest and tax payments are in line with 2017.

Uses of free cash generated

(£m)H1 2018H1 2017
Free cash flow128188
Investment capex(58)(56)
Investments in freehold property(41)(23)
Acquisitions0(7)
Dividends(76)(75)
Pensions payments(5)(5)
Cash payment in respect of adjusting items(12)(6)
Purchase of own shares(44)(9)
Other(17)(13)
Change in cash/cash equivalents(125)(6)

Additional cash contributions to the defined benefit pension schemes above the income statement charge were £5m (2017: £5m). The cash cost of 2018 adjusting items and utilisation of prior year provisions for adjusting items was £12m. There were no acquisitions in the period.

The Group moved from issuing new shares for employee share schemes to purchasing shares in the market. The initial set up of this structure required a £44m purchase in the first half of 2018, with modest further purchases in future periods.

Capital Investments

Allocation of capital to support and improve the business continued in 2018.

(£m)H1 2018H1 2017
Maintenance (including vehicles)(25)(25)
IT - inc. Merchant ERP / Digital capabilities(24)(24)
Growth capex - inc. New stores / store refits(34)(32)
Base capital expenditure(83)(81)
Freehold property - inc. new freehold sites / existing leases(41)(23)
Gross capital expenditure(124)(104)
Property disposals5150
Net capital expenditure(73)(54)

*IT investments exclude prepayments in relation to the development of cloud-based software of £7m (2017: £5m)

Investments in digital capabilities continued as anticipated, with the main focus being the programme to deliver a new ERP system to support the Group’s Merchant businesses. The programme team are gearing up for the first deployment of the system into the BSS business in early 2019. The programme will deliver significant benefits, making it easier for our customers to do business with the Group, and making it simpler and more efficient for colleagues to serve customers.

Under accounting practices for the cloud based systems, a portion of the IT costs are expensed, leading to the higher unallocated central costs, with the remainder capitalised or treated as a prepayment.

Growth capex spend of £34m was similar to 2017 (£32m). A greater proportion of planned capex has already been completed in the first half of 2018, including fitting out three new Wickes stores, three new Travis Perkins branches and completing all of the planned Wickes refits for the year. The expansion of the Toolstation network accelerated, with 22 stores opened in the half, with this pace to be maintained in the second half of the year.

Net debt and funding

Net debt of £461m at 30 June 2018 was an increase of £119m from the end of December 2017, reflecting the lower profitability, temporary increase in working capital and the move to purchase shares for employee share schemes in the market as previously described.

Details of non-statutory disclosures are shown in note 16.

 Medium Term GuidanceH1 2018FY 2017∆ 
Net debt £461m£342m£119m
Lease debt £1,540m£1,525m£15m
Lease adjusted net debt £2,001m£1,867m£134m
Lease adjusted gearing* 47.6%42.6%5ppts
Fixed charge cover3.5x3.1x3.1x-
LA net debt : EBITDAR2.5x3.0x2.7x0.3x

Lease adjusted gearing (note 16g) increased by 5.0ppts to 47.6% because of the higher net debt figure. The Group’s fixed charge cover ratio (note 16d) was unchanged at 3.1x. The lease adjusted net debt/EBITDAR ratio (note 16c) rose to 3.0x, reflecting higher net debt and lower earnings.

Principal Risks and Uncertainties

The principal risks and uncertainties faced by the Group have been, and are expected to remain, consistent with those described on pages 33 to 39 of the 2017 Annual Report and Accounts. Details are provided for inherent risks relating to the changing customer and competitor landscape, colleague recruitment, retention and succession, supplier dependency and disintermediation, unsafe practices resulting in harm to stakeholders, the efficient allocation of capital, business transformation projects, market conditions, Brexit, defined benefit pension scheme funding, data security and the changing regulatory framework.


Condensed consolidated income statement

 Six months ended
 30 June
2018
(unaudited)
Six months ended
 30 June
2017
(unaudited)
Year
ended
31 December
2017
(audited)
 £m£m£m
Revenue3,364.53,220.86,433.1
Operating profit before amortisation and adjusting items178.7190.2380.1
Adjusting items (note 2)(286.3)-(40.9)
Amortisation of acquired intangible assets(4.5)(6.9)(12.3)
Operating (loss)/profit(112.1)183.3326.9
Share of associates’ results(1.1)-(2.2)
Net finance costs (note 6)(10.2)(15.7)(35.0)
(Loss)/profit before tax(123.4)167.6289.7
Tax before adjusting items(32.1)(32.2)(63.5)
Tax on adjusting items7.6-7.8
Tax (note 7)(24.5)(32.2)(55.7)
(Loss)/profit for the period (147.9)135.4234.0
Attributable to:   
Owners of the Company(148.9)134.9232.8
Non-controlling interests1.00.51.2
 (147.9)135.4234.0
Earnings per ordinary share (note 8)   
Basic(59.8p)53.6p93.1p
Diluted(59.7p)53.2p92.2p
Total dividend declared per share (note 9)[15.5p]15.5p46.0p

All results relate to continuing operations.


Condensed consolidated statement of comprehensive income

 Six months ended
30 June
2018
(unaudited)
Six months
ended
30 June 2017
(unaudited)
Year
ended
31 December 2017
(audited)
 £m£m£m
(Loss)/profit for the period(147.9)135.4234.0
Items that will not be reclassified subsequently to profit and loss:   
Actuarial gains on defined benefit pension schemes73.776.890.8
Income taxes relating to items not reclassified(14.0)(14.5)(17.1)
Other comprehensive income for the period59.762.373.7
Total comprehensive (loss)/ income for the period(88.2)197.7307.7


Attributable to:   
Owners of the Company(89.2) 197.2306.5
Non-controlling interests1.00.51.2
 (88.2)197.7307.7


Condensed consolidated balance sheet

 As at
30 June
2018
(unaudited)
As at
 30 June
2017
(unaudited)
As at
31 December
2017
(audited)
 £m£m£m
ASSETS   
Non-current assets   
Goodwill 1,292.81,536.1 1,539.2
Other intangible assets 396.9368.1  387.1
Property, plant and equipment 962.9930.8  932.0
Interest in associates  25.115.6  20.3
Investments  11.39.0  9.5
Retirement benefit asset (note 5)54.9--
Other receivables  37.413.3  30.4
Total non-current assets2,781.32,872.92,918.5
Current assets   
Inventories809.4767.1816.3
Trade and other receivables1,268.31,148.21,130.2
Derivative financial instruments2.01.5  -
Cash and cash equivalents151.5245.3276.8
Total current assets2,231.22,162.12,223.3
Total assets5,012.55,035.05,141.8


Condensed consolidated balance sheet (continued)

 As at
30 June
2018
(unaudited)
£m
As at
 30 June
2017
(unaudited)
£m
As at
31 December
2017
(audited)
£m
EQUITY AND LIABILITIES   
Capital and reserves   
Issued capital  25.225.125.2
Share premium account  545.5531.6543.4
Merger reserve  326.5326.5326.5
Revaluation reserve  15.716.815.7
Own shares(53.0)(9.0)(15.3)
Other reserves  (4.9)(4.0) (4.9)
Retained earnings1,793.31,884.21,958.0
Equity attributable to owners of the Company2,648.32,771.22,848.6
Non-controlling interests12.710.211.7
Total equity2,661.02,781.42,860.3
Non-current liabilities   
Interest bearing loans and borrowings606.7618.9612.1
Derivative financial instruments4.94.04.9
Retirement benefit obligations (note 5)-46.928.3
Long-term provisions17.821.217.1
Deferred tax liabilities75.958.261.0
Total non-current liabilities705.3749.2723.4
Current liabilities   
Interest bearing loans and borrowings5.63.56.2
Derivative financial instruments--1.2
Trade and other payables1,549.51,395.21,453.6
Tax liabilities40.651.044.5
Short-term provisions50.554.752.6
Total current liabilities1,646.21,504.41,558.1
Total liabilities2,351.52,253.62,281.5
Total equity and liabilities5,012.55,035.05,141.8

The interim condensed financial statements of Travis Perkins plc, registered number 824821, were approved by the Board of Directors on 30 July 2018 and signed on its behalf by:

John Carter Alan Williams
Chief Executive Officer Chief Financial Officer


Condensed consolidated statement of changes in equity

  Issued share capitalShare premium accountMerger reserveRevaluation reserveOwn sharesOtherRetained earningsTotal equity before non-controlling interestNon- controlling interestTotal equity
  £m£m£m£m£m£m£m£m£m£m
 At 1 January 2018 (audited)  25.2  543.4326.515.7(15.3)(4.9)1,958.02,848.611.72,860.3
 IFRS 9 adoption------(2.4)(2.4)-(2.4)
 At 1 January 2018 (restated)25.2543.4326.515.7(15.3)(4.9)1,955.62,846.211.72,857.9
 Loss for the period------(148.9)(148.9)1.0(147.9)
 Other comprehensive income for the period net of tax ------59.759.7-59.7
 Total comprehensive income for the period------(89.2)(89.2)1.0(88.2)
 Dividends------(75.6)(75.6)-(75.6)
 Dividend equivalent payments------(0.5)(0.5)-(0.5)
 Issue of share capital-2.1-----2.1-2.1
 Purchase of own shares----(43.6)--(43.6)-(43.6)
 Tax on share based payments------(0.1)(0.1)-(0.1)
            
 Own shares movement----5.9-(5.9)---
 Credit to equity for equity-settled share based payments------9.09.0-9.0
 At 30 June 2018 (unaudited)25.2545.5326.515.7(53.0)(4.9)1,793.32,648.312.72,661.0
       
                    


 

Condensed consolidated statement of changes in equity (continued)

  Issued share capitalShare premium accountMerger reserveRevaluation reserveOwn sharesOtherRetained earningsTotal equity before non-controlling interestNon- controlling interestTotal
 equity
  £m£m£m£m£m£m£m£m£m£m
 At 1 January 2017 (audited)25.1528.5326.516.8(8.7)-1,760.12,648.37.32,655.6
 Profit for the period------134.9134.90.5135.4
 Other comprehensive income for the period net of tax ------62.362.3-62.3
 Total comprehensive income for the period------197.2197.20.5197.7
 Dividends------(74.6)(74.6)-(74.6)
 Issue of share capital-3.1-----3.1-3.1
 Purchase of own shares----(8.9)--(8.9)-(8.9)
 Tax on share based payments------(0.3)(0.3)-(0.3)
 Options on non-controlling interest-----(4.0)-(4.0)-(4.0)
 Own shares movement----8.6-(8.6)---
 Arising on acquisition--------2.42.4
 Foreign exchange------0.50.5-0.5
 Credit to equity for equity-settled share based payments------9.99.9-9.9
 At 30 June 2017 (unaudited)25.1531.6326.516.8(9.0)(4.0)1,884.22,771.210.22,781.4
       
                  


Condensed consolidated statement of changes in equity (continued)

    
  Issued share capitalShare premium accountMerger reserveRevaluation reserveOwn sharesOtherRetained earningsTotal equity before non- controlling interestNon- controlling interestTotal
 equity
  £m£m£m£m£m£m£m£m£m£m
 At 1 January 2017 (audited)25.1528.5326.516.8(8.7)-1760.12,648.37.32,655.6
 Profit for the year------232.8232.81.2234.0
 Other comprehensive income for the year net of tax------73.773.7-73.7
 Total comprehensive income for the year------306.5306.51.2307.7
 Dividends------(113.0)(113.0)-(113.0)
 Issue of share capital0.114.9-----15.0-15.0
 Purchase of own shares----(19.2)--(19.2)-(19.2)
 Realisation of revaluation reserve in respect of property disposals---(0.8)--0.8---
 Difference between depreciation of assets on a historical basis and on a revaluation basis---(0.3)--0.3---
 Tax on share based payments------0.10.1-0.1
 Option on non-controlling interest-----(4.9)-(4.9)-(4.9)
 Arising on acquisition--------3.23.2
 Foreign exchange------0.20.2-0.2
 Own shares movement----12.6-(12.6)---
 Credit to equity for equity-settled share based payments------15.615.6-15.6
 At 31 December 2017 (audited)25.2543.4326.515.7(15.3)(4.9)1,958.02,848.611.72,860.3
              


 Condensed consolidated cash flow statement

 Six months ended
30 June
2018
(unaudited)
£m
Six months ended
 30 June
2017
(unaudited)
£m
Year
ended
 31 December 2017
(audited)
£m
Operating profit before acquired intangible amortisation and adjusting items178.7190.2380.1
Adjustments for:   
Depreciation of property, plant and equipment51.549.0102.0
Amortisation of internally generated intangibles8.45.612.6
Other non-cash movements – share based payments9.09.915.6
Other(2.5)0.30.2
Losses of associates-0.7-
Gains on disposal of property, plant and equipment(17.0)(8.9)(30.6)
Operating cash flow228.1246.8479.9
Decrease / (increase) in inventories6.90.9(47.0)
Increase in receivables(146.4)(104.4)(106.3)
Increase in payables35.144.176.8
Payments on adjusting items(12.3)(6.0)(20.2)
Pension payments in excess of the charges to profits(4.6)(5.2)(11.3)
Cash generated from operations106.8176.2371.9
Interest paid(1.1)(2.6)(27.6)
Total income taxes paid(27.8)(27.4)(57.2)
Net cash from operating activities77.9146.2287.1
Cash flows from investing activities   
Interest received0.20.20.5
Proceeds on disposal of property, plant and equipment51.150.3113.9
Development of software(23.1)(19.8)(48.1)
Purchases of property, plant and equipment(101.1)(84.3)(179.0)
Interests in associates(7.5)(4.9)(11.3)
Dividends received0.5--
Investments--0.3
Acquisition of businesses net of cash acquired-(6.6)(9.7)
Net cash used in investing activities(79.9)(65.1)(133.4)
Financing activities   
Net proceeds from the issue of share capital2.13.215.0
Movement in finance lease liabilities(2.9)(2.6)(7.0)
Shares purchased(43.6)(8.9)(19.2)
Decrease in loans, liabilities to pension scheme and loan notes(3.3)(3.2)(3.2)
Dividends paid(75.6)(74.8)(113.0)
Net cash (outflow) / inflow from financing activities(123.3)(86.3)(127.4)
Net (decrease) / increase in cash and cash equivalents(125.3)(5.2)26.3
Cash and cash equivalents at the beginning of the period276.8250.5250.5
Cash and cash equivalents at the end of the period151.5245.3276.8

Notes to the interim financial statements

    1.        General information and accounting policies

The interim financial statements have been prepared on the historical cost basis, except that derivative financial instruments, available for sale investments and contingent consideration arising from business combinations are stated at their fair value. The condensed interim financial statements include the accounts of the Company and all its subsidiaries (“the Group”).

Basis of preparation

The financial information for the six months ended 30 June 2018 and 30 June 2017 is unaudited. The June 2018 information has been reviewed by KPMG LLP, the Group's auditor, and a copy of their review report appears at the end of this interim report. The June 2017 information was also reviewed by KPMG LLP. The financial information for the year ended 31 December 2017 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for the year ended 31 December 2017 as prepared under International Financial Reporting Standards as adopted by the EU (“IFRS”) has been delivered to the Registrar of Companies. The auditor’s report on those accounts was not qualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The unaudited interim financial statements for the six months ended 30 June 2018 have been prepared in accordance with IAS 34 - Interim Financial Reporting and have been prepared on the basis of IFRS.

The annual financial statements of the Group are prepared in accordance with IFRS. As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, the condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2017, except for the adoption of new and amended standards as set out below.

The accounting policies adopted by Travis Perkins plc are set out in the 2017 full year financial statements, which are available on the Travis Perkins website www.travisperkinsplc.co.uk.

The Directors are currently of the opinion that the Group’s forecasts and projections show that the Group should be able to operate within its current facilities and comply with its banking covenants. The Group is however exposed to a number of significant risks and uncertainties, which could affect the Group’s ability to meet management’s projections.

The Directors believe that the Group has the flexibility to react to changing market conditions and is adequately placed to manage its business risks successfully. After making enquiries, the Directors have formed a judgement that there is a reasonable expectation that the Group has the resources to continue in operational existence for twelve months from the date of signing these interim financial statements. For this reason the interim financial statements have been prepared on a going concern basis.

New and amended standards adopted by the Group

A number of new or amended standards became applicable for the current reporting period and the Group had to change its accounting policies and make retrospective adjustments as a result of adopting the following standards:

●      IFRS 9 - Financial Instruments,

●      IFRS 15 - Revenue from Contracts with Customers, and

●      Annual improvements to IFRS 2014-2016 cycle

The impact of the adoption of these standards and the new accounting policies are disclosed in note 17.

Impacts of standards issued but not yet applied by the entity

In January 2016 the IASB issued IFRS 16 - Leases and this was endorsed by the European Union in October 2017. It will be effective from 1 January 2019. This Standard will have a material effect on the Group because the value of the operating leases it has entered into will be included in the balance sheet in future. The Group has a project team working to determine the effect of this new Standard and implement the processes and systems necessary to comply with its requirements.

Notes to the interim financial statements

 1.        General information and accounting policies (continued)

Given the complexity of the Standard and the volume of leases, this project has not been completed at the date of these interim financial statements, however based on an analysis of all the Group’s material leases the initial estimates are that the implementation of the standard will result in net debt that is comparable to or lower than lease-adjusted net debt as currently disclosed in note 16.

The Group plans to apply IFRS 16 - Leases using a “modified retrospective” approach as described in paragraph C5(b) of the standard. Therefore, the cumulative effect of adopting IFRS 16 - Leases will be recognised as an adjustment to the opening balance of retained earnings at 1 January 2019, with no restatement of comparative information.

  1. Adjusting items

To enable a reader of the interim financial statements to obtain a clear understanding of the underlying trading, the Directors have presented the items below separately in the income statement.

 

 

 
Six months ended
30 June
2018
£m
Six months ended
30 June
2017
£m
Year
ended
31 December
2017
£m
Plumbing & Heating division transformation34.4-40.9
Impairment of Wickes goodwill (note 12)246.3--
Wickes restructuring and software impairment10.3--
Pension curtailment gain (note 5)(4.7)--
 286.3-40.9

In August 2017 the Group announced that, following a comprehensive strategic review of the Plumbing & Heating division, it would reduce capacity, integrate the CPS and PTS businesses, overhaul the division’s customer proposition and create a dedicated Plumbing & Heating supply chain. In accordance with the Group’s accounting policy the total cost of £34.4m (2017: £40.9m) has been treated as an adjusting item. The adjusting item consisted of the following:

The Wickes restructuring and software impairment cost of £10.3m consists of redundancy and reorganisation costs of £3.8m incurred in respect of the cost-reduction programme announced in May 2018 and software impairment costs of £6.5m.

The £4.7m pension curtailment gain, recognised as a result of the closure of the Travis Perkins Pensions and Dependants’ Benefit Scheme and the BSS Defined Benefit Scheme to future accrual, is stated net of £0.5m of associated administrative expenses.

Notes to the interim financial statements

  1. Business segments

As required by IFRS 8 - Operating Segments, the operating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker (“CODM”), which is considered to be the Board of Directors, to assess their performance. All four divisions sell building materials to a wide range of customers, none of which are dominant, and operate almost exclusively in the United Kingdom. Segment profit represents the profit earned by each segment without allocation of certain central costs, finance income and costs and income tax expense. Unallocated segment assets and liabilities comprise financial instruments, current and deferred taxation, cash and borrowings and pension scheme assets and liabilities.

Six months ended 30 June 2018

 General
Merchanting
Plumbing
& Heating
ContractsConsumerUnallocatedConsolidated
 £m£m£m£m£m£m
Revenue1,065.0773.8718.4807.3-3,364.5
Segment result before amortisation, adjusting items and property profits86.519.743.028.5(16.0)161.7
Property profits1.52.73.89.0-17.0
Segment result before amortisation and adjusting items88.022.446.837.5(16.0)178.7
Adjusting charges(4.7)(29.7)-(256.6)-(291.0)
Adjusting gains4.7----4.7
Amortisation of acquired intangible assets-(0.9)(3.0)(0.6)-(4.5)
Segment result 88.0(8.2)43.8(219.7)(16.0)(112.1)
Share of associates----(1.1)(1.1)
Finance income----4.24.2
Finance costs----(14.4)(14.4)
Profit / (loss) before taxation88.0(8.2)43.8(219.7)(27.3)(123.4)
Taxation----(24.5)(24.5)
Profit / (loss) for the period88.0(8.2)43.8(219.7)(51.8)(147.9)


Notes to the interim financial statements

3.      Business segments (continued)

Six months ended 30 June 2017

 General
Merchanting
Plumbing
& Heating
ContractsConsumerUnallocatedConsolidated
 £m£m£m£m£m£m
Revenue1,054.7669.2674.8822.1-3,220.8
Segment result before amortisation and property profits97.313.241.245.4(13.9)183.2
Property profits6.00.10.20.7-7.0
Segment result before amortisation 103.313.341.446.1(13.9)190.2
Amortisation of acquired intangible assets-(0.5)(4.0)(2.4)-(6.9)
Segment result 103.312.837.443.7(13.9)183.3
Finance income----0.40.4
Finance costs----(16.1)(16.1)
Profit / (loss) before taxation103.312.837.443.7(29.6)167.6
Taxation----(32.2)(32.2)
Profit / (loss) for the period103.312.837.443.7(61.8)135.4
       

Year ended 31 December 2017

 General
Merchanting
Plumbing
& Heating
ContractsConsumerUnallocatedConsolidated
 £m£m£m£m£m£m
Revenue2,109.51,365.51,369.01,589.1-6,433.1
Segment result before amortisation and property profits182.630.885.7 82.5(30.9)350.7
Property profits18.07.61.91.9-29.4
Segment result before adjusting items and amortisation200.638.487.684.4(30.9)380.1
Adjusting items-(40.9)---(40.9)
Amortisation of acquired intangible assets-(1.0)(6.3)(5.0)-(12.3)
Segment result200.6(3.5)81.379.4(30.9)326.9
Share of associates----(2.2)(2.2)
Finance income----0.70.7
Finance costs----(35.7)(35.7)
Profit / (loss) before taxation200.6(3.5)81.379.4(68.1)289.7
Taxation----(55.7)(55.7)
Profit / (loss) for the year200.6(3.5)81.379.4(123.8)234.0

Notes to the interim financial statements

3.      Business segments (continued)

 30 June

2018

£m
30 June

2017

£m
31 December 2017

£m
Segment assets:   
General Merchanting1,855.11,702.11,811.0
Plumbing & Heating560.1607.9592.3
Contracts915.7877.3867.2
Consumer1,363.21,545.91,544.6
Unallocated318.4301.8326.7
Total assets5,012.55,035.05,141.8


 30 June

2018

£m
30 June

2017

£m
31 December 2017

£m
Segment liabilities:   
General Merchanting(438.3)(415.3)(441.5)
Plumbing & Heating(299.7)(299.6)(317.8)
Contracts(332.4)(295.9)(323.5)
Consumer(479.3)(447.8)(403.6)
Unallocated(801.8)(795.0)(795.1)
Total liabilities(2,351.5)(2,253.6)(2,281.5)
  1. Seasonality

The Group’s trading operations when assessed on a half yearly basis are mainly unaffected by seasonal factors. In 2017 the period to 30 June accounted for 50.1% of the Group’s annual revenue (2016: 50.1%).


Notes to the interim financial statements

  1. Retirement benefit obligations
  1. Pension scheme asset / (liability) movement
 Six months ended 30 June 2018
 TP Schemes
£m
BSS Schemes
£m
Group
£m
Gross pension asset / (liability) at 1 January6.6(25.7)(19.1)
Restriction of asset recognised-(9.2)(9.2)
Gross asset / (liability) at 1 January6.6(34.9)(28.3)
Service costs charged to the income statement(3.7)(1.4)(5.1)
Curtailment gain3.61.65.2
Net interest income / (expense)0.1(0.3)(0.2)
Contributions from sponsoring companies2.96.79.6
Return on plan assets (excluding amounts included in net interest)(5.3)(0.8)(6.1)
Actuarial gains arising from changes in demographic assumptions6.82.18.9
Actuarial gains arising from changes in financial assumptions63.420.283.6
Actuarial gains arising from experience adjustments10.69.920.5
Increase arising from IFRIC 14 restriction-(33.2)(33.2)
Gross pension asset / (liability) at 30 June85.0(30.1)54.9
    
Gross actuarial asset85.03.188.1
Additional liability recognised for minimum funding requirements-(33.2)(33.2)
Gross pension asset / (liability) at 30 June85.0(30.1)54.9

A curtailment gain has been recognised as a result of the closure of the Travis Perkins Pensions and Dependants’ Benefit Scheme and the BSS Defined Benefit Scheme to future accrual from 31 August 2018.

Notes to the interim financial statements

5.            Retirement benefit obligations (continued)

 Six months ended 30 June 2017
 TP Schemes
£m
BSS Schemes
£m
Group
£m
Gross pension liability at 1 January(61.8)(65.5)(127.3)
Service costs charged to the income statement(3.5)(1.2)(4.7)
Net interest expense(0.8)(0.8)(1.6)
Contributions from sponsoring companies3.06.99.9
Return on plan assets (excluding amounts included in net interest)27.216.844.0
Actuarial gains arising from changes in demographic assumptions19.86.226.0
Actuarial gains arising from changes in financial assumptions9.04.513.5
Increase arising from IFRIC 14 restriction-(6.7)(6.7)
Gross deficit at 30 June(7.1)(39.8)(46.9)
    
Gross actuarial deficit(7.1)(33.1)(40.2)
Additional liability recognised for minimum funding requirements-(6.7)(6.7)
Gross pension liability at 30 June(7.1)(39.8)(46.9)

Notes to the interim financial statements

5.            Retirement benefit obligations (continued)

 Year ended 31 December 2017
 TP Schemes
£m
BSS Schemes
£m
Group
£m
Gross pension liability at 1 January(61.7)(65.6)(127.3)
Service costs charged to the income statement(7.0)(2.6)(9.6)
Net interest expense(1.5)(1.6)(3.1)
Contributions from sponsoring companies7.013.920.9
Return on plan assets (excluding amounts included in net interest)56.724.280.9
Actuarial gains arising from changes in demographic assumptions20.26.626.8
Actuarial (losses) / gains arising from changes in financial assumptions(2.2)1.1(1.1)
Actuarial losses arising from experience adjustments(4.9)(1.7)(6.6)
Increase arising from IFRIC 14 restriction-(9.2)(9.2)
Gross pension asset / (liability) at 31 December6.6(34.9)(28.3)
    
Gross actuarial surplus / (deficit)6.6(25.7)(19.1)
Additional liability recognised for minimum funding requirements-(9.2)(9.2)
Gross pension asset / (liability) at 31 December6.6(34.9)(28.3)
  1. Net pension asset
 Six months ended 30 June 2018
 TP Schemes
£m
BSS Schemes
£m
Group
£m
Gross pension asset / (liability) at 30 June85.0(30.1)54.9
Deferred tax   (10.4)
Net pension asset at 30 June  44.5


 Six months ended 30 June 2017
 TP Schemes
£m
BSS Schemes
£m
Group
£m
Gross pension liability at 30 June(7.1)(39.8)(46.9)
Deferred tax   9.0
Net pension liability at 30 June  (37.9)

 

Notes to the interim financial statements

5.            Retirement benefit obligations (continued)

 Year ended 31 December 2017
 TP Schemes
£m
BSS Schemes
£m
Group
£m
Gross pension asset / (liability) at 31 December6.6(34.9)(28.3)
Deferred tax   5.4
Net pension liability at 31 December  (22.9)
  1. Amounts recognised in the statement of comprehensive income
 Six months ended 30 June 2018
 TP Schemes
£m
BSS Schemes
£m
Group
£m
Return on plan assets (excluding amounts included in net interest)(5.3)(0.8)(6.1)
Actuarial gains arising from changes in demographic assumptions6.82.18.9
Actuarial gains arising from changes in financial assumptions63.420.283.6
Actuarial gains arising from experience adjustments10.69.920.5
Increase arising from IFRIC 14 restriction-(33.2)(33.2)
Actuarial gains / (losses) on defined benefit pension schemes75.5(1.8)73.7


 Six months ended 30 June 2017
 TP Schemes
£m
BSS Schemes
£m
Group
£m
Return on plan assets (excluding amounts included in net interest)27.216.844.0
Actuarial gains arising from changes in demographic assumptions19.86.226.0
Actuarial gains arising from changes in financial assumptions9.04.513.5
Increase arising from IFRIC 14 restriction-(6.7)(6.7)
Actuarial gains on defined benefit pension schemes56.020.876.8

Notes to the interim financial statements

5.            Retirement benefit obligations (continued)

 Year ended 31 December 2017
 TP Schemes
£m
BSS Schemes
£m
Group
£m
Return on plan assets (excluding amounts included in net interest)56.724.280.9
Actuarial gains arising from changes in demographic assumptions20.26.626.8
Actuarial gains / (losses) arising from changes in financial assumptions(2.2)1.1(1.1)
Actuarial (losses) / gains arising from experience adjustments(4.9)(1.7)(6.6)
(Increase) / decrease arising from IFRIC 14 restriction-(9.2)(9.2)
Actuarial gains / (losses) on defined benefit pension schemes69.821.090.8
  1. Finance costs
  1. Net finance costs
 

 

 
Six months ended
30 June
2018
£m
Six months ended
30 June
2017
£m
Year
ended
31 December
2017
£m
Interest receivable1.00.40.7
Net gain on re-measurement of derivatives at fair value3.2--
Finance income4.20.40.7
    
Interest on bank loans and overdrafts(1.2)(1.0)(2.6)
Interest on sterling bonds(10.4)(10.4)(21.0)
Amortisation of issue costs of bank loans(0.7)(0.7)(1.5)
Other interest(0.1)(0.3)(0.7)
Interest on obligations under finance leases(0.2)(0.3)(0.8)
Unwinding of discounts – liability to pension scheme(1.2)(1.2)(2.4)
Unwinding of discounts – property provisions(0.3)(0.4)(0.7)
Other finance costs – pension scheme(0.3)(1.6)(3.1)
Net loss on re-measurement of derivatives at fair value-(0.2)(2.9)
Finance costs (14.4)(16.1)(35.7)
Net finance costs (10.2)(15.7)(35.0)

Notes to the interim financial statements

6.      Finance costs (continued)

  1. Interest for non-statutory measures
 

 

 
Year
ended
30 June
2018
£m
Year
ended
30 June
2017
£m
Year
ended
31 December
2017
£m
Interest on bank loans and overdrafts2.82.42.6
Interest on sterling bonds 21.021.021.0
Amortisation of issue costs of bank loans1.51.51.5
Interest on obligations under finance leases0.70.50.8
Unwinding of discounts – liability to pension scheme 2.42.42.4
Interest for fixed charge ratio purposes28.427.828.3
  1. Tax
 

 
Six months
ended
30 June
2018
£m
Six months ended
30 June
2017
£m
Year
ended
31 December
2017
£m
Current tax   
UK corporation tax   
 - current year(24.0)(34.7)(57.5)
 - prior year--(0.4)
Total current tax (24.0)(34.7)(57.9)
Deferred tax   
 - current year(0.5)2.5(2.5)
 - prior year--0.3
Total deferred tax(0.5)2.5(2.2)
Total tax charge(24.5)(32.2)(55.7)

Tax for the interim period is charged on profit before tax, based on the best estimate of the corporate tax rate for the full financial year.

Notes to the interim financial statements

  1. Earnings per share
  1. Basic and diluted earnings per share
 Six months ended
30 June
2018
Six months ended
30 June
2017
Year
ended
31 December
2017
 £m£m£m
Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity shareholders of the Parent Company(148.9)134.9232.8
 No.No.No.
Weighted average number of shares for the purposes of basic earnings per share249,131,207251,798,828250,100,896
Dilutive effect of share options on potential ordinary shares 182,8691,825,5822,468,248
Weighted average number of shares for the purposes of diluted earnings per share249,314,076253,624,410252,569,144
Earnings per share(59.8p)53.6p93.1p
Diluted earnings per share(59.7p)53.2p92.2p
  1. Adjusted earnings per share

Adjusted earnings per share are calculated by excluding the effects of amortisation of acquired intangible assets and adjusting items from earnings.

  Six months ended
30 June
2018
£m
Six months ended
30 June
2017
£m
Year
ended
31 December
2017
£m
Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity shareholders of the Parent Company(148.9)134.9232.8
Adjusting items286.3-40.9
Amortisation of acquired intangible assets4.56.912.3
Tax on amortisation of acquired intangible assets(0.9)(1.3)(2.1)
Tax on adjusting items(7.6)-(7.8)
Effect of reduction in corporation tax rate on deferred tax---
Earnings for adjusted earnings per share133.4140.5276.1
Adjusted earnings per share53.5p55.8p110.4p
Adjusted diluted earnings per share53.5p55.4p109.3p


 Notes to the interim financial statements

  1. Dividends

Amounts were recognised in the financial statements as distributions to equity shareholders in the following periods:

 Six months ended
30 June
2018
£m
Six months ended
30 June
2017
£m
Year
ended
31 December
2017
£m
Final dividend for the year ended 31 December 2017 of 30.5 pence (2016: 29.75 pence) per share75.674.874.7
Interim dividend for the year ended 31 December 2017 of 15.25 pence per share--38.3

The proposed interim dividend of 15.5p per share in respect of the year ending 31 December 2018 was approved by the Board on 30 July 2018 and has not been included as a liability as at 30 June 2018. It will be paid on 9 November 2018 to shareholders on the register at close of business on 5 October 2018. The shares will be quoted ex-dividend on 4 October 2018.

  1. Borrowings

At the period end, the Group had the following borrowing facilities available:

 

 

 
As at
30 June
2018
£m
As at
30 June
2017
£m
As at
31 December
2017
£m
Drawn facilities:   
5 year committed revolving credit facility---
Sterling bond 2014 (due 2021)260.9264.1262.6
Sterling bond 2017 (due 2023)300.0300.0300.0
 560.9564.1562.6
Undrawn facilities:   
5 year committed revolving credit facility (expires December 2020)550.0550.0550.0
Bank overdraft30.030.030.0
 580.0580.0580.0
     
  1. Share capital
 Allotted
 No.£m
Ordinary shares of 10p  
At 1 January 2018251,994,70825.2
Allotted under share option schemes149,215-
At 30 June 2018252,143,92325.2


Notes to the interim financial statements

  1. Impairment

The Group tests goodwill and other non-monetary assets with indefinite useful lives for impairment annually or more frequently if there are indications that an impairment may have occurred. The recoverable amounts of the goodwill and other non-monetary assets with indefinite useful lives are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and like-for-like market volume changes which impact sales and therefore cash flow projections and maintenance capital expenditure. Management estimates pre-tax discount rates that reflect current market assessments of the time value of money and the risks specific to the cash generating unit groupings that are not reflected in the cash flow projections.

In the 2017 Annual Report & Accounts it was disclosed that the Wickes CGU was sensitive to key assumptions. As Wickes has underperformed its forecasts so far in 2018 an impairment review has been performed. The Directors’ calculations have shown that an impairment of £246.3m has occurred in relation to goodwill. 

The key variables applied to the value in use calculations were:

Sensitivity of results to changes in assumptions

Whilst management believe the assumptions are realistic, it is possible that a materially different impairment would be identified if any of the above key assumptions were changed significantly. The impact on the impairment charge recognised of a change in each assumption, all other assumptions remaining the same, is shown in the table below.

Terminal valueDiscount rateLong-term growth rate
Reduction in assumptionImpactIncrease in assumptionImpactReduction in assumptionImpact
5%£30m1%£119m0.5%£54m


Notes to the interim financial statements

  1. Net debt reconciliation
 Six months ended
30 June
2018
£m
Six months ended
30 June
2017
£m
Year
ended
31 December 2017
£m
Net debt at 1 January(341.5)(377.5)(377.5)
(Decrease) / increase in cash and cash equivalents(125.3)(5.2)26.3
Cash flows from debt6.25.97.0
Cash flows from pension liability--3.2
Finance charges movement(0.7)(0.7)(1.5)
Amortisation of swap cancellation receipt1.71.73.4
Discount unwind on liability to pension scheme(1.2)(1.2)(2.4)
Net debt at 30 June / 31 December(460.8)(377.0)(341.5)
  1. Financial instruments

The fair values of financial assets and financial liabilities are determined as follows:

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

There were no transfers between levels during the year. There are no non-recurring fair value measurements.
Notes to the interim financial statements

14.    Financial instruments (continued)

 As at
30 June
2018
£m
As at
30 June
2017
£m
As at
31 December
2017
£m
Included in assets   
Level 2   
Foreign currency forward contracts at fair value through profit and loss2.01.5-
 2.01.5-
Current assets2.01.5-
Non-current assets---
 2.01.5-
    
Included in liabilities   
Level 2   
Foreign currency forward contracts at fair value through profit and loss--1.2
Level 3   
Option on non-controlling interest at fair value through reserves-4.0-
Deferred consideration at fair value through equity4.9-4.9
 4.94.06.1
Current liabilities--1.2
Non-current liabilities4.94.04.9
 4.94.06.1


Notes to the interim financial statements

  1. Related party transactions

The Group has related party relationships with its subsidiaries and with its directors. Transactions between group companies, which are related parties, have been eliminated on consolidation and are not disclosed in this note. There have been no related party transactions with directors other than in respect of remuneration. In the first half of 2018 the Group made loans to associates of £7.5m (2017: £4.9m). Operating transactions with the associates were not significant during the period.

  1. Non-statutory information
  1. Adjusted operating profit

Adjusted operating profit is calculated by excluding the effects of amortisation of acquired intangible assets and adjusting items from operating profit.

  Six months ended
30 June
2018
£m
Six months ended
30 June
2017
£m
Year
ended
31 December
2017
£m
Operating (loss)/profit(112.1)183.3326.9
Adjusting items286.3-40.9
Amortisation of acquired intangible assets4.56.912.3
Adjusted operating profit178.7190.2380.1
  1. Adjusted profit before taxation

Adjusted profit before taxation is calculated by excluding the effects of amortisation of acquired intangible assets and adjusting items from profit before taxation.

  Six months ended
30 June
2018
£m
Six months ended
30 June
2017
£m
Year
ended
31 December
2017
£m
(Loss)/profit before taxation(123.4)167.6289.7
Adjusting items286.3-40.9
Amortisation of acquired intangible assets4.56.912.3
Adjusted profit before taxation167.4174.5342.9


Notes to the interim financial statements

16. Non-statutory information (continued)

  1. Ratio of lease adjusted net debt to EBITDAR (rolling 12 months)
 

 
 30 June
2018
£m
 30 June
2017
£m
31 December
 2017
£m
Operating profit28.397.6326.9
Depreciation and amortisation129.8126.0126.9
EBITDA 158.1223.6453.8
Adjusting items327.2292.040.9
Adjusted EBITDA485.3515.6494.7
Property operating lease rentals192.5187.8190.6
Adjusted EBITDAR 677.8703.4685.3
    
Reported net debt (note 13)460.8377.0341.5
Property operating lease rentals x81,540.01,502.41,524.8
Lease adjusted net debt2,000.81,879.41,866.3
    
Lease adjusted net debt to adjusted EBITDAR3.0x2.7x2.7x
  1. Fixed charge cover (rolling 12 months)
 

 
30 June
2018
£m
30 June
2017
£m
31 December
 2017
£m
Adjusted EBITDAR677.8703.4685.3
Property operating lease rentals192.5187.8190.6
Interest for fixed charge cover (note 6)28.427.828.3
Fixed charge220.9215.6218.9
Fixed charge cover3.1x3.3x3.1x


Notes to the interim financial statements

  1. 6.    Non-statutory information (continued)
  1. Adjusted free cash flow
 Six months ended
30 June
2018
£m
Six months ended
30 June
 2017
£m
Year
ended
31 December
 2017
£m
Operating profit before acquired intangible amortisation and adjusting items178.7190.2380.1
Depreciation and amortisation of internally generated intangible assets59.954.6114.6
Other non-cash movements (share based payments)9.010.915.6
Gain on disposal of property plant and equipment(17.0)(8.9)(30.6)
Movement on working capital*(100.3)(54.4)(54.4)
Net interest paid(0.9)(2.4)(27.1)
Income tax paid(27.8)(27.4)(57.2)
Maintenance capital expenditure(25.0)(25.0)(48.0)
Proceeds from disposal of property, plant and equipment51.150.3113.9
Dividends received0.5--
Adjusted free cash flow128.2187.9406.9

*Excludes £7.0m in relation to the development of cloud-based software (31 December 2017: £22.1m; 30 June 2017: £5.0m).

  1. Capital ratios (rolling 12 months)

(i)       Lease adjusted operating profit

 30 June 2018
£m
30 June
 2017
£m
31 December
 2017
£m
Operating profit28.397.6326.9
Amortisation of acquired intangible assets9.815.212.3
Adjusting items327.2292.040.9
Adjusted operating profit365.3404.8380.1
50% of property operating lease rentals 96.393.995.3
Revised lease adjusted operating profit461.6498.7475.4


Notes to the interim financial statements

16.    Non-statutory information (continued)

f)        Capital ratios (rolling 12 months) (continued)

(ii)      Lease adjusted capital employed

 30 June
2018
£m
30 June
 2017
£m
31 December
 2017
£m
Opening net assets2,781.42,868.32,655.6
Net pension deficit37.939.8103.2
Net borrowings 377.0529.4377.5
Exchange and fair value adjustment-(19.4)-
Impairment of goodwill and other intangibles-(235.4)-
Tax on impairment of goodwill and other intangibles-3.8-
Opening capital employed as previously stated3,196.33,186.53,136.3
Impairment of goodwill and other intangibles(246.3)(246.3)(246.3)
Revised opening capital employed2,950.02,940.22,890.0
Closing net assets2,661.02,781.42,860.3
Net pension (asset)/liability (44.5)37.922.9
Net borrowings 460.8377.0341.5
Closing capital employed as previously stated3,077.33,196.33,224.7
Impairment of goodwill and other intangibles-(246.3)(246.3)
Closing capital employed3,077.32,950.02,978.4
Average capital employed3,013.72,945.12,934.2
Property operating lease rentals x81,540.01,502.41,524.8
Lease adjusted capital employed4,553.74,447.54,459.0

(iii)     Lease adjusted return on capital employed

 30 June 2018
£m
30 June
 2017
£m
31 December
 2017
£m
Revised lease adjusted operating profit461.6498.7475.4
Revised lease adjusted capital employed4,553.74,447.54,459.0
Revised lease adjusted return on capital employed10.1%11.2%10.7%


Notes to the interim financial statements

16.    Non-statutory information (continued)

  1. Lease adjusted gearing
 

As at
30 June
2018
£m
 

As at
30 June
 2017
£m
 

As at
31 December
 2017
£m
Reported net debt460.8377.0341.5
Property operating lease rentals x81,540.01,502.41,524.8
Lease adjusted net debt2,000.81,879.41,866.3
Property operating lease rentals x81,540.01,502.41,524.8
Total equity2,661.02,781.42,860.3
 4,201.04,283.84,385.1
Lease adjusted gearing47.6%43.9%42.6%
  1. Like-for-like sales
 General
Merchanting
Plumbing
& Heating
ContractsConsumerTotal
 £m£m£m£m£m
2017 H1 revenue1,054.7669.2674.8822.13,220.8
Like-for-like revenue change7.1131.835.5(34.0)140.4
 1,061.8801.0710.3788.13,361.2
Branch opening8.11.73.626.640.0
Branch closures(4.9)(33.4)(1.8)(7.4)(47.5)
Acquisitions-4.56.3-10.8
2018 H1 revenue1,065.0773.8718.4807.33,364.5

Like-for-like sales are a measure of underlying sales performance for two successive periods. Branches contribute to like-for-like sales once they have been trading for more than twelve months. Revenue included in like-for-like sales is for the equivalent times in both years being compared. When branches close revenue is excluded from the prior year figures for the months equivalent to the post closure period in the current year.


Notes to the interim financial statements

  1. Changes in accounting policies

This note explains the impact of the adoption of IFRS 9 - Financial Instruments and IFRS 15 - Revenue from Contracts with Customers on the Group’s financial statements and also discloses the new accounting policies that have been applied from 1 January 2018, where they are different to those applied in prior periods.

The new standards have generally been adopted without restating comparative information. The reclassifications and the adjustments arising from the new impairment rules are therefore not reflected in a restated balance sheet as at 31 December 2017, but are recognised in the closing balance sheet as at 30 June 2018 or, for the change to the Group’s financial asset impairment model necessitated by IFRS 9 - Financial Instruments, have been recognised in the opening balance sheet at 1 January 2018.

  1. IFRS 15 - Revenue from Contracts with Customers

Impact of adoption

The Group has adopted IFRS 15 - Revenue from Contracts with Customers from 1 January 2018 which resulted in changes in accounting policies and the reclassification of amounts recognised in the financial statements. None of the adjustments impacted the Group’s retained earnings and this standard is not expected to have a significant impact on the Group.

Provisions for customer returns were previously presented on a net basis, as part of accruals and deferred income. Following adoption of IFRS 15 - Revenue from Contracts with Customers they are now shown on a gross basis and liabilities for the full amount expected to be refunded to customers (£3.1m as at 1 January 2018) are included in trade and other payables. Subsequently assets for the value of goods expected to be returned are included in trade and other receivables (£1.8m as at 1 January 2018).

Accounting policies

Revenue recognition

Revenue is recognised when the Group has satisfied its performance obligations to the customer and the customer has obtained control of the goods or services being transferred.

Revenue is measured at the fair value of consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts and value added tax. For the Group, services comprise tool hire and kitchen and bathroom installations. Tool hire revenue is recognised on a straight line basis over the period of hire. Revenue from the installation of kitchens and bathrooms is recognised when the Group has fulfilled all its performance obligations under the installation contract.

Customer rebates

Where the Group has rebate agreements with its customers, the value of customer rebates paid or payable, calculated in accordance with the agreements in place based on the most likely outcome, is deducted from turnover in the year in which the rebate is earned.


Notes to the interim financial statements

17.    Changes in accounting policies (continued)

  1. IFRS 9 - Financial Instruments

Impact of adoption

IFRS 9 - Financial Instruments replaces the provisions of IAS 39 - Financial Instruments: Recognition and Measurement that relate to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting.

The adoption of IFRS 9 - Financial Instruments from 1 January 2018 resulted in changes in accounting policies and adjustments to the amounts recognised in the financial statements. The new accounting policies are set out below. In accordance with the transitional provisions in IFRS 9 - Financial Instruments, comparative figures have not been restated.

Classification and measurement

On 1 January 2018 (the date of initial application of IFRS 9 - Financial Instruments), the Group’s management has assessed which business models apply to the financial assets held by the Group and has classified its financial instruments into the appropriate IFRS 9 - Financial Instruments categories. The main effects resulting from this reclassification are as follows:

 NoteOriginal classificationNew classification under IFRS 9 - Financial InstrumentsCarrying amount
1 January 2018
£m
FINANCIAL ASSETS    
Derivative financial instrumentsa)Designated as FVTPLMandatorily at FVTPL-
Cash and cash equivalents Available -for-saleAmortised cost276.8
Trade and other receivablesb)Loans and receivablesAmortised cost1,049.2
Available-for-sale investmentsc)Available -for-saleDesignated instrument by instrument as either FVOCI or FVTPL4.7
FINANCIAL LIABILITIES    
Derivative financial instrumentsa)Designated as FVTPLMandatorily at FVTPL(1.2)
  1. Under IAS 39 - Financial Instruments: Recognition and Measurement, these foreign currency forward contracts were designated as fair value through profit and loss (FVTPL) because they were managed on a fair value basis and their performance was monitored on this basis. These assets have been classified as mandatorily measured at FVTPL under IFRS 9 - Financial Instruments.
  2. Trade and other receivables that were classified as loans and receivables under IAS 39 - Financial Instruments: Recognition and Measurement are now classified at amortised cost as the business model is to hold the financial asset to collect contractual cash flows which represent solely the payment of principal and interest. An increase of £2.4m in the allowance for impairment over these receivables was recognised in opening retained earnings at 1 January 2018 on transition to IFRS 9 - Financial Instruments.
  3. These equity securities represent investments that the Group intends to hold for the long term for strategic purposes. As permitted by IFRS 9 - Financial Instruments, the Group has designated these investments on a instrument by instrument basis as either fair value through other comprehensive income (‘’FVTOCI’’) or FVTPL.

Notes to the interim financial statements

17.    Changes in accounting policies (continued)

Impairment of financial assets

Trade receivables and contract assets are subject to the new expected credit loss model in IFRS 9 - Financial Instruments and therefore the Group has revised its impairment methodology. The impact of the change in impairment methodology on the Group’s retained earnings and equity is a reduction of £2.4m in retained earnings and net assets at 1 January 2018.

The Group applies the IFRS 9 - Financial Instruments simplified approach to measuring expected credit losses. This uses a lifetime expected loss allowance for all trade receivables and contract assets. To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets. On that basis, the loss allowance as at 1 January 2018 was determined to be £2.4m higher than these previously recognised under the incurred loss model of IAS 39 - Financial Instruments: Recognition and Measurement. The amount restated represents the impairment loss recognised on current trade receivables and contract assets.

The loss allowance at 30 June 2018 is £23.5m. Under the incurred loss model of IAS 39 - Financial Instruments: Recognition and Measurement it would have been £20.2m.

Trade receivables and contract assets are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and the commencement of legal proceedings.

Accounting policies

The adoption of IFRS 9 - Financial Instruments has not had a significant effect on the Group’s accounting policies related to financial liabilities and derivative financial instruments. The impact of IFRS 9 - Financial Instruments, on the classification and measurement of financial assets is set out below.

Investments and other financial assets

Classification:

From 1 January 2018, the Group classifies its financial assets in the following measurement categories:

The classification depends on the business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at FVTPL or at FVOCI.

The Group reclassifies debt investments when and only when its business model for managing those assets change.

Measurement:

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss.

Notes to the interim financial statements

17.    Changes in accounting policies (continued)

Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. There are two measurement categories into which the Group classifies its debt instruments:

Equity instruments

The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Group’s right to receive payments is established.

Changes in the fair value of financial assets at FVTPL are recognised in other gains/(losses) in the statement of profit or loss as applicable. Impairment losses (and the reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

Impairment:

From 1 January 2018, the Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables, the Group applies the simplified approach permitted by IFRS 9 - Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.


RESPONSIBILITY STATEMENT

We confirm that to the best of our knowledge:

  1. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
  2. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By order of the Board

John Carter                               Alan Williams

Chief Executive Officer              Chief Financial Officer

30 July 2018                              30 July 2018


INDEPENDENT REVIEW REPORT TO TRAVIS PERKINS PLC

Conclusion

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2018 which comprises the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed consolidated statement of changes in equity, condensed consolidated cash flow statement and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2018 is not prepared, in all material respects, in accordance with IAS 34 - Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules (“the DTR”) of the UK’s Financial Conduct Authority (“the UK FCA”).

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Directors’ responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 - Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Greg Watts

for and on behalf of KPMG LLP

Chartered Accountants

One Snowhill
Snow Hill Queensway
Birmingham
B4 6GH

30 July 2018


Close


London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.

 


Half-year report - Travis Perkins plc Interim results for the six months ended 30 June 2018 - RNS