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BUILDING
FOR THE
FUTURE
Annual Report and Accounts 2021
Kaii Bailey, Travis Perkins General Merchant
WHAT’S IN
OUR REPORT
Strategic report
Financial performance
1
Our purpose
2
4
Our Group at a glance
6 Our ambitions and values
8
Investment case
10 Chair’s statement
12 Chief Executive’s report
14 Market overview
18 Business model
20 Our strategy
26 Strategy in action
28 Key performance indicators (KPIs)
30 Business performance and priorities
32 Merchanting
34 Toolstation
36 Financial performance
40
Statement of principal risks
and uncertainties
48 Climate-related financial disclosure
52 Sustainability report
72 Section 172 statement
74 Non-financial information statement
Governance
76 Board of Directors
78 Corporate governance report
84 Nominations Committee report
86 Audit Committee report
91 Directors’ Remuneration report
94 Annual Remuneration report
105 Directors’ report
108 Statement of Directors’ responsibilities
Financial statements
110
Independent Auditor’s report
118 Consolidated income statement
118 Consolidated statement of
comprehensive income
119 Consolidated balance sheet
120 Consolidated statement of
changes in equity
121 Consolidated cash flow statement
122 Notes to the consolidated
financial statements
161 Company balance sheet
162 Company statement of
changes in equity
163 Notes to the Company’s
financial statements
Other information
172 Five year summary
174 ESG data report
176 Other shareholder information
Throughout the Strategic report, and consistent with prior years, alternative performance measures (“APMs”) are used to
describe the Group’s performance. These are not recognised under IFRS or other generally accepted accounting principles
(“GAAP”). The Board focus on these measures when assessing ongoing trading and they facilitate meaningful year-on-year
comparisons and hence provide useful information to shareholders. APMs are defined in the notes to the financial statements
and reconciled to the closest GAAP measure.
Financial performance
Like-for-like revenue
Adjusted EPS
Return on capital employed
25.4%
2020: (10.0)%
107.3p
2020: 21.0p
14.1%
2020: 5.3%
Revenue
Covenant net debt
Basic EPS
£4,587m
2020: £3,698m
£87m
2020: £40m
103.9p
2020: loss of 14.3p
Adjusted operating profit
Profit after tax
£353m
2020: £128m
£241m
2020: loss after tax £35m
Operational highlights
• Successfully refocused the organisation around the
Group’s ambition to become the leading partner to
the construction industry
• Completed portfolio actions with Wickes demerged
and Plumbing & Heating (P&H) business sold
• Excellent performance in Merchanting resulting
from volume growth, improved operational focus
and a streamlined cost-base
• Another strong year for Toolstation with the UK
rollout accelerated and scale building in Europe
• Continued progress on sustainability with the
Scope 1 & 2 and new Scope 3 carbon targets
approved by the Science-Based Target initiative
(“SBTi”) as in-line with a 1.5˚C pathway and over
1,300 colleagues enrolled onto apprenticeships or
Kickstart programmes
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Travis Perkins plc Annual Report and Accounts 2021
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OUR PURPOSE
WE’RE HERE
TO HELP
BUILD BETTER
COMMUNITIES
AND ENRICH
LIVES
OUR AMBITION
LEADING
PARTNER
TO THE
CONSTRUCTION
INDUSTRY
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Travis Perkins plc Annual Report and Accounts 2021
Darren Pascoe – CCF
Ian Richards – CCF
WE COLLABORATE ACROSS OUR BUSINESSES TO ADD VALUE
We are committed to creating a more sustainable future, guided by
our impact goals and Environmental, Social and Governance (“ESG”)
commitments.
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Our values underpin
everything we do
• We care
• We give our best to be the best
• We’re better together
Go to page 6 to see more
Adding value and long-term
success for our stakeholders
• For our customers, communities,
suppliers, employees and investors
Go to page 24 to see more
Having negotiated the challenges of
the Covid-19 pandemic and completed
the demerger of Wickes and sale of our
Plumbing & Heating business, the Group
is extremely well-positioned for the future.
In 2021 we have set out our leading ambition
and reshaped our purpose, aligning these to
our updated strategy and ESG commitments
to drive long-term success and value for our
stakeholders.
Go to page 6 to see more
Travis Perkins plc Annual Report and Accounts 2021
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OUR GROUP AT A GLANCE
Travis Perkins is the largest distributor of building materials in the UK.
A balanced Group, focused on supporting both general and specialist
trades through a range of market leading businesses tailored to
meeting the needs of our customers.
Large and varied
customer base
Broad geographical spread
in the UK
Engaged colleagues
in the UK and Europe
Evolving branch
network
20 0k £4.6bn 20k
Trade credit customers
Revenue
Colleagues
1,513
Branches
Toolstation
Merchanting
Offers customers an
innovative lightside
proposition. With a
wide range of products
available in-branch
and for next-day
delivery, long opening
hours, a strong digital
offering and a strong
customer service ethos,
Toolstation has been
helping to change the
purchasing experience
of trade and DIY
customers. Toolstation
operates from over
500 branches across
Great Britain and is
growing quickly in the
Netherlands, Belgium
and France.
The market-leading
general merchant,
offering a destination
for heavyside products,
complimented by
lightside convenience.
Serving general
trades and specialist
contractors with 60%
delivered products
from over 550 national
locations. Contains
a comprehensive
tool hire offer plus
innovative Managed
Services solutions.
Market-leading supplier
of commercial and
industrial heating and
cooling solutions,
supplying specialist
contractors with a wide
variety of products
from over 60 branches
and two bespoke
distribution centres.
Offers customers
a tailored tool hire
proposition and
contains TF Solutions,
a specialist provider
of air-conditioning
products.
Distributes insulation
and interior building
products from just
under 40 branches
to contractors
throughout Great
Britain. Supports
the new build and
renovation of both
domestic and
commercial buildings
with service and
specialist knowledge.
A civils specialist,
Keyline supports
housebuilders,
groundworkers
and infrastructure
contractors to build
and redevelop facilities
which are vital to the
nation. Delivering heavy
products from over 40
locations in a safe and
accurate manner,
Keyline works as
a partner to their
specialist customers
and is developing new
areas of expertise in
roads and highways
and Tool Hire.
Go to page 34 to see more
Go to page 32 to see more
Go to page 33 to see more
Go to page 33 to see more
Go to page 33 to see more
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Travis Perkins plc Annual Report and Accounts 2021
Amy Johnson – Travis Perkins
Our goal is to deliver exceptional customer service from advantaged
businesses operating from well positioned networks in our chosen
geographies. We offer a range of high quality products and give customers
the choice of a range of channels, fulfilment options and ways to pay.
Geographic split
South East
32%
North and Scotland
22%
Midlands
24%
Wales and South West
20%
Europe
2%
Channel
100%
75%
50%
25%
63%
37%
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Product mix
Payment method
0%
Collect
Deliver
Plumbing & Heating
16%
Heavyside
46%
Lightside
24%
Timber
14%
100%
75%
50%
25%
0%
71%
Credit
29%
Cash
Travis Perkins plc Annual Report and Accounts 2021
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OUR AMBITIONS AND VALUES
Driven by our Group
ambition, we have set
three impact goals to help
create a more sustainable
construction industry,
aligned to our existing
Group Purpose
ESG commitments
Our values
Our values have been refreshed after an extensive process of
employee engagement to ensure they continue to reflect what
matters to us and how we do things.
We care
By looking after each other’s safety and wellbeing, treating people with respect
and encouraging everyone to be themselves.
We give our best to be the best
Pushing ourselves to be bold, go the extra mile and deliver, always proud to own
our actions and win.
We’re better together
Working together to share knowledge, learn and grow – making the most of
who we are and what we do.
Go to page 12 to see more
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Travis Perkins plc Annual Report and Accounts 2021
Group Purpose
WE ARE GUIDED BY A CLEAR PURPOSE
AND STRETCHING GOALS
Group purpose
We’re here to help build
better communities and enrich lives
Group ambition
Leading partner to the construction industry
Modernising
construction
Leading the development
of future construction processes
that enable the industry to build
better, higher-quality outputs in a
safer and more sustainable way
Decarbonising
our industry
Helping the industry to decarbonise
by using the most efficient
products, supplied in the most
efficient way to produce the right
outcomes for our communities
Developing the
next generation
Impacting a generation
of young people, enriching
their lives through work
experience, skills building
and career opportunities
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Our ESG leading commitments
Safety and wellbeing
Responsible sourcing
Net zero carbon
Sustainable Products & Services
Diversity and inclusion
People and development
Driving strong total shareholder returns
Travis Perkins plc Annual Report and Accounts 2021
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INVESTMENT CASE
A reshaped Group to compete
in a changing world
The demerger of Wickes and the successful sale of the Plumbing & Heating
business marked the end of the Group-reshaping activity and has produced
a more-focused and better-aligned business. The Group has worked hard
through the Covid-19 pandemic and taken opportunities to improve and
innovate to emerge well-positioned for the future.
The new strategic direction articulated at our Capital Markets Update in
September 2021 demonstrates the potential of the Group to generate
enhanced returns from the delivery of innovative propositions to our
customers which will help them to adapt to the upcoming changes
in the construction market.
Group Purpose
A compelling investment proposition
01
Reshaped Group more
stable and predictable with
competitively advantaged,
trade-focused portfolio.
02
Actions taken to simplify
processes, speed up decision
making and address the cost
base.
04
Strong balance sheet with good
cash conversion, sufficient to
fund investment requirements.
05
Scope for enhanced
shareholder returns over
and above ordinary dividend.
03
Well positioned to take
advantage of new market
opportunities and deliver
profitable growth ahead
of our markets.
Alexandra Murariu –
Travis Perkins
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Travis Perkins plc Annual Report and Accounts 2021
Merchanting
leadership and
Toolstation expansion
driving above
market growth
Robust balance
sheet and focused
allocation of capital
Repeatable model
that delivers
sustainable returns
to shareholders
Strong cash
conversion from
disciplined working
capital management
Alexandra Murariu –
Travis Perkins
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Incremental cash
release from
freehold property
development
Attractive earnings growth
Ordinary dividend of 30–40% adjusted earnings
Potential for additional return of surplus capital
Travis Perkins plc Annual Report and Accounts 2021
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Chair’s statement
Shareholder returns
Having taken the difficult but prudent decision to suspend
dividend payments in 2020 as the Group navigated the
pandemic, I am pleased to confirm the reinstatement of
the dividend with the final dividend of 26.0p payable on
13 May 2022 to shareholders on the register on 3 April 2022.
This will give a full-year ordinary dividend of 38.0p for the year.
The strength of the Company’s balance sheet will enable the
return of the full net proceeds from the sale of the Plumbing &
Heating business. This process started with a special dividend
of 35p paid in November 2021 and the remaining proceeds
are being returned to shareholders through a share buy-back
programme that started on the same date. The initial buy-back
of £170m is largely complete and will now be extended to
£240m, which will complete this stage of the programme.
As set out in the 2021 Capital Markets Update, we intend
to grow total shareholder return by:
• Driving earnings growth through operating margin
accretion over time and market outperformance
on revenue
• Payment of 30%–40% of adjusted earnings each year
as an ordinary dividend
• Delivering strong free cash flow conversion which,
combined with disciplined capital allocation and
achievable leverage targets, will create the scope
for additional shareholder returns
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Travis Perkins plc Annual Report and Accounts 2021
I am delighted to introduce the
Annual Report for the Group for the
year ended 31 December 2021 and
feel privileged to have been selected
as the Chair of Travis Perkins at this
important time for the Group and
all its stakeholders.”
Jasmine Whitbread
Chair
Introduction
As I reflect on the end of my first year as Chair, I’m struck by the
Group’s strong people orientation and by how resilient and relevant
our businesses have proven to be during the pandemic and during
the supply challenges we’ve faced. This resilience, underpinned by
our culture and values, has enabled us to achieve a huge amount
in 2021 and will enable us to lead change in the construction sector
and deliver for all our stakeholders.
Performance
The Group delivered an excellent performance in 2021. The extensive
work undertaken to enhance the customer proposition through
investment in network capacity and technological capability, coupled
with the robust recovery in the Group’s main markets, helped the Group
deliver revenue of £4,587m, up 24.0% from 2020 and 10.6% from 2019.
Operating profit increased to £349m and adjusted operating profit
grew by £225m to £353m, with growth across all businesses,
reflecting actions taken to restructure the business and improve
operational effectiveness, coupled with disciplined management
of the inflationary pressures and the product availability challenges.
Strategy
The demerger of Wickes and sale of the Plumbing & Heating business
in 2021 marked the completion of the strategic agenda laid out in
2018. It was therefore fitting that in September Nick Roberts and
his leadership team had the opportunity to set out a clear strategy
for the Group over the next cycle, at the Capital Markets Update.
In engaging in the development of our strategy, the Board focused
on the long-term evolution of the construction industry and the
opportunities and risks that this presents. The Board fully endorses
the Group’s refreshed strategic direction, which responds to macro
changes and sector-specific factors and which positions the Group
well for growth, profit enhancement and shareholder returns over
the medium term. There are three elements of the strategy that
demonstrate the intent of the Group.
Dividend per share
Total cash dividends
73.0p
£167m
including special dividend of 35.0p
In 2021 Blair Illingworth, Chris Rogers and John Rogers resigned
from the Board. During Blair’s two years’ service, he made a valuable
contribution to the Group as a Non-executive Director and in his role
as Chair of the Stay Safe Committee. Chris Rogers stepped down at
the 2021 AGM to take up the Chairmanship of Wickes plc after six
years of service that included being our Senior Independent Director.
John joined the Board in 2014 and gave the Group dedicated and much
valued service in his role as a Non-executive Director and as Chair of
the Audit Committee. The Board is grateful for the service of Blair, John
and Chris and wish them every success in their future endeavours.
Summary and looking forward
2021 has been a year of significant change for the Group and I have
been impressed by the pace of strategy execution and the energy of
colleagues, at all levels, that I have seen since I joined. The work done
to simplify the Group and focus our efforts on our substantial trade
customer base is already delivering results and has helped us to
successfully navigate the challenges of the recent year.
Looking ahead, the Group is in excellent shape and we approach the
future with confidence and enthusiasm. There is growing momentum
in our core Merchant business, fuelled by our market-leading positions
and scale advantage, while our newer businesses – such as Toolstation,
TF Solutions and Staircraft – offer important growth opportunities in
the UK and Europe.
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Firstly the clear focus on the customer and the quality of our customer
relationships. The commitment to add value to customers and help to
solve their problems is clear; our strategic framework highlights the
potential to elevate and deepen relationships and shows how this can
be achieved.
Secondly the strategy makes a clear statement about collaboration
and working for customers across the Group. Since joining I have been
impressed by the coherence and cross-Group alignment that I have
seen. It is clear to me that the Group is more than the sum of its parts
and there are some critical areas of incremental value that are unique
to Travis Perkins.
The final area I would draw out is that ESG is rightly and necessarily at
the heart of the strategy. The potential for the Group to take a leading
position in the decarbonisation of the built environment and to support
the development of the sector’s next generation workforce is genuinely
exciting. It offers a combination of clearly being the right thing to do and
of commercial opportunity.
The Group is on a sound strategic footing, with a strong and aligned
team who are doing the right things for customers, shareholders and
society as a whole. The Board is fully behind this direction and we look
forward to helping navigate this next chapter in the Group’s story.
Board and Leadership
In March 2021, Stuart Chambers retired as Chairman. On behalf of the
Board I would like to thank Stuart for his outstanding leadership. Stuart
expertly guided the Board as it shaped the Group’s strategy and left
having ensured that a strong, capable Board is in place with the skills
and experience needed to meet the future demands on the business.
In addition the Board has been strengthened by Heath Drewett joining
in May 2021 and taking over as Chair of the Audit Committee and
Jora Gill joining the Board in August 2021. Heath, an experienced
CFO, brings a wealth of financial and commercial acumen to the
Board based on his experience across a number of sectors adjacent
to the construction industry and Jora brings valuable technology
and digital experience and skills to the Board, along with a strong
commercial background and focus.
Travis Perkins plc Annual Report and Accounts 2021
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Chief Executive's statement
Progress and delivery
2021 was a remarkable year for the Group and I am immensely proud
of what we have achieved. Once again our colleagues have overcome
many difficult challenges to deliver exceptional service to all our
customers, and I thank them for their commitment and spirit. This
commitment has enabled the Group to deliver an excellent financial
performance alongside significant progress against many other key
objectives.
During the year, the Group delivered our previous strategic
commitments with the demerger of Wickes and sale of our Plumbing
& Heating business. This positions us well for the future as a cohesive
Group of market-leading trade-focused businesses, with more stable
revenues, disciplined capital allocation and opportunities for growth.
The construction industry has been at the heart of the UK’s economic
recovery following the initial impact of the Covid-19 pandemic. Despite
enormous challenges with the availability of materials and input cost
inflation throughout the year, the Group worked closely with customers,
suppliers and industry bodies to successfully satisfy strong near-term
demand, whilst never losing sight of the need to ensure the safety of
everyone who works within or interacts with the Group. As a result of
our 2021 achievements, we are in a strong position to embrace the
opportunities in front of us.
Safety at the heart of our culture
The pandemic and other related external factors created a number
of challenges for our business from a safety perspective. Whilst our
performance was challenged, progress in improving our safety
culture was positive. The tone and emphasis from the leadership
community on safety and wellbeing have improved during the year
and I remain confident in the continued improvement in our culture
as we move forward.
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Travis Perkins plc Annual Report and Accounts 2021
2021 has been a year of significant
progress for the Group, executing our
strategy and navigating challenging
market conditions and I am delighted
with the positive response of all of our
colleagues, which is reflected in an
outstanding performance.”
Nick Roberts
Chief Executive Officer
Our purpose and ambition
As we completed our portfolio changes during 2021 it was appropriate
to look forward, define our purpose to reflect our culture and the role we
play in our industry and communities in the long term, and to frame our
strategy for growth.
The Group sits at the heart of an extensive network of stakeholders
and our long term success relies on all benefiting positively from a
progressive construction industry. We have the ability to influence the
way in which our customers undertake the construction process, the
development of skills, new materials and ways of working, and the
quality and sustainability of the built environment that touches our
lives every day.
Therefore our purpose – we’re here to help build better communities
and enrich lives – will, with our reshaped values, guide the way in which
we execute our strategy and make long-term decisions regarding the
future of the Group.
In September we held a Capital Markets Update to set out our ambition:
to become the leading partner to the construction industry. The pace
of change within the construction industry provides the opportunity
for the Group to use its considerable assets and capabilities to do more
for our customers; providing services, equipment and expertise to our
customers in addition to remaining the largest provider of building
materials to the trade. Together our purpose and ambition provide the
basis for our intention to lead and collaborate with others in our industry
and beyond to make positive progress to modernise and decarbonise
construction and address the skills and diversity issues the sector faces,
both now and in the future.
A strategy to delight customers and deliver our ambition
Within our market-leading businesses we are focused on:
• Deepening our customer relationships by providing simple,
convenient ways to transact with us, whether that be through
our branch or digital channels.
• Elevating our customer relationships by providing value-added
services that directly address our customers’ challenges and by
removing costs and complexity or providing new capabilities to
help them navigate changes to the construction process.
The acquisition of Staircraft, a leader in technology and design led
timber engineering, in late 2021 allows us to provide innovative
solutions to deliver efficiencies on our customers’ projects.
Furthermore, we are leveraging the power of the Group by collaborating
between our businesses to provide even more convenience to our
customers, utilising our unique combination of assets and capabilities
to support their needs.
I’m delighted by the way our colleagues and customers have embraced
our strategy, and we look forward to delivering the benefits as we grow.
These priorities are explored in greater detail in the strategy section of
this report.
Significant operational progress
Whilst 2021 has been a year in which significant effort has been
invested in both strategy development and execution, we have also
made excellent progress on key operational initiatives within our
business. From our market leading digital channel development,
including the launch of mobile apps for the Travis Perkins General
Merchant and Toolstation, to the continued development of our branch
network to deliver further market share gains and customer service
improvements, the business continues to move at pace in order to
maximise growth opportunities.
In addition, the progress we have made in developing our customer
propositions across our businesses continues to be augmented by the
simplification of internal processes to empower local decision making
and enable our branch colleagues to serve customers and compete
effectively in their markets. We remain committed to improving our
business for customers, colleagues and shareholders.
A positive outlook
I am confident that as we deliver this strategy our customers will
trust and value us as a forward-thinking supplier of relevant and
integrated solutions and as a proactive partner that is helping the
industry accelerate to a net zero carbon future and enabling
communities to thrive.
Looking forward, the long-term fundamentals of the Group’s end
markets remain robust as a result of ongoing demand for new housing
and the historic under-investment in the repair, maintenance and
improvement (“RMI”) of many areas of the country’s built environment.
Our core end markets remained robust throughout 2021 with strong
RMI activity, a healthy recovery in the new build sector and substantial
infrastructure investment. We are optimistic that these trends will
continue into 2022.
Having successfully delivered significant portfolio rationalisation
and operational improvements over the last two years, the Group
is well-placed to continue to outperform its markets and generate
further value for shareholders and I am excited by the opportunities
that lie ahead.
Revenue
£4,587m
2020: £3,698m
Adjusted operating profit
£353m
2020: £128m
Our year in review
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Executed planned portfolio actions
with Wickes demerged and the
Plumbing & Heating business sold
Announced our new purpose, updated
our values and framed our strategy,
encompassing our ambition to become the
leading partner to the construction industry
Merchant businesses performed well,
benefiting from decisive actions taken
in 2020 and robust end-market demand
Toolstation UK rollout continues at pace
with 77 new branches in 2021. Toolstation
Europe added 40 branches and remains
an exciting growth opportunity
Set out plans to expand TF Solutions
and added Staircraft to the Group
Scope 1 & 2 and new Scope 3 carbon
targets, consistent with a 1.5˚C pathway
902 apprenticeships started and
409 under-25s recruited on the
Kickstart programme
Go to page 34 to see more
Travis Perkins plc Annual Report and Accounts 2021
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MARKET OVERVIEW
THE GROUP OPERATES
IN A £76BN MARKET
The market for construction materials totals over £76bn. This is fulfilled
through a variety of channels but a significant proportion (over £60bn)
comes through distribution and is therefore addressable by the Group.
60
50
40
30
20
10
0
UK addressable market size by business unit (£bn)
Other (e.g. garden)
Electrical
Plumbing & heating
Lightside
Insulation, drylining & ceilings
Civils
Heavyside
Timber
Joinery
Kitchens
Roofing
• Market
compound
annual growth
rate of 3.4%
2013–2019
• Businesses
are #1 or #2 in
their markets
• Significant M&A
and capital
inflows into
the sector
Addressable
market
Position in market
#1
#2
#1
#2
#1
Group businesses hold leading positions in the markets in which they operate and
all have the available headroom to continue to grow and take market share.
The sector has been active with ongoing transactions and significant capital inflows.
This demonstrates the attractiveness and resilience of our markets.
14
Travis Perkins plc Annual Report and Accounts 2021
Market fundamentals are strong –
showing good recovery post Covid-19
Construction output forecast: new work
Strong new build prospects based on domestic and
infrastructure markets
• Average age of UK housing stock is c. 70 years
• Aim to build 300,000 new homes each year
• Average annual shortfall of 90,000 homes
• Clear government intention to increase infrastructure spend
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
2019
2020
2021
2022
2023
House building
Infrastructure
Commercial & Industrial
Construction output forecast: RMI
RMI markets are resilient and less cyclical
• Robust domestic Repair, Maintenance and Improvement
(“RMI”) market as working patterns drive relocation
• Carbon targets mean substantial investment is required
to upgrade building stock
15%
10%
5%
0%
-5%
-10%
-15%
2019
2020
2021
2022
2023
Domestic RMI
Non Housing R&M
The exposure of the Group is majority domestic and RMI
The majority of Group sales go into the domestic RMI
sector. This has proven to be more resilient and less
cyclical than new build and offers the potential for
long-term service-based relationships.
Group market exposure
Market
Commercial
& industrial
Infrastructure
Group
RMI
Domestic
43%
New build
23%
11%
18%
Total
66%
29%
1%
4%
5%
55%
45%
35%
65%
100%
100%
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• Dependable end-markets driven by:
– Housing transactions
– Consumer confidence
– Trade resilience vs consumer
– RMI shows lower cyclicality than new build
• Infrastructure is a significant area of potential for the Group
• Public sector exposure of 23% represents an opportunity
given the Group’s credentials and ambition
Travis Perkins plc Annual Report and Accounts 2021
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MARKET OVERVIEW continued
Changes to the market are causing all parties
to consider the way that they work – raising
expectations and creating opportunities
for partners that are able to respond.
Macroeconomic Factors
Digital
ESG
Technical
connectivity
Fulfilment
Construction
sector-specific factors
Group Purpose
Modern methods
of construction
Labour shortages
Productivity
Macro factors
• Digital and technology developments are having
Sector-specific factors
• Modern methods of construction are beginning to
significant impacts across all industries – connecting
customers with products and services in a way which
changes all of our lives.
• Customer expectations are increasing, driven by the
experiences that we all enjoy as consumers. Many
construction customers will still want to work using
more traditional means, however needs are beginning
to change rapidly.
• ESG is highly relevant across the construction industry
to all customers and suppliers and is becoming
increasingly important.
change the industry. Both procurers and constructors
are becoming increasingly interested in the benefits
that can be derived from changing the way in which
buildings are designed and constructed. The goal
is to deliver higher quality at a lower cost by making
the building process more controlled and efficient.
Customers are increasingly demanding solutions
which allow them to respond to these demands
and access the available benefits.
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Travis Perkins plc Annual Report and Accounts 2021
• Labour and knowledge scarcity is driving change. The ageing
of the construction industry workforce has been observed for a
while, with the availability of skilled labour coming under pressure.
This trend has been exacerbated by the reliance of key markets
on overseas labour (35% in London and the South East)
with skills being lost due to Brexit and with Covid-19 reducing
international mobility. The ability to retain, curate and disseminate
knowledge and information will help to mitigate this and, in
addition, customers will benefit from solutions which require
lower skill levels where possible.
• The construction industry has not enjoyed the advances in
productivity seen in other sectors. All industry players are keen
to enjoy the benefits of increased productivity – delivering better
quality products with a lower labour content.
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Offsite manufacture and modern
methods of construction (MMC) can
be defined as the design, planning,
manufacture and pre-assembly of
construction elements or components
in a factory environment, prior to
installation on site at their intended,
final location.”
Kier Group
Offsite and Modern Methods of Construction, 2020
Travis Perkins plc Annual Report and Accounts 2021
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BUSINESS MODEL
Strong and lasting customer and supplier
relationships, combined with the strength
of Travis Perkins’ network and unique culture
allow value creation and growth in a
self-reinforcing cycle.
Amy Millar – Keyline
Inputs
Competitively advantaged resources and relationships
What we do
Collaborative value chain
Deep customer relation-
ships and understanding
of needs
• Nationwide branch network,
embedded in communities
• 19,000 engaged colleagues
with a unique and open culture
• Industry-leading supply chain
• Strong balance sheet
• Disciplined capital allocation
• 200+ year heritage
and businesses that are
#1 or #2 in their market
Deep and lasting
supplier relationships
with ability to connect
to customers across
the country
Customers
Resources
Suppliers
Underpinned by
Responsible and sustainable approach
Go to page 52 to see more
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Travis Perkins plc Annual Report and Accounts 2021
Amy Millar – Keyline
Outputs
Self-reinforcing model generating growth and
value for stakeholders
Requirements
• Collaborate, specify
and quote
• Negotiate, convert and sell
• Range and source
• Assort and procure
• Fulfil, collect and deliver
Go to pages 21–25 to see more
Products and services
• Fulfilled customers
• Engaged colleagues
• Enriched communities
• Satisfied shareholders
• Valued suppliers
Go to page 72 to see more
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Sound corporate governance
Go to page 78 to see more
Robust risk management
Go to page 40 to see more
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OUR STRATEGY
Delivering on previous
commitments
In 2018 the Group laid out an ambitious plan to Simplify the Group and Focus
on Trade. Despite the challenges of Covid-19 and Brexit the execution of this
plan was completed in 2021 leaving the Group well-placed to progress.
Simplify the Group
Focus on the Trade
Demerged Wickes
Sold Plumbing & Heating business
Sold Tile Giant
Reduced annualised cost base
by c.£120m
Reset operating model
Strengthened the balance sheet
Improved digital enablement through
Travis Perkins and Toolstation apps
Improved the branch network to
deliver better service
Strengthened the core in the
general merchant
Opened c.60 Toolstation UK
branches every year
Acquired controlling stake in
Toolstation Europe
Strengthening the Group through the pandemic
The Group developed an ambitious plan through the pandemic. In addition to keeping
customers, suppliers and colleagues safe, steps were taken to improve the business.
With twin goals of improving competitiveness and capability, work was undertaken
to support colleagues and bring better experiences to customers.
More
competitive
More
capable
Competitive and accessible pricing
Tools and support for branch empowerment
Commercial deals simplified
Bespoke apprenticeship and colleague training increased
Launch of customer mobile apps in Travis Perkins and Toolstation
Larger, more capable, merchant branches opened
Delivery management system rolled out
Development of value-added services
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Travis Perkins plc Annual Report and Accounts 2021
Offering customers
more
All the Group companies have innovative plans to win share by deepening and elevating
customer relationships. As customer needs evolve over time the Group is committed to
maintaining leading positions by exceeding expectations wherever possible.
Leading in general merchanting
Travis Perkins General Merchant is the leading general merchant in the UK. With over
550 branches spread across Great Britain the business offers exceptional service to
all trade customers from small builders to national contractors and housebuilders.
Travis Perkins General Merchant worked hard to improve services throughout the
pandemic and has been rewarded with market share gains and sales growth and
the business has clear plans to continue innovating and growing.
Network – The business plans to open 50 new branches and
relocate and improve 50 more over the next five years. This will allow
the development of newer, larger branches with improved safety,
delivery, productivity and stockholding capabilities.
Digital – The Travis Perkins app has been downloaded more
than 120,000 times since launch early in 2021, allowing customers
to purchase products, check the status of orders and manage their
accounts. Planned further developments aimed at small and large
customers will support customers’ expanding trial and adoption of
digital services.
Value-added services – Travis Perkins will offer more
value by adding services that save customers time and money. This
is possible in many areas, including kitchen design, the provision of
tools for hire and the development of innovative customer solutions
such as within the Managed Services activity.
App downloads
>120k
Scott Percy – Travis Perkins
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Offering customers more continued
Expanding the Toolstation offering
The Toolstation model is market leading, offering a combination of range,
accessibility and value that has allowed consistent market outperformance in
recent years. Delivering a broad range with optimised stock holding and rapid
multichannel service allows Toolstation to continue to grow and take share.
25,000 products available in Toolstation UK
13,000
Available
next day
12,000
Stocked in branch
Fast in-store
service
Nationwide
coverage
Dynamic
stock range
Long opening
hours
Low-cost
small branches
Further UK growth comes from four key areas
Network growth
• 60 new branches annually to around 650
Proposition development
• Range development to reach 50,000 products
• Potential for smaller format branches and
• Enhanced delivery proposition, e.g. last mile and
collection points
same day
• Blending new delivery capacity with local fulfilment
• New value-add services
Trade focus
• Enhanced trade proposition
• Extended trade ranges
• Maximising convenience for the trade
Digital acceleration
• Further app development
• Enhanced digital experience
• Loyalty programme
• Customer data
Toolstation Europe
With a well established business in the Netherlands and growing businesses in Belgium and France, the potential of the
Toolstation model to appeal to overseas customers is becoming clear. Tailoring the proposition to cater for local market
requirements allows all three countries to deliver growth and a route to profitability.
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Travis Perkins plc Annual Report and Accounts 2021
Growing the specialist merchants
The three specialist merchant businesses offer exceptional service to customers in a way that is uniquely tailored to their individual
needs and markets. Each of the three businesses and the TF Solutions opportunity in BSS has a bright future, with a clear recipe
for growth based on a combination of four elements:
Core markets + Decarbonisation + Adjacencies + Value-added services
Sources of growth
Branch rollout
Refrigeration
Decarbonisation of heating
Robust core markets:
e.g. schools and hospitals
Design to Use
Robust core residential market
Insulation growth to make
buildings more sustainable
Technical insulation
Robust core residential market
Growth in infrastructure
Flood attenuation and
rainwater harvesting
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Core markets The specialist merchants serve a variety of core
markets, the majority of which are in extremely good health:
• Residential new build continues to grow as the UK addresses
the shortfall in home-building versus overall demand.
• Core infrastructure such as road and rail and service-driven
infrastructure such as hospitals and schools are receiving
investment to help cope with demand.
Value added services The specialist businesses add value
to customers in a variety of ways, working hard to help to solve
problems before they arise and ensure the smooth delivery
of projects. The Group is exploring ways of helping customers
design and select appropriate solutions created around the
supply of available products.
Decarbonisation Construction and the built environment need
to decarbonise and this provides a consistent source of demand.
From the insulation required for a “fabric first” approach to
reducing thermal loss to products that capture and manage
rainwater from changing weather patterns, the specialist
businesses have a range of innovative solutions for customers.
Adjacencies The Group remains alert to the potential of using
acquisitions to enhance the specialist businesses’ propositions
and bring more choice to customers.
Travis Perkins plc Annual Report and Accounts 2021
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OUR STRATEGY
Working and
collaborating together
On top of the Group’s leading individual businesses, there is
a commitment to collaborate to bring innovative and leading
propositions to the Group’s customers. Two major axes exist,
outlining two ways of adding value to major customer segments.
Elevating relationships by adding services and new areas of added value
The Group is committed to finding ways of adding incremental value to customers by working hard to go up the
value chain, by identifying customer needs and pain points and by working collaboratively to bring innovative
solutions that meet them in the most effective way.
Professional
trades and general builders
Typically smaller customers who value
local relationships and who serve
domestic and light commercial
markets for mostly RMI work.
Elevating
relationships
Deepening
relationships
Larger
contractors
and developers
Larger and more complex customers
who serve local and national markets,
often working in conjunction with other
contractors, suppliers and specifiers
to deliver new build and RMI
solutions across residential,
commercial and
infrastructure.
Deepening relationships to earn a greater share of spend
Recognising that customers face a choice between different suppliers for their materials, the Group is committed
to earning a greater share of spend through deepening relationships and delivering solutions which makes the
purchasing process as smooth and integrated as possible.
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Travis Perkins plc Annual Report and Accounts 2021
“
Lease signed on
500,000 sq ft
premises near
Northampton for direct
customer dispatch.
Offering customers the benefit of the Group
Collaboration between Travis
Perkins and Toolstation to provide
better and more convenient solutions for
trade customers. The Group is in the early
stages of exploring how best to combine
the relative strengths of these businesses to
offer even better service to customers. Trial
activity is already underway, with Travis
Perkins customers now able to buy
products ranged and supplied by
Toolstation from the TP website.
Innovative solutions for customers using modern methods of construction
Three main areas of activity are underway
to ensure that the Group works innovatively
and collaboratively with customers who
are exploring new ways of working
in construction.
Supply-chain solutions for modular builders
The Group is working proactively with
several leading modular builders to help to
deliver innovative solutions which facilitate
the delivery of buildings in modular form.
Value-added design solutions for regional
house-builders Working with customers in
this vital segment for the UK economy, the
intention is to provide access to the benefits
of modern methods of construction.
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Completion of the acquisition of Staircraft
In October, the Group completed the
acquisition of Staircraft. This offers a market
leading proposition for national, offsite and
regional housebuilders comprising fully
integrated stair and flooring solutions.
The combination of high quality timber
engineering and cutting edge technology
allows customers to build quickly, accurately
and efficiently.
Travis Perkins plc Annual Report and Accounts 2021
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Strategy in action
The Group is exploring different ways
of elevating customer relationships
by developing innovative propositions
and partnerships
The goal here is to elevate relationships with key customers to provide richer
value-adding services.
Managed Services
Multichannel
customer access
with centralised ordering
and management
solutions
Support services
Stand-alone managed
stores and access to the
wider General Merchant
branch network
Remote product
access solutions
On-the-road
product management
Active catalogue
management
Management
information portal
Van stock
management tools
Project
tracking
Product
swaps
TP Managed Services supports key customers with long-term arrangements based around exceptional levels of service.
This can involve the deployment of specific infrastructure, tailored technology solutions and dedicated personnel working
with the customer over a multi-year period. The majority of customers serve the social housing market and the timely
provision of materials to repair and refurbish dwellings is vital.
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Travis Perkins plc Annual Report and Accounts 2021
BSS “Design to Use” – meeting customer challenges
BSS are developing new service lines to address key customer challenges. They plan to expand up the
value-chain to assist customers with the advisory and design stages and integrate this through the more
traditional order and fulfilment steps and into the service layer. This will provide a joined up and end to
end service to customers which will both elevate and deepen relationships to new levels.
BSS
today
Advise
Design
Order
Fulfil
Support
Service
Customer challenges
BSS
tomorrow
• Lack of design capability and design inaccuracies
• Lack of clarity around scope and project integrity
• Lack of product and data interoperability
• Changing legislation
Opportunities to differentiate and add value
• Lack of maintenance schedules
• Transition from reactive to planned maintenance
• Management of product assets and data
• “Golden thread” of product
Advise
Design
Order
Fulfil
Support
Service
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Gary Lenearth celebrated his 30th year
with BSS Exeter in 2021.
Travis Perkins plc Annual Report and Accounts 2021
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Key performance indicators (KPIs)
The Group tracks its performance using two operating KPIs, three financial KPIs and
two non-financial KPIs that the Board believes are key indicators of progress against
the Group’s strategic and financial targets. In addition, the Group has a number of
guidance measures at a Group, segmental and business level, details of which
are set out in the financial performance section on pages 36 to 39.
Operational
Adjusted operating profit*
Like-for-like sales growth
2021
2020†
2019
2018
2017
£353m
2021
25.4%
£128m
2020† (7.1)%
2019
2018
2018
£442m
£375m
£380m
2019 3.8%
2018 4.9%
2017 3.3%
Definition (note 2a)
Profit before tax, financing charges and
income, amortisation of acquired intangibles
and adjusting items.
Reason
Operating profit is adjusted to exclude
non-trading items, such as adjusting items
and the amortisation of other intangible
assets arising on the acquisition of a
business, so management can monitor the
Group’s underlying trading performance.
Definition (note 1b)
Revenue growth adjusted for new branches,
branch closures, business acquisitions
and disposals and trading day differences.
Revenue included in like-for-like is for the
equivalent periods in both years under
comparison. Branches are included once
they have traded for more than 12 months.
Reason
Like-for-like sales help management
monitor the performance trend of the
underlying business and gives a good
indication of the health of the business
compared to competitors.
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Financial
Leverage ratio*
2021
2020†
2019
2018
2017
Free cash flow
Return on capital employed*
1.2x
2.0x
2.5x
2.7x
2.7x
2021
2020†
2019
2018
2017
2018
£65m
£241m
£195m
£168m
£154m
2021
2020†
2019
2018
2017
14.1%
5.3%
10.1%
10.5%
10.7%
Definition (note 25)
The ratio of net debt to earnings before tax,
interest, depreciation, amortisation and
adjusting items (“EBITDA”). The figure for
2017 and 2018 is calculated as the ratio of
lease-adjusted net debt to EBITDA adjusted
for rent (“EBITDAR”).
Reason
The leverage ratio is an indicator for
management and lenders of the Group’s
ability to support its debt. The Group has
a target of 1.5x–2.0x.
Definition (note 24)
Net cash flow before dividends, freehold
property purchases and disposals, pension
deficit repair contributions, adjusting cash
flows and financing cash flows.
Reason
The Group needs to generate strong free
cash flows to enable it to invest, expand
its operations and pay dividends to
shareholders. Freehold investments
are financed by property disposals
and enable the Group to access the
best property locations.
Definition (note 26)
Adjusted operating profit divided by the
combined value of balance sheet debt and
equity. The figure for 2018 and earlier is
EBITDA less 50% of property rent divided
by debt, equity and eight times annual
property rental expense.
Reason
This ratio allows management to measure
how effectively capital is used in the business
to generate returns for shareholders.
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Non-financial
Accident frequency rate
Carbon emissions
2021
2020†
2019†
2018†
2017†
5.6
5.4
5.4
7.8
8.2
2021
2020
2019
2018
2017
78
79
101
114
114
Definition
The number of lost-time incidents (“LTIs”)
per million hours worked.
Reason
Keeping people safe is the Group’s first
priority. This ratio allows management
to measure progress in ensuring
a safe workforce.
Definition
Total Scope 1 and 2 carbon emissions
(kilotonnes of CO₂e). Figures for all years
reflect continuing businesses only.
Reason
The Group has a responsibility to take
action to prevent the worst impacts of
climate change. This measure allows
management to measure progress in the
decarbonisation of our business. This KPI
has replaced the previous carbon intensity
(carbon emissions relative to inflation-
adjusted revenue) KPI. This reflects the
Group’s commitment to reduce Scope 1
and 2 carbon emissions by 80% by 2035
(from a 2020 baseline).
* These KPIs were impacted by the adoption
of IFRS 16 – Leases on 1 January 2019.
† Figures restated to exclude the Retail and
Plumbing & Heating segments. KPI figures
for older periods include these segments.
Travis Perkins plc Annual Report and Accounts 2021
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Business performance and priorities
Completed portfolio actions with Wickes
demerged and Plumbing & Heating (P&H)
business sold
Strong revenue performance driven by enhanced
customer proposition and robust recovery in key
market segments. Like-for-like revenue grew by
25.4% and was 14.4% ahead of 2019*.
Adjusted operating profit of £353m including
£49m of property profits, 19% ahead of 2019
(2020: £128m including property profits of £9m)
Excellent performance in Merchanting resulting
from volume growth, improved operational focus
and a streamlined cost base. Another strong year
for Toolstation with the UK rollout accelerated and
scale building in Europe
Total ordinary dividend of 38.0 pence per share.
P&H net sale proceeds returned to shareholders
in full via a 35.0 pence per share special dividend
and ongoing buyback programme which has been
extended to £240m.
£m (unless otherwise stated)
Revenue
Like-for-like revenue growth
Adjusted operating profit
Adjusted earnings per share
Adjusted return on capital employed (“ROCE”)
Adjusted ROCE excluding property profits
Net debt / adjusted EBITDA
Dividend per share
Operating profit
Total profit / (loss) after tax
Basic earnings / (loss) per share
2020
2021
3,698
4,587
25.4% (10.0)%
128
353
107.3p
14.1%
12.1%
1.2x
38.0p
349
241
103.9p
21.0p
5.3%
4.9%
2.0x
nil
27
(35)
(14.3)p
* Revenue and profit measures are presented for continuing businesses only.
The Retail and Plumbing & Heating segments are treated as discontinued
operations.
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Travis Perkins plc Annual Report and Accounts 2021
Summary
The Group has made excellent progress during the year at a strategic
and operational level. The business has been dramatically simplified
and the Group has laid out its new ambition, to be the leading partner
to the construction industry. The decisive actions taken in 2020 to
refocus the business and improve operational capability, combined
with the portfolio rationalisation in 2021, have created a platform
for the Group to drive growth, generate cash and deliver enhanced
shareholder returns.
2021 Performance
The Group delivered a strong performance in 2021 with revenue of
£4,587m, up 24.0% versus 2020 and 10.6% ahead of 2019*. This
performance reflects the extensive work undertaken to enhance the
customer proposition, through investment in network capacity and
technological capability, coupled with the robust recovery in both
the RMI and new house building markets.
Actions taken to restructure the business and improve operational
effectiveness, coupled with disciplined management of increasing
inflation and product availability challenges, enabled the business to
increase overall operating margin in continuing businesses by 60bps
versus 2019 and deliver an adjusted operating profit of £353m, 19%
ahead of 2019*.
Strategic development
During the first half of the year, the Group completed its stated portfolio
actions. The demerger of Wickes was successfully completed in April,
shortly followed by the sale of the Plumbing & Heating business in
late May to an affiliate of H.I.G. Capital, a leading global alternative
investment firm, for an enterprise value of £325m, with the proceeds
returned to shareholders.
In September, the Group held a Capital Markets Update to set out its
ambition to become the leading partner to the construction industry.
The pace of change within the construction industry and the need
for investment to address sustainability challenges in the UK’s built
environment are both significant which creates opportunities for the
Group to use its considerable assets and capabilities to do more for
its customers; providing services, equipment and expertise in addition
to remaining the largest distributor of building materials to the trade.
Within the Group’s portfolio of market-leading businesses, the focus is
on deepening customer relationships by providing simple, convenient
ways to transact through our branch or digital channels and elevating
customer relationships by delivering value-added services that directly
address customer challenges and remove costs and complexity.
Furthermore, the Group is enhancing collaboration between its
businesses to provide even more convenience to customers, while
introducing new capabilities to help them navigate changes to the
construction process. The acquisition of Staircraft in late 2021, a leader
in technology and design-led timber engineering, is a significant step on
our journey towards providing innovative solutions to remove cost and
complexity from our customers’ projects.
Capital structure and shareholder returns
The Group’s balance sheet has been transformed by a combination
of strong financial performance and portfolio actions with net debt
under IFRS 16 reducing from £1,788m (2.5x adjusted EBITDA) at the
end of 2019 to £605m (1.2x adjusted EBITDA) at the end of 2021,
or 1.5x EBITDA on a pro-forma basis when adjusting for proceeds
from the P&H disposal still to be returned via share buybacks.
These actions have enabled the Group to set a medium term leverage
target (on an IFRS 16 basis) of 1.5x–2.0x net debt / adjusted EBITDA
(on a rolling 12 months basis). This target range is consistent with
investment grade credit metrics. Given the cash generative nature
of the business, the Group’s strong balance sheet provides the
flexibility for the Group to invest in attractive opportunities that open
up new or adjacent markets, such as the recent acquisition of Staircraft
or the expansion of TF Solutions, at the same time as creating capacity
to return surplus capital to shareholders when at the lower end of this
target range.
The strong performance during 2021 and the strength of the Group’s
balance sheet enabled the Board to reinstate the ordinary dividend in
August with an interim dividend of 12.0 pence per share. The Group
has set out a policy of distributing between 30% and 40% of full year
adjusted earnings as a regular dividend and is today proposing a final
dividend of 26.0 pence per share.
Following the sale of the Plumbing and Heating business, £78m of the
net proceeds was returned directly to shareholders via a 35.0 pence
per share special dividend. The balance of the net proceeds are
being returned to shareholders via a share buyback programme. The
programme of £170m is now largely complete (31 December 2021
£70m) and today it has been extended by a further £70m to £240m,
which will complete the programme.
Central costs
Central costs reduced slightly year-on-year as savings generated from
the restructuring programme in 2020 offset the reinstatement of
management incentives.
Property transactions
Excellent progress has been made in exiting both freehold and
leasehold sites vacated as part of the restructuring programme
announced in June 2020, with solutions having now been found
for the vast majority of properties.
These transactions, alongside a profit of £28m on the sale of the
former Tilbury distribution centre, have generated significant upside
with £49m of total property profits recognised during the year and
cash receipts of £78m.
Outlook
The strong performance of the Group’s end markets has demonstrated
the importance of the construction sector to the UK economy. The
rapid recovery of demand has led to well-documented challenges,
particularly with respect to inflation and product availability, and
the Group’s businesses have demonstrated their ability to manage
these effectively.
Although macroeconomic uncertainties remain, the Group’s lead
indicators for the year ahead are encouraging with improved levels
of housing transactions, the continued move to hybrid working
arrangements and year-on-year growth in new housing developments
expected to support volumes in the Group’s core trade markets.
Given robust end market demand and a positive start to the new
year, the Group remains confident of making further progress in 2022.
Over the longer term, the requirement to expand and decarbonise the
UK housing stock offers significant growth opportunities for the Group.
Government policy remains supportive across all sectors, recognising
the essential role that construction will play in delivering a sustainable
UK economy.
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Technical guidance
The Group’s technical guidance for 2022 is as follows:
•
•
Effective tax rate of 20%
Base capital expenditure of around £140m, inclusive of £15m
on the new Toolstation lightside direct fulfilment centre in
Northampton (see page 34)
Property profits of around £25m
•
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Business performance and priorities continued
Merchanting
Revenue
£3,826m
2020: £3,065m
2022
strategic priorities
• Continued investment in larger,
more capable branches focused
on major conurbations
• Further development of
the service offering through
value-added services including
tool hire, Benchmarx, Managed
Services and Staircraft
• Enhancement of the customer
experience through the continued
development of digital channels
• Leverage the benefits of
best-in-class delivery management
system, with roll-out across tool
hire planned for 2022
Total revenue growth
24.8%
2020: (17.0)%
Scott Percy – Travis Perkins
Alexandra Murariu – Travis Perkins
Total revenue
Like-for-like growth
Adjusted operating profit*
Adjusted operating margin
ROCE
Branch network
2021
2020
£3,826m
28.2%
£320m
8.4%
16%
860
£3,065m
(14.0)%
£152m
5.0%
7%
846
Change
24.8%
110.5%
340bps
9ppt
14
* Segmental adjusted operating profit figures are presented excluding property profits
The Merchanting businesses delivered an
excellent performance, led by the rejuvenated
Travis Perkins General Merchant and
complemented by record profit delivery in
both BSS and Keyline. Underpinning this strong
operational delivery was the robust recovery in
domestic RMI demand and new housebuilding,
alongside continued investment in UK
infrastructure. Overall Merchanting revenue
was up 24.8% versus 2020, where trading
was significantly affected by the pandemic,
and 3.3% ahead of 2019. Factoring in the
2020 branch closure programme, like-for-like
revenue growth was 28.2%, or 11.9% compared
to 2019.
The robust sales performance, combined with
solid gross margins and cost benefits from the
restructuring programme, delivered an adjusted
operating profit of £320m, up 13% versus
2019, and an operating margin of 8.4%,
some 70bps ahead of 2019. Operating margin
benefitted from around 40 bps of inflation
gains in stock given the high input cost inflation
experienced. These are not expected to repeat
in 2022.
Price inflation accelerated through the year, with
prices increasing by around 4% in H1, rising to
around 13% in H2, driven by shortages of
product as the pace of demand recovery
outstripped the rebuilding of manufacturing
capacity. The Merchanting businesses have
managed these challenges extremely well,
utilising the Group’s extensive supply chain
expertise to maximise product availability and
providing transparency on pricing to customers.
Travis Perkins General Merchant delivered
a very strong performance as actions taken
during the previous two years to refocus the
business enabled both branch and central
teams to respond quickly and effectively to the
opportunities presented by the rapid recovery
in demand. The changes to the business have
been extensive with processes and commercial
deals simplified, shelf edge pricing overhauled
and decision making on pricing and range now
locally driven, enabling our branch teams to
meet the needs of their local customers.
The General Merchant also continues
to leverage the benefits of its scale and
multifaceted customer proposition. The
integration of Benchmarx, the introduction
of web-based ordering and bespoke
sustainability training packages in Managed
Services and significant investment in tool
hire have all enhanced the service offering to
customers. These propositional developments
are being complemented by investment in the
branch network with three new branches
opening in the year, four more relocated
to improved sites and a dedicated tool
hire hub opened in London.
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Travis Perkins plc Annual Report and Accounts 2021
Merchanting
Adjusted operating profit
Return on capital employed
£320m
2020: £152m
16%
2020: 7%
2022
strategic priorities
• Continued development of the
BSS “design-to-use” proposition
as a leading service offer
• Expansion of TF Solutions to grow
share in air conditioning and low
carbon heating markets
• Strengthening CCF’s technical
services offer and extension of
its insulation range
• Keyline extending its capabilities
to become a true partner to the
civils industry through providing
new and sustainable solutions
throughout the supply chain
The specialist businesses continue to trade
well, with BSS in particular demonstrating the
value of its best-in-class technical capabilities
to lead in the commercial RMI market. BSS
continues to build on its deep product expertise
and long standing relationships with innovative
new solutions such as “design to use” which
will enable the business to provide an even
greater range of services to its customers.
As outlined at the Capital Markets Update,
TF Solutions represents an exciting growth
opportunity in the air conditioning and
refrigeration markets. Over time, the Group
intends to grow the business to a network of
around 30 branches and this expansion plan
is well underway with 5 new branches added
during the year, doubling the network capacity.
Keyline also delivered a very strong
performance in 2021, being ideally placed
to benefit from the UK’s infrastructure
investment and the ongoing strong demand
for new housebuilding. The business continues
to gain advantage from its operationally
efficient model whilst from a customer
proposition perspective, the focus remains
on Keyline extending its capabilities to become
a true partner to the civils industry. These
enhancements are being delivered by
providing new and sustainable solutions
throughout the supply chain in collaboration
with suppliers and customers incorporating
service offerings on logistics, technical
specification and project management.
CCF saw the most significant impact in terms
of product availability during the year and
responded well to the situation by continuing
to focus on quality of business and service
proposition development, resulting in an
operating margin ahead of 2019. The clear
momentum now that supply challenges have
eased has been reflected in the opening of
three high quality new branches in Ruislip
(relocation from West London), Enfield and
Birmingham alongside recent investment
in technical resources to broaden the
offering to customers.
Across the Merchanting businesses, the
Group continues to invest in new platform
technologies to develop customer propositions
at pace, layering these on the stable
foundations of its heritage platforms. In 2021,
this structured approach to development
delivered new features and capabilities to
the Travis Perkins General Merchant website
and saw the launch of the TP App, as well
as migrating CCF and Keyline onto this
digital platform. The Group’s new delivery
management solution has been rolled out
across CCF, Keyline and all core General
Merchant branches, with tool hire to follow
in 2022, providing our customers with a
best-in-class delivery notification service.
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Business performance and priorities continued
Toolstation
Revenue
Like-for-like growth
£761m
2020: £633m
12.3%
2020: 22.2%
2022
strategic priorities
• Continued network growth with
a further 100 branches planned
for 2022, 60 in the UK and
40 in Europe
• Open a 500,000 ft2 distribution
centre in Northampton for direct
customer dispatch
• Trial Toolstation implants in
TP branches
• Further enhancements to the
trade customer proposition
through the credit offer,
range extension and
multichannel capability
Total revenue
Like-for-like growth
Adjusted operating profit*
Adjusted operating margin
ROCE
Branch network (UK)
Branch network (Europe)
Adjusted operating profit – UK
2021
£761m
12.3%
£22m
2.9%
5%
530
123
£42m
2020
£633m
22.2%
£8m
1.3%
2%
460
83
£24m
Change
20.2%
(9.9ppt)
175.0%
160bps
3ppt
70
40
75.0%
* Segmental adjusted operating profit figures are presented excluding property profits
2021 was another year of great progress
for Toolstation with 20.2% revenue growth
demonstrating the strength of the customer
proportion and representing further market
share gains. Toolstation has now more than
doubled its revenue in the last three years and,
on the back of this sustained outperformance,
the Group continues to drive the expansion of
the branch network in both the UK and Europe.
The Toolstation app has achieved a Trustpilot
rating of 4.7 to date, from over 300,000
reviews. New front-of-branch merchandising
has been rolled out across the Toolstation
network, providing easy access for customers
to key products. This has been complemented
by the addition of c. 3,600 products to
the range, again primarily focused on
trade customers.
In the UK, a net 70 new branches were
opened during the year as the Group’s more
focused capital allocation strategy enabled
the acceleration of planned openings. Whilst
network expansion is a key enabler of future
growth, the development of Toolstation’s
market-leading value proposition is also
central to attracting new trade customers
and growing the share of wallet from
existing customers.
As a further enhancement of its trade
customer proposition, the UK business
introduced trade credit at the start of the year
which has been well received by customers
and driven an increase of 25% in average
order value on credit sales. Toolstation has
continued to drive the digital agenda with the
Toolstation app launched in 2021, making it
even more convenient for customers to interact.
The operating margin of Toolstation UK at 6.3%
continues to develop in line with management
expectation, reflecting the significant
investment in the business over the last
three years, with 195 new branches opened.
Looking forward, a further 60 branches are
expected to open in 2022. The branch network
will be complemented by the opening of a new
500,000 square feet lightside direct fulfilment
centre in Northampton. In order to mitigate
risks around future labour availability, the
decision has been taken to automate the
facility. While this will lead to an incremental
capital investment of £15m in 2022, it will
deliver future operating cost benefits. Start-up
costs of approximately £5m are expected to
be incurred in 2022 in relation to the
distribution centre project.
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Travis Perkins plc Annual Report and Accounts 2021
The European business continues to make
encouraging progress as brand awareness
and scale build. Overall revenue grew by 35%
in 2021 and in Benelux, where sales were up
32%, 22 more branches were opened, taking
the total to 86. In France, sales grew by 61%
with 18 new branches opened, taking the
total to 37. The new c. 100,000 square feet
distribution centre just outside Lyon is now
fully operational, which will facilitate the
continued expansion of Toolstation France.
Customer feedback continues to be very
positive with Toolstation Netherlands achieving
a Trustpilot rating of 4.5 and France at 4.7,
both equivalent to a rating of “Excellent”. The
“Click & Collect in 10 minutes” offer remains
well ahead of the competition in terms of
speed of service.
Toolstation Europe overall made a loss of
£20m in 2021, in-line with management
expectations, as the business continues to
build scale across its territories. Losses in
2022 are expected to be of similar magnitude
as the rollout continues, with 40–50 more
branch openings targeted for 2022.
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In 2021 Toolstation celebrated the opening of its 500th UK branch in New
Malden, Surrey. The team held a brilliant launch event on Thursday 5th
August to mark the opening, with customers, colleagues, suppliers and
community & charity partners coming together to help mark the occasion.
There was even a special guest appearance from footballer and “Homes
Under The Hammer” icon, Dion Dublin!
The event was also used to launch the next Toolstation Volunteer-It-Yourself
(“VIY") project, which saw 30 young people helping to update the kitchen and
cafe space at the nearby YMCA Dickerage, a busy community building in
New Malden.
Travis Perkins plc Annual Report and Accounts 2021
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Financial performance
Revenue analysis
Both business segments delivered strong revenue growth in 2021, although the dynamics impacting the businesses across the year were quite
different.
The Merchanting business was comparing to a period of low activity in Q2 2020 at the start of the pandemic and comparisons to 2020 are
also impacted by the subsequent restructuring programme where around 15% of Merchanting branches were closed, equating to approximately
a 9% reduction in revenue due to the branches being smaller, operationally challenged sites.
Taking these factors into account, the 11.9% revenue growth of like-for-like Merchant branches versus 2019 provides a much more meaningful
comparison and represents a very strong performance, demonstrating both the resilience of end markets and the ability of the Merchant
businesses to navigate the many challenges they have faced during the year, notably in terms of materials price increases and product availability.
After a relatively benign Q1, input cost inflation accelerated from Q2 onwards as a result of the strong recovery in construction and subsequent
shortage of key materials. In Merchanting, prices are updated in line with manufacturer increases which are invariably communicated clearly to
the market and all businesses have managed this well, focusing on ensuring that we can meet the needs of all of our different customer cohorts.
Volume, price and mix analysis
Total revenue
Volume
Price and mix
Like-for-like revenue growth
Network expansion and acquisitions / disposals
Trading days
Total revenue growth
Quarterly revenue analysis
Merchanting
Toolstation
Total Group
18.9%
9.3%
28.2%
(3.0%)
(0.4%)
24.8%
9.2%
3.1%
12.3%
7.9%
–
20.2%
17.2%
8.2%
25.4%
(1.1%)
(0.3%)
24.0%
Like-for-like revenue
2021 vs 2020
2021 vs 2019
2021 vs 2020
2021 vs 2019
2021 vs 2020
2021 vs 2019
Merchanting
Toolstation*
Total Group
Q1 2021
Q2 2021
Q3 2021
Q4 2021
H1 2021
H2 2021
FY 2021
15.7%
94.1%
15.2%
11.9%
47.3%
13.7%
28.2%
5.8%
16.1%
11.7%
14.0%
11.0%
12.8%
11.9%
42.1%
19.7%
1.4%
(5.1)%
29.8%
(2.0)%
12.3%
47.6%
38.7%
25.2%
26.4%
42.9%
25.8%
33.8%
19.5%
76.9%
13.1%
8.8%
44.1%
11.0%
25.4%
10.2%
18.6%
13.3%
26.4%
14.5%
14.4%
14.4%
Total revenue
2021 vs 2020
2021 vs 2019
2021 vs 2020
2021 vs 2019
2021 vs 2020
2021 vs 2019
Merchanting
Toolstation*
Total Group
Q1 2021
Q2 2021
Q3 2021
Q4 2021
H1 2021
H2 2021
FY 2021
5.7%
87.8%
15.1%
13.6%
37.5%
14.4%
24.8%
(2.6)%
6.4%
3.0%
6.7%
1.9%
4.7%
3.3%
49.8%
29.0%
9.1%
1.7%
38.7%
5.3%
20.2%
96.4%
83.9%
63.6%
45.9%
89.9%
54.2%
70.8%
11.5%
74.6%
14.1%
11.4%
37.7%
12.8%
24.0%
7.0%
14.3%
9.2%
11.8%
10.7%
10.4%
10.6%
*Toolstation Europe is only included in comparatives from Q4 2019 onward as it was previously not wholly owned by the Group
Toolstation delivered another year of strong growth, resulting in the market share gains across both the UK and Europe. Price increases were
much lower than in the Merchant businesses, reflecting both lower input cost inflation on lightside products and also the different pricing model
with Toolstation seeking to maintain its value leadership position. On a two-year basis Toolstation UK revenue up 54.2%, or 32.8% higher on a
like-for-like basis.
Volumes in H1 2020 were not as significantly affected by the pandemic as Toolstation pivoted to a “dark store” format and was able to maintain
a good level of trade through the first lockdown. Throughout the first 14 months of the pandemic, until the easing of Covid restrictions in late
May 2021, the business saw a dramatic increase in DIY customer spend and this is reflected in the relative sales performance during H2.
Management expects this to continue through H1 2022 before comparatives normalise in H2 2022 when the business will again cycle
against a primarily trade customer mix.
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Travis Perkins plc Annual Report and Accounts 2021
Operating profit and margin
2020 was significantly impacted by the first national Covid-19
lockdown and hence the rebuilding of revenue, alongside good gross
margin management and the benefits of the restructuring programme
undertaken in 2020, resulted in significantly increased adjusted
operating profit.
A more meaningful comparison is against 2019 where adjusted
operating profit for the continuing businesses was £296m. The
actions described above have delivered a 19% improvement
against this benchmark.
Earnings per share
The Group reported a total profit after tax of £279m (2020: loss
of £22m), resulting in basic earnings per share of 120.3 pence
(2020: loss of 9.0 pence). Excluding the £38.1m profit from
discontinued operations (2020: £13.2m), basic earnings per share
were 103.9 pence (2020: loss of 14.3 pence) and diluted earnings
per share for continuing operations were 102.6 pence (2020: loss
of 14.3 pence).
Adjusted profit after tax was £249m resulting in adjusted earnings
per share (note 20) of 107.3p (2020: 21.0 pence). Diluted adjusted
earnings per share were 105.9 pence (2020: 21.0 pence).
£m
Merchanting
Toolstation
Property
Unallocated costs
Adjusted operating profit
Aamortisation of acquired
intangible assets
Adjusting items
Operating profit
2021
2020
320
22
49
(38)
353
(11)
7
349
152
8
9
(41)
128
(9)
(93)
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Change
110.5%
175.0%
n/m
7.3%
175.8%
During 2021, the Group successfully exited the leases on a number
of branches closed in 2020 for less than the contractual lease liability,
which has generated a net credit to adjusting items of £7m. The prior
year charge primarily related to the restructuring programme
undertaken in June 2020.
Finance charge
Net finance charges, shown in note 6, were £43m (2020: £47m). The
key driver of the reduction was a £10m accelerated interest payment
in 2020 related to bond refinancing. This was partly offset by foreign
exchange movements.
Taxation
The tax charge for continuing activities for the 2021, including the
effect of adjusting items, is £65m (2020: £15m).
The tax charge for the year before adjusting items is £58m (2020:
£27m) giving an adjusted ETR of 19.7% (standard rate 19%, 2020
actual 20.1%). The adjusted ETR rate is higher than the standard rate
due to the effect of expenses not deductible for tax purposes, such as
the depreciation of property and unutilised overseas losses, partially
offset by the increase in the deferred tax asset related to employee
share schemes following an increase in the share price in 2021.
An adjusting deferred tax charge of £5m was recognised as a result
of the increase in the UK corporation tax rate and the recognition
of a deferred tax asset in respect of Toolstation Netherlands.
Free cash flow
£m
Group adjusted operating profit excluding
property profits
Depreciation of PPE and
other non-cash movements
Change in working capital
Net interest paid (excluding lease interest)
Interest on lease liabilities
Tax paid
Adjusted operating cash flow
Capital investments
Capex excluding freehold transactions
Proceeds from disposals, excluding
freehold transactions
Free cash flow
2021
2020
304
98
(152)
(14)
(21)
(60)
155
119
84
197
(28)
(21)
(28)
323
(95)
(87)
5
65
5
241
2021 saw the rebuilding of working capital as trading volumes returned
to pre-pandemic levels. The increase was driven by the strong recovery
of revenue in the Merchant businesses, where sales are predominantly
on credit terms. While stock levels increased by £205m reflecting input
cost inflation and business growth, this was fully mitigated by a
corresponding increase in creditors.
Capital investment
£m
Growth capex
IT
Maintenance
Base capital expenditure
Freehold property
Gross capital expenditure
Disposals
Net capital expenditure
2021
2020
66
9
20
95
81
176
(82)
94
42
11
34
87
26
113
(55)
58
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Financial performance continued
Base capital expenditure was £8m higher than the prior year, but there
was a significant shift towards growth investment as the business
pushed ahead with expansion plans given the strong market recovery.
Strategic capex was almost exclusively focused on Toolstation (117
new branches), Travis Perkins General Merchant new branches and
investment in new tool hire assets, including a new hub in London.
Maintenance capex was significantly lower than 2020 due to the
redeployment of fleet assets from the 2020 restructuring programme
and also the shift from tool hire replacement spend into the purchase
of new assets. The level of spend is expected to normalise in 2022 to
around £40–45m.
Freehold property purchases were significantly higher as the cash
generated from the sale of properties vacated as part of the restructuring
programme was recycled into new Merchant branches. This included
Travis Perkins sites in Battersea (which was previously leased) and
Watford and a new Keyline branch in Birmingham. Disposal proceeds
were £27m ahead of prior year with the sale of the former distribution
centre at Tilbury the key driver of this upside.
Uses of free cash flow
Free cash flow (£m)
Net freehold transactions
Acquisitions / disposals
Dividends
Cash payments on adjusting items
Share buybacks
Capitalisation of Wickes
Other
Change in cash and cash equivalents
2021
65
(3)
249
(105)
(33)
(70)
(130)
(20)
(47)
2020
241
29
1
–
(60)
–
–
86
297
With respect to acquisitions and disposals, the key transactions
during the year were the disposal of the P&H business and the
acquisition of Staircraft.
Strong cash generation and actions taken to strengthen the balance
sheet enabled the Group to reinstate the dividend during the year.
The amounts shown above includes both the 2021 interim dividend
and the special dividend paid in connection with the P&H disposal.
Net debt and funding
£m
Covenant net debt
Covenant net debt / adjusted EBITDA
Net debt under IFRS 16
Net debt excluding discontinued
operations / adjusted EBITDA
2021
2020
Change
87
0.2x
605
40
0.1x
1,397
47
0.1x
(792)
1.2x
2.0x
(0.8)x
Covenant net debt increased by £47m across the year to £87m.
This movement is principally a result of cash outflows relating to the
Wickes demerger being partially offset by the remaining c. £170m of
net proceeds from the sale of the Plumbing & Heating business which
will be returned to shareholders via the share buyback programme.
The significant reduction in net debt under IFRS 16 is due to the
reduction in lease liabilities associated with the demerger of Wickes
and the sale of the P&H business. The Group has set a target of being
in the range of 1.5 – 2.0x net debt / adjusted EBITDA and, adjusting for
the remaining P&H sale proceeds mentioned above, was at the lower
end of that range at the end of 2021.
Funding
As at 31 December 2021, the Group’s committed funding of £950m
comprised:
• £300m guaranteed notes due September 2023, listed on the
London Stock Exchange
• £250m guaranteed notes due February 2026, listed on the London
Stock Exchange
• A revolving credit facility of £400m, refinanced in January 2019,
of which £54m matures in 2024 and the remaining £346m
matures in 2025
As at 31 December 2021, the Group had undrawn committed facilities
of £400m (2020: £400m) and deposited cash of £435m (2020:
£455m), giving overall liquidity headroom of £835m.
The Group’s credit rating, issued by Standard and Poor’s, was affirmed
at BB+ following a review in August 2021, with the outlook revised to
stable from negative. The Group’s credit rating from Fitch Ratings was
affirmed at BBB- with stable outlook following a review in October 2021.
Financial risk management
The overall aim of the Group’s financial risk management policies is to
minimise potential adverse effects on financial performance and net
assets. The Group manages the principal financial and treasury risks
within a framework of policies and operating parameters reviewed and
approved annually by the Board of Directors. The Group does not enter
into speculative transactions.
The Group negotiated a new revolving credit facility with a syndicate
of eight banks in January 2019. The new facility is for a total value of
£400m with £54m maturing in January 2024 and £346m maturing
in April 2025. Built into the agreement is an option to extend the size
of the facility to £550m.
The Group’s policy is to enter into derivative contracts only with
members of its bank facility syndicate, provided such counterparties
meet the minimum rating set out in the Board-approved derivative
policy. At the year end the Group had no interest rate derivatives and
its borrowings were fixed on 100% of the Group’s cleared gross debt
(before cash and cash equivalents).
The Group settles its currency denominated purchases using a
combination of currency purchased at spot rates and currency
bought in advance on forward contracts. It purchases forward
contracts for approximately 90% of its committed requirements
six months forward based on the firm placement of forward stock
purchases. At 31 December 2021 the nominal value of currency forward
contracts was €11.0m (2020: nil) and US$20.5m (2020: US$85.0m).
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Travis Perkins plc Annual Report and Accounts 2021
The Group is a substantial provider of credit to a large portfolio of
small and medium-size businesses throughout the UK together with
some of the country’s largest construction companies. It manages
its exposure to credit risk through a strong credit control function
that works closely with the business and its customers to ensure
the Group offers credit sufficient for the needs of those customers
without exposing the Group to excessive risk. The bad debt charge
in 2021 was approximately 0.4% (2020: 0.9%) of credit sales.
In summary, the key aspects of the Group’s financial risk
management strategy are to:
• Run the business to investment-grade credit parameters
•
Reduce reliance on the bank market for funding by having
a diverse mix of funding sources with a spread of maturities
• Seek to maintain a strong balance sheet
•
Place a high priority on effective cash and working
capital management
Maintain liquidity headroom of over £250m and build and
maintain good relationships with the Group’s banking syndicate
Manage counterparty risk by raising funds from a syndicate
of lenders, the members of which maintain investment
grade credit ratings
Operate banking covenants attached to the Group’s revolving
credit facilities within comfortable margins
The ratio of net debt to adjusted EBITDA less than 3.0x. It was 1.2x
(2020: 2.0x excluding discontinued operations) at the year-end
Have a conservative hedging policy that reduces the Group’s
exposure to currency fluctuations
•
•
•
•
•
The financial ratios are calculated under IFRS as adopted by the EU
as it was immediately before the adoption of IFRS 16 – Leases.
Tax strategy and tax risk management
The Group’s objectives in managing and controlling its tax affairs
and related tax risks are as follows:
• Ensuring compliance with all applicable rules, legislation and
regulations under which it operates
• Maintaining an open and co-operative relationship with the UK tax
authorities and with the tax authorities that the Group’s overseas
businesses operate under, to reduce the Group’s risk profile
• Paying the correct amount of tax as it falls due
Tax policies and risks are assessed as part of the formal governance
process and are reviewed by the Chief Financial Officer and reported to
the Audit Committee on a regular basis. Significant tax risks, implications
arising from these risks and potential mitigating actions are considered
by the Board when strategic decisions are taken. In particular the tax
risks of proposed transactions or new areas of business are fully
considered before proceeding. The Group employs professional tax
specialists in the UK to manage tax risks and takes appropriate tax
advice from professional firms where it is considered to be necessary
for both its UK and overseas operations. The Group’s tax strategy is
published on its website.
Viability assessment
In accordance with Provision 31 of the UK Corporate Governance Code,
published by the Financial Reporting Council in 2018, the Board of
Directors has undertaken an assessment of the viability of the Group.
As part of its deliberations the Board undertook a robust review of the
Emerging and Principal Risks and Uncertainties facing the Group, how
they are managed and the actions that could be taken to mitigate their
effect or avoid them altogether. The resulting disclosures, which include
those risks that could threaten the Group’s business model, performance,
solvency and liquidity are shown on pages 18 to 39 of the Annual
Report. The Board believes the Group is well-placed to manage
those risks successfully.
The Board has decided that it is appropriate to assess the performance
of the Group over a three-year period from 28 February 2022, the
month-end date closest to the approval of the 2021 annual results.
Three years has been chosen because this is the period that it is
reasonably possible to forecast forward with a degree of accuracy.
This is because the Group is subject to the vagaries of the economic
cycle and property market which cannot reasonably be forecast with
certainty further than three years forward. Whilst the Board has no
reason to believe the Group will not remain viable over a longer period,
the inherent uncertainty involved means three years is the appropriate
period over which to give users of the Annual Report a reasonable
degree of confidence.
The Corporate Plan, which is prepared annually on a rolling basis,
considers the Group’s future profitability, cash flows, liquidity headroom,
availability of funds and covenant compliance. For the purposes of the
viability review, the Board has performed a robust sensitivity analysis
to stress test the downside scenario principally based upon the
2008/2009 financial crisis and the mitigating actions that would
be taken to protect the Group’s viability. These actions include
reducing costs, capital spend, revenue investment and payments to
shareholders, as well as restricting credit to customers. In undertaking
this analysis, the Board considered the impact of potential further
Covid-19 restrictions, as well as the effects on the wider economy
and property market from the current interest rate environment and
cost-price inflation in building materials and energy prices, as well
as general price levels. Given the Group’s trading experience in the
Covid-19 pandemic and the nature of the near-term risks to the
economy, the use of the 2008–2009 financial crisis as a model for
a prolonged downturn in the housing market remains appropriate.
Based upon the assessment undertaken, the Directors confirm that
they have a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due over
the three-year period of their assessment.
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Statement of principal risks and uncertainties
Risk management is a key factor in the successful
delivery of the Group’s strategic objectives, which
will protect and create shareholder value.
The risks and uncertainties that the Group faces continue to evolve.
Against a backdrop of continued pandemic-related disruption and
wider economic change, we have continued to take a proactive
approach to risk management to identify and pursue opportunities,
deliver our strategic priorities, and, most importantly, prioritise the
safety and wellbeing of the Group’s colleagues and customers.
Risk management framework
We operate in an industry and markets which, by their nature, are
subject to a number of inherent risks. In common with most large
organisations we are also subject to general commercial, political and
economic risks. We are able to mitigate those risks by adopting different
strategies and by maintaining a strong system of internal control which
is routinely tested and assured.
Our risk management framework has three pillars:
• Top down: activities at the Board and Group Leadership Team
levels, focused on material risks to the strategy and operations.
• Bottom up: activities across the Group that capture risk perspectives
that are significant at a business unit, programme or functional level.
• Emerging risk: new and emerging risks are considered through the
regular risk activities above, the results of assurance activities, and,
at least twice a year, through a process that assesses our risk set
against external benchmarks.
The output from each pillar informs the process to determine our
principal risks.
Responsibility and oversight
The Board has overall responsibility for risk management and internal
controls, and for reviewing their effectiveness at least annually.
The Board is supported in its assessment by the work of the Audit
Committee, which regularly assesses the risk framework and the
results of key assurance processes, including the work of Internal
Audit, to provide assurance to the Board that risk is being effectively
managed throughout the Group. During the year the Board reviewed
and reconfirmed its approach against the latest FRC guidance and good
practice examples. Further details on risk management responsibilities
and oversight are given in the corporate governance report on page 83.
Risk appetite
The Board accepts that, in order to achieve its strategic objectives and
generate suitable returns for shareholders, it must accept and manage
a certain level of risk. It undertakes an exercise, at least annually, to
consider the nature and level of risk it is prepared to accept to deliver
the strategy. Risk appetite is set across a suite of risk categories directly
relevant to the Group, supported by high-level risk statements which
set out the expectations for the management and control of each
category of risk. The resulting assessment of risk appetite has been
set to balance opportunities for growth and business development in
areas of potentially higher risk and return, whilst prioritising safety and
maintaining the Group’s reputation, legal and regulatory compliance
and the desired high levels of customer service and satisfaction.
Risk assessment and reporting
Our risk management processes aim to identify and assess risks
before they impact on activities, and position the businesses and
support functions to effectively manage those risks and leverage
related opportunities. The Board has developed a risk reporting
framework that ensures it has visibility of key risks, the potential
impacts on the Group and how and to what extent those risks
are mitigated.
Our risk management activities continue to be developed to support
management’s assessments of threats and opportunities that could
materially impact strategic delivery, performance, compliance and
reputation. Whilst Covid-19 has continued to influence risk activities
in 2021, there has also been a focus on risk management in the context
of the new strategy and on embedding regular assessment into key
strategic work streams and performance reviews. This has driven an
increased focus on risk and opportunity management at key decision
points. We have continued to develop the risk assessments that
underpin the Group’s suite of minimum standards for ESG focus
areas, which include a risk and opportunity register for climate change.
Risk assurance
We operate a “three lines of defence” model to obtain assurance that
major risks are adequately mitigated and controlled, as set out below.
Oversight is ultimately provided by the Group Leadership Team and
the Audit and Stay Safe Committees, which includes regular review
of progress against agreed improvement actions. Regular updates
on assurance activities are provided to the Board.
Line of defence Source of assurance
Nature of assurance
Direct assurance: Execution of policies and procedures,
training completion, management controls and monitoring,
key performance indicators and self-assessments
Oversight
Business leadership teams
Management assurance: Risk-management programme,
compliance and monitoring activities, central governance
processes (including the setting of policies, procedures
and training)
Group Leadership Team
Stay Safe Committee
Independent assurance: Internal audit activities, third party
audits and reviews that objectively assess the adequacy
and effectiveness of governance, risk management and
controls and support continuous improvement
Audit Committee
Stay Safe Committee
1st
Business operations and
operational management
Branches and distribution
centres
2nd
Central functions
Includes Safety, Fleet, Legal,
Finance, IT and HR
3rd
Independent reviews
Includes internal audit, external
audit and other third parties
40 Travis Perkins plc Annual Report and Accounts 2021
Principal risks
The principal risks that we consider to have a potentially material impact
on the Group’s operations and the achievement of its strategic objectives
are set out below. Further detail in respect of the potential impact of these
risks and the mitigating actions taken are explored on the following
pages. The scope and potential impact of risks will change over time.
As such the risks set out below should not be regarded as a
comprehensive statement of all potential risks and uncertainties that
may manifest in the future. Additional risks and uncertainties that are not
presently known to us, or which are currently deemed immaterial, could
also have an adverse effect on the Group’s future operating results,
financial condition or prospects.
Risk category
External
Strategic
Technological
Operational
Principal risks
1. Long-term market trends
2. Pandemic
3. Macroeconomic volatility
4. Supply chain resilience
5. Managing change
6. Climate change and carbon reduction
7. Cyber threat and data security
8. Health, safety and wellbeing
9. Legal compliance
10. Critical asset failure
Strategic objective
ABCD
AE
BC
ABCDE
D
D
D
D
BCD
Risk trend
2021
1
1
N
h
1
N
h
1
1
N
2020
h
N
h
1
1
1
h
Inherent risk
High
Medium
Medium
High
Medium
High
High
Medium
Medium
Medium
Key
A Operating and leading in attractive markets
B Leading the evolution of the merchanting model
C Maximising the potential of Toolstation
D Leveraging the power of the Group
E Delivering attractive financial outcomes
N New
h
Increasing
i Decreasing
1 Limited change year-on-year
The Board and Group Leadership Team robustly assess the Group’s
principal and emerging risks at least twice a year. During 2021 the Board has
considered principal risks at four meetings, including detailed assessments of
external and internal developments and influences on the risk set.
Key disruptive risks that may impact the viability of a strategy or business
model are also identified and managed. Whilst several principal risks,
particularly long-term market trends, include elements that can be
considered disruptive in nature, they are categorised here according
to the primary driver of the risk for the Group.
Key changes in the year
The risk environment in which we operate does not remain static and the
Board has made a number of changes to the principal risk set in 2021:
• Following the successful completion of the Wickes and P&H
transactions, the Board no longer considers Portfolio
Management to represent a principal risk.
• Risks in relation to Market Conditions and the Changing Customer
and Competitor Landscape have been combined within the Long
Term Market Trends, which present both risks and opportunities
for the Group as it executes its new strategy.
• In light of availability challenges and inflation during 2021, a
shorter-term Macroeconomic Volatility risk has been introduced,
whilst the Group actively manages these developments.
• The existing risk in relation to suppliers has been re-focused on
Supply Chain Resilience, which remains an area of focus post-Brexit
and in light of ongoing pandemic-related impacts. Longer-term,
our ESG commitments, which place additional requirements on
the supply chain, may impact sourcing decisions.
• The Managing Change risk brings together elements of the former
People, Change Management and IT Systems and Infrastructure
principal risks to recognise the risks and opportunities associated
with delivering strategic and technology-enabled change.
• We are committed to responding to climate change impacts in our
own business and helping the construction industry to decarbonise.
Given our ambitions and commitment to industry-leading net zero
carbon targets, we have recognised Climate Change and Carbon
Reduction as a principal risk for the Group.
• Whilst the pandemic in 2020 tested and confirmed our ability to
respond to operational disruption, our risk profile is changing as we
add new fulfilment channels and services, so we have included a
new principal risk in relation to Critical Asset Failure.
Principal risks heat map:
After mitigating actions or controls
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Emerging risks
As part of the overall risk assessment process, and in line with the
requirements of the UK Corporate Governance Code, we capture and
monitor areas of uncertainty that do not currently present a significant
risk but which have the potential to adversely impact the Group in the
future. These emerging risks are identified from regular reviews of risk
research and other publications, alongside perspectives on emerging
risks collated from assessments made by the business unit and
functional leadership teams and the results of assurance activities.
The emerging risks considered by the Board during 2021 included
consideration of data and digital technologies, the proposed reforms
to corporate governance in the UK and renewed calls for a referendum
on Scottish Independence.
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Statement of principal risks and uncertainties continued
Long-term market trends
Inherent risk: High
Change in risk level: 1
Relevance: Industry-wide
Description
The construction sector is changing, driven by both macro and sector-
specific factors. The fundamental long-term market drivers are robust
and a number of industry trends present both opportunities and risks
for the Group:
• Traditional ways of working in the industry will change, driven by
technology and an increasing move to modern methods of construction.
• There is a need to address a growing productivity challenge in the
construction sector alongside an increasing scarcity of technical
knowledge and general labour shortage.
• Customers want digitally-enabled solutions. Our ability to deliver
platforms that meet customer demand and keep pace with competitor
developments will impact longer-term growth and delivery of our strategy.
• Our ability to provide innovative fulfilment solutions combined with digital
models will be a key differentiator. This could draw new entrants into the
market, operating business models which differ significantly from the
traditional merchanting and online formats.
• Increased digitisation and the development of fulfilment capabilities may
also increase the risk that manufacturers of the materials and products
that we sell look to sell directly to end customers in the future,
diminishing our role as a distributor.
• ESG factors are becoming more fundamental to long-term success.
• Central UK government policy drives a need to manage changing
building standards and the future framework for heat in buildings
through the products and services that we offer.
Mitigation
We are well positioned to adapt quickly to these trends and changing
conditions and are choosing to be an active leader as the market changes.
Our businesses all hold #1 or #2 positions in their markets, which facilitates
the addition of services that deepen relationships to earn a greater share of
spend. The Group also has a balanced portfolio of businesses giving insight
into different business models.
We are establishing a number of partnerships to work with companies
involved in modem methods of construction.
We continue to make progress in digitising key customer journeys
and building tools that complement our existing operations and enable
customers to transact through different channels that best suit their needs.
We are also trialling new fulfilment services to give customers further
flexibility and choice.
We maintain a comprehensive tracking system for lead indicators that
influence the market for the consumption of building materials in the UK.
The Board conducts an annual review of strategy, which includes an
assessment of likely competitor activity, market forecasts and possible
future trends in products, channels of distribution, disintermediation
threats and customer behaviour.
Impact: Adverse effect on financial results, loss of market share
Pandemic
Inherent risk: Medium
Change in risk level: 1
Relevance: Industry-wide
Description
A prolonged global health threat and associated government restrictions
could adversely impact our operations and colleagues’ health. The Group
remains exposed to the impact of the Covid-19 pandemic in its UK and
European operations and across the territories in which its suppliers
are based.
Whilst the Group has successfully managed Covid-19 impacts and
restrictions to date, it remains exposed to a risk of new variants and/or
diseases, which may present different challenges from those navigated
so far and require governments to introduce further measures to mitigate
the associated health, economic and societal impacts.
Central UK government, and the devolved authorities in other parts of the
UK, deemed the Group to be an essential provider to ensure critical national
infrastructure remains operational and homes remain warm and dry. Any
change to this status would significantly impact our operations and results
in the event of another lockdown.
The pandemic remains a factor influencing wider market conditions and
uncertainty. This may weaken consumer confidence and adversely impact
demand for our products and services.
Mitigation
The safety and wellbeing of colleagues and customers remains
the overriding priority in our continued response to the pandemic.
Tiered crisis response teams were mobilised before the first UK lockdown
to coordinate activity. These teams continue to monitor the situation closely,
with regular oversight from the Board, and update measures, advice and
communications as required.
We have procedures in place that protect both colleagues and customers
whilst continuing to trade. These are assessed regularly to ensure continued
alignment with the latest government guidance.
We maintain strict, enhanced hygiene routines across the Group’s estate.
New properties and refurbishments, including our newly created office
“Hubs” for support colleagues, incorporate air circulation and other
protections that significantly reduce the risk of infection transmission.
We have introduced hybrid working for those colleagues who are able
to work from both home and a Group location, which provides greater
flexibility for colleagues and, in the event of a surge in infections,
can be flexed to support remote working.
Impact: Detrimental impact to health and wellbeing, operational disruption arising from colleague absence,
stock availability issues due to supply chain disruption
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Travis Perkins plc Annual Report and Accounts 2021
Macroeconomic volatility
Inherent risk: Medium
Change in risk level: NEW
Relevance: Industry-wide
Description
Our end markets in construction are cyclical in nature and our performance
is affected by general economic conditions and a number of specific drivers
of construction, repairs, maintenance and improvement and DIY activity.
In the last year, our lead indicators, which include the volume of housing
transactions, house price inflation, and consumer confidence, have
shown considerable volatility and growth has been more erratic.
This is influenced by the pandemic, which has driven rapid moves to higher
levels of inflation globally. In the UK, this has been exacerbated by certain
Brexit-related developments that have particularly contributed to labour
shortages, notably commercial drivers, with resultant salary cost pressure.
Driver availability is critical to the operation of our fleet to meet customer
delivery expectations.
Our operations are mainly based in the UK, serving UK customers,
with a small but growing presence in the EU. These operations rely on a
multi-territory supply base that exposes us to wider economic and political
uncertainty.
The Group, and the wider construction sector, has faced interruptions to
supply across certain product categories during 2021, greater instances
of allocation and rapid price rises. Whilst the Group has navigated these
challenges well to date, and there are signs that things are improving,
some uncertainty remains, including the threat of further inflation or
even deflationary pressures.
Mitigation
We have taken steps to reduce the Group’s exposure to retail markets
and our strategy is to develop value-added services, both leaving the
Group less closely correlated to the economic cycle which should
reduce future volatility.
We undertake constant product price and availability monitoring across
our businesses. The market positions of our businesses and strong
relationships with our suppliers, as set out opposite, have been leveraged
during this uncertain period to ensure that wherever possible the Group
maintains adequate stocks to meet demand during an extended period
of disruption. Where availability is less challenged, buffer stocks are held.
Pricing strategies across the Group are regularly reviewed and we have
been successful in 2021 in working with our customers to pass through
higher input costs in the most transparent and fair way possible.
Policy and legislative changes that may impact our businesses are monitored
and, where appropriate, strategies are devised to influence these changes by
using the Group’s leading position to input into Government agendas.
We regularly benchmark salaries and other benefits to ensure that the
Group offering remains competitive.
Our strong cash position allows us to build depth of stocks and ensure
that supply is adequate and we are well positioned to manage supply
chain volatility.
We have a conservative hedging policy to reduce our exposure to
currency fluctuations.
Impact: Operational disruption, adverse effect on ranging and price, customer service and financial results
Supply chain resilience
Inherent risk: High
Change in risk level: h
Relevance: Industry-wide
Description
A resilient supply chain is a critical factor in serving our customers and
achieving our strategic objectives.
There is both breadth and depth to our supply chain. The Group sources
products from across the globe and sells a wide range of products, from
materials such as timber through to power tools comprised of many
components.
In certain product categories, we face risk in relation to key supplier
dependencies, where there are limited alternative options. We are the
largest customer to a number of our suppliers and, in some cases, those
suppliers are material enough to cause us significant difficulties and
disruption if they are unable to meet their supply obligations. Alternative
sourcing may be available, but the volumes required and the time it may
take those suppliers to increase production could result in availability issues.
The pandemic has tested our supply chain’s ability to ensure continued
supply and respond quickly to changes in demand. Further disruption
as a result of this pandemic, or other global crises, could further challenge
the resilience of our supply base, and impact the Group.
ESG matters are increasingly important to us and our customers. This
places additional requirements on the supply chain, which are likely to
increase over time. This helps in the assessment of resilience but, with
responsible sourcing a leading commitment for the Group, this could
further restrict supplier options if they do not meet our standards.
Mitigation
We maintain strong relationships with our key suppliers and work closely
with them to agree contracts that are mutually beneficial, conduct due
diligence in line with our commitment to responsible sourcing, and ensure a
continuous supply of quality materials.
Where possible, contracts exist with more than one supplier for key
products, to reduce the risks of dependency on a sole supplier.
Since we began preparing for Brexit, we have increased our supplier liaison
and review activities. This has further strengthened relationships with
suppliers and helped us to understand specific risks and take targeted
mitigating action.
We keep stock levels under constant review and, helped by the market
position of the Group, have managed recent availability issues well in
conjunction with our suppliers.
We have made a significant investment in our TP Asia office to support
direct sourcing. This allows the development of own brand products,
thereby reducing the reliance on branded suppliers.
We have published Supplier Commitments that articulate our expectations.
Independent checks are undertaken on the factories producing products
for the Group, covering ethical, safety, environmental, financial and quality
factors. The results of these checks are kept under review with action taken
as necessary to address any concerns.
Impact: Adverse effect on ranging, customer prices, customer service and financial results
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Statement of principal risks and uncertainties continued
Managing change
Inherent risk: Medium
Change in risk level: 1
Relevance: Company specific
Description
Embracing and effectively navigating change is fundamental to our future success.
Strategic change
Our strategy to deliver growth and added value is built upon innovation and the
delivery of new business models and ways of working. This will demand some
capabilities that are different from our traditional merchanting skill set. We will
need to build new services, digitise our businesses and adapt to new ways of
working within the industry, all whilst maintaining a high level of service to our
more traditional customers for whom change will come more slowly. Our
ability to attract and retain colleagues, and add capability through targeted
acquisitions, is central to ensuring that we have the skills and experience to
deliver the strategic initiatives set out on pages 20–27.
Technology-enabled business change
We have embarked on a number of major technology projects to underpin our
operations, enable our future growth plans and meet customers’ changing
needs. Delivering the systems and associated change required is key to
successful execution of the strategy.
In adopting a more agile, incremental approach to business change, enabled
by technology, we will need to manage an extended period of transition where
old and new technologies must successfully co-exist. There is significant risk
associated with IT-enabled business change programmes including risks
in relation to prioritisation and sequencing, resource allocation, cost and
time overruns, testing and business acceptance. These risks, alone or in
combination, could impact our short-term performance and achievement
of our longer-term strategy.
Mitigation
All potentially significant projects are subject to detailed
investigation, assessment and approval prior to commencement.
We create dedicated teams to deliver major programmes with external
expertise added to support when necessary. Our strategic initiatives
consider the related capability requirements and, as demonstrated
in taking full control of Staircraft this year, we will make bolt-on
acquisitions when needed to deliver an opportunity that is
strategically significant.
All major programmes are ultimately governed by the Group
Programme Review, overseen by the CEO, CFO and COO and
managed by a dedicated PMO with regular reporting to the Board.
This review considers the portfolio of programmes in terms of
progress, milestones, interaction, key decisions, risks and requirements.
If projects do not deliver against expectations, we undertake exercises
to capture the “lessons learned” which are fed into future programmes.
The Group considers people development and diversity and inclusion
to be among its leading commitments and has plans in place to deliver
the pillars of its People agenda: attract, belong, deliver, learn and grow.
Impact: Failure to deliver the strategy, adverse effect on financial results, shareholder value, colleague engagement
Climate change and carbon reduction
Inherent risk: High
Change in risk level: NEW
Relevance: Industry-wide
Description
Climate change has the potential to significantly impact the construction
sector during the transition to a low carbon environment. Change is virtually
certain but the nature, extent and scale of change remains unclear We are
committed to helping the industry to decarbonise by using the most efficient
products, supplied in the most efficient way, to produce the right outcomes
for communities. This commitment not only promotes a sustainable and
value-generating business model, underpinning our ambition to be the
leading partner to the construction industry, but more fundamentally aligns
with our purpose to help build better communities and enrich lives, fulfilling
our responsibility to take action now and influence the wider industry, to mitigate
the significant threats posed by climate change.
We assess our top climate-related risks to relate to:
• The move to a low-carbon fleet, given we have one of the largest
UK vehicle fleets
• Increasing costs of goods due to producer country carbon
pricing mechanisms
• The ability to transition to new lower-carbon product categories
• Product obsolescence for higher-carbon product categories
We have set industry-leading carbon reduction targets, approved by the Science
Based Targets initiative. Delivering these targets will be challenging. It requires
significant investment and engagement with the wider construction products
industry to reduce supply chain and product carbon.
Environmental matters are increasingly important to our colleagues, customers,
suppliers, investors and government, driving changes to demand, expectations
and information requirements, which we must identify and effectively respond to.
Mitigation
We regularly identify our most material climate-related responsibilities
and challenges in order to target investment and manage them well.
The Board’s role in climate change governance is well established.
During the year the Board has undertaken climate-awareness sessions
and received regular reports on the most material related risks and
opportunities for the Group, the actions being taken and the
progress made.
Scenario analysis has been developed this year to consider how the
Group might perform under different future pathways, the results from
which underpin our carbon reduction plans and support our reporting
under TCFD.
We allocate capital to meet our stated commitments. This year we
continued to invest in our built estate to improve energy efficiency, using
low carbon, renewable energy systems where possible, such as LED
light installations, air source heat pumps and solar panels. We also
added our first fully electric HGV in CCF and started the trial of
hydrotreated vegetable oil (HVO), a low carbon alternative to diesel
which can reduce emissions by up to 90%.
We have a plan of engagement with our supply chain, both upstream
and downstream, to encourage the reduction of their emissions and
the embodied carbon in products as part of our commitment to tackle
our Scope 3 emissions.
Further information on progress made during the year can be found in
the Sustainability report on pages 52 to 71.
Impact: Adverse effect on reputation, financial and operational performance, competitive disadvantage,
less attractive as an investment stock
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Travis Perkins plc Annual Report and Accounts 2021
Cyber threats and data security
Inherent risk: High
Change in risk level: h
Relevance: Industry-wide
Description
Incidents of sophisticated cyber-crime represent a significant and
increasing threat to all businesses including the Group. As we seek
to meet our customers’ increasing digital expectations and drive
competitive advantage in this area, the underlying data is attractive
to external attackers whose methods and global footprint are rapidly
evolving. There is therefore a balance to be struck between increased
digitisation and availability of data against the risks that such
activities introduce.
Incidents impacting the confidentiality, integrity and availability of
our data and systems could result in disruption to customer-facing,
supplier-facing and financial systems through theft and misuse of
confidential data, damage to or manipulation of operationally critical
data or interruption to our IT services, any of which may have serious
consequential impacts on our reputation, ability to trade and
compliance with regulations including GDPR.
We assess our main risk of attack to be from opportunistic criminals,
seeking financial gain either from the theft and sale of personal data
or ransom payments, either directly or as the result of supply chain
attacks. Over the past year we have seen a continued increase in the
volume, frequency and sophistication of attempted cyber-attacks.
Our strategy to modernise and digitise capabilities also presents
a further dimension to cyber and data security risk.
Using personal data in a non-compliant manner (whether deliberately
or inadvertently) may exacerbate the impact of security incidents.
Mitigation
We take our responsibilities and legal obligations in respect of data security
and protection seriously and focus on a combination of people, process and
technology to reduce the likelihood and impact of cyber incidents.
Our growing Information Security team aligns our approach to the National
Institute of Standards and the Technology Cybersecurity Framework. Alongside
user awareness and education, best of breed security controls and technologies
are key to reducing the likelihood of an attack and are regularly tested. These
include firewalls, virus protection, email threat protection and intrusion detection.
A combination of penetration testing, vulnerability scanning and breach
simulation technology is used to continually test and measure our security
posture and address any vulnerabilities.
All changes to technology solutions require Information Security review
and approval.
Our 24/7 security operations centre, designed to monitor for suspicious activity
and behaviours and work with resolver teams, has been further optimised since
its introduction in 2020.
Our cyber-incident response protocol is regularly updated with lessons learned
from responses to attempted attacks and external cases. Third party forensic
capability is in place, if needed, to support our response capability.
We continue to prioritise a number of initiatives to further minimise the
risk profile, including programmes focused on the optimisation of security
technology, increasing user awareness and maintaining GDPR compliance,
which is crucial to reduce both the likelihood and impact of cyber threat and
data security risk.
Impact: Operational disruption, adverse effect on reputation, potential legal action, fines and penalties
Health, safety and wellbeing
Inherent risk: Medium
Change in risk level: 1
Relevance: Industry-wide
Description
Keeping our colleagues, customers, suppliers and the public safe
is a cornerstone of the business and central to how we operate.
A workforce that is safe and physically and mentally healthy,
is the foundation of everything that we do.
We expect everyone to go home safe and well, every single day.
We operate a large estate, with many sites running complex and
busy yards. We also operate one of the largest vehicle fleets in the
UK, distributing heavy and bulky materials. Certain products that we
sell pose health and safety risks. Poorly implemented safety practices
on site, on the road and at delivery locations could result in significant
harm to our colleagues, customers and the wider community.
The Covid-19 pandemic remains a threat to the health and wellbeing
of our colleagues and the safe operation of our businesses. The tactical
steps we have taken to respond to the challenges of the pandemic are
set out in the separate Pandemic risk.
Mitigation
Health, safety and wellbeing is one of our fundamental values. We continue
to challenge our thinking and approach to de-risk our operations and improve
safety performance through our established “Stay Safe” brand. We strive
to foster an open reporting culture around safety. Colleagues continue to be
encouraged to “Call It Out” if they see anything that they consider to be unsafe
and regular communications highlight examples where “calling it out” has
avoided a safety issue.
Governance of Stay Safe is well established and designed to promote a
continual focus on health and safety. Stay Safe performance is reviewed
at all Board Meetings, by the Group Leadership Team, by every business
leadership team and by the dedicated Stay Safe Committee, which is chaired
by a Non-executive Director. In these forums we also monitor the achievement
of transport compliance requirements. The Fleet team has focused this year
on the delivery of improvements against its roadmap.
Incidents are monitored, investigated and corrective action taken to address
the root cause. An Incident Review Board is held in the event of a significant
incident, with the lessons shared across the Group.
Our support for mental health and wellbeing has increased this year,
with a significant expansion of our Mental Health First Aider population,
the introduction of Stay Well Ambassadors and investment in a range
of resources, accessed through the Stay Well Hub.
Further information on progress made during the year can be found
in the Health and Safety report on pages 56 to 57.
Impact: Harm to our colleagues, customers or the public, potential legal action, fines and penalties, adverse effect
on reputation
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Statement of principal risks and uncertainties continued
Legal compliance
Inherent risk: Medium
Change in risk level: 1
Relevance: Industry-wide
Description
We are subject to a broad range of existing and evolving governance
requirements, environmental, health and safety and other laws, regulations,
standards and best practices which affect the way that we operate and give
rise to significant compliance costs, potential legal liability exposure for
non-compliance and potential limitations on the development of our
operations and strategy.
Should we fail to deliver against our legal and regulatory obligations, as well
as broader responsibility commitments, this could significantly undermine
our reputation, result in legal exposure and adversely impact our operations.
Regulatory change driven by the Grenfell disaster will drive new
requirements in terms of product chain of custody. The potential
introduction of an attestation of internal controls in the UK, similar in
nature to the US Sarbanes-Oxley legislation, and the replacement of the
Financial Reporting Council with a new regulatory body, will also require the
Group to assess current processes, reporting and assurance requirements.
Mitigation
The General Counsel’s Office is responsible for monitoring changes to
laws and regulations that affect the business and is supported by external
advisors. The Group Leadership Team and the Board regularly monitor
compliance with laws and regulations.
A Code of Conduct, supported by minimum standards and detailed
policies, sets out our requirements on all colleagues to do business in the
right way. This is underpinned by a comprehensive framework of policies.
We share Supplier Commitments with our suppliers to articulate our
expectations and higher risk suppliers are assessed against these
requirements using an Online Risk Assessment.
We provide online training in key areas of legal and regulatory compliance,
including mandatory modules that are revisited by colleagues to a set
cadence.
We encourage colleagues to speak up whenever they see or suspect
activity that contravenes our values and policies. We relaunched the
Speak Up! hotline, provided through an independent third party, this
year. All reported cases are investigated.
We continued to develop and improve the existing compliance and
assurance framework in 2021. Significant progress has been made in
implementing a suite of Minimum Standards that set clear expectations
to support policy adherence.
Impact: Adverse effect on reputation, financial and operational performance; potential legal action, fines and penalties;
diversion of management attention
Critical asset failure
Inherent risk: Medium
Change in risk level: NEW
Relevance: Company specific
Description
Disruption of a critical Group asset, whether a primary distribution
location, or a key system failure or outage, could significantly interrupt
our operations. More generally, if we are unable to effectively respond
to global or national events, such as a pandemic, which may impact
multiple sites simultaneously, this could also significantly impact
operations and performance.
Distribution Centres
We operate a small number of distribution centres with significant
stockholdings and an increasing volume of deliveries are now shipped
direct to the end customer. Whilst many categories, particularly lightside
products, are held throughout the network such that a short period of
disruption could be managed, certain categories such as kitchens would
present more significant challenges over a prolonged period of disruption.
Certain distribution locations hold product, and related handling equipment,
that is not carried elsewhere in the network.
IT Systems
In our day-to-day operations we are dependent on a wide range of IT
systems and supporting infrastructure. Our current IT landscape is complex
and includes legacy systems that lack the functionality of modern software
and where expertise is diminishing. Although adequate resources and
processes are in place that keep the current IT estate well maintained
and operational, the older systems present an increasing risk of failures
or outages and require more effort to maintain. Our IT modernisation
plans will lead to the replacement of a number of legacy systems.
Mitigation
Business continuity management
We take a risk-based approach to business continuity management.
Key distribution locations maintain business continuity plans which
cover a range of scenarios. Regular prevention measures, such as fire risk
assessments, are undertaken across the estate as well as maintenance
programmes, in order to reduce the risk of internally-generated disruption.
Our size and scale helps to mitigate stock issues in the event of disruption.
We carry a level of buffer stock in the network that would be sufficient to
cover a short-term disruptive event. We have the ability to leverage the
lightside capability in Toolstation to support an issue in Travis Perkins,
and vice versa. Branch-level disruption would be managed by fulfilling
orders from alternative local sites and re-routing stock.
Crisis management
The Covid-19 pandemic confirmed our crisis response capability was
effective. Tiered crisis response teams were mobilised before the first UK
lockdown to coordinate activity and provide ongoing monitoring, decision
support and communications. A lessons learned exercise informs the
refreshed crisis management framework, which we will roll out to the
business in 2022.
IT Disaster Recovery
Our IT disaster recovery plans are regularly tested and the results assessed
to drive further improvements. Our incident management process is
designed to prioritise and respond to any incident quickly and effectively,
with escalation and communication protocols. Recovery targets are in
place and are designed to minimise the operational and customer impact.
Impact: Adverse effect on performance: financial, operational, customer service; diversion of management attention
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Climate-related financial disclosure (in line with TCFD guidelines)
Governance
Scope and sphere of influence.
The market for construction materials is over £76bn with £60bn
coming through distribution channels. The Group has a 7.5% share of
this addressable market, serving generalist and specialist customers
that range from the smallest jobbing tradesperson to the largest
national contractor or housebuilder. The Group operates over 1,500
distribution sites and has a turnover of £4.6bn and a fleet of over
5,500 owned or leased commercial vehicles or plant.
Leadership role
Decarbonisation of our own business and our supply chain is one of the
Group’s purpose goals, as shown below.
Group purpose
We’re here to help build better
communities and enrich lives
Group ambition
Leading partner to the construction industry
Modernising
construction
Leading the development of future
construction processes that enables
the industry to build better, higher
quality outputs in a safer and more
sustainable way
Decarbonising
our industry
Helping the industry to decarbonise
by using the most efficient products,
supplied in the most efficient way
to produce the right outcomes for
our communities
Developing the
next generation
Impact a generation of young people,
enriching their lives through work
experience, skills building and
career opportunities
Driving strong total shareholder returns
The Group has sector-leading commitments to reduce carbon in line
with a 1.5 degree pathway across the value chain. To monitor delivery
of this commitment, the Group has two key long-term targets which
have been verified by the Science-Based Target initiative (“SBTi”).
For more information on the Group’s carbon agenda see page 60.
The scenario analysis conducted by the Group during 2021 identifies
that an early adoption pathway has the lowest risk and best financial
opportunities for the Group. Consequently the Group will advocate
for progressive action on climate change in line with these scenarios.
The Group’s targets are SBTi-approved as being in line with a
1.5 degree pathway. By 2035 Travis Perkins will have reduced
absolute Scope 1 and 2 GHG emissions by 80% and Scope 3
emissions by 63% from a 2020 baseline.
Advocates for change
The Group’s CEO chaired the Construction Leadership Council’s
debate at COP26 in Glasgow in November 2021. The Group is a
CO2nstructZero Business Champion, taking a leading role in delivering
against the performance metrics determined by the Construction
Leadership Council for the sector to achieve Net Zero by 2050.
Suppliers attending the 2021 Group Supplier Conference were
asked to calculate and reduce their carbon.
Accountabilities
Climate change is a boardroom topic with the CEO setting the agenda.
Carbon strategy is directed by the CFO with delivery steered by the
Group’s Sustainability Director, Head of Environment and Fleet and
Property departments and owned by the Group’s businesses. The
management reporting cycle on carbon is at least quarterly, with 11
sessions with the Group Leadership Team or plc Board during 2021.
The Board has recognised the strategic importance of managing
climate-related risks and opportunities due to the Group’s ongoing
materiality and contextual analysis. For more information, see the
climate change principal risk on page 44.
Alignment of incentives to carbon commitments
The 2021 bonus targets for the Group Leadership Team included a
Scope 2 carbon reduction target and strategic performance in carbon
reduction (see page 92). In addition, the new restricted stock scheme
includes a climate-related performance underpin.
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Travis Perkins plc Annual Report and Accounts 2021
Strategy
The material considerations in achieving the Group’s strategic
commitment to the transition to a low carbon economy include:
• Accelerated trends in product replacement and the associated
changes to the Group’s business model, including the move away
from fossil-fuel boilers
• The need to adapt the Group’s branches and fleet to be low carbon
or no-carbon
• Changes to customer projects and locations that may impact the
Group’s estate
Strong customer and supplier partnerships remain key in achieving a
successful transition.
Our low carbon transition plan
The Group has shared the roadmaps to 2035 for Scopes 1, 2 and
3 on its corporate website (https://www.travisperkinsplc.co.uk).
Key activities include:
Reducing the embodied and in-use carbon of products sold
(Scope 3 represents 99% of the Group’s footprint)
• Working with the whole value chain to phase out fossil-fuel boilers
from sales by 2035. This primarily relates to commercial gas boilers
sold by the BSS business.
• Reducing the Group’s total forecast emissions in 2035 by 25%
through reduction of the embodied carbon in the goods the Group
sells. This will be achieved through influencing supplier action and
supporting their uptake of new technologies such as carbon capture
and storage and introducing alternative products where carbon
reduction is not viable.
Improving in-use product efficiencies at a higher rate than
International Energy Agency modelling between now and 2025.
•
•
Decarbonisation of the fleet and estate
(Scopes 1 & 2 represent 1% of the Group’s footprint)
• Phasing in the use of hydrotreated vegetable oil (“HVO”) fuel for
diesel engines from 2021, scaling up over 5 years. The first 30
HGVs were moved to HVO in 2021.
Introducing electric or alternate technology HGVs from 2026 at
the latest. The first electric HGV was deployed in 2021 as a pilot
to inform the Group’s roadmap and the Managed Services fleet
now has two electric vans.
Improving the energy efficiency of buildings. In 2021 the
Group moved to a 100% renewable energy tariff for all UK sites.
• Continuing to move from gas boilers to air-source heat pumps
•
and other low-carbon technologies to heat the Group’s branches
and offices.
Risk management
As climate governance is integrated into business decision-making, the
principal risks and uncertainties are recorded and reported with other
business risks and uncertainties on p44. The identification of risks and
opportunities around climate change uses the same complementary
likelihood and impact criteria as other Group risks and the assessment
covers direct and indirect physical and transitional impacts. A detailed risk
assessment process is conducted annually to identify any emerging risks
and ensure the assessment of impact from all risks and the selection
of management approach is appropriate. Details on the most material
climate risks and opportunities have been published annually for the
last ten years in the Carbon Disclosure Project (CDP) climate disclosure.
The uncertainties around impacts are considered via scenario analysis.
In 2021, the Group carried out a climate-related risks and
opportunities assessment and engaged with specialists at PwC
to support in developing its scenario analysis. An internal team of
key stakeholders, including the Group’s Chief Financial Officer, then
identified key business and strategic impacts to ensure that these are
adequately considered.
Scenarios and modelling process
The Group selected three scenarios outlining possible physical
and transitional impacts out to 2050: no additional action, early action
and late action. The scenarios used are from the Network for Greening
the Financial System and are the same scenarios used by the Bank of
England in its Climate Biennial Exploratory Scenario publication which
explores the financial risks from climate change.
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Scenarios
Early action
Late action
No additional action
Action taken early and effectively. Net zero CO2
emissions are achieved by 2050, limiting
temperature rise to 1.8˚C. Physical and
transition risks are both low.
Action is delayed until 2031 and is more
sudden and disorderly. Global warming limited
to 1.8˚C with sharper emissions reductions.
Higher transition risk and short term
macroeconomic disruption.
No further action is taken on climate change and
even current obligations are not met. Hence GHG
emissions grow unchecked leading to +3˚C of
Global warming and severe physical risks.
Transition risks are low.
Travis Perkins plc Annual Report and Accounts 2021
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Climate-related financial disclosure (in line with TCFD guidelines)
continued
Scenario risk lenses
The climate change impact under
each of the three scenarios was
modelled through four key risk
lenses for the Group, including
the following examples.
Investment risk
• Costs of decarbonising
the fleet
Supply chain risk
• Key physical locations across
the supply chain, including the
largest ports and the highest
revenue and traffic sites
• Supply issues due to
increasing frequency of
weather extremes
Climate
change
impact on
the business
Energy and utilities risk
• Electricity costs from switching to
a decarbonised vehicle fleet
• Charges for use of electricity
and gas in the business
• Cost of the diesel, Hydrogenated
Vegetable Oil (HVO) and
electricity used to
power the fleet
Product sales risk
• Increasing sales of sustainable
products and raw materials to
support energy transition
• Changes in sales of carbon-
heavy products
• Potential introduction of
emission tax on products
Two examples of modelled data are shown below:
Total capital investment and maintenance cost for fleet
Scenario assumptions
The Group had to make assumptions to be able to model
impacts under different scenarios. These included:
• The retention of current market share in all categories
where the Group is active
• Full international implementation of country-level
commitments on climate change action
• The use of a blended construction and manufacturing
gross value added (“GVA”) to project revenue. This
assumes the sector moves from unsustainable
manufacturing processes to new, as yet unknown,
processes and materials
• Price parity for non-fossil fuel delivery will not be
achieved before 2040
• The expected no. of days of business interruption from
physical climate change impact are modelled with the
Gumbel distribution to best represent extreme events
2020
2025
2030
2035
2040
2045
2050
Early action scenario
Late action scenario
Energy and utilities fuel cost, including vehicle electricity
2020
2025
2030
2035
2040
2045
2050
Early action scenario
Late action scenario
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Travis Perkins plc Annual Report and Accounts 2021
Raw materials
Suppliers
Transport
Distribution
Branches
The Group’s climate change strategy means it asks more from its value
chain partners in terms of compliance and innovation than its peers.
Over the medium-term, the Group’s engagement strategy with its
supply chain will become more targeted on lowering lifetime impacts.
For example, in promoting innovative and sustainable products to
customers and developing packaging waste solutions. The Group
has expertise in developing low carbon solutions that other parts
of the value chain will require and is looking for ways to develop
this into a service.
Next steps
The approach to scenario analysis will evolve and be refined over
forthcoming years. The next steps on carbon reduction can be
seen on page 60.
Metrics
KPIs
The Group sets out performance against a number of environmental
KPIs on pages 60–61, including absolute carbon reduction and
performance against targets and additional detail on energy
consumption. SECR-compliant disclosures on carbon and
energy can be seen on pages 61 and 174–175.
During 2022 the Group will establish additional KPIs measuring its
transitioning vehicle fleet and product mix. In setting and reporting on
these KPIs, the Group will be led by the roadmaps to its 2035 targets
and its understanding and testing of what is material to stakeholders.
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Scenario results
The Group’s exposure to stress from physical climate change or
transitional climate change impacts is low and can be successfully
mitigated by following the adopted strategy and roadmaps outlined
above. The ability to pivot away from some construction materials
and technologies and towards the supply of other materials will be
key to the future success of the Group.
The early adoption pathway delivers a decarbonised business
model in the most efficient way with the best financial outcomes.
The Group’s SBTi approved targets and roadmaps are aligned
to this early action path.
As a distributor, the Group is not a capital intensive business.
The investment required to decarbonise the Group’s heavy fleet
is affordable and is most effectively deployed in a phased manner
starting immediately. In the last two years, Capital spend requirements
to deliver efficiency programmes have been approved and have
proven to decrease direct costs. In 2021 £2m was invested in lighting
improvements and is forecast to reduce the energy costs of refitted
sites by up to 46%.
The scenario analysis for physical risks (flooding, tidal rises, wind and
fire) identified increased risk and impact on the Group’s estate and
supply chain over the next 30 years compared to 2021.
However the modelled risk and impact is small enough that, even with
increasing frequency and magnitude of physical events, the business
interruption is forecast to remain low. This is partly due to the locations
of the Group’s sites, which are predominantly in less exposed areas of
the UK with a small number of locations in France, Belgium and the
Netherlands, and partly due to the Group’s ability to adapt to new
global supply routes and suppliers.
The transitional risk implication of climate change is that the Group’s
businesses will need to evolve their product mix and develop services
to meet the product, data and service requirements of a low carbon
construction sector. The analysis has identified a risk of product
obsolescence, for example gas boilers in some markets, and changing
customer demand towards materials, products and solutions that
reduce lifetime GHG emission levels from buildings. The Group
measures product sales that contribute to a low carbon economy
and is looking at ways of promoting more sustainable construction
in the medium and longer-term.
Travis Perkins plc Annual Report and Accounts 2021
51
Financial statementsGovernanceStrategic report
Sustainability report
BUILDING
FOR BETTER
Building better communities is at the heart of the
Group’s new strategy and delivery against the Group’s
Environmental, Social and Governance (“ESG”)
agenda is key to achieving the strategic goals.
The Group’s market-leading businesses along with its
position in the supply chain, connecting thousands of
suppliers and thousands of customers, means that
the Group is well positioned to influence and lead the
sustainability changes the construction industry needs.
Consistent ESG focus areas, reframed to demonstrate
alignment to the new Group Purpose
Within the Group’s new strategy, the six ESG leading
commitment focus areas have been reframed to reflect
how they support the Group’s strategic goals and how
they are supported by the six strong core focus areas.
Group Purpose
We’re here to help build
better communities and enrich lives
Group Ambition
Leading partner to the construction industry
Modernising
construction
Decarbonising
our industry
Developing the
next generation
“Building for Better” - the Group’s ESG Framework
SAFETY &
WELLBEING
Everyone
home safe
and well,
every
single day
RESPONSIBLE
SOURCING
Known,
ethical and
sustainable
supply chains
NET ZERO
CARBON
Lead the
industry in
tackling
climate
change
SUSTAINABLE
PRODUCTS &
SERVICES
Facilitate
sustainable
construction
and retrofit
PEOPLE
DEVELOPMENT
Upskilled
colleagues
delivering
outstanding
service
-
DIVERSITY &
INCLUSION
g
Industry-
leading
inclusive
and diverse
employer
Our ESG Leading Commitment focus areas above are underpinned by our
Strong Core focus areas below
Legal compliance * Modern slavery & Human Rights * Operational waste
* Charity & Volunteering * Colleague voice & engagement * Reward
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Travis Perkins plc Annual Report and Accounts 2021
Taking action to lead: 2021 highlights
SBTi-approved carbon targets
Kickstart colleagues under-25
Apprenticeships delivered
1.5°C
aligned
409
902
In 2021 the Group has delivered positive change across the whole agenda, setting industry-leading standards in a number of key areas.
2021 highlights:
• A Scope 3 supply-chain carbon target was set and both the Scope 1 & 2 and new Scope 3 targets were approved by the Science-Based Target
initiative (“SBTi”) as being in line with a 1.5˚C pathway.
• Recruited 409 under-25 colleagues via the Kickstart scheme and delivered 902 apprenticeships, of which 340 were with new starters.
• The Group’s diversity networks and Advisory Board have driven significant change through the business, upgrading family policies and creating
strong engagement and awareness.
Progress in all other focus areas is reported in the following pages. The Group’s commitments for 2022 are shown below.
Long-term targets are in place for carbon and will be developed during 2022 for other leading commitment focus areas.
Leading commitments
2022 key commitments
Safety and
wellbeing
Responsible
sourcing
Carbon
Sustainable products
and services
People
development
Continue to drive a
culture of “Calling It
Out”, taking time to
“Stop, Step Back,
Think. Then Act” by
ensuring daily 751,606
team briefings take
place at all locations
Evolve the Group’s
due diligence
approach to bring
into scope remaining
product suppliers
and “goods-not-for-
resale” suppliers,
on a risk-basis
Increase
engagement with
stakeholders, with
particular focus
on suppliers, to
reduce Scope 3
carbon emissions
Develop a retrofit
proposition to support
social landlords with
the decarbonisation
of their properties
Deliver a broad group wide
development curriculum
offering career development
opportunities to all colleagues
enabling the development
of the next generation
workforce and helping
to change construction
Diversity and
inclusion
Create a Diversity,
Inclusion and Equality
policy that reflects the
Group’s vision “You be
you, it’s what makes us,
us.” Engage with the
business to educate
and to implement the
policy effectively
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A strong core
2022 key commitments
Legal
compliance
Modern slavery and
human rights
Refresh of mandatory,
Group-wide baseline
training covering key
legal compliance
areas, improving
awareness of
reporting channels
and completeness
monitoring
Expand in-person ID
checks, currently
conducted on
higher-risk labour
agency workers, to
include other third
parties working at the
Group’s sites, based
on risk
Waste
Charity and
volunteering
Colleague voice and
engagement
Reward
Reduce the amount
of plastic waste the
Group produces
by engaging with
suppliers and
seeking alternative,
sustainable
packaging solutions
Put charity
and community
partnerships in place
that support the Group
purpose, engage
colleagues, strengthen
collaboration and
deliver on the
Group’s strategy
and impact goals
Engage all colleagues in the
Group’s purpose, values and
strategy, with focus on what
this means at a local
business level
Further develop
financial wellbeing
support to colleagues
by launching new
services with the
Group’s partner
“Wagestream”
Travis Perkins plc Annual Report and Accounts 2021 53
Financial statementsGovernanceStrategic report
Sustainability report continued
Governance of sustainability
The Board has overall responsibility for sustainability. The Group
Sustainability Director supports the Group in developing, governing and
delivering against its sustainability strategy. Each of the material focus
areas has a Group Lead, nominated Leads and Leadership sponsors
in each business. Progress is reported to the Group Leadership Team
and the Board on each material focus area to monitor and improve
performance. A separate Stay Safe Committee of the Board oversees
performance in health and safety. Objectives or targets are set for each
material focus area.
Assessing climate-related financial risks and
opportunities
The Group has submitted an annual climate disclosure to the Carbon
Disclosure Project (“CDP”) for 12 years, including a financial assessment
of climate-related risks and opportunities. The Group has completed its
first full disclosure against the Task Force for Climate-related Financial
Disclosure (“TCFD”) recommendations on pages 48-51. During
2021 the Group further enhanced its climate risk and opportunity
assessment methodologies and engaged PwC to support in developing
climate scenarios and assessing their relative impacts on the Group.
Alignment with the UN Sustainable Development Goals
By doing the right thing, the Group is supporting a number of the UN
Sustainable Development Goals (“SDGs”). Of the 17 UN SDGs, seven
align most directly with the Group’s sustainability programme. In 2022
the Group’s leading commitments will be explicitly aligned to the SDGs
to show how they are delivering against these goals.
Defining the material focus areas
The material focus areas of the Group’s sustainability programme
were determined through in-depth consultation with a wide group
of stakeholders, taking into account key risks and opportunities.
An ESG materiality assessment was completed during 2019 and
revisited in 2020, involving colleagues, the Group Leadership Team
and a range of different customers, suppliers and investors. In 2021
the Group conducted a desktop materiality assessment researching
the key focus areas and targets of competitors, suppliers and customers.
The Group also consulted with suppliers, customers, investors and other
stakeholders, as shown in the Stakeholder engagement map. As an
outcome of this research, nature and biodiversity is now reflected in
our Responsible Sourcing leading commitment area. The impact of new
policies and regulation in the sector across construction, retrofit, carbon
and packaging were also highlighted and have been taken into account
within the framework and associated programmes of work. The Group
will complete a full materiality assessment in 2022 to ensure that the
most important topics for the business and its stakeholders are within
scope. A materiality map will be published in the 2022 Annual Report.
Engaging with stakeholders
The Group actively engages with stakeholders to share progress,
inform plans, listen to feedback and seek views. The key stakeholder
groups, their key ESG concerns and our engagements with them in
2021 are detailed in the table below. The Group has a proactive
approach to sharing key ESG progress through business and trade
media publications as well as sharing updates on social media channels
with the purpose of engaging multiple stakeholder audiences.
Reporting in line with SASB
The Group reports ESG data and information in line with SASB
requirements. This information can be found in the table on
pages 174 to 175.
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Travis Perkins plc Annual Report and Accounts 2021
Stakeholder group Key ESG concerns
Engagements in 2021
Customers
Colleagues
Suppliers
Investors
Carbon
Waste
Nature and biodiversity
Diversity and inclusion
Skills development
Safety and wellbeing
Diversity
Development
Carbon
Safety and wellbeing
Carbon
Waste
Nature and biodiversity
Modern slavery
Carbon
Diversity and inclusion
Responsible sourcing
Executive remuneration
Direct conversations with key customers to understand their sustainability priorities and how the
Group can support.
In-depth customer insight project including interviews with 49 customers and a survey to 300
homeowners on sustainability, to understand their needs and how the Group can help.
RMI survey with 888 customers on sustainability in October.
Group-wide engagement survey issued in 2021, including detailed questions around people, safety
and ESG.
ESG-live week in July to raise awareness on ESG overall and the six lead commitment areas – 3,895
colleagues joined.
Supplier conference in October updated the Group’s top 329 suppliers on the Group’s strategy,
people plan, safety and wellbeing, sustainability and data.
Business supplier conference in TP, which covered sustainability topics, was attended by
224 suppliers.
10 ESG-specific investor updates.
Half year and full year results incorporated ESG key messages.
Annual General Meeting.
Capital Markets Update in October covering the new strategy, purpose, ambition and purpose goals.
Communities
Charity and volunteering
Education on sustainability
Extended partnership with VIY (Volunteer It Yourself).
Engagement with the Group’s 11 charity partners.
Government
Carbon
Trade bodies
Carbon
Partnership with Northampton University continued, including support of their COP26 week.
CEO chaired a panel discussion as part of the Construction Leadership Council’s forum at COP26
and the Group participated in a follow up Ministerial briefing to input into the CLC’s CO2nstructZero
work plan for 2022.
Participated in an industry group exercise with the Council for Sustainable Business to develop a
briefing paper on the systemic barriers and recommended government support to achieve net
zero carbon.
Travis Perkins Group COO, Frank Elkins, joined the Board of the Builders Merchant Federation.
Nick Roberts, Chief Executive, Frank Elkins, COO, Megan Adlen, Group Sustainability Director,
and James Vance, Group Head of Environment, presented at three Builders Merchant Federation
events on sustainability, to support industry-wide improvements.
The Group signed up to CO2nstructZero, the Construction Leadership Council’s framework for
Net Zero in the construction industry, as a Business Champion, submitting information into the
consultation to define performance metrics for the framework.
Richard Byrne, Group HSE & Fleet Director, joined Logistics UK’s Strategic Council exploring how
industry and Government needs to react to the driver shortage crisis as well as to inform on fleet
decarbonisation.
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NGOs
Peat
Reforestation
The Group responded to WWF’s request for information around the limited use of peat in its product
range and eliminated peat completely from central sourcing in 2021.
The Woodland Trust engaged with the Group on reforestation opportunities. The options are under
consideration.
Professional bodies
ESG overall
Environment
Health and safety
The Group continued its Corporate Membership of the Institute of Environmental Management &
Assessment (“IEMA") benefitting from cross sector knowledge sharing, greater insight of emerging
legislation and enhancing influence on government policies.
The Group Sustainability Director supported the Institute of Corporate Responsibility and
Sustainability (“ICRS”) Northampton Hub, joining a “Build back better” forum in June alongside
other large businesses from Northamptonshire to share best practices.
In June, Richard Byrne, Group HSE and Fleet Director, joined a number of other prominent Health
and Safety Leaders from Siemens Mobility and Heathrow Airport for a panel discussion discussing
the impact of Covid-19 within their organisations, along with their predictions for the next 12 months.
In October, Richard also took part in NEBOSH’s Conference on Resilience in Health and Safety. He
was a member of a panel of senior health and safety figures from a cross section of British industry
exploring the role of risk management in supporting businesses to improve colleague safety and
wellbeing both during the current pandemic and beyond.
Travis Perkins plc Annual Report and Accounts 2021 55
Financial statementsGovernanceStrategic report
Sustainability report continued
Safety and wellbeing
2021 objectives
The Group committed to:
• Robustly manage the changing risks arising from Covid-19
• Drive a culture of “Calling It Out” across all parts of the business
• Expand the Group’s network of mental-health first aiders and implement business-led wellbeing plans
Considering the Group’s safety culture more broadly, the picture is
more positive:
• Results from the Group’s colleague engagement survey
(Your Voice, Our Future) showed a high number of colleagues
recognise that everyone has responsibility for safety (2021: 92%).
• The overall score for 2nd line of defence safety assurance reviews
improved (Group average 2021: 6.7; 2019: 6.2) - noting the
programme was changed for 2020 due to the Pandemic.
• Feedback from colleagues shows that they are engaged
with “Calling It Out” if something does not look safe.
2021 Improvement Activities
Each business continued to implement their Safety and Wellbeing
Improvement Plans which recognise their specific risk profiles as well
as their own unique challenges and opportunities. Across the Group
improvement programmes included:
• Launching “Colleague Safety Voice” which provides feedback to the
Group Leadership Team and the Board’s Stay Safe Committee on
where the Group’s safety culture is against the output measures
in the Group’s safety and wellbeing strategy.
Introduced 189 mental-health first-aiders across the Group and
provided a way for colleagues in crisis to reach out to them for
immediate support. The Group continued to promote wellness
via Mental Health Awareness Week and a Wellbeing Month
covering the topics of Financial Health, Mental Fitness and
the various support programmes in place for colleagues.
• Revised two of the Group’s property safety policies, “Control
•
of contractors” and “How we refurbish or build new sites safely”,
introducing new procedures which create a step change for how
safety in contracted works is managed in the business and the
wider industry sector.
• Continued the focus in Travis Perkins on load security and
safety at the delivery point, as well introducing an improvement
programme across the Group to reduce risks from interactions
between pedestrians and forklift trucks.
• Undertook “deep dives” into forklift truck activities and lone working.
How does this support the Group purpose?
Keeping people safe and well is clearly aligned to the Group’s
purpose. It is one of the Group’s leading ESG commitments and
remains the Group’s number one priority. Without our colleagues,
we don’t have a business.
2021 progress
The Group’s safety performance continued to be adversely affected by
the ongoing impact of COVID-19, through the anxiety and colleague
shortages created by self-isolation requirements. These were
compounded by product supplier issues and continued customer
demand. The business evolved its operating model in response:
• Reducing the number of initiatives that branches had to implement
during the summer, acknowledging the obvious holiday pressure
point and allowing them to focus their resources on servicing
customers safely.
• Easing social distancing restrictions in accordance with Government
advice and introducing hybrid working.
On a like-for-like basis the Lost Time Incident (LTI) Frequency Rate was
5.59 LTIs per million hours worked (2020: 5.42; 2019: 5.44) and the
Severity Rate 0.10 lost work days per thousand hours worked (2020:
0.07; 2019: 0.07).
Lost time incident frequency rate
5.44
5.42
5.59
2019
2020
2021
0.10
0.07
0.07
d
e
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o
w
s
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o
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l
l
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p
s
I
T
L
8.0
6.0
4.0
2.0
0.0
Severity rate
0.125
0.100
0.075
0.050
0.025
d
e
k
r
o
w
s
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u
o
h
d
n
a
s
u
o
h
t
r
e
p
s
y
a
d
k
r
o
w
t
s
o
L
0.000
2019
2020
2021
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56 Travis Perkins plc Annual Report and Accounts 2021
Travis Perkins plc Annual Report and Accounts 2021
Modernising
construction
LTI frequency rate (per million hours worked)
Severity rate (per thousand hours worked)
5.59
0.10
Case study:
Stand Downs prove how serious we are about safety
Introduced last year, each of the businesses have continued to use
Stand Downs proactively to help “reset the business” or promote
a specific safety message. Their importance was recognised in the
Group’s Colleague Safety Voice work as Emily Egleton HSE & Fleet
Communications Lead explains: “Whilst colleagues said the content
of Stand Downs was important, they often valued the fact the
business gave them “time out” to come together as a team to
openly discuss areas for safety improvement and how they
would tackle them collectively.”
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Case study:
Getting people talking about mental health
The Group provided two Branch Managers the opportunity to
undertake a secondment to be “Stay Well Ambassadors”. Operating
across the Group their role was to find out what colleagues really
want from the Group to help improve their wellbeing as well as
be influencers to raise awareness of mental health issues in the
colleague base.
Travis Perkins Regional Director Rob Kuzemko invited one of the
Ambassadors, Natalie Ashcroft, to attend his team meeting, explaining:
“This was the first meeting that we have had face-to-face and
many of the Branch Managers had never even met each other
before. Following Nat’s intro I couldn’t quite believe the way in which
all of the Branch Managers then went on to tell their own stories…
It was absolutely unbelievable and extremely humbling to just sit
back and listen to what they had to say… and I have no doubt
that without Nat’s valuable contribution we wouldn’t have been
privileged to be part of something that will remain with me for
a very long time.”
What’s next?
Continue to drive a culture of “Calling It Out”, taking time to “Stop,
Step Back, Think. Then Act” by ensuring daily team briefing take place
at all locations.
This year has been particularly challenging for
the businesses from a safety perspective as
they continue to feel the effects of the Covid-19
pandemic. That said, I am impressed with the way
they have navigated their way through this and
continue to deliver good cultural improvements
for both colleague safety and wellbeing.”
Jora Gill
Chair, Stay Safe Committee
NED
Travis Perkins plc Annual Report and Accounts 2021
Travis Perkins plc Annual Report and Accounts 2021
57
57
Financial statementsGovernanceStrategic report
Sustainability report continued
Modernising
construction
Responsible sourcing
FSC® or PEFC™ certified timber purchased in 2021
98%
97.5%
95.8%
98%
38.4%
37.8%
49%
59.1%
58%
49%
100%
75%
50%
25%
0%
2019
2020
2021
PEFC™
FSC®
Case study:
Trialling solutions for product traceability
A strategic workstream on “Product Provenance” launched in 2020
and continued to evolve in 2021. The focus is understanding how
the Group improves the “golden thread” of data, all the way from
raw material extraction, through manufacturing, via the Group’s own
operations and into customer projects; facilitating asset mapping and
predictive maintenance. A pilot project was undertaken to trace a fire
door through the supply chain and the results are informing future
plans for traceability. With increasing customer needs around
product data, Building Information Modelling (“BIM") objects, asset
management and supply chain transparency, the Group’s value-add
service proposals will help to change data flows in construction.
Case study:
Advocating for change in the industry
Colleagues across the Group met with 329 suppliers at the
Group Supplier Conference in October and shared the new
Group strategy and people, safety and sustainability plans.
One commitment for next year is to launch Supplier Forums
for best practice sharing and upskilling across the industry on
a broad range of sustainability topics.
2021 objectives
The Group committed to:
• Reduce risk in the supply chain and protect supply chain
workers through the improved supplier assessment and
site auditing approach
• Launch a new online risk assessment specifically for
“goods-not-for-resale” suppliers
• Work with manufacturing sites and branded suppliers to
meet the regulation changes triggered by Brexit
How does this support the Group purpose?
The way products and services are sourced has a material impact on
the environmental and social sustainability of construction. By requiring
and supporting suppliers to evolve and to improve their operations, the
Group can enhance sustainability. Improved data and traceability of
products will bring more accountability and effective decision-making
to the construction sector.
2021 progress
During the year 667 centrally managed suppliers submitted online risk
assessments and 101 factory audits were completed. Corrective action
plans are being used to resolve all identified issues.
A due diligence approach for locally sourced suppliers is under
development and will be launched in 2022. The new online risk
assessment for “goods-not-for-resale” and service providers will
be launched in 2022 and supplements the existing higher-risk
assessments for labour agencies, freight companies and facilities
management contractors. The new tool will help reduce risk in the
supply chain by increasing the number of suppliers covered by the
assessments and making them more consistent.
All businesses in the Group worked internally and with key suppliers to
ensure full compliance with the technical and regulatory requirement
implications of Brexit. For example, the transition from EU Timber
Regulations to UK Timber Regulations has meant that more supply
chains are in scope for a full supply chain assessment by the Group’s
timber legality assessment partner.
A “Restricted Sales” strategic workstream focused on compliance
with age-restricted sales regulations for knives, poisons and explosive
precursors and has strengthened controls over these products,
introducing product flags, till prompts, awareness posters and delivery
checks. Specific requirements are made of suppliers to ensure chemical
hazards are managed within the supply chain and are included in the
Group’s Supplier Commitments.
What’s next?
Evolve the Group’s due diligence approach to bring into scope
remaining product suppliers and “goods-not-for-resale” suppliers,
on a risk-basis.
“
” indicates that the data point has been assured. Please see page 67 for more information.
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58 Travis Perkins plc Annual Report and Accounts 2021
Travis Perkins plc Annual Report and Accounts 2021
Sustainable products and services
2021 objectives
The Group committed to:
• Develop a suite of ESG value-add services for
customers, supporting their needs and helping them to
win through sustainability
• Establish supplier and customer forums to share best
practices and collaborate on solutions to the Industry’s
shared challenges
• Develop a sustainability support package for Managed
Services customers
How does this support the Group purpose?
To help to change construction and to decarbonise the construction
industry, the Group needs to provide the right products, data and
services to customers. Innovation is essential. Enabling sustainable
construction and retrofit will support the living standards and
comfort of all.
2021 progress
We conducted a customer insight exercise early in 2021 across all
customer segments in order to inform which value-add services
each segment may need to help them to win through sustainability.
The findings showed that all customers need support on sustainable
operations and sustainable construction, but in different ways. Our
large customers are leading the charge and want new sustainability
information on products, new innovative solutions and value-add
services. Our smaller customers want support to understand and
adapt to the changes ahead. This research has underpinned our
priorities in this space, all of which are now underway:
1. Helping customers to identify and select more sustainable products
in our ranges and reduce the environmental and social impacts of
products and packaging.
– We have developed a new information request to suppliers
around product sustainability, for example embodied carbon
and percentage recycled content.
2. Helping colleagues and customers to understand changing
regulation and key sustainability focus areas.
– We have begun training sessions for key internal teams
and are developing broader plans to enhance our training
solutions in 2022.
3. Helping customers to adapt to new products or construction
methods or enhance their sustainability performance through
value-add services.
– We have launched the first of our value-add services to
aid sustainable construction and retrofit; Design to use
(see page 27).
What’s next?
Develop a retrofit proposition to support social landlords with the
decarbonisation of their properties.
For further data please refer to the ESG data table on pages 174 to 175.
Decarbonising
the industry
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We engaged with two initial customer forums to collaborate on
sustainability solutions; the existing regional builder forum and a
new sub-contractor forum. Both forums have informed our thinking
and plans in this space.
A suite of ESG case studies have been shared at
https://www.travisperkinsplc.co.uk to share best practices, as well as a
stand alone sustainability report. These have proven to be particularly
useful for our Managed Services business in the tender process for
public sector contracts.
We calculated the percentage of our revenues which are from products
with an environmental certification. To begin with this only includes
our FSC® and PEFC™ certified timber and we will expand the scope
of products included in this metric during 2022.
Case study:
Readying the business for change
Businesses across the Group are readying themselves to provide
the new products, data and value-add services that are needed to
support customers on their sustainability journey. This includes a
team within the BSS business to deliver new Design-to-use services
and new Retrofit experts within the Travis Perkins Managed Services
team. The commercial teams are also upskilling to adopt new
product categories, encourage innovation and to better profile
products and help customers to identify the more sustainable
products within each range. A Steering Committee was set up
for Sustainable Products and Services including the Group COO,
business MDs and other key stakeholders across our Group to
assess the changing market and customer needs, navigate new
regulation and policies and support the businesses to evolve,
aligning the businesses on resources and projects where it
makes sense to do so.
Travis Perkins plc Annual Report and Accounts 2021 59
Travis Perkins plc Annual Report and Accounts 2021 59
Financial statementsGovernanceStrategic report
Sustainability report continued
Carbon
2021 objectives
The Group committed to:
• Begin implementation of its Net Zero Carbon
plan, including:
– Trials of alternative fuels in vehicles
– Continued LED replacement programme
– Branch incentive programme
• Full recalculation of Scope 3 footprint and
setting of targets
• Formal accreditation of all carbon targets (Scopes 1, 2
and 3) using science-based methodologies
• Development of case studies to showcase to stakeholders
• Promotion of low carbon sustainable products
How does this support the Group purpose?
One of the Group’s purpose goals is to “Decarbonise the Industry”.
The Group’s carbon agenda is focused on exactly that: decarbonising
not only the Group’s own operations but also supporting suppliers
and enabling customers to decarbonise their businesses and the
built environment.
2021 progress
The Group made progress on carbon reduction during 2021.
Scope 1 and 2 carbon reduced in absolute terms by 1.7% from the
2020 baseline. Scope 3 carbon increased by 4% in that time-frame
but importantly reduced by 14% per £m revenue, showing the first
signs of decoupling Scope 3 carbon from revenue growth.
The specialist consultancy, South Pole, was commissioned to conduct
a Scope 3 carbon assessment. The assessment revealed that supply
chain emissions account for 99% of the Group’s total carbon footprint.
The target to reduce Scope 3 emissions by 63% by 2035 was
approved by the Board in summer 2021.
In November 2021, the Science-Based Target initiative (SBTi) confirmed
that the Group’s targets would keep global warming in line with a 1.5
degree pathway. Achieving this endorsement provides credibility and
confidence to stakeholders that the Group is serious about reducing
its carbon footprint and taking a leading position in the sector.
Operational carbon (Scope 1 and 2 emissions) was reduced:
Estate: The electricity supply for all UK sites was switched to a 100%
renewable electricity tariff. The LED roll-out programme continued, with
the 13,500 LED lights installed helping each branch reduce average
electricity consumption by 46% and achieve a 2-year payback period.
Case study:
Realising the branch of the future
As part of the Group’s Net Zero Carbon plans, a “branch of the
future” specification has been developed and implementation
has begun on the Group’s existing sites such as Travis Perkins,
Martlesham Heath. Opened in April 2021, the branch has an 11kW
photovoltaic solar panel system providing electricity, air source
heat pumps for heating, an LED lighting system, electric forklift
trucks and an EV charging point for colleague cars. It’s being
referenced as the benchmark for all future sites.
The Group installed air source heat pumps, EV charging points and PV
solar panels at key locations such as Travis Perkins Martlesham Heath.
Fleet: The CCF Harmondsworth branch launched the UK’s first, fully
electric curtainside 27 tonne HGV. With a range of 120 miles, it provides
customers with a zero-carbon delivery service. In October 2021 the
Group started a trial of hydro-treated vegetable oil (“HVO”); a low
carbon alternative to diesel which can be used in existing vehicles
without any engine adaptations. Produced from waste oils (not virgin
crops), the fuel can reduce carbon emissions by up to 90% and,
if successful, this trial will be expanded across the Group’s entire
|vehicle fleet as an interim solution whilst electric and hydrogen
options become more viable.
To ensure colleagues are fully engaged in the carbon reduction plans
and know how they can contribute, a “Carbon” training module was
launched, enabling everyone to learn about carbon management, its
impact on the environment and how the Group is reducing emissions.
A suite of sustainability case studies were developed to share
with customers.
A tool for profiling sustainable products was developed in 2021 ready
for launch in 2022. To read more see page 59.
Case study:
UK’s first 27 tonne electric HGV added to our fleet
CCF, has worked in collaboration with Electra, to launch the UK’s
first 27 tonne curtainside Battery Electric Vehicle (“BEV"), with
287kWh traction batteries. The new vehicle represents CCF’s
commitment to drive innovation across its customer operations
in support of a low-carbon future.
The brand-new 27 tonne BEV, which is the first of its size and type in
the UK, is the product of three years of development driven forward
by CCF. The BEV has been manufactured and supplied through
Electra, in order to complete zero emission customer deliveries, from
CCF’s Harmondsworth branch, across West and Central London.
With a charge time of up to seven hours, the BEV has the capacity
to cover up to 120 miles on a full charge. The CCF vehicle has been
fitted with a sensor system to alert the driver to the presence of
vulnerable road users, an audible vehicle manoeuvring alarm, and
a five-way camera monitoring system. Onboard weighing scales,
telematics and vehicle tracking will also be used to monitor the
BEV’s energy use in real time.
Tonnes of CO2e (Absolute) – Scopes 1 & 2
2
&
1
s
e
p
o
c
S
–
)
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s
b
A
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(
e
2
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100
72,165
80
60
40
20
53,981
56,465
28,615
25,111
21,284
Absolute carbon
reduction 2020
to 2021 – Scopes
1 and 2
-1.7%
Transport
Buildings
0
* Baseline year for new target
2019
2020*
2021
2035 Target (total)
“
” indicates that the data point has been assured. Please see page 67 for more information.
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60 Travis Perkins plc Annual Report and Accounts 2021
Travis Perkins plc Annual Report and Accounts 2021
Decarbonising
the industry
Scope 3 absolute emissions (from 2020)
Scope 3 relative to £m revenue (from 2020)
+4%
-14%
The increase in Scope 3 carbon in 2021 shows the
scale of the challenge we face, but it’s one we’re
absolutely committed to.”
Megan Adlen
Group Sustainability Director
What’s next?
Increase engagement with stakeholders, with particular focus on
suppliers, to reduce Scope 3 carbon emissions.
kWh energy
Annual energy use relating to gas,
purchased electricity and transport
fuel
Ongoing business
Including sold and
demerged businesses
2021
2020
Variance
UK
Non-UK
Total
UK
Non-UK
Total
%
Energy kWh
358,494,358
6,332,618 364,826,976 334,383,277
5,332,957 339,716,234
7.39%
448,032,536
6,332,618
454,365,154 530,860,542
5,332,957
536,193,499
-15.26%
Carbon Dioxide Equivalent (CO2e) Tonnes
Scope 1
Direct emissions from burning gas
and solid fuel for heating and from
road fuel use for distribution2
Ongoing business
Including sold and
demerged businesses
63,285
814
64,099
60,656
77,531
814
78,345
88,372
Scope 2
Indirect emissions from
our use of electricity
Ongoing business
13,121
530
13,651
17,333
Including sold and
demerged businesses
17,865
530
18,395
32,380
641
641
461
461
61,297
4.57%
89,013
-11.98%
17,794
-23.28%
32,841
-43.99%
Scope 1 & 2 Absolute
Ongoing business
76,406
1,344
77,750
77,989
1,102
79,091
-1.70%
Scope 1 & 2 Intensity3
Emissions from Scope 1
and 2 sources per £m of inflation
adjusted sales
Including sold and
demerged businesses
Ongoing business
Including sold and
demerged businesses
Scope 3 Absolute
Indirect emissions from the supply
chain. Including all Scope 3
categories
Ongoing business
95,396
1,344
96,740
120,752
1,101
121,853
-20.61%
16.9
21.2
0.3
0.3
17.2
21.5
20.9
21.52
0.3
0.2
21.2
-18.87%
21.72
-1.01%
14,772,991
14,205,277
4.00%
Scope 3 Intensity3
Emissions from Scope 3 sources
per £m of inflation adjusted sales
Ongoing business
3,284
3,814
-13.90%
A full breakdown of the Group’s Scope 3 carbon across the 15 Scope 3 categories is shared on the website https://www.travisperkinsplc.co.uk
Carbon data table1
The Group has reported on all of the emissions’ sources required under the Companies Act 2006 (Strategic report and Directors’ reports) Regulations
2013. Scope 1 and 2 emissions are calculated using the UK Government Conversion Factors for Company Reporting 2021 on an operational control
basis. 95% of Scope 1 and 2 data is from measured sources with the remainder extrapolated from either expenditure on fuel or distance travelled.
Specific data points in the carbon chart and the carbon data table, marked with the logo “(V)”, have been assured against Lloyd’s Register verification
procedures. For a link to the assurance report see page 67.
1. The kWh and Scope 1&2 numbers reported include data for companies where Travis Perkins plc has operational control.
2. Fugitive emissions from domestic refrigeration, vehicles and building air conditioning are excluded as they are not material to the Group’s overall emissions.
3. Carbon intensity is reference to turnover, adjusted to allow for inflation, relative to baseline year. Adjusted sales figures use 2021 Office of National Statistics inflation data.
For further data please refer to the ESG data table on pages 174 to 175.
Travis Perkins plc Annual Report and Accounts 2021
Travis Perkins plc Annual Report and Accounts 2021
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Financial statementsGovernanceStrategic report
Sustainability report continued
Development
2021 objectives
(i) Apprenticeships
The Group committed to:
• Grow its apprenticeship offering in 2021, adding an
additional six new programmes to ensure that there
are appropriate programmes for all colleagues
• Recruit 500 new apprentices in 2021 and develop
500 existing colleagues to enable them to progress
to a new role through the “Branch Counter to Boardroom”
career pathways
(ii) Management and leadership development
The Group committed to:
• Focus on its leadership culture, with coaching for
senior leaders so they can have better performance
conversations and enable their managers to do the same
• Support managers in recruiting people from different
backgrounds and increase the diversity of thought in
the Group’s workforce
(iii) Talent and succession
The Group committed to:
•
Invest in developing talent across the Group by setting
out clearer paths to senior leadership roles
• Use the Group’s apprenticeship programmes to
ensure all colleagues can access outstanding career
development support
• Focus on encouraging, coaching and supporting our most
talented individuals to drive their own career development
Case study:
Industry leading training and development
opportunities
Jordan started his career at CCF by completing an Apprenticeship,
and he’s now a successful Branch Manager in Scunthorpe:
“I have only been in the industry for just over 5 years,
but CCF has made my rapid progression possible. They
have, and continue to, provide industry leading training and
development opportunities for each and every step of my journey.
I joined CCF on their 2-year apprentice program and as an
apprentice I attended numerous training courses and took every
opportunity to network with colleagues and suppliers. The
apprenticeship was a fantastic gateway into the industry, and
I would recommend it to anyone seeking a progressive career.”
Jordan Berry – Branch Manager, CCF Scunthorpe.
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Travis Perkins plc Annual Report and Accounts 2021
Travis Perkins plc Annual Report and Accounts 2021
How does this support the Group purpose?
To build better communities and a stronger business through
the development and deployment of talent and the next
generation workforce.
The development and apprenticeship programmes upskill colleagues
in their current roles and introduce new colleagues to the business and
the wider construction supply sector. Development is not only about
construction sector skills but also life skills including digital skills, maths
and English. Delegates give us feedback about how these programmes
enrich their lives.
New colleagues are being introduced to the merchanting sector and
often bring enhanced digital capability. The Group is helping colleagues
develop their digital skills and enable modern merchanting.
In the majority of programmes, colleagues are being taught about
modern construction methods, enabling them to help customers
build better.
In this way the Group is developing the next generation for the
construction supply sector.
Case study:
Kickstarting careers with Travis Perkins
Christie joined Travis Perkins via the Kickstart scheme in May 2021.
Her willingness to learn and apply herself within her job role quickly
got her recognised by the branch team and she secured a
permanent role on an Apprenticeship in August, just 3 months after
the start of her programme. Christie will now complete the
Certificate in Merchanting, a Level 2 Trade Supplier Apprenticeship
which will arm her with the skills, knowledge and behaviours to
continue to grow a valuable career with the business.
“Without the kickstart scheme I would have never even thought
about a job in the construction industry, but I am glad that I was
given the opportunity and am now in a job that I enjoy and look
forward to every day.”
Christie Rose – Branch Apprentice, Travis Perkins Grantown
on Spey.
What’s next?
Deliver a broad Group-wide development curriculum, offering
career development opportunities to all colleagues that enable
the development of the next-generation workforce and help to
change construction.
Developing the next
generation
Management and leadership development
Enrolled 240 managers onto L3–L5 management apprenticeship
programmes and 12 senior managers onto degree-level
apprenticeships in leadership.
Launched a recruitment campaign offering more flexible contracts,
including part-time, flex up choose your hours. 60% of hires were
from outside of the industry which supported the Group to bring
more diversity into the organisation.
Colleagues enrolled onto
apprenticeship programmes
783
Graduates passing with
“distinction” in 2020
93%
Talent and succession
Supporting colleague’s desire to develop, the apprenticeship
self-nomination process allows all colleagues to sign themselves
up to a programme. The “Branch Counter to Boardroom”
apprenticeship brand shows colleagues how it can progress
their career and 30% are promoted following an apprenticeship.
For further data please refer to the ESG data table on pages 174 to 175.
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2021 progress
Apprenticeships
The Group expanded its apprenticeship offering by launching six
new programmes that support operations and data capability:
• Work Winning Sales
• BSS Hire It
• BMX Certificate in Customer Service
• Business Admin
• Data Literacy
• Data Apprenticeship
Progress was made against apprenticeship targets:
• 902 apprentices started in 2021: 562 existing colleagues
and 340 external recruits
• 200 have already graduated from the programme,
95% of whom achieved a distinction or merit
• 409 under-25s were recruited on the Kickstart programme,
with 144 already having secured permanent employment
with the Group and 67 enrolled onto an apprenticeship
• The Group started working with Eastleigh college to
deliver 300 traineeships as a pre-employment programme
• The Group supported the relaunch of the Institute of Builders
Merchant by signing up 700 apprentices to student membership
Supporting industry-wide improvement:
The Builders Merchant Federation appointed LEAP, the Group’s Early
Careers and Apprenticeship provider, allowing a far broader scope of
access to apprenticeships across the industry.
Apprenticeships are reducing labour turnover:
Labour turnover - All ages
29%
All colleagues
22%
Apprentices
Labour turnover - 18-24 year olds
56%
All colleagues
28%
Apprentices
Travis Perkins plc Annual Report and Accounts 2021 63
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Financial statementsGovernanceStrategic report
Sustainability report continued
Diversity and inclusion
2021 objectives
The Group committed to:
• Establish a diversity and inclusion advisory board that includes all the Group’s networks, with each area sponsored by a GLT
member. The advisory board will work with the GLT to set targets and contribute to the GLT’s agenda
• Create a diversity and inclusion action plan in each business
How does this support the Group purpose?
To enrich colleagues’ lives, to create a sense of belonging and to build
better communities it’s essential the Group attracts and retains a
diverse pipeline of colleagues; supports and enables a high-
performance culture; develops inclusive leaders; and positively
impacts a generation of young people.
2021 progress
The Group launched a revised and industry leading Family Friendly
policy which was designed by Travis Perkins’ colleagues.
TP Inc, the Group’s Gender Balance employee-led network, was fully
established and further networks were created: Pride (LGBTQ+), ACE
(Awareness of Cultures & Ethnicities), Ability and Youth. Each of the
networks has a GLT sponsor and these sponsors meet regularly to
review activity and share best practice. The networks used a number
of events such as Women in Construction week, Pride month and
Black History month for significant engagement and awareness
building activities across the Group. Additionally, a Diversity and
Inclusion Advisory Board was confirmed with representatives
from all networks and businesses to support D&I action
planning and to provide advice to the GLT.
The broad range of apprenticeships offered by the Group have proven
successful in attracting more diverse candidates to the organisation.
This includes the BSS Fast Track Management apprenticeship scheme
which is one of the schemes helping to ensure that we increase
diversity in senior roles.
Different methods and providers of inclusive leadership training were
trialled during the year, including TLC Lions and The Human Library,
to inform Group wide learning and capability interventions planned
for 2022/23.
What’s next?
Create a Diversity, Inclusion and Equality policy that reflects
the Group’s vision “You be you, it’s what makes us, us”.
Engage with the Group’s business to educate and to implement
the policy effectively.
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64 Travis Perkins plc Annual Report and Accounts 2021
Travis Perkins plc Annual Report and Accounts 2021
Adriane Kisamba, BSS
BSS Fast Track Management apprentice scheme
1st cohort
90% female
2nd cohort
46% BAME
30% female
Developing the next
generation
Gender diversity
Director
Manager
Colleague
Total
Central Services
Toolstation
Merchanting
Total
Group head count
Female
3
66
4,920
4,989
Female
423
2,486
2,080
4,989
%
38%
25%
25%
25%
%
48%
38%
16%
25%
Male
5
200
14,794
14,999
Male
456
4,008
10,535
14,999
%
62%
75%
75%
75%
%
52%
62%
84%
75%
Total
8
266
19,714
19,988
Total
879
6,494
12,615
19,988
%
100%
100%
100%
100%
%
100%
100%
100%
100%
Flexible working
patterns
Full-time
16,482
Part-time
3,506
= 19,988
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Men
14,999
Women
4, 989
Women in senior management*
Age bands
Under 25
3,516
28 – 39
6,944
40 – 59
7,979
60 and over
1,549
%
4
9
1
.
%
6
8
1
.
%
9
.
1
2
%
2
5
2
.
2018
2019
2020
2021
* Senior management is defined as Directors and managers
per the statutory reporting of gender diversity
Ethnicity
Non-white
British
777
Non-British
1,177
Unknown
5,503
White British
12,531
For further data please refer to the ESG data table on pages 174 to 175.
Travis Perkins plc Annual Report and Accounts 2021 65
Travis Perkins plc Annual Report and Accounts 2021 65
Financial statementsGovernanceStrategic report
Sustainability report continued
Our strong core
Case study:
Readiness to respond
The Group engaged with the Slave-Free Alliance (SFA) in 2021 to
kick-off a project supporting key internal stakeholders to understand
how to respond if any slavery issues are identified in the Group’s
own businesses or its supply chain. It is critical to take a victim-first
approach, ensuring the safety and wellbeing of all workers. The
SFA ran a six stage process with a number of key stakeholders,
supported the enhancement of the existing Issue Response plan
and gave the team increased confidence in the Group’s ability to
respond in the right way if a red flag is raised. This aligns with the
Group’s values in putting people first and protecting the wellbeing
of all workers.
What’s next?
Expand in-person ID checks, currently conducted on higher-risk labour
agency workers, to include other third parties working at the Group’s
sites, based on risk.
Modern slavery and human rights
2021 objectives
The Group committed to:
• Continue to roll out due diligence controls for suppliers
identified as more exposed to the risk of slavery and
improve the understanding of slavery risks across the
supplier base
• Monitor completion of modern slavery training modules
• Promote the “Speak Up” line to help colleagues raise
concerns about modern slavery and share this line
with suppliers so that workers in our supply chain
can raise concerns
How does this support the Group purpose?
The construction industry is one of the most exposed industries to
modern slavery. The Group’s work in this space will help to change
construction and ensure the fair treatment and protection of rights
of all workers.
2021 progress
The Group’s policies and procedures to tackle modern slavery
are described in the Modern Slavery Statement https://www.
travisperkinsplc.co.uk. It describes how the Group assesses
risk and carries out due diligence, along with policies on
employee recruitment and human rights.
To manage upstream risk, the Group continued to roll out its supplier
assessments during 2021 (see page 58). To manage in-house risk,
the Group established a new project looking to extend the work
already completed on higher-risk, high-volume agencies of manual
labour. The project team is reviewing the tail of labour agencies used
for both head office and branches and in 2022 will work to establish
controls to reduce risk in this area.
The Group continued to roll out training for key colleagues and for
the general workforce. The new training module for modern slavery
which launched in 2020 has now been delivered to 267 colleagues,
representing 92% of the total population of higher-risk colleagues.
Training was delivered via video conference either by the Group
Sustainability Director or by the Responsible Sourcing Lead or HR
Lead for each business. Remaining higher-risk colleagues will be
trained during the first half of 2022.
For the general workforce, refresher messaging was sent to UK
colleagues in all merchant businesses to remind them of the red
flags to look out for and how to escalate concerns. Toolstation UK
issued the Code of Conduct to all colleagues, including a page on
Modern Slavery with a list of the red flags to look out for.
The Group’s Speak Up line was relaunched to colleagues in Q1 via the
Group’s internal newsletter, The Measure, and it features in the Code of
Conduct. In addition, support was leveraged from HR business partners
to ensure colleagues have access to the line and know when to use it.
The Speak Up details were also shared with suppliers at the Group’s
Supplier Conference in October and have been shared on the plc
website so that our suppliers and other external stakeholders can
flag concerns to us. The importance of tackling modern slavery
together was highlighted at the Group’s Supplier Conference,
directing suppliers to the Stronger Together website resources.
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66 Travis Perkins plc Annual Report and Accounts 2021
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Our strong core
2021 progress
The Group continued its engagement with suppliers to review product
packaging to reduce unnecessary packaging and single use plastic. This
forms a crucial part of the Group’s waste strategy to ensure the target to
eliminate single use plastic by 2025 is met and to prepare the Group for
new EPR legislation. In addition, we communicated with our suppliers on
the Plastic Tax which comes into force in April 2022, requesting that if
plastic is supplied it must contain a minimum of 30% recycled content.
The Group continued to operate its waste backhaul service for materials
such as cardboard, plastic wrap, paper and wood, processing over 3,000
tonnes of material for onward recycling.
Discussions are underway with The Pallet Loop who are targeting a
circular model for pallets in the industry to avoid waste. A working group
has been established with other stakeholders in the sector to review the
practicalities and discuss implementation.
The Group worked with Biffa to continue to increase the volume of waste
diverted from landfill. The average diversion is now 95%.
The Waste Management Guide was relaunched to all branches,
highlighting the best ways to reduce and manage waste on site.
The number of sites that offer waste solutions for our customers
also increased.
What’s next?
Reduce the amount of plastic waste the Group produces by
engaging with suppliers and seeking alternative, sustainable
packaging solutions.
For further data please refer to the ESG data table on pages 174-175.
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Waste
2021 objectives
The Group committed to:
• Launch a “Waste & Circular Economy” action plan
• Work closely with suppliers to embed circular economy
concepts into their products and explore reuse
opportunities from surplus building products with
reuse organisations.
• Work with suppliers to include at least 30% recycled
contentin packaging
• Continue to work towards diverting 100% of waste
from landfill
• Expand the Group’s backhaul recycling operation
to enable “WEEE” recycling from branches and trial
customer take-backs for bulk bags and other products
How does this support the Group purpose?
The construction sector accounts for approximately 120 million tonnes
of waste in the UK. The Group has a significant role to play in removing
waste from construction by offering reusable, repairable products and
sustainable packaging.
Total tonnes of waste
e
t
s
a
w
f
o
s
e
n
n
o
T
30
25
20
15
10
5
0
26,245
26,912
17,829
1,773
1,353
1,492
2019
2020
2021
Recycled/Recovered Waste (Tonnes)
Landfilled Waste (Tonnes)
Waste diverted
from landfill
2021
95%
Environment incidents
In 2021 the Group recorded 28 environmental incidents with 11 classed as “reportable” and 17 “non-reportable”. Of the 11 reportable incidents,
10 were spillages of either paint, diesel or hydraulic oil and one incident related to a third-party issue regarding a blocked drain outside the
Group’s site boundary.
Assurance
Specific data points in the Sustainability (or “Building for Better”) section, marked with the logo “V", have been assured against LRQA
verification procedures which are based on AA1000AS (2008) and ISAE 3000. A copy of their verification statement is available at
https://www.travisperkinsplc.co.uk.
Travis Perkins plc Annual Report and Accounts 2021
Travis Perkins plc Annual Report and Accounts 2021
67
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Sustainability report continued
Charities and volunteering
2021 objectives
The Group committed to:
• Complete and implement a new framework for community
and charitable engagement work that will include more
cross-brand and multi-discipline projects
• Expand its support for Volunteer-It-Yourself (“VIY”). Nearly
20 branches have pledged support for some of the 150
VIY projects that are in the pipeline for next year
How does this support the Group purpose?
With a business based on strong relationships, the Group’s colleagues
sit at the heart of the communities where they live and work. The
Group’s culture and values – “we care” – means that great pride is
taken in helping others and making positive changes happen.
2021 progress
Charity and community is about supporting others and making
positive change happen, both locally and nationally.
Following extensive consultation with over 2,000 colleagues, through
a survey, focus groups and interviews, the Group developed an action
plan to branch out from fundraising, and make sure the Group’s charity
partnerships have a clear purpose and create value all around.
The Group maintained its fundraising initiatives with a number
of cancer charities, and in addition further built its partnership
with social enterprise “VIY”, through volunteering and mentoring.
New partnerships with The Lighthouse Club and Youthbuild UK
were established.
The 20 year partnership with The Northampton Saints Rugby Club, one
of the longest running in British sport, was also extended and the Group
became the Club’s Headline Community Partner from 2022. This will
help Saints to make the game of rugby more accessible to all, and use
the power of sport to positively impact a wide range of groups and
individuals in the Northampton area.
Colleagues continued to show great creativity, with charity challenges
that included cake baking, cycling, walking and running challenges, as
well as market stalls and abseiling to help raise valuable funds for the
Group’s charities.
Charity
Macmillan Cancer Support – £751,606
VIY material contributions – £76,000
Mind – £35,000
Business area
Travis Perkins and
Toolstation
BSS
Payroll-giving and other group initiatives – £49,000
Group
Prostate Cancer UK – £30, 000
Whizz-Kidz – £52,000
Keyline
Transport
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Travis Perkins plc Annual Report and Accounts 2021
Case study:
New Social Enterprise Partnership
Volunteer It Yourself (VIY) is a social enterprise which helps young
people aged 14–24 gain trade skills through the renovation of local
community premises. In 2021 the Group supported over 545 young
people across 35 VIY projects nationwide. Nearly 400 of the
participants achieved City & Guilds accreditation. 35 Travis Perkins
and Toolstation branches donated products and materials to a value
of £127k and over 130 colleagues provided mentoring and other
practical on-the-ground support to these VIY projects, which included
youth centres, local sports facilities, theatres and other community
venues in need of repair and refurbishment. In 2022 the Group
plans to build on this engagement with work placements and
recruitment opportunities.
“I really enjoyed getting involved and was glad we could help!
It’s great to hear the young people enjoyed the sessions and
have taken some good knowledge away with them.”
Matt Hulls, Assistant Branch Manager, Blackpool South
“This partnership is one of great mutual benefit, where we get to
tap into your skills and expertise, and gratefully receive materials
and equipment, but this is also a great way to engage your
colleagues and for your business to help directly develop a
new diverse generation of tradespeople whilst improving local
community spaces and supporting young people with construction
skills and employment opportunities.”
Tim Reading, CEO, VIY
Our strong core
Everyone at the Club is looking forward to what the
next phase of our enduring partnership with Travis
Perkins will bring.
Mark Darbon
CEO, Northampton Saints
Case study:
Toolstation Pennies Pilot
Following a successful trial of the “pennies” initiative, Toolstation
rolled out Pennies’ micro-donation service across the business.
This gives the opportunity to raise funds for charities at the point
of payment, when the customer is invited to add a flat donation, or
round up to the nearest pound on an order amount, which then goes
to charity. The trial showed that there is potential to raise substantial
funds for charity using this method. There are now plans to add it to
the Toolstation website, and expand it to other businesses within the
Group in 2022.
“We are thrilled and overwhelmed by the support from Toolstation,
stepping forward to unlock even faster growth of this fantastic
movement that has raised over £30m for 750+ charities – which
for us is really just the start. Our success so far belongs to the
millions of people who have generously given their digital spare
change when shopping across a growing number of retail and
hospitality brands.”
Alison Hutchinson CBE, CEO, Pennies
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
What’s next?
Put charity and community partnerships in place that support the
Group purpose, engage colleagues, strengthen collaboration and
deliver on the Group’s strategy and impact goals.
Travis Perkins plc Annual Report and Accounts 2021 69
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Financial statementsGovernanceStrategic report
Sustainability report continued
Our strong core
Colleague voice and engagement
Legal compliance
2021 objectives
The Group committed to:
• Maintain the Group’s ability to “take the pulse” of colleagues
and respond to what matters to them, finding ways to give
real-time insight and bring colleague engagement data to life
• Undertake colleague engagement surveys in the first half
of 2021
2021 objectives
The Group committed to:
• Embed the recently launched Code of Conduct
• Continue the roll-out of the minimum standards
framework and develop business-specific action
plans to close gaps
• Continue roll-out and monitoring of updated legal
How does this support the Group purpose?
To enrich colleagues’ lives, to create a sense of belonging and to build
better communities, it’s essential the Group has a means to hear
colleagues’ voices. Listening to colleagues enables the Group to
make better decisions, leverage diversity of thought and be
responsive and agile to colleague’s needs.
2021 progress
During 2021 the first Group-wide shared colleague engagement survey
was completed, which has enabled progress to be compared and insights
to be shared across all businesses and support functions in the Group.
The Group has continued to engage and listen to the voice of
colleagues. For example:
• Keyline invited colleagues representing a wide range of views and
perspectives to participate in their strategy development and ensure
their voices were heard
• The Group’s new core business values were developed with input
from colleagues representing all businesses, all levels and all functions
• As the Group embeds its purpose, values and strategy, the voices of
colleagues are being heard through focus groups, surveys and
broad participation in working groups
Case study:
Colleagues shaping our future
65 colleagues joined the leadership team to kick off the strategy
development process to demonstrate the importance of colleagues’
voices in shaping the future direction of the business. The business
benefited from a diverse range of perspectives, experience and
expertise on the Group’s strengths, challenges and opportunities.
The virtual meetings enabled the development of a video
representing the insight gained which, along with customer,
supplier and industry feedback, enabled the leadership team,
regional leadership team, representatives from the functions
and Branch Manager representatives to have access to a
broad and detailed set of insight to work from.
compliance training across:
– Anti-bribery and corruption
– Insider trading
– Competition law
– Money laundering
– Conflicts of interest
– Corporate criminal offences
How does this support the Group purpose?
Establishment of the Code of Conduct and a strong Legal Compliance
framework helps to ensure stakeholders can rely on the Group to
continue to “Do the Right Thing”.
2021 progress
The Group further embedded the Code of Conduct and the expectation
of “doing the right thing”. A series of refreshed policies were launched
covering key areas including Anti-Bribery and Corruption, Money
Laundering, Competition Law and Corporate Criminal Offence. These
policies provide a readily accessible way for colleagues to understand
the key principles through clear summaries of what “doing the right
thing” entails. They also provide worked examples to bring the
guidance to life.
New Minimum Standards Frameworks were rolled out across a number
of key areas of legal compliance. Expectations of the controls and
processes required to be compliant with the Group’s policies are
clearly defined and a mechanism for assurance is established.
Refreshed training on Anti-Bribery and Corruption and Competition
Law was made available in the Group’s Learning Management System.
The GDPR Programme executed workstreams of activity to increase
the level of control in data protection compliance. This included the
deployment of refreshed processes to manage activity which must
be carried out effectively to achieve legal compliance, such as the
maintenance of records of processing activity, the response to data
subject access requests and the conduct of data protection impact
assessments.
What’s next?
Engage and connect all colleagues in our Group Purpose, Values and
Strategy with a lens as to what this means at a local business level
giving colleague’s an opportunity to connect with what this means
from a personal contribution point of view.
What’s next?
Refresh of mandatory, Group-wide baseline training covering key
Legal Compliance areas, improving reporting channel awareness
and completeness monitoring.
For further information please refer to the Section 172 statement on
pages 72 to 74.
For further data please refer to the ESG data table on pages 174 to 175.
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70 Travis Perkins plc Annual Report and Accounts 2021
Travis Perkins plc Annual Report and Accounts 2021
Our strong core
Case study:
Supporting financial awareness and wellbeing through
a series of webinars
During the year the Group hosted three webinars to support
the financial awareness and wellbeing of colleagues:
• Gender pension gap – Women often make up a greater share of
part-time workers and often have breaks in employment history
to raise children, meaning pension savings can be lower than
needed. This webinar covered the specific challenges for women
regarding the gender pension gap and what this means for
retirement planning.
• Financial wellbeing – This webinar covered a wide range of
areas of financial health and how to improve financial fitness.
• Change of pension provider – This webinar explained the
transition, how it would effect colleagues and the benefits
of the move, as well as reinforcing pension engagement.
The webinars were viewed by over two thousand colleagues.
With exceptional feedback:
“In all honesty it was probably the clearest presentation I have
attended on Pensions (a subject which I find complicated).”
“I found the session useful with great information. And for me, this
method is more informative than an information pack you would
need to read.”
“I wish that I had had access to this information when I was in
my 20s.”
“Very informative and helpful. This has brought to my attention how
important it is to maintain my lifestyle once retired and how I can
achieve this.”
“More of the same please. It was informative and covered a lot of
issues that I didn’t know how to address.”
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Reward
2021 objectives
The Group committed to:
• Full deployment of the simplified and refocused incentive
and bonus approach
• Simplification and realignment of all colleague bonuses
• Continued focus on colleague wellbeing, particularly
financial wellbeing, with a review of the employee pension
provision and levels of colleague engagement
How does this support the Group purpose?
Improving the financial health of colleagues has a direct link to their
emotional and physical wellbeing, enabling stable communities and
enriching the lives of colleagues and those around them.
2021 progress
At the end of 2020 the Group consulted widely on the proposed
implementation of a Restricted Share Plan to replace the existing
Performance Share Plan and Co-Investment Scheme. The first awards
under the new RSP were made mid-2021 and the plan’s greater
simplicity and clearer, more focused alignment to strategy was well
received by participants. The Group also introduced a simplified bonus
framework, halving the number of sets of scheme rules, making the
plans easier for colleagues to understand and increasing alignment
across the Group.
The Group migrated its defined contribution plan (the Travis Perkins
Retirement Savings Plan) from Standard Life to Scottish Widows. This
resulted in a significant reduction in investment charges for colleagues
which will make a meaningful difference to their retirement savings in
the long-term. The Group signed up to the Green Pensions Charter,
“Make My Money Matter”, to support colleagues in making positive
investment choices and in support of the Group’s commitment to
tackling climate change.
What’s next?
Further develop financial wellbeing support to colleagues by
launching new services with the Group’s partner “Wagestream”.
For further data please refer to the ESG data table on pages 174 to 175.
Travis Perkins plc Annual Report and Accounts 2021
Travis Perkins plc Annual Report and Accounts 2021
71
71
Financial statementsGovernanceStrategic report
Section 172 statement
Engaging with stakeholders
Building positive relationships through strong engagement,
collaboration and dialogue with stakeholders that share our values
is important to us. Working together towards shared goals assists
us in delivering long-term sustainable success.
Our Group comprises a number of businesses and all engage with
each other because the value of working together is recognised.
Each business also has extensive engagement with its own unique
stakeholders. The Group’s governance framework delegates authority
for local decision-making to businesses, up to defined levels of cost and
impact, which allows the businesses to take account of the needs of their
own stakeholders in their decision-making.
The leadership teams of each business make decisions with a
long-term view and with the highest standards of conduct in line
with Group policies. In order to fulfil their duties, the Directors of each
business and of the Group itself take care to have regard to the likely
consequences on all stakeholders of the decisions and actions which
they take. Where possible, decisions are carefully discussed with affected
groups and are therefore fully understood and supported when taken.
The Board is well informed about the views of stakeholders. Reports
are regularly made to the Board by the businesses about strategy,
performance and key decisions taken, which provides the Board
with assurance that proper consideration is given to stakeholder
interests in decision-making. It uses this information to assess the
impact of decisions on each stakeholder group as part of its own
decision-making process. Details of the Group’s key stakeholders
and how we engage with them are set out below.
Shareholders
We rely on the support of shareholders and their opinions are important
to us. We want to enable shareholders to have an in-depth understanding
of our strategy and operational and financial performance, so they can
accurately assess the value of our shares.
We have an open dialogue with our shareholders through one-to-one
meetings, group meetings, and the Annual General Meeting. Discussions
with shareholders cover a wide range of topics including financial
performance, strategy, outlook, governance and ethical practices.
Shareholder feedback along with details of movements in our
shareholder base are reported to and discussed by the Board and
their views are considered as part of decision-making. The Group
held a Capital Markets Update in 2021 to set out its ambition to
become the leading partner to the construction industry and to
set out how the Group intends to grow total shareholder return.
It was necessary to consider the potential impact of Covid-19
restrictions when planning the 2021 AGM and with regret we had to
insist that shareholders did not attend the AGM venue. The 2021 AGM
was, therefore, undertaken via a webcast, through which shareholders
could see and hear the Directors; and could ask questions and vote in
real-time at the meeting.
Colleagues
Our people are key to our success and we want them to be successful
individually and as a team. We aim to build a fully inclusive environment
where treating each other with respect and encouraging everyone to be
themselves is at the heart of our values.
We work hard to engage with and listen to our colleagues in a variety of
ways. Our Group-wide engagement survey in 2021 was sent to 16,559
colleagues with a completion rate of 67%, representing the views of
approximately 11,000 colleagues. The engagement survey included
detailed questions around people, safety and ESG.
Group diversity and inclusion networks with GLT sponsorship
and diversity and inclusion forums established within the individual
businesses, aiming to: retain a diverse pipeline of colleagues, enable
a high performance culture, develop inclusive leaders and positively
impact a generation of young people.
Pete Redfern was the designated workforce engagement Non-executive
Director in 2021 and focused on holding listening sessions with
colleagues to seek direct insight into what was important. Participants
nominate themselves for the listening sessions, which have a strong
emphasis on confidentiality. Agendas for the meetings were driven by
the colleagues who participated rather than Pete. His role was to listen
and facilitate the conversation. During the meetings in the first half of
2021, six key themes emerged: safety, resources, Covid-19, diversity &
culture, mental health and IT. Feedback from colleagues was broadly
supportive of the businesses’ direction and changes being made, however
some concern was expressed at the pace of change and resources.
In response, taking account of the on-going additional pressures caused
by the pandemic, deliberate steps were taken to slow the pace of some
change activity over the summer to allow colleagues additional time to
catch up. Key themes emerging from listening sessions in the second half
of 2021 focused on workload and the communication of change, rather
than change itself. The themes from earlier in the year did not emerge in
the same way. The change in emphasis and topics in the feedback during
the second half suggested that the deliberate slowing of some activity
over the summer had worked and that engagement with colleagues
via the listening sessions had made a difference.
Further information on how the Group engages with colleagues can
be found under “Colleague voice and engagement” on page 70.
Customers
Our ambition is to be the leading partner to the construction industry by
delivering an exceptional, innovative service to customers. We build quality
relationships with our customers and spend considerable time with them
to understand their needs and views and listen to how we can improve our
offer and elevate and deepen the relationship.
Our most significant customers and customer groups are fundamental
to our success and they are monitored closely so that we can identify
their needs and bring them innovative solutions that help resolve the
pain-points in the most effective way. We use this knowledge to inform
our decision-making as customer needs evolve over time, including
tailoring our digital propositions to suit customer demands. E.g.
launching the Travis Perkins app in order to offer more flexibility
in accessing products and account management.
Suppliers
Our suppliers are experts in the wide range of products we source
from them. Macro factors such as the increasing relevance of ESG and
sector-specific changes seen in the development of modern methods
of construction are raising expectations of us and our suppliers and
creating opportunities. We aim to build strong supplier relationships
and develop mutually beneficial, lasting partnerships that meet these
expectations and seize these opportunities.
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Engagement with suppliers is primarily through a series of interactions
and formal reviews. We also host regular conferences to bring suppliers
and customers together to discuss shared goals and build relationships.
In particular, colleagues across the Group met with 329 suppliers at the
Group Supplier Conference in October 2021. Key areas of focus included
innovation, product development, health and safety and ESG. The Board
recognises that relationships with suppliers are important to the Group’s
long-term success and is briefed on supplier feedback and issues on a
regular basis. We have maintained regular contact with our suppliers
safely throughout the Covid-19 pandemic.
Communities and the environment
Investing in sustainable growth means supporting and empowering
the communities in which we operate. By ensuring we make a positive
contribution, we can help build thriving communities and strengthen
our business. We engage with the communities we operate in, to build
trust and understand the local issues. Key areas of focus include how
we can support local causes and issues; create opportunities to recruit
and develop local people; and help to look after the environment.
We partner with local charities and organisations at a site level to
raise awareness and funds. The key issues and themes across local
communities are reported back to the Board. The Group’s impact
on the environment is a key focus for the Board. During 2021 carbon
targets were set to support the Group’s leading ambitions on ESG.
Further information is available in the Sustainability report on
pages 52 to 71 and decision-making in practice regarding the
carbon targets is set out below.
Government and regulators
The regulatory environment significantly impacts the success of
our business. We believe it is important that those who can influence
policy, law and regulation understand our views. We also want to share
information and perspectives on areas that impact our businesses.
We engage with the government and regulators through a range
of industry consultations, forums, meetings and conferences to
communicate our views to policy-makers relevant to our business.
Key areas of focus are compliance with laws and regulations, health
and safety and product safety. The Board is updated on legal and
regulatory developments and takes these into account when
considering future actions.
Decision-making in practice
One of the major decisions made by the Group this year was to commit to and publish new industry-leading, SBTi-approved carbon targets, including
Scope 3 carbon, in line with a 1.5°C pathway. This was to meet increasing stakeholder expectations around carbon and, recognising our role as market
leader, to set the bar for the industry. In making this decision the Board considered the interests of and the impact on all stakeholders. To provide insight
into the approach taken by the Board, a summary of stakeholder views and conclusions is set out below.
Stakeholder
Stakeholder views
Conclusions
Shareholders
Colleagues
Customers
Suppliers
Our shareholders want us to operate in the
most cost effective way, preserve cash and
maximise returns thereby creating value and
ensuring the long term sustainable success
of the Group.
Investors see companies with a strong focus on material sustainability
issues outperforming. Carbon is a material issue for the Group and
investors expect credible action. SBTi approval of the Group’s 1.5°C-aligned
carbon targets gives endorsement and credibility to the work the Group will
lead to decarbonise the industry.
Our colleagues want the Group to take its
responsibilities around sustainability seriously.
For both current and future colleagues,
sustainability is a deciding factor in who
they work for and how engaged they feel.
Our customers want propositions that work
for them and this is increasingly influenced
by carbon requirements. For example,
larger customers ask for new:
• data: corporate carbon, product embodied
carbon and delivery carbon
• products: low-carbon alternate materials
or fossil-fuel free heating and
energy-related products
• services: supporting modular construction
or providing other value-add solutions
Our suppliers want to understand the impact
of the carbon targets on their businesses.
They also want to have confidence that the
business will continue to trade with them
in the long-term.
The Group cares about its colleagues and wants to retain and attract the
best to the business and the industry. The latest employee engagement
survey asked colleagues whether environmental, community and charitable
responsibility was important to them, with a large majority confirming
it was. External research suggests that workers are prepared to leave
their jobs if their organisations aren’t serious about addressing ESG
related issues.
The Group maintains regular communication with its customers, consulting
regularly with them on their changing needs. For large customers, carbon
is core to their own strategies and they need the Group to support them.
For smaller customers, changes to building regulations and carbon-related
product taxes require them to adapt and they are looking to their materials
suppliers to provide guidance and training. Carbon performance forms part
of most customer tenders (sometimes now being considered over price)
and the Group’s commitment to and progress in carbon reduction will
retain existing and attract new customers.
The business engaged with key suppliers through the process of
determining new targets. Suppliers in hard-to-decarbonise product
categories (i.e. cement-based products) are reliant on carbon capture
and storage solutions being established and have some uncertainty about
the pace of change that is viable. However they are setting and working
towards reduction targets and recognise how vital this is for future success.
Many suppliers are keen to better promote their existing low-no carbon
solutions to the market.
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Section 172 statement continued
Decision-making in practice continued
Stakeholder
Stakeholder views
Conclusions
Communities
Our communities want our continued
support with local causes and issues.
Government
and
regulators
The government and regulators want us to
operate in an environmentally sustainable
way and comply with laws and regulations.
335 UK councils have announced climate emergencies. Nationally, locally
and at a project level, carbon targets are increasingly being set and local
communities expect large companies to play a leading role in addressing
climate change. The Group is responding to this challenge by operating a
low carbon estate and fleet within those communities, and providing the
products, data and services which communities need to decarbonise the
built environment and construction.
The government launched a new Procurement Policy Note (PPN) in
2021 requiring carbon reduction plans to be taken into account in the
procurement of major government contracts. New building regulations
will prevent gas boiler installations into new buildings from 2025 and into
existing buildings from 2035. Energy Performance Certificate requirements
are under review and, if passed, will see many residential and commercial
rentals requiring upgrade in the next ten years. Credible carbon
commitments and action are expected by government and regulators.
Non-financial information statement
The information below is intended to help users of these accounts understand our position on key non-financial matters and has been prepared
in response to the reporting requirements contained in section 414C(7), 414CA and 414CB of the Companies Act 2006.
Reporting requirements
Colleagues
Principal risks
Health, safety and wellbeing
Managing change
Environment
Climate change and
carbon reduction
Human rights,
anti-bribery and
anti-corruption
Social and
community
Legal compliance
Supply chain resilience
Managing change
Policy embedding, outcomes and key performance indicators
Business model
KPIs – Accident frequency rate
Safety and wellbeing
Development
Modern slavery and human rights
Diversity and inclusion
Colleague voice and engagement
Reward
Directors’ remuneration report
Directors’ report – Employees
Business model
KPIs – Carbon emissions
Climate-related financial disclosure
Sustainability report
Carbon
Waste
Sustainable products and services
Human rights and modern slavery
Legal compliance
Chair’s introduction – Culture
Directors’ report – Modern slavery
Business model
Charities and volunteering
Responsible sourcing
Link
Page 18–19
Page 29
Page 56–57
Page 62–63
Page 66
Page 64–65
Page 70
Page 71
Page 91–93
Page 105
Page 18–19
Page 60–61
Page 48–51
Page 52–71
Page 60–61
Page 67
Page 59
Page 66
Page 70
Page 79
Page 106
Page 18–19
Page 68–69
Page 58
A description of the Group’s business model and how it creates sustainable value can be found on pages 18 to 19.
Most of the reporting on these topics and KPIs is contained in the Strategic report under the sections Business model, Sustainability
report and Statement of principal risks and uncertainties or are incorporated into the Strategic report by reference from the pages noted.
The Group has appropriate policies and diligence procedures regarding all the non-financial information presented in this Annual Report.
Strategic report approval
The Strategic report on pages 1 to 74 was approved by the Board of Directors and signed on its behalf by:
Nick Roberts
Chief Executive
28 February 2022
Alan Williams
Chief Financial Officer
28 February 2022
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Corporate governance report
Governance
76 Board of Directors
78 Corporate governance report
84 Nominations Committee report
86 Audit Committee report
84 Nominations Committee report
86 Audit Committee report
91 Directors’ remuneration report
94 Annual remuneration report
105 Directors’ report
108 Statement of Directors’ Responsibilities
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Board of Directors
Jasmine Whitbread
Chair
Nationality
British/Swiss
Appointment date
31 March 2021
Nick Roberts
Chief Executive Officer
Nationality
British
Appointment date
July 2019
Alan Williams
Chief Financial Officer
Nationality
British
Appointment date
3 January 2017
Committee membership:
N
R S
Committee membership:
S
Committee membership: N/A
Skills and experience
Nick previously led international design,
engineering and project management
consultancy Atkins and has spent nearly
30 years in the international engineering
and construction industry. A geologist by
profession, he is an Honorary Fellow of the
Institution of Civil Engineers. He is the Deputy
Chair, a Trustee and Director of the Forces in
Mind Trust.
Skills and experience
Alan is a qualified Accountant and Treasurer
and in addition to having a strong finance
background, he has extensive experience
in leading strategic initiatives, mergers
and acquisitions, integration and business
transformation. Prior to joining the Group,
Alan served as CFO at Greencore Group plc
for six years. Alan also previously worked at
Cadbury plc in a variety of financial roles in
the UK, France and the USA.
Skills and experience
Jasmine has extensive boardroom experience
from a number of large public companies.
These include BT Group plc, where she chaired
the Digital Impact and Sustainability Committee,
Standard Chartered plc, Compagnie Financière
Richemont SA and WPP plc, where she remains
a non-executive director.
A seasoned executive leader, whose career spans
over two decades, she was most recently CEO
for London First (2016–2021) where she worked
with business leaders to keep the UK’s capital
globally competitive. Prior to this Jasmine was
CEO of Save the Children UK (2005-2010).
She became the first CEO of Save the Children
International, aligning 30 federation members
in over 100 countries.
Prior to this Jasmine’s career was in marketing
in the technology sector, holding management
positions with Rio Tinto and then in the US with
Cortex and Thomson Financial.
Committee membership key:
A
N
R
S
Audit
Nominations
Remuneration
Stay Safe
Chair
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Travis Perkins plc Annual Report and Accounts 2021
Pete Redfern
Senior Independent Non-Executive
Director
Nationality
British
Appointment date
1 November 2014
Committee membership:
Skills and experience
Pete has extensive financial, operational and
management experience as well as strong
construction and property expertise. Pete is
a Chartered Surveyor, as well as a Chartered
Accountant. Since 2007, Pete has held the
position of CEO at Taylor Wimpey. He was
previously Chief Executive of George Wimpey plc
and prior to that, successively held the posts
of Finance Director and Chief Executive of
George Wimpey’s UK Housing business.
A
N R S
Committee membership:
A
R
Committee membership:
R
Coline McConville
Non-Executive Director
Nationality
Australian
Appointment date
1 February 2015
Marianne Culver
Non-Executive Director
Nationality
British
Appointment date
1 November 2019
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Skills and experience
Coline has a wealth of international experience
with a background in management, marketing
and media as well as extensive remuneration
and boardroom experience. Coline is currently
a Non-executive Director of TUI AG, Fevertree
Drinks plc and 3i Group plc and was formerly
a Non-executive Director of Inchcape plc, UTV
Media plc, Wembley National Stadium Limited,
Shed Media plc and HBOS plc. Prior to that Coline
was Chief Operating Officer and Chief Executive
Officer Europe of Clear Channel International
Limited. She holds an MBA from Harvard
Business School where she was a Baker Scholar.
Skills and experience
Marianne has extensive executive and board
experience in the global distribution and logistics
sectors. She has served as Chief, Global Supply
Chain with Premier Farnell plc and as Chief
Executive (UK & Ireland) of TNT. Marianne was
latterly Global President of RS Components,
the components trading and distribution
division of Electrocomponents plc. Marianne
is a member of the Supervisory Board of
Blackstone portfolio company the BME Group B.V.
Her Non-Executive Directorship career to date has
included membership of the Boards of Rexel SA,
The British Quality Foundation and EDS
Corporation Inc.
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Heath Drewett
Non-Executive Director
Nationality
British
Appointment date
11 May 2021
Committee membership:
A
Skills and experience
Heath is an experienced CFO and currently
Chief Financial Officer at Aggreko; a global power,
temperature control and energy services company
and former constituent of the FTSE 250 prior to
its take-over in August 2021. Heath has extensive
experience in the engineering, leisure and
transportation and industrial sectors having
previously worked for WS Atkins, British Airways,
Morgan Advanced Materials and PwC. Heath
brings a wealth of financial and commercial
acumen to the Board at Travis Perkins based on
his experience across a number of markets and
sectors adjacent to the construction industry.
Jora Gill
Non-Executive Director
Nationality
British
Appointment date
4 August 2021
Committee membership:
N S
Skills and experience
Jora has extensive data and digital experience having
held a number of Chief Information Technology
Officer and Chief Digital Officer roles in significant
organisations, including Standard and Poors, Elsevier,
the Economist, and latterly SHL Group Ltd where he
served as Chief Digital Officer until December 2021.
Jora is now the CEO and Co-founder of an AI and
data analytics company, Insights Driven. He also
serves as an non-executive director of the Care
Quality Commission, a role he has held since 2016.
Travis Perkins plc Annual Report and Accounts 2021
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Corporate governance report
Jasmine Whitbread
Chair
28 February 2022
I am pleased, on behalf of the Board, to
present the corporate governance report
for the year ended 31 December 2021
We had all hoped that by the time we came to write this Annual
Report, the Covid-19 pandemic would be behind us. Unfortunately
that is not the case and during 2021, just as in the prior year, we
have had to operate the Group in the face of ongoing restrictions
and cope with the challenges which running a large business during
a pandemic has presented to us.
It is in such times of adversity and uncertainty that the strength
of an organisation’s governance framework is particularly tested.
I am pleased to be able to report that, although tested, the
governance framework and processes of the Group have withstood
the challenges presented by the pandemic. I am confident that the
Group has a strong governance framework in place with a robust
system of controls and effective processes for the identification,
mitigation and management of risk.
In the early part of 2021 the Board continued to prioritise
adjusting the Group’s businesses in order to successfully navigate
the uncertainty caused by Covid-19. As 2021 progressed, with
the demerger of Wickes and the sale of the Plumbing & Heating
business successfully concluded and the Group demonstrating
consistently strong performance and disciplined capital
management, the Board took the decision to reinstate dividend
payments. The Board also focused on the Group’s new strategy
and the communication of the strategy to shareholders and other
stakeholders. The strength of the Group’s governance framework
was an essential underpin helping to enable the successful
delivery of all of these things.
The Board remains confident in the Group’s ability to navigate
near-term uncertainty and in the Group’s position for the long-term.
We are clear that the Group’s strategy, underpinned by robust and
efficient governance structures, will deliver sustainable long-term
value for shareholders and other stakeholders, whatever the
external environment. We remain firmly of the view that good
corporate governance will contribute to a sustainable business
over the long-term.
UK Corporate Governance Code
Throughout the year ended 31 December 2021, the Company
was in compliance with the principles and provisions of the UK
Corporate Governance Code 2018 (“the Code”) issued by the
Financial Reporting Council, which is available at www.frc.org.uk,
but for two exceptions.
Provision 21 of the Code requires FTSE 350 companies to have
an externally facilitated board evaluation every three years. Being
the third year since the Company last undertook an externally
facilitated evaluation, ordinarily, the Board would have done so in
2021. However, given the Chair’s succession in March and the other
changes to the membership of the Board which occurred during
the year, it was decided that it would be better to defer an externally
facilitated evaluation until 2022 to give the new Chair and Directors
the opportunity to settle into their roles and to allow new working
relationships to develop. Accordingly, the Company will undertake
an externally facilitated board evaluation in 2022.
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Travis Perkins plc Annual Report and Accounts 2021
Further, Provision 38 of the Code requires that “pension contribution
rates for the Executive Directors, or payments in lieu, should be aligned
with those available to the workforce”. The FRC’s guidance “Improving
the quality of ‘comply or explain’ reporting” published in February 2021
recognised that “As a new requirement of the Code, it was expected
that it would be difficult for some companies to comply with this
Provision immediately due to contractual obligations”, however the
Company had acted before the FRC published its guidance and in the
Directors’ Remuneration report contained in the 2020 annual report,
the Company reported its intention to move away from the contractual
position agreed with Alan Williams on recruitment some three years
previously, stating “CFO Alan Williams’ pension had been agreed at
25% on recruitment in 2017. From 1 January 2020 it was reduced and
fixed at £103,530 (equalling 20% at the time). Taking into account
shareholder expectations and best practice, it will be further reduced
to 10% of salary with effect from 1 January 2023”. As a result this
non-compliance with the code will end on 1 January 2023.
Leadership
Role of the Board
The Board is responsible for promoting the long-term sustainable
success of the Company, generating value for shareholders and
contributing to wider society. It sets the overall Group Strategy, the tone
and approach to corporate governance and considers the opportunities
and risks to the future success of the business. The principal risks of
the business are set out in more detail on pages 40 to 46. The Board
discusses strategic matters at every meeting and in June 2021 held an
off-site strategy day to consider the Group’s strategic direction and the
opportunities and risks faced by the Group. The Group’s strategy and
business model are set out on pages 18 to 27.
The Board has a schedule of matters reserved to it which is reviewed
annually. The Board’s review in December 2021 resulted in some minor
proposed changes to the schedule of matters reserved to the Board
and these were approved in February 2022. The latest approved
schedule of matters reserved can be found on the Group’s website.
In line with the Corporate Governance Code, the Board has a number
of Committees to which it delegates certain responsibilities.
There are four Committees: Audit, Nominations, Remuneration
and Stay Safe. All Committees operate within defined terms of
reference and these can be found on the Group’s corporate website.
The minutes of all Committee meetings are made available to all
Directors and the Chairs of the Committees report on the proceedings
of the Committee meetings at each subsequent Board meeting.
Culture
The Board recognises the important role it plays in assessing and
monitoring the Group’s culture to ensure that policy, practices and
behaviour throughout the Group are aligned with its purpose,
strategy and values. The Board receives regular updates on cultural
indicators to assist its understanding and oversight of the Group’s
culture. These include the Colleague Voice Panel, the Group-wide
colleague engagement survey and a number of listening groups
and colleague communities.
During the year significant work was undertaken on the Company’s
purpose, values and strategy. The Board was closely involved
throughout and at its meeting in December, the Board approved the
Group’s new values, an evolution of the “Cornerstones” which were the
previous articulation of the Group’s values, having approved the new
articulation of the Group’s purpose earlier in the year prior to the Capital
Markets Update in September. The Group’s purpose, values and
strategy are intrinsically linked and further information on them and
their development during the year can be found on pages 6 to 27.
Engaging with stakeholders and the workforce
The Board takes into account the views of its stakeholders when making
decisions, liaising with various stakeholder groups throughout the year,
particularly when strategic decisions are to be taken. Stakeholder groups
such as shareholders, customers, suppliers and colleagues were
engaged with when formulating the strategic direction of the Group to
gain feedback to inform the implementation and realisation of the
strategy.
A statement on the ways in which the Group meets its duties under
Section 172 of the Companies Act 2006 is described in the Strategic
report on pages 72 to 74.
Pete Redfern is the Colleague Voice Representative on the Board.
Details of his activities in this capacity intended to help bring the
employee voice into the boardroom can be found in the “Colleague
voice and engagement” section of the Sustainability report in the
Strategic report on page 70.
Annual General Meeting
Shareholders receive more than 20 working days’ notice of the Annual
General Meeting (“AGM”) at which, ordinarily, all Directors are present
and available for questions. Each substantive issue considered at the
AGM is the subject of a separate resolution and in accordance with best
practice, voting is conducted by way of a poll rather than a show of
hands. The numbers of proxy votes, lodged in advance of the meeting,
for and against each resolution are announced at the meeting and the
final votes are subsequently published on the Company’s website.
In 2020 we had to respond to the fast evolving Covid-19 pandemic
and found ourselves in uncharted territory with a national lockdown
imposed preventing physical attendance at the meeting. For the first
time ever we conducted a remote meeting and we recognised that
the hastily implemented arrangements for our 2020 AGM were not
ideal. We undertook to do better in 2021 and to make our AGM as
participative as possible for shareholders. As we planned the 2021
AGM we did not know whether people would be allowed to attend
the AGM in person. We were guided in the planning process by two
overarching principles: firstly that we should take the most conservative
approach possible to the safety and wellbeing of colleagues,
shareholders and other participants in the AGM; and secondly
that the AGM must be as accessible and participative for
shareholders as possible.
We conscientiously followed the Government’s “roadmap” out of the
Covid-19 restrictions in place in Spring 2021. By the time of the AGM
in April 2021, indoor gatherings continued to be restricted and people
were required to work from home where possible. Consequently,
we had to insist that shareholders did not attend the AGM venue.
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Corporate governance report continued
At the time of her appointment, Jasmine Whitbread and John Rogers
held cross-directorships at WPP plc where John is Chief Financial Officer
and Jasmine is a non-executive director. As part of Jasmine’s
appointment process the Board gave careful consideration to whether it
could consider her independent in light of that cross-directorship. The
Board concluded that as Jasmine was a Non-executive Director and John
an Executive Director and there was no reporting line relationship
between them; they had never worked together in any executive capacity
or in any other organisation; and they had no links other than the
cross-directorship at WPP plc; there was no impediment to the Board
considering Jasmine to be independent on appointment and continuing
to consider John to be an independent Non-executive Director.
The roles of the Chair and Chief Executive are split and the Board has
approved a written statement of the division of key responsibilities
between the Chair and Chief Executive which is reviewed annually and is
available on the Group’s corporate website.
Non-executive Directors
The Board ensures that at least half of its members, excluding the Chair, are
independent non-executives and continually reviews any relationships or
circumstances which are likely to affect their independence. There were a
number of changes to the Non-executive Directors during the year, with the
appointment of Heath Drewett in May and Jora Gill in August, and with
John Rogers stepping down in October and Blair Illingworth in November.
In November 2021 Blair was appointed Chief Executive Officer of Aggreko
Ltd where Heath Drewett is Chief Financial Officer. Following Blair’s
appointment at Aggreko, Heath reports to him in an executive capacity. As
a result Blair stood down from our Board in order to preserve Heath’s
independence. We were sorry to lose Blair so soon in his service with the
Company, however, his decision to stand down was the right course of
action.
A more detailed examination of the changes to the Board during 2021
and the work of the Nominations Committee is set out in the report on
pages 84–85. The Board is satisfied that none of the circumstances set
out in provision 10 of the Code currently apply and that all Non-
executive Directors remain independent.
Pete Redfern is the Company’s Senior Independent Director (“SID”).
The SID acts as a sounding board for the Chair and an intermediary
for Directors and shareholders. The SID’s responsibilities are set out in
writing and are available on the Group’s corporate website. The SID is
available to shareholders should they wish to raise an issue through an
alternative channel. The Non-executive Directors led by the SID meet
without the Chair present annually to discuss the Chair’s performance
and any other matters as required.
The Non-executive Directors provide constructive challenge, strategic
guidance and appraise Executive Directors’ performance against
agreed performance targets. The Non-executive Directors and Chair
meet regularly without the Executive Directors present.
Having taken careful note of developments in hybrid meetings and
feedback from shareholders and the wider governance community on
how meetings might be better arranged, the 2021 AGM was
undertaken via a webcast through which shareholders could see and
hear the Directors, could ask questions and could vote in real-time at
the meeting. We provided the most interactive possible alternative to a
physical meeting, ensuring shareholders remained enfranchised.
Should we be able to admit shareholders to the 2022 AGM in person,
we will do so, but we will also webcast the meeting so that shareholders
who are unable to attend in person can participate in the AGM as if they
were physically present. If restrictions on gatherings indoors are in
place in April 2022 and we have to conduct a remote AGM, we will
once again conduct the AGM on the most inclusive basis possible using
a webcast which enables shareholders to attend remotely but see and
hear from the Directors, ask questions and vote in real-time.
At our 2021 AGM we received strong support from shareholders for the
resolutions put to the meeting with an average of 96% of votes in favour.
Should a resolution at an AGM receive 20% or more of votes cast
against the Board’s recommendation, the Board would consult with
shareholders to understand the reasons behind their voting.
Conflicts of interest and raising concerns
Declarations of any actual or potential conflicts of interest with items on
the agenda are requested and made at the start of every Board and
Committee meeting. A register of the Directors’ interests and conflicts
is maintained by the Company Secretariat and Directors complete an
annual questionnaire on potential or actual conflicts of interest and their
activities throughout the year. Any potential conflicts are reviewed by
the Board as a whole and if necessary, mitigating actions are taken and
recorded on the Directors’ interests and conflicts. The impact of any
relationships or involvements are considered carefully to ensure that
they do not compromise or override the Directors’ ability to exercise
independent judgement.
Concerns in relation to the operation of the Board can be raised with
the Chair or the Senior Independent Director. No such concerns were
raised during the year.
During 2021 we continued to embed the principle of “calling it out”
across the Group with the reinforcement of the Code of Conduct and
the availability of the Speak Up line. The Audit Committee, on behalf of
the Board, received quarterly reports on issues raised through the
Speak Up line and subsequent action taken, and the Board reviewed the
effectiveness of the Speak Up line at its meeting in December. During
2022 we intend to continue to emphasise the importance of the Code
of Conduct and the Speak Up line, which is available for colleagues and
others who interact with the Group to raise matters that are inconsistent
with the Group’s values or otherwise require investigation and attention.
Division of responsibilities
Chair and Chief Executive
The Chair leads the Board and ensures its effectiveness. Stuart
Chambers who was Chair until the end of March was independent on
appointment as was Jasmine Whitbread who succeeded him. Provision
10 of the Code sets out circumstances which are likely to impair, or
could appear to impair, a non-executive director’s independence,
including where individuals hold cross-directorships or have significant
links with other directors through involvement in other companies or
bodies.
80 Travis Perkins plc Annual Report and Accounts 2021
Time commitment
When making new appointments the Board carefully considers the
competing demands on candidates’ time. Prior to appointment,
candidates are required to disclose any significant commitments along
with the estimated associated time commitment. Each Non-executive
Director’s letter of appointment sets out the time commitment expected
of them and these letters will be available for inspection at the Annual
General Meeting.
The Board considers on an annual basis the time commitments of each
Director and it is satisfied that all Directors continue to have sufficient
time available to fulfil their duties. Any new external appointments
during the year are given careful consideration, taking into account the
number and scale of each Director’s other commitments before
approval is given and recorded. Subject to approval by the Board,
Executive Directors are allowed to accept one external non-executive
directorship with a listed entity.
So far as is practicable, the Company liaises with the Non-executive
Directors to ensure the schedule of meetings does not clash with
external appointments. Directors are able to attend meetings by video or
telephone conferencing if there is an issue with location or travel.
Board and Committee meetings
At the beginning of the year, restrictions associated with Covid-19
meant the Board and its Committees continued to meet remotely by
video conference. With the lifting of restrictions in June 2021 the Board
was able to meet in person for the first time since February 2020. Since
its June meeting the Board has met in person for each of its meetings.
Some of the Committee meetings have been held using video
conference.
The Board held eight scheduled meetings in 2021. Regular items on
the agenda included detailed updates on health and safety, progress
against strategic objectives, financial results and performance against
KPIs, and strategic reviews of the Group’s businesses. Other areas of
consideration included funding, capital expenditure, investor feedback,
risk and governance. During 2021 the Board focused especially on
bringing to fruition the strategy of “simplifying the Group” and “focusing
on the trade” through the demerger of the Wickes business and the sale
of the Plumbing & Heating business; the Group’s revised strategy,
details of which are set out in the Strategic Review on pages 20 to 27;
the Group’s purpose, values and culture; and diversity and inclusion.
Ordinarily the Board makes two operational site visits a year, however
ongoing Covid-19 restrictions hampered the Board’s ability to undertake
operational visits during the first half of 2021 and during the second
half of the year the Board decided not to add to the burden of
colleagues who were still managing the under the additional strain of
Covid-19 related pressures by making operational visits. It is hoped that
during 2022, the Board will be able to resume operational visits but it is
mindful, at least during the early part of the year, of ongoing Covid-19
related pressures which colleagues are having to manage, especially
the effects of the Omicron variant. As a result the Board is unlikely to
undertake operational visits until the second half of 2022 at the earliest.
The General Counsel & Company Secretary manages the process of
setting the agenda for each Board meeting which is agreed between
the Chair, the Chief Executive and the Chief Financial Officer. A
programme of work and key priorities is set with the Board at the
beginning of each year, with agendas based on the annual plan as well as
topical items and matters of particular concern or interest to the Board.
Key financial and other relevant information is circulated to the Board
outside scheduled meetings and is monitored by the Chair to ensure that
it is sufficient, timely and clear.
The Chair meets regularly with Board members and with members of
the Group Leadership Team between Board meetings and ensures that
Board members are kept informed of material developments. At
meetings the Chair encourages debate and equal contribution from each
Board member within a transparent and constructive atmosphere. The
names of the Directors who served on the Board during the year
together with the number of Board and Committee meetings attended by
each Director is set out below.
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Number of meetings
Attendance:
S. Chambersi
M. Culver
H. Drewettii
J. Gilliii
B. Illingworthiv
C. McConville
P. Redfern
N. Roberts
C. Rogersv
J. Rogersvi
J. Whitbreadvii
A. Williams
PLC
Board
8
2/2
8/8
5/5
2/2
7/7
8/8
8/8
8/8
3/3
7/7
6/6
8/8
Audit
Committee
Stay Safe
Committee
Nominations
Committee
Remuneration
Committee
Overall
attendance (%)
5
n/a
n/a
3/3
n/a
n/a
5/5
5/5
n/a
n/a
4/4
n/a
n/a
3
n/a
n/a
n/a
n/a
3/3
n/a
3/3
3/3
n/a
n/a
3/3
n/a
6
1/2
6/6
3/3
n /a
6/6
6/6
6/6
n/a
3/3
5/5
5/5
n/a
3
3/3
3/3
n/a
n/a
n/a
3/3
3/3
n/a
2/2
n/a
1/1
n/a
85
100
100
100
100
100
100
100
100
100
100
100
i
Stuart Chambers stood down from the Board & Committees on 31 March 2021
ii Heath Drewett joined the Board, Audit Committee & Nominations Committee on
11 May 2021
iii Jora Gill joined the Board on 4 August 2021
iv Blair Illingworth stood down from the Board on 29 November 2021
v Chris Rogers stood down from the Board and its Committees on 27 April 2021
vi John Rogers stood down from the Board its Committees on 6 October 2021
vii Jasmine Whitbread joined the Board on 31 March 2021
Travis Perkins plc Annual Report and Accounts 2021
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Corporate governance report continued
Group Leadership Team
The Board has delegated responsibility for the execution of the Group’s
strategy and the day-to-day management and operation of the Group’s
business to the CEO. The CEO has established and chairs the Group
Leadership Team which comprises key business and functional leaders.
Other colleagues are invited to attend Group Leadership Team
meetings from time to time in relation to specific matters. The main
purpose of the Group Leadership Team is to assist the Executive
Directors in the performance of their duties, particularly in relation to
the development and implementation of strategy, operational plans,
policies, procedures and budgets; the monitoring of operational and
financial performance; the assessment of control of risk; and the
prioritisation and allocation of resources.
Provision of information and support
All Directors have direct access to the General Counsel & Company
Secretary who is responsible for advising the Board on all governance
matters. Directors may also seek independent professional advice at
the Company’s expense in the furtherance of their duties as required.
Composition, succession and evaluation
Board composition
As at 31 December 2021 the Board comprised six Non-executive
Directors and two Executive Directors. The biographies of the Board are
listed on pages 76 and 77.
Appointments
Appointments of new Directors are made by the Board on the
recommendation of the Nominations Committee. The Nominations
Committee undertakes a rigorous and comprehensive search and
selection process for new Directors, normally with the assistance of a
professional search firm. Were the Nominations Committee unable to
use the services of a search firm, it would place advertisements when
conducting a search for new Directors. The Nominations Committee’s
responsibilities and a description of its work can be found in the
Nominations Committee report on pages 84 and 85.
Re-election of Directors
All Directors are considered to be eligible, on the basis of performance
and contribution to the long-term sustainable success of the Company,
to submit themselves for re-election at the 2022 AGM.
Board effectiveness review
A rigorous evaluation of the performance of the Board and its
Committees is carried out annually in order to identify efficiencies,
maximise strengths and highlight areas for further development.
Consistent with the requirements of the UK Corporate Governance
Code. The effectiveness review is ordinarily facilitated by an
independent external facilitator every three years. An external review
was last conducted in 2018 and for the reasons explained at the start of
this corporate governance report, although 2021 would have been the
third anniversary of that review, no externally-facilitated review of Board
effectiveness was undertaken during the year. An externally-facilitated
review will be undertaken in 2022.
During 2021 the Board undertook an internally-facilitated effectiveness
review which identified the following key focus areas for 2022:
• Management of change
• Key metrics
• Stakeholders
• Board skills and experience
• Non-executive Director succession planning
• Risk management
• Culture and diversity and inclusion
The SID undertook an evaluation of the Chair’s performance with input
from the Executive and Non-executive Directors and the Non-executive
Directors reviewed the performance of the Chief Executive and Chief
Financial Officer. The performance of all Directors was judged
satisfactory.
The Board concluded that each Director brings considerable expertise
and experience to Board discussions. The Board is satisfied that each
Director continues to contribute effectively to Board debate and guides
and challenges management’s strategic plans and their
implementation.
Statement by the Board
A review of the performance of the Group’s businesses and the
financial position of the Group is included in the Strategic report on
pages 30 to 39. The Board uses it to present a full assessment of the
Group’s position and prospects, its business model and its strategy for
delivering that model. The Directors’ responsibilities for the financial
statements are described on page 108.
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Going concern
After reviewing the Group’s forecasts and risk assessments and making
other enquiries, the Board has formed the judgement at the time of
approving the financial statements that there is a reasonable
expectation that the Group and the Company have adequate resources
to continue in operational existence for the 12 months from the date of
signing this Annual Report and Accounts. For this reason the Board
continues to adopt the going concern basis in preparing the financial
statements.
In arriving at their opinion the Directors considered:
• The Group’s cash flow forecasts and revenue projections
• Reasonably possible changes in trading performance
• The committed debt facilities available to the Group and the
covenants thereon
• The Group’s robust policy towards liquidity and cash flow
management
• The Group’s ability to successfully manage the principal risk and
uncertainties outlined on pages 40 to 46 during periods of uncertain
economic outlook and challenging macroeconomic conditions
The downside scenarios tested, outlining the impact of severe but
plausible adverse scenarios based on a severe recession and housing
market weakness, show that there is sufficient headroom for liquidity and
covenant compliance purposes for at least the next 12 months from the
date of approval of these financial statements.
The Board’s fair, balanced and understandable declaration
At the Board meeting during which the Group’s results for the year were
presented by the Chief Executive and the Chief Financial Officer, the
Board considered whether the Annual Report and Accounts, when
taken as a whole, present a fair, balanced and understandable overview
of the Group and its performance. After hearing from the Executive
Directors, receiving a report from the Audit Committee Chair on that
Committee’s meeting to review the preparation and content of the
year-end financial statements and the audit conducted upon them and
reviewing the contents of the Annual Report and Accounts; the Board
concluded that the Annual Report and Accounts are fair, balanced
and understandable and accordingly the Directors’ declaration to that
effect can be found under the Statement of Directors’ Responsibilities on
page 108.
Remuneration
The Board has established a Remuneration Committee
comprising at least three independent Non-executive Directors. The
Remuneration Committee’s responsibilities and a description of its work
is set out in the Remuneration Committee report on pages 91 to 104.
Audit, risk and control
The Board has established an Audit Committee comprising three
independent Non-executive Directors. The Audit Committee’s
responsibilities and a description of its work is set out in the Audit
Committee report on pages 86 to 90.
The Board is responsible for the Group’s system of internal control and
for reviewing its effectiveness. In the design of the system of internal
control, consideration has been given to the significant risks to the
business, the probability of these risks manifesting themselves and the
most cost-effective means of controlling them.
The threat posed by those risks and any perceived change in that threat is
reviewed half yearly by both the Group Leadership Team and the Board.
The system manages rather than eliminates risk and therefore can only
provide reasonable and not absolute assurance against material
misstatement or loss.
The day-to-day operation of the system of internal control is delegated
to the Group Leadership Team and senior management, but the Audit
Committee reviews and discusses internal controls on a regular basis.
The system of internal controls is reviewed by the Board in a process
that accords with the Financial Reporting Council guidance on Risk
Management, Internal Control and Related Financial and Business
Reporting.
It is the responsibility of the Board to establish the risk framework
within which the Group operates. The Board and the Group
Leadership Team review the risk register and risk appetite at least
once each year. Members of the Audit Committee also receive
reports on internal audit reviews. If appropriate these reports
include recommendations for improvements in controls or for the
management of those risks. Measures to integrate risk management
processes into the Group’s operations, to extend awareness of the
importance of risk management and to ensure that recommended
improvements are implemented are regularly reviewed.
As part of its viability review, the outcome of which is set out on page
39, the Board considered the principal risks and uncertainties and
mitigating factors set out on pages 40 to 46.
In conjunction with the Audit Committee, the Board has carried out
an annual review of the overall effectiveness of the system of internal
control and risk management during the year and up to the date of
approval of this Annual Report, and concluded that they are effective.
Where areas requiring improvement have been identified, processes are
in place to ensure that the necessary action is taken and that progress
is monitored.
The Corporate governance report has been approved by the Board of
Directors and is signed on its behalf by:
Jasmine Whitbread
Chair
28 February 2022
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Nominations Committee report
Jasmine Whitread
Chair, Nominations Committee
28 February 2022
2021 focus areas
– Appointment of Jasmine
Whitbread as Chair
– Committee chair and
Non-executive Director
appointments
– Succession planning for senior
management roles
– Board and executive diversity
Number of scheduled meetings
during 2021
6
84
Travis Perkins plc Annual Report and Accounts 2021
Dear Shareholder,
I am pleased to present the Nominations
Committee report for the year ended
31 December 2021.
I took over as Chair of the Nominations Committee on my appointment as
Chair of the Board when I succeeded Stuart Chambers at the end of March
2021. I would like to take this opportunity to thank Stuart for his leadership
of the Committee as it set the strong foundations on which we were able to
build during the year.
Focus in 2021
The work of the Nominations Committee is primarily focused on succession
planning. As the Committee continued with that remit in 2021 we kept in
mind the evolving strategy and needs of the Group, as well as the skills and
experience required on the Board to help shape that strategy and bring
relevant experience to guide, advise and challenge the execution of that
strategy. Diversity under-pinned the Committee’s activity when searching for
new Board members in 2021.
Activities in 2021
My own appointment aside, the constituency of the Board changed a great
deal in 2021. When the demerger of Wickes was concluded, Chris Rogers
stood down from the Board to be the Chairman of Wickes Group plc. Chris’
departure in April was followed by the appointment of Heath Drewett in May.
Heath’s appointment was part of a planned succession process for John
Rogers who in 2020, prior to my appointment as Chair, had indicated a
desire to step down from the Board during 2021. Russell Reynolds assisted
in the search for John’s successor. Heath succeeded John as Chair of the
Audit Committee in August. John stood down from the Board in October and
I’d like to thank John for his dedicated and valued service as Chair of the
Audit Committee, and as a Non-executive Director for seven years.
Given the Code requirement to have a Committee member with recent and
relevant financial experience, the search for an Audit Committee Chair had
specific pre-requisites. We tasked Russell Reynolds with looking for additional
potential candidates with data and technology experience as they searched
for an Audit Committee Chair, having identified that gap in the Board’s
experience which needed to be filled. Part of the Group’s strategy involves
the digitalisation of customer interactions, improvements in how we exploit
our data and consequential investment in our technology infrastructure.
Furthermore, a key project for the coming years is the implementation of a
new finance system across the Group.
The Committee believed that all of the foregoing would benefit from greater
depth of experience of data and technology among the Non-executive
Directors. Accordingly, we were delighted when our search activity resulted
in the appointment of Jora Gill as a Non-executive Director in August. Jora
has excellent digital, data and technology experience and capabilities and is
already changing the nature of the Board’s conversation on those subject
areas with his insight.
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The final Board change of the year came about as a result of
circumstances. Blair Illingworth, who joined our Board in 2019, was given
the opportunity to take on the role of Chief Executive at Aggreko Ltd.
Unfortunately, Blair’s executive opportunity collided with his non-
executive role with the Company as Heath Drewett is Chief Financial
Officer at Aggreko. Having two of our Non-executive Directors in a direct
reporting line relationship in executive roles was not tenable as the
independence of both of them would have been compromised.
Accordingly, Blair stood down from the Board in order to preserve Heath’s
independence. We are sorry that, as a result of a coincidence, Blair had to
step down from our Board so early in his service.
In that search we are keeping in mind not only the skills and
characteristics which will be lost when they leave the Board, but also the
sector experience lost with Blair’s departure.
Process for appointments
Through a rigorous selection process, appointments to the Board are
made on merit and against an agreed set of specific and objective
criteria. The Committee oversees this process on behalf of the Board
and advises the Board on the identification, assessment and selection of
candidates.
During the year the Committee used the services of Egon Zehnder and
Russell Reynolds. Other than the use of their services in search
assignments, the Company’s Directors have no connection with those
organisations.
Succession pipeline and diversity
Consistent with its remit under Provision 17 of the Code, during 2021
the Committee also focused on the succession pipeline for the Group
Leadership Team (“GLT") with particular emphasis on diversity.
Diversity in the GLT and its succession pipeline needs to be improved.
At 31 December 2021, 27% of the GLT was female and 21% of the
pipeline for the GLT roles was female. That same pipeline comprised
only 3% from minority ethnic backgrounds. Ensuring diversity in the
future pipeline starts with laying foundations for diversity in recruitment
at all levels of our Group and taking steps to ensure we are attractive to
all applicants, whether that’s how we write our recruitment adverts or
the media we use to advertise roles. We want to attract the best people
irrespective of gender, ethnicity, age, sexuality, socio-economic background
or any other characteristic.
Building a culture and an environment where all colleagues can be
themselves and are treated fairly and with equality is core to ensuring
diversity. The executive team is committed to achieving such a culture and
environment. The Committee is equally committed to ensuring that the
executive team retains focus on this, as we believe that just talking about
it is not enough to succeed: tangible, demonstrable progress is required.
In October 2021 the Board was joined by Pavita Cooper, a leading talent
and diversity expert who is a passionate advocate of diversity in the
C-suite and committed to accelerating the progression of “hidden”
talent including women, ethinic minorities and leaders with atypical
backgrounds. Pavita led a workshop with the Board to help develop
a shared view on its role regarding diversity and inclusion. During the
workshop the Board looked at the current diversity and inclusion
landscape, explored those things which get in the way of progress and
those things which aid progress. The Committee and Board will continue
to focus on diversity and inclusion.
Focus for 2022
Looking forward, the Committee’s focus remains on succession planning
for the Board, ensuring a robust, diverse pipeline is built for succession to
the Group Leadership Team and that progress on diversity and inclusion
at all levels across the Group continues to improve. In just over two years
Pete Redfern and Coline McConville will have completed nine years’
service. The Committee is conscious that with the amount of change the
Board has recently undergone, there is no reason to hasten the loss of the
deep experience and knowledge of the Group and its businesses which
Pete and Coline have. Nonetheless, as it can take a long time to find the
right candidates for the Board with the right experience and who will help
to further broaden our diversity, the Committee has already started to
search for Pete and Coline’s successors.
The appointment process includes:
1. Agreeing the key skills, attributes and business experience required
for the role as well as diversity priorities
2. Preparing a role description
3. Engaging independent search consultants
4. Conducting a market search via the search consultants
5. Preparing a “long list” of candidates, taking into account diversity
considerations and the Committee’s review of the composition,
experience and skill-sets of the Board
6. Selecting a shortlist which meet the Committee’s criteria
7. Candidate interviews and assessments
8. Making a recommendation to the Board, following detailed
references
Appointees are provided with a programme of induction meetings and
visits with key personnel to key areas of the businesses within the
Group.
Board diversity
The Nominations Committee and the Board recognise the advantages
diversity brings to the Group. The Hampton Alexander Review and the
Parker Review both reflect broader societal concern over issues of gender
and ethnic diversity and Travis Perkins supports their recommendations.
As at 31 December 2021 37.5% of the Company’s Directors were female,
including the Chair and the Company had one Director from a minority
ethinic group, in compliance with both Reviews. While gender and
ethnicity are key elements of diversity, they are not the only ones.
Diversity of skills, experience and backgrounds also brings competitive
advantage to organisations. The Nominations Committee will strive to
achieve diversity in all senses in Board and senior management
appointments and will provide oversight of the adoption of the same
approach to diversity in the pipeline for Board and senior management
roles, and more broadly in the approach which is taken to the recruitment
of colleagues at all levels of the Group. Led by senior management, the
Group has embarked on a structured programme to improve diversity
in the Group and further details of the Group’s diversity and inclusion
programme can be found on pages 64 to 65.
DTR 7.2.8AR requires companies to provide a description of their
diversity policy applied to their administrative, management and
supervisory bodies. This Nominations Committee report together with
the Group’s report on its diversity and inclusion policies and activities on
pages 64 to 65 provide an explanation of the Company’s diversity
policy for the purposes of the Disclosure and Transparency Rules.
Jasmine Whitbread
Chair
28 February 2022
Travis Perkins plc Annual Report and Accounts 2021 85
Audit Committee report
Heath Drewett
Chair, Audit Committee
28 February 2022
2021 focus areas
– Internal audit and risk
management progress
– Demerger of Wickes and sale
of the Plumbing & Heating
business
– Information security and
physical security risks
Number of scheduled meetings
during 2021
5
86 Travis Perkins plc Annual Report and Accounts 2021
Dear Shareholder,
I am pleased to present the Audit
Committee’s report for the year ended
31 December 2021, having been appointed as
Chair of the Committee on 4 August 2021.
The report sets out the Committee’s work in
relation to financial reporting, internal audit,
risk management and oversight of the
external audit process.
During the year the Committee has monitored the execution of the
internal audit plan and development of the risk management
framework, against which notable progress has been made, and
reviewed financial reporting judgements relating to the demerger of
Wickes and the sale of the Plumbing & Heating business. The 2022
internal audit and risk management plans were approved by the
Committee at its meeting in November 2021 and aim to build on the
progress made in these areas.
I will be available at the Annual General Meeting to answer any
questions about the work of the Committee.
Committee membership and attendance
On 4 August 2021 John Rogers stepped down from his role as
Chairman of the Audit Committee and Heath Drewett was appointed as
his successor. John stepped down from the Board of the Company and
the Committee at the conclusion of the Board’s meeting on 6 October
2021. On behalf of the Company, I would like to thank John for his
service as both a member and the Chairman of the Committee. The
members of the Committee for the year ended 31 December 2021
have been:
• Heath Drewett (4 August 2021–31 December 2021)
• Coline McConville
• Pete Redfern
• John Rogers (1 January 2021–6 October 2021)
All members are independent Non-executive Directors. Two of the
members have recent and relevant financial experience and all
members have competencies relevant to the Company’s sector, gained
through a variety of corporate and professional appointments, as
required by the UK Corporate Governance Code (see biographies on
pages 76 to 77).
The Group Head of Corporate and Commercial Legal Services is the
Secretary to the Committee, as nominee of the Company Secretary.
The Committee held five formal meetings in 2021. The Chair of the
Board, Chief Executive, Chief Financial Officer, General Counsel &
Company Secretary, Director of Group Finance, Director of Internal
Audit & Risk, Director of Financial Accounting & Control and the Group’s
external auditor also attended the Committee’s meetings. The
Committee held separate meetings with the Director of Internal Audit &
Risk and external auditors without the presence of management and
held separate meetings with management without the external auditors.
Work of the Committee
The Committee functions around an annual work plan. This work plan
is regularly reviewed by the Committee to ensure that it reflects the
priorities of the business and continues to include all matters for which
consideration must be given in order to meet the Committee’s
corporate governance responsibilities.
The Committee considers the content of the Annual Report and
Accounts, the results announcements prepared by management and
the associated press releases issued at the half-year and year-end. In
discharging its financial reporting responsibilities, the Committee
reviewed accounting policies and compliance with accounting
standards, going concern and viability assumptions, and significant
financial reporting estimates and judgements made during the
preparation of the Group’s interim and annual accounts.
In addition, during the year, the Committee reviewed:
• The Group’s systems of controls, the effectiveness of controls and
management’s continuing controls improvement initiatives
• The Group’s approach to risk, key risks and the effectiveness of the
risk management framework
• Progress reports on information security initiatives and other
security matters
• The external audit plan and findings
• The internal audit plan and strategy for the further development of
internal audit activities
• Financial reporting judgements relating to the demerger of Wickes
and the sale of the Plumbing & Heating business
• The effectiveness and independence of internal audit and the
external auditors
• The activity of the Operational Compliance Support teams within
the Group’s businesses
• Reports regarding matters disclosed to the Group’s Speak Up!
Attendance of members at the Committee’s meetings during the year
can be found in the Corporate Governance report on page 81.
hotline
Role of the Audit Committee
The Audit Committee assists the Board in fulfilling its oversight
responsibilities. The main roles and responsibilities of the Committee
include:
• To monitor the integrity of the financial statements of the Company
and any formal announcements relating to the Company’s financial
performance, which includes reviewing significant financial reporting
judgements contained therein.
• To review the effectiveness of the Company’s internal financial
controls and internal control and risk management systems.
• To monitor and review the effectiveness of the Company’s internal
audit function.
• To maintain an appropriate relationship with the Company’s external
auditors and to review and monitor its independence, objectivity and
effectiveness in carrying out the audit process, taking into account
relevant UK professional and regulatory requirements.
In addition to the above specific matters, the Committee considered at
each of its meetings the following standing agenda items:
•
• Progress on implementing recommendations arising from internal
Internal audit reports
audit work
• Non-audit fees
The Committee places reliance on regular reports from management,
internal audit and the external auditors in order to carry out the activities
set out above. The Committee is satisfied that it received sufficient,
timely and reliable information to enable it to fulfil its responsibilities
during the year.
At each meeting of the Committee, an opportunity is provided for the
Committee to meet with members of the internal and external audit
teams without management present. The Board is updated on key
matters and recommendations following each Audit Committee
meeting.
In the final quarter of 2021, the Board undertook a review of Board and
Committee effectiveness, including the Audit Committee. The review
was conducted through an internally-managed questionnaire-based
process, culminating in a review and discussion of feedback on the
performance and effectiveness of the Committee. at the Board The
review concluded that the Committee was operating effectively, scoring
an average of 4.4 out of 5 in the responses to the questionnaire.
Travis Perkins plc Annual Report and Accounts 2021
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Audit Committee report continued
Significant issues related to the financial statements
The Audit Committee has assessed whether suitable accounting policies have been adopted by the Group and whether management has made
appropriate judgements and estimates.
The table below sets out the key judgement areas associated with the Group’s financial statements for the year ended 31 December 2021 that were
considered by the Audit Committee. This is not a complete list of all accounting issues, estimates and policies, but includes those which the
Committee believes are the most significant.
In reaching its conclusions, set out in more detail in the table, the Committee considered papers and explanations given by management, discussed
each matter in detail, challenged assumptions and judgements made and sought clarification where necessary. It reviewed and discussed any
internal audit reports in respect of the matters under consideration and the Committee also received a report from the external auditor on the work
undertaken to arrive at the conclusions set out in the audit report on pages 110 to 117, discussing all relevant matters in depth.
Area
Issue and nature of judgement
Factors considered and conclusions reached
Accounting for inventory and
inventory valuation
Defined benefit pension
accounting
To meet customer expectations, the Group
carries a wide range of inventory in around
1,500 locations.
Inventory should be included in the balance
sheet at the lower of cost or net realisable
value. At 31 December 2021 the Group’s
inventory was valued at £724m.
The determination of cost is made more
difficult by the ageing accounting systems
and material rebate and fixed price discount
agreements; requiring regular reconciliations
in areas such as accruals for goods received
not invoiced.
At 31 December 2021 the Group’s balance
sheet included a net asset position of £276m
in respect of its defined benefit pension
schemes, which reflects a gross pension asset
of £1,742m and pension liability of £1,466m.
The valuation of the pension liability is
calculated under the unit credit method
specified in IAS 19 – Employee Benefits and
depends on several key assumptions
including the discount rate, inflation forecasts
and life expectancy. By their nature, these
estimates are subject to considerable
uncertainty and small changes in the value
could materially impact the valuation of the
liability.
During the year, management regularly reported on inventory
valuation and provisioning to the Committee and did so
again at its meeting to consider the year-end Annual
Report and Accounts.
The Committee reviewed and discussed the information
presented about gross inventory values and the adjustments
made by management to reduce inventory carrying values to
allow for rebates and fixed price discounts attributable to
inventory and provisions to reflect obsolescence or
slow-moving inventory.
The Committee assessed the judgements made by management
and concluded from the information it had received and its
discussions with management and the external auditor that
inventory was fairly stated in the balance sheet.
Further information is given in the notes to the financial
statements (note 12 – inventories and note 13 – supplier income).
Management presented the Committee with papers setting out
the results of the work done, the assumptions made and the
conclusions reached with respect to the Group’s defined benefit
pension schemes.
Management explained to the Committee how the discount rate,
inflation and life expectancy estimates were prepared and how
sensitive the valuation was to changes in these key assumptions,
with specific discussion of the impact of Covid-19 on the
mortality tables and the effect of the planned phasing out of
RPI by 2030.
After reviewing these papers and obtaining further explanation
where necessary, the Committee concluded that management
had taken a consistent, balanced and reasoned approach to
preparing its calculations and made acceptable judgements.
Further information is given in the financial statements (note 18
– pension arrangements).
88 Travis Perkins plc Annual Report and Accounts 2021
Internal audit
The delivery of the Internal Audit Plan, which is structured to align with
the Group’s strategic priorities and principal risks, is a key source of
internal assurance for the Group. The in-house Internal Audit team
develops the Plan, with input from management, and delivers the
majority of reviews, supported as needed by co-source partners to
provide specialist knowledge and skills. The Audit Committee assesses
and approves the annual plan of activity and reviews results and
progress against the Plan at each Committee meeting. The Audit Plan
is reviewed periodically throughout the year and is updated as business
priorities and risks change, to ensure that it remains relevant.
Internal Audit undertook assurance activities throughout 2021. While
many audits were delivered remotely during periods of Covid-related
restrictions, the team has developed a hybrid working model that
utilises the Group’s digital tools to collaborate and access data remotely
alongside periods of on-site fieldwork to assess processes and controls
in situ. The audits delivered during 2021 covered a broad range of
operational, financial, legal, regulatory, IT and transformation activities.
Core financial control areas are audited regularly. In 2021 this included
reviews of cash and banking protocols, fixed assets and the year-end
statements from the Group’s businesses on their compliance with key
internal financial controls.
All audit findings and agreed management actions are communicated
to the Audit Committee and tracked through to completion. The
Committee receives an update at every meeting on the age of findings
and the level of risk to the business. Significant progress has been
made in the last year to address oustanding audit findings, thereby
reducing the ongoing risks to the business.
Internal Audit has a continuous improvement strategy, with initiatives
set annually and progress regularly reported to the Committee.
Initiatives continued during 2021, with a particular focus on capturing
stakeholder feedback, building IT capability within the function and
expanding the use of data in audits. The use of data and analytics
remains a key focus for 2022 as a means to increase the depth of
assurance and insight provided by each audit, underpinned by
structured development programmes in data analytics for a number of
the team members.
During the year the Committee reviewed the effectiveness of Internal
Audit both in relation to delivery against its plans, stakeholder feedback
and against recognised attributes of a high-performing internal audit
function. Based on the progress made, the Committee was satisfied
with the overall effectiveness of the function throughout 2021 and, in
accordance with best practice, is planning to undertake an external
assessment of the function in 2022.
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Risk management and internal controls
Risks are managed on an ongoing basis at either a Group level or within
the businesses, captured in risk logs and assessed in key strategic and
performance review processes throughout the year. Key risks are
regularly collated and reviewed by the Group Leadership Team and the
Board to assess the potential impact and likelihood of occurrence, after
taking into account key controls and mitigating factors, as well as
interdependencies. Additional mitigating actions are put in place as
required to manage risks within the Board’s risk appetite.
Significant time was spent in 2021 considering the changes to the
risk and opportunity landscape for the Group arising from the new
strategy, as well as the ongoing risk impacts of the Covid-19 pandemic,
macroeconomic factors and long-term market trends. Detailed reports
were regularly provided to the Board and Group Leadership Team
to review and challenge this risk assessment and associated
mitigation strategies.
The Group adopts a continuous improvement approach to risk
management. The risk management framework was refined during
2021 and this will continue in 2022. There was a particular focus in
2021 on further developing the climate change risk and opportunity
assessment, which informs our carbon reduction activities and
underpins the TCFD information set out on pages 48 to 51.
The Audit Committee recently approved a plan for an independent
review of the Group’s risk management framework in the coming year
that will test plans and ambition in continuing to develop
this area. The principal risks and uncertainties are set out on pages 40
to 46, together with information on how those risks are mitigated and
how emerging risks are assessed.
The Company operates a “three lines of defence” assurance model.
The Audit Committee plays a key role in monitoring activities in respect
of the Company’s internal control and assurance framework throughout
the year, to ensure that risks are adequately mitigated (see “Risk
assurance” on page 40). The Committee has received regular updates
on the status of these activities and, where applicable, the impact of
pandemic-related restrictions on assurance provision, particularly
during the lockdown period in early 2021. The majority of assurance
activities continued without interruption throughout the year.
The Committee conducted a review of the effectiveness of the
Company’s risk management and internal controls, concluding that
they remain effective. The internal control framework is intended to
manage, rather than eliminate, the risk of failure to achieve business
objectives and can only provide reasonable, and not absolute,
assurance against material misstatement or loss.
Management has continued its initiatives to improve the control
environment, which has developed over many years. There are a
number of system replacements in progress, including a new finance
system, that will enhance and improve the Group’s control framework
and lead to greater consistency and automation of controls. The Audit
Committee will monitor the progress of these programmes through
2022 and reviewing the system transformation programmes will remain
an area of focus for internal audit.
Travis Perkins plc Annual Report and Accounts 2021 89
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Audit Committee report continued
External auditor
KPMG LLP has been the external auditor since 2015. There are no
contractual restrictions on the Group with regard to this appointment.
The individual lead audit engagement partner for KPMG LLP is Anthony
Sykes, appointed in May 2019. The Company expects to re-tender the
external audit in accordance with the timescales set out in the Financial
Reporting Council’s guidance, which require the external audit to be put
out to tender by 2025. Based on the Committee’s assessment of the
effectiveness of the audit, the Committee considers a tender for the
2025 audit to be in the best interests of the Company’s shareholders.
Audit scope and effectiveness
The scope of the external audit of the 2021 Annual Report and
Accounts was presented by the external auditor to the Committee in
October 2021 to enable the Committee to discuss and challenge the
audit plan and understand the key elements.
The Committee considers the effectiveness of the external auditor
during the year and, with input from management, carries out a formal
review of its performance after the year-end audit has been completed.
In undertaking this assessment the Committee considers:
• The experience and expertise of the auditor
• The completion of the agreed external audit plan
• The content, quality of insights and added value of
external audit reports
• The robustness and perceptiveness of the external auditor
in their handling of key accounting and audit judgements
• The interaction between management and the auditor
• The provision of non-audit services
Financial Reporting Council
During 2021 the Committee monitored the Group’s engagement with
external stakeholders relevant to the Committee’s areas of oversight,
including the Financial Reporting Council (the “FRC”). In particular,
during the year the Group was made aware that the FRC’s Audit Quality
Review Team (“AQRT”) would be reviewing KPMG’s audit of the Group’s
2020 financial statements as part of its annual inspection of audit
firms. The Committee received and reviewed the final report from the
FRC in December 2021 and discussed the findings with the audit
partner. The Committee was satisfied that the matters raised by the
AQRT were appropriately incorporated into the 2021 audit plan.
The process for approving all non-audit work provided by the external
auditor is overseen by the Committee to safeguard the objectivity and
independence of the auditor. The Committee considers whether it is in
the interests of the Company that the services are procured from
KPMG LLP rather than another supplier.
In 2021 KPMG was engaged to provide non-audit services in relation to
the demerger of the Wickes business. This service was pre-approved by
the Committee. KPMG was considered the most appropriate firm to
carry out the reporting accountant work for the Wickes demerger given
its knowledge of the Group and the synergies that arise from running
this engagement alongside the main audit.
The amount of non-audit fees payable to the external auditor in any
particular year cannot exceed 70% of the average of the current and
previous two years’ audit fees. The Committee determines the policy on
provision of non-audit services by the external auditor, reviews the
nature and extent of non-audit work performed and monitors and
confirms annually compliance with the policy.
Reporting
The Chief Financial Officer reports to the Committee on fees for
non-audit services payable to the external auditor at every meeting. As
shown in note 4 to the accounts, during the year the auditor was paid
£1,820,000 (2020: £1,657,000) for audit-related work and £770,000
(2020: £600,000) for non-audit work. Non-audit work related to the
review of the Group’s interim financial statements and the Wickes
demerger. Fees for non-audit work were 42% (2020: 38%) of fees for
audit-related work. The total fees paid by the Group to KPMG LLP in
2021 represent 0.1% of KPMG’s UK fee income. In addition, £1.9m
(2020: £1.0m) of fees were paid to other accounting firms for non-audit
work.
Assessment of the external auditor
Having considered the external auditor’s performance and
representations from the auditor about its internal independence
processes, the Committee was satisfied with the independence,
objectivity and effectiveness of the external auditor and recommended
to the Board that it recommend that KPMG LLP be reappointed by
shareholders at the Annual General Meeting on 29 April 2022.
This report has been approved by the Board of Directors and signed on
its behalf by:
Independence and objectivity
One of the Committee’s responsibilities is to ensure compliance with the
Board’s policy on services provided by and fees paid to the external
auditor. The policy sets out the work that is permitted to be performed by
the external auditor and the work that is prohibited.
Heath Drewett
Audit Committee Chair
28 February 2022
90 Travis Perkins plc Annual Report and Accounts 2021
Directors’ remuneration report
Coline McConville
Remuneration Committee Chair
28 February 2022
2021 focus areas
– Remuneration impacts
of the demerger of
Wickes and sale of
the P&H business
– Implementation of the
Restricted Share Plan
– Approval at the
2021 AGM of the
remuneration policy
Number of scheduled meetings
during 2021
3
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Dear Shareholders,
As Chair of the Remuneration Committee, I am
pleased to introduce the 2021 Directors’
Remuneration report.
No changes to policy
During 2019 and 2020 the Committee undertook a comprehensive
review of the Group’s executive remuneration framework and, following
extensive shareholder consultation in both years, it submitted a new
remuneration policy to the 2021 Annual General Meeting which was
approved by 89% of shareholders. The Policy sought to simplify and
refocus executive remuneration in order to support long term
sustainable business performance, to align management and
shareholders and to foster a culture of collaboration. The primary
change to the Policy was the replacement of our performance-based
Performance Share and Co-Investment Plans with our new Restricted
Share Plan. The Committee believes the Policy remains the right
approach to ensure delivery of these objectives, and so no changes are
proposed to the Policy or the approach to implementation (including
quantum and metrics) this year.
Link Between pay and performance
The Group’s previously stated ambition to deliver long term sustainable
value to shareholders, remains at the heart of the Committee’s
approach to executive remuneration. A fundamental aspect of this is
the link between the Group’s strategy and remuneration with each part
of the remuneration package playing a role in driving performance
beyond the short and medium terms to deliver the long-term ambition
and improve shareholder returns.
Travis Perkins plc Annual Report and Accounts 2021
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Directors’ remuneration report continued
The Committee believes that there is good alignment between the
Group’s incentive payouts and performance and the value created for
shareholders. In the Quick View of remuneration set out on page 93 the
link between the Group’s strategic ambition and corresponding
incentive KPIs is detailed.
We had great success with our apprenticeship scheme, which is one of
our fundamental diversity pipelines, along with the kickstart programme.
On average during 2021 we had 886 apprenticeships against a target of
700–840. We achieved our Scope 2 carbon reduction target of 10%
against a 2019 baseline.
Salary review
The Executives took a voluntary salary reduction in 2020 and received
no increase to salary during 2021. The Remuneration Committee
reviewed Executive salaries and, taking into account current market
conditions, determined that their salaries would be increased by 3%
from 1 April 2022. This is in-line with increases awarded to other
managers and colleagues in the business. Non-executive Directors’ fees
were not increased during the year and will next be reviewed in April
2022.
Adjustment to LTIP targets
During the year the Remuneration Committee approved revised 2019
LTIP award targets, to exclude both Wickes and P&H from 1st January
2021 to align with the actual results reported. The Committee is satisfied
that the revised targets are not materially less or more difficult to achieve
than the original targets. Further details are set out in the “ Explaining the
Single Figure Table” section.
2021 remuneration outcomes
The generation of cash was critical during 2020 and the Group excelled
in cash management during that period as revenues were impacted by
the pandemic. To cement this performance, cash flow generation
became a fundamental measure in our incentive plans in 2021. The
Group took no Government support in relation to the Covid-19
pandemic during 2021.
The hard work of 2020 set a strong foundation to drive excellent
recovery of financial performance in 2021. This out-performance of
expectations is reflected across all incentive measures both in bonus
(adjusted operating profit and cash flow) and long term incentives (cash
return on capital employed, earnings per share growth, aggregate cash
generation and total shareholder return). Performance against key
financial objectives is as follows:
• Adjusted operating profit of £353m (target £227m)
• Adjusted operating cash flow of £155m (target £89m)
2021 bonus payout: 97% of maximum
Bonuses for Executive Directors are based on adjusted operating profit
(50%), free cash flow (20%) and strategic performance (30%). The
Group adjusted operating profit achievement of £353m resulted in a
payout of 100% of maximum bonus potential for this element and an
adjusted operating cash flow performance of £155m similarly led to a
100% payment reflecting strong cash control throughout the year.
2021 delivery against strategic measures has been very strong, with
delivery over and above the Strategic Milestones. We have seen strong
delivery against the strategic plan for the Travis Perkins General
Merchant and against the growth agenda for our UK and European
Toolstation businesses. The demerger of Wickes completed in April
2021 and the simplification of the Group was completed earlier than
envisaged with the sale of the Plumbing & Heating business in
September 2021. Significant progress was made against our IT
Modernisation milestones. Whilst we made important cultural advances
in Stay Safe performance, the targeted reduction in accident frequency
and severity rates was not fully delivered and therefore no payment is
made against this measure.
On this basis the Committee determined that 90% of the bonus element
aligned to strategic performance (including ESG measures) had been
earned. In total this means a bonus equal to 174.6% of salary was
earned by the CEO and CFO (97% of maximum). The Committee
believes the level of bonus earned is reflective of the strong
performance of the Group in 2021 and the Committee did not exercise
any discretion.
Long-term incentives: 96.4% of maximum
Long-term incentive awards granted in 2019 were based on our
previous Policy before the introduction of the RSP and therefore vest
based on performance to 31 December 2021. Awards under the 2019
Co-Investment Plan vested in full and awards under the 2019
Performance Share Plan vested at 94%.
2019 Co-Investment Awards
These awards were subject to CROCE performance. Performance over
the three-year period was 13.4% reflecting continued strong cash
generation underpinned by a focus on liquidity and working capital
management through a fundamental review and streamlining of our
stock management, purchasing and rebate processes. This
performance resulted in the award vesting in full.
2019 PSP vesting
PSP awards granted in 2019 were subject to Adjusted EPS (40%), TSR
(20%) and cash flow (40%) performance. The Adjusted EPS annual
growth rate was 13.5% meaning this element vested in full. Aggregate cash
flow over the three-year period was £1,054m resulting in 88% of this
element vesting. TSR performance was at the 74th percentile resulting
in 95% of this element vesting. Overall 94% of PSP awards granted
in 2019 vested. The Committee considered that the level of vesting under
the Performance Share and Co-Investment plans in respect of 2021 to
be an appropriate reflection of performance over the last three years and
in particular the work management have undertaken to continue to
deliver exceptionally strong cash performance. No discretion was
exercised by the Committee.
Elsewhere in the Group
All our colleagues are eligible to earn a bonus and we are pleased that,
after a difficult 2020 where our colleagues worked hard to ensure we
served our customers throughout the pandemic, we are able to reward
them with strong bonuses reflecting the strong performance of our
businesses in 2021. We also aim to maintain our position as a Real Living
Wage employer across our merchant businesses when we conduct our
annual salary review in April 2022.
Following the approval of our new Restricted Share Plan by
shareholders at the last Annual General Meeting, I am pleased to advise
this was deployed during the year and has been very well received
amongst the management team. The RSP will be cascaded to further key
roles in 2022. The Committee will be submitting its remuneration report
to the 2022 AGM where it will be subject to an advisory shareholder vote.
I very much look forward to receiving your support, and will be available
to answer any questions.
Coline McConville
Remuneration Committee Chair
28 February 2022
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Travis Perkins plc Annual Report and Accounts 2021
Quick view – Remuneration in 2021
Measuring performance
Ambition
Profit growth
Strategic KPI
Adjusted operating profit
Turning profit into cash
Adjusted operating cash flow
Delivery against investments
Return on Capital Employed (“ROCE”)
Strategic delivery
Strategic and operational objectives so that we continue to lay
the foundations to deliver future success
Governance
ESG measures and strong governance framework
Delivering value to shareholders
Alignment to shareholder experience
2021 Outcomes
Element
Base Salary (annualised)
Annual bonus (% of Max)
LTIP (% of Max)1
Bonus Weighting
RSP Weighting
50%
20%
–
20%
10%
–
–
underpin
–
underpin
–
100% (as awards
are made in shares)
Nick Roberts
£636,300
97.0%
96.4%
Alan Williams
£517,650
97.0%
96.4%
1. Combined vesting across the PSP and Co-Investment plans awarded in 2019, based on the performance period 2019-2021.
Annual bonus outcome for 2021
The maximum bonus opportunity for the Executive Directors is 180% of
salary. Half of the bonus earned is deferred into shares for three years.
LTIP outcome for 2021
Under the previous policy the maximum PSP award for Executive
Directors is 150% of base salary. The maximum award under the
Co-Investment Plan is 100% of base salary subject to an Executive
investing 50% of their net salary.
Adjusted operating profit
100
EPS Growth
Cash flow
Strategy
100
Aggregate Cash flow
88
90
TSR
0
25
50
75
CROCE
100
99
100
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All bonus and LTIP outcomes are subject to malus and clawback.
Performance weighting and measures are unchanged from the
previous year.
Share ownership guidelines
Executive Directors are required to hold shares valued at two times
annual salary within 5 years of appointment. They will also be expected
to maintain this level of shareholding (or their actual shareholding if lower)
for a period of two years following stepping down from the Board.
0
25
50
75
Policy report
The Group’s Directors’ Remuneration Policy (the “Policy”) was
approved by 89% of shareholders at the AGM held on 27 April 2021.
The policy can be found on pages 94 to 104 of the Annual Report &
Accounts 2020, available on the company website. A summary of the
policy is also provided below under the “Statement of Implementation
of Remuneration Policy in 2021” section.
Travis Perkins plc Annual Report and Accounts 2021 93
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Annual remuneration report
The following sets out the Group’s Annual Remuneration report for 2021 which includes details of how its policy was implemented in 2021 and how
it intends to implement its policy in 2022. This report is subject to an advisory shareholder vote at the 2022 Annual General Meeting.
Statement of Implementation of the Remuneration Policy in 2022
Executive Directors:
The following provides a summary of the Group’s remuneration policy and how the Group intends to implement the policy during 2022.
Plan
Base salary
(Increase of 3%
with effect from
1 April 2022)
Individual maximum
opportunity in 2022
CEO – £655,389
(2021 – £636,300)
CFO – £533,180
(2020: £517,650)
Benefits
(No change)
n/a
Pension
(No change)
CEO 10% of salary
in-line with the rate
available across the
wider workforce
CFO pension allowance
is £103,530 per
annum.
Restricted Share
Plan
(No change)
Maximum annual award
of 125% of base salary
Measures and weighting
Operation
n/a
n/a
n/a
For 2022 the performance underpins remain
as follows:
• ROCE above 9%. ROCE is one of the
business’ key KPIs assessing how
successful our investments have been in
returning value to shareholders. Return
measures have been a feature of our
incentive plans for a number of years.
• Satisfactory governance performance
including no ESG issues that result in
significant reputational damage to the
Company.
The Remuneration Committee reviewed executive
salaries and, taking into account current market
conditions, determined that salaries would increase
less than the workforce as a whole but in line with
other management increases of 3% from 1 April
2022.
Directors continue to be entitled to benefits in-line
with policy, including private medical insurance,
income protection, annual leave, company car (or
cash alternative), life insurance of up to 5 times
salary and participation in all-employee share plans
operated such as Sharesave (SAYE) and BAYE.
Directors participate in a defined contribution
arrangement or receive a cash allowance.
As previously advised from 1 January 2020 the
Committee agreed with the CFO that his pension
would be reduced to 20% of salary. This monetary
amount of £103,530 has been frozen at this fixed
level and does not attract future salary increases.
From 1 January 2023 the CFO’s pension will be
reduced to the wider workforce rate of 10%.
On the third anniversary of grant 75% of the award
vests, subject to an additional holding period of a
further two years. The final 25% of the award vests
on the fifth anniversary of award.
If the Company does not meet one or more of the
underpins the Committee would consider whether it
was appropriate to scale back the level of payout
under the award to reflect this. The Committee
retains discretion to determine what level of scale
back is appropriate.
Malus and clawback provisions apply.
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Travis Perkins plc Annual Report and Accounts 2021
Plan
Annual bonus
(No material
change)
Individual maximum
opportunity in 2022
Maximum annual bonus
opportunity of 180%
Measures and weighting
Operation
The 2021 bonus will be based on the following
measures:
• Adjusted operating profit 50%
• Adjusted operating cash flow 20%
• Strategic performance 30%
For 2022 business strategic performance
will include:
Targets are determined in relation to the Group’s
budget.
Threshold payment is made for performance at
95% of the Group’s budget with maximum only
being made for performance well in excess of the
Group’s budget. Performance below threshold
results in zero bonus.
50% of bonus earned is deferred as shares for
three years.
Malus and clawback provisions apply.
Strategic milestones:
• Market share growth
• Operation cost efficiency
• Delivery of critical foundational
programmes
ESG Measures:
• Health and safety performance
• Sustainability
• People development and diversity
Adjusted operating profit has been chosen to
ensure that there is a continued focus on driving
revenue and managing costs to deliver profit to
shareholders. Likewise adjusted operating cash
flow is a critical measure for the business to
ensure that we have the resources necessary to
invest in the business transformation to return
value to shareholders.
Our ESG measures will again focus on key
areas such as health and safety of our
colleagues and customers, our apprenticeship
programmes and our carbon footprint. This will
be the second year where focus has been given
to these specific areas in the annual incentive
plan. These measures will be reviewed in
subsequent periods to ensure they remain the
most appropriate focus.
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Bonus targets are considered to be commercially sensitive, and disclosure of such may provide an unfair advantage to the Company’s competitors.
However, targets and the corresponding level of bonus earned will be disclosed retrospectively in the relevant reporting period.
We consider that the new RSP is the right plan for the Group. Further details of how it aligns with our strategic priorities and the UK Corporate
Governance Code are set out on page 94 of the 2020 Annual Report.
Travis Perkins plc Annual Report and Accounts 2021 95
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Annual remuneration report continued
Non-executive Directors:
Fees and benefits • Non-executive Director fees policy is to pay:
• A basic fee for membership of the Board
• An additional fee for the Chair of a Committee and the Senior Independent Director to take into account the additional
responsibilities and time commitment of the role.
• The Non-executive Chair receives an all-inclusive fee for the role.
• Non-executive Directors do not receive any other benefits (other than a staff discount card for purchasing products) and are
not eligible to join a company pension scheme.
• The review date for Non-executive Directors’ fees is 1 April. Fees were last reviewed with effect from 1 July 2021 and were
not increased. They are next due to be reviewed with effect from 1 April 2022 in line with colleagues. The current fees are
as follows:
• Chair – £320,000
• Non-executive basic fee – £60,000
• Chairs of Audit and Remuneration Committees – £17,000
• Senior Independent Director – £12,500
• Chair of Stay Safe Committee – £12,000
Considering stakeholders’ views
Shareholders: The Committee believes that it is very important to maintain open dialogue with shareholders on remuneration matters. The
Committee regularly consults with significant shareholders and advisory bodies regarding our approach to Executive remuneration and the
views of shareholders are important in determining any final changes. The Committee engaged extensively with shareholders regarding the
changes proposed to the Policy and were pleased with the level of engagement and support. The Committee intends to continue to consult
with shareholders regarding any material changes to remuneration arrangements. However in 2021 there have been no material changes to
policy and therefore shareholders were not consulted in 2021.
Colleagues: The Company undertakes regular engagement surveys for all Group employees to understand their views on working for Travis
Perkins and how this can be improved. Employee feedback on all matters of reward is provided as part of this survey, and through
supplementary surveys focusing on specific areas such as employee health and financial wellbeing. The Company established a Colleague
Voice Panel in 2019 which includes within its terms of reference the aim of listening to colleagues’ views when developing the Directors’
Remuneration Policy. Pete Redfern, the designated Non-executive Director for engagement with the workforce pursuant to the UK Corporate
Governance Code 2018 is the Colleague Voice representative on the Board. He hosts a number of listening groups throughout the year and all
relevant views are incorporated into remuneration reviews. A significant portion of colleagues are shareholders meaning that they are also able
to express their views in the same way as other shareholders.
Remuneration elsewhere in the Group
During 2020 we commenced a process to simplify and realign our bonus processes. This work was completed and the bonus plans deployed in
2021 reflected our strategic aim for greater collaboration across our businesses at all levels. 2020 was an exceptionally challenging year for our
colleagues as they sought to balance family and commitments to our customers through the Covid-19 pandemic. Following strong performance
during 2021 we are delighted that our colleagues will be rewarded with well deserved bonus awards.
All the merchant businesses moved to be Real Living Wage employers at the beginning of 2021. We are pleased that we maintain that position
as part of our annual salary review which takes effect from 1 April 2022.
Our colleague wellbeing programmes are well-established, during 2021 we escalated our focus on financial wellbeing with a series of
communications and webinars around financial wellbeing topics, in particular various aspects around retirement savings, providing advice,
support and guidance as required. It is our intention to roll-out additional, practical financial wellbeing tools with our partner Wagestream in 2022.
The Restricted Share Plan approved by shareholders was deployed to the management team with great success. The greater clarity and
alignment to shareholders was well-received. The RSP will be cascaded to further key roles in 2022.
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Audited information
Single total figure of remuneration
£000
Executive Directors
Nick Roberts
Alan Williams
Non-executive Directors
Jasmine Whitbread3
Stuart Chambers4
Coline McConville
Pete Redfern
Chris Rogers5
John Rogers8
Marianne Culver
Blair Illingworth9
Heath Drewett6
Jora Gill7
Total
£000
Executive Directors
Nick Roberts
Alan Williams
Non-executive Directors
Stuart Chambers
Ruth Anderson10
Coline McConville
Pete Redfern
Chris Rogers
John Rogers
Marianne Culver
Blair Illingworth
Total
Salary
Benefits
Pension
636
518
241
80
77
72
20
56
60
67
46
25
1,898
29
19
–
–
–
–
–
–
–
–
–
–
48
64
104
–
–
–
–
–
–
–
–
–
–
168
Salary
Benefits
Pension
605
492
301
13
73
75
61
70
56
56
1,802
27
20
–
–
–
–
–
–
–
–
47
64
104
–
–
–
–
–
–
–
–
168
Total
fixed
729
641
241
80
77
72
20
56
60
67
46
25
2,114
Total
fixed
696
616
301
13
73
75
61
70
56
56
2,017
2021
Bonus
LTI1 Buy-out
Total
variable
Total
1,111
904
1,894
1,430
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,015 3,324
712
3,717 4,446
2,975
– 2,334
–
–
–
–
–
–
–
–
–
–
241
–
80
–
77
–
72
–
20
–
56
–
60
–
–
67
–
46
–
25
712 6,051 8,245
2020
Bonus
LTI2 Buy-out
Total
variable
Total
–
–
– 1,096
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 1,096
–
–
–
1096
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 1,096
696
1,712
301
13
73
75
61
70
56
56
3,113
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Notes:
1. LTI reported for 2021 include LTI awards vesting in March 2022. The value of these awards has been calculated based on the average share price for
the last quarter of 2021 of £15.33 . For Alan Williams’ co-investment plan awards, the share price on the date of grant of 1 April 2019 was £15.45.
For his performance share plan awards, the share price on the date of grant of 12 March 2019 was £15.97. As the share price used to value the LTIP
for single figure purpose of £15.33, no value in the value reported is attributable to the share price appreciation for Alan Williams. For Nick Roberts’
co-investment plan awards, the share price on the date of grant of 14 August 2019 was £12.04. For performance share plan awards (including his
buyout award), the share price on the date of grant of 14 August 2019 was £12.05. The share price used to value the LTIP for the single figure table is
£15.33 and represents a 27% increase. Therefore the proportion of the 2019 LTIP value disclosed in the single figure attributable to share price growth
is 27%. The Remuneration Committee did not exercise discretion in respect of the share price appreciation.
2. The LTI figure reported for 2020 Alan Williams (£824k) was reported last year on an estimated basis using the average share price of the final
quarter of 2020 of £12.14. The figure has been restated to reflect the actual share prices on vesting (PSP £16.15 and Co-investment Plan £16.15)
giving a revised figure of £1,095,616.
3. Jasmine Whitbread was appointed to the Board on 31 March 2021
4. Stuart Chambers stepped down from the Board on 31 March 2021
5. Chris Rogers stepped down from the Board on 27 April 2021
6. Heath Drewett was appointed to the Board on 11 May 2021
7. Jora Gill was appointed to the Board on 4 August 2021
8. John Rogers stepped down from the Board on 6 October 2021
9. Blair Illingworth stepped down from the Board on 29 November 2021
10. Ruth Anderson stepped down from the Board on 3 March 2020
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Explaining the Single Figure Table
Salary
All Board and Group Leadership Team members took a 20% pay reduction for three months during 2020.
Benefits
Benefits for 2021 for Nick Roberts and Alan Williams include private medical insurance and the provision of a company car and fuel
(or allowance alternative).
Annual bonus for 2021
Annual bonuses for 2021 were subject to adjusted operating profit (50%), adjusted operating cash flow (20%) and performance against our
strategic performance (30%).
The following table summarises the bonus targets and achievement for 2021:
Performance
measure
Adjusted operating
profit
Adjusted operating
cash flow
Strategic
performance
Weighting
50%
20%
Targets
Threshold
(0%)
£219m
Plan
(50% bonus)
Maximum
(100% bonus)
Actual
performance
Pay-out (as a
% of maximum)
£231m
£243m
£353m
£80m
£89m
£98m
£155m
100%
100%
90%
30% The Committee assessed performance against a number of strategic targets which were
set at the start of the year. A summary of performance is provided below.
Measure
Summary of Performance
Committee’s Assessment
Strategic
milestone
Market share
Toolstation
expansion
Market share improvement delivered through execution of a number of
strategic measures
Delivered
Successful delivery of the expansion plans in Toolstation UK and Europe Delivered
Simplification of the
Group
Wickes demerger complete in April 2021, sale of Plumbing and Heating
businesses completed sooner than envisaged in September 2021
IT modernisation
Significant achievement against key milestones including in the plan to
modernise group IT infrastructure, including digital acceleration across the
Merchant businesses, customer support and finance systems
Exceeded
Delivered
ESG measures
Safety
Lost Time Injury and Severity rates were narrowly short of targets.
However significant cultural and behavioural changes were deployed.
Not delivered
Carbon reduction
38% reduction in Scope 2 carbon emissions against a target of 10%.
Exceeded
Apprenticeships
An average of nearly 900 apprentices or kick starters across the year
against a target of 700-840
Exceeded
Long Term Incentive Plans (“LTIP”)
Impact of Wickes and Plumbing & Heating disposals
During the year the Group completed two material corporate transactions. In April we demerged the Wickes business and in September the
Plumbing & Heating division (P&H) was sold. Taking into account the significance of the transactions and the impact on the LTIP performance
metrics the Committee reviewed the targets for in-flight LTIP schemes granted in 2019 and 2020 to ensure that performance was being assessed
on a comparable basis with the targets for outstanding LTIP awards. Following careful consideration the Committee determined that it was
appropriate to exclude Wickes and P&H performance from 1 January 2021 both from the target set and from reported performance. This ensures
that management are held to account for the performance of these businesses prior to the end of 2020 while ensuring that performance continues
to be fairly assessed against targets.
Performance Share Plan awards granted in 2019 and 2020 are subject to three measures: relative TSR, adjusted EPS growth and aggregate cash
flow. Due to the nature of relative TSR it is not necessary to make any adjustments to the targets or the assessment of performance. Given the
growth nature of the targets, no adjustments have been made to the EPS targets set. Wickes and P&H have been included in the aggregate cash
flow targets up to the end of 2020 but have been adjusted to exclude both divisions for 2021. Actual performance has been assessed on the same
basis to ensure consistency between the actual trading results and the targets.
Co-Investment Plan awards are subject to three-year average CROCE targets. As with the aggregate cash flow, the targets have been adjusted on
the same basis to exclude the impact of both divisions in respect of 2021. The adjusted targets for the 2019 awards are set out in the tables below
and the Committee is satisfied that they are not materially less or more difficult to achieve than the original targets.
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The long-term incentive figure in the single figure is made up of the following plans:
Performance Share Plan
Co-Investment Plan
Total LTIP
Buyout (PSP)
Nick Roberts
£1,176,348
(76,735 shares including 3,018 dividend
equivalents added in the vesting period)
£717,842
(46,826 shares including 1,841 dividend
equivalents added in the vesting period)
£1,894,190
£586,249
(38,242 shares
including 1,110
dividend
equivalents
added in
vesting period
Alan Williams
£827,130
(53,955 shares including 3,279 dividend
equivalents added in the vesting period)
£603,526
(39,369 shares including 2,391 dividend
equivalents added in the vesting period)
£1,430,656
Nil
The value of shares vesting has been calculated with reference to the average price over the last quarter of 2021 of £15.33
Performance Share Plan
The following table sets out the performance targets, achievements and vesting levels for the Performance Share Award granted in 2019 and
vesting in 2022 in respect of the performance period ending on 31 December 2021:
Measure
Adjusted EPS Growth
Relative TSR
Aggregate cash flow
Total vesting
Weighting
40%
20%
40%
Threshold
3% p.a.
Median
£970m
Maximum
Actual
Vesting
10% p.a.
Upper quartile
£1,070m
13% p.a.
74th percentile
£1,054m
40%
19%
35%
94%
Relative total shareholder return performance was measured against companies ranked 50 -150 in the FTSE index on the date of award.
Co-Investment Plan
The following table sets out the performance targets, achievements and vesting levels for the matching awards granted in 2019 and vesting in
2022 in respect of the performance period ending on 31 December 2021:
Measure
Weighting
Threshold
Maximum
Cash Return on Capital Employed (3 year average)
100%
11.4%
12.4%
Total vesting
Actual
13.4%
Vesting
100%
100%
When considering the level of annual bonus payout and long-term incentive vesting, the Committee also considered the underlying performance of
the Group over the performance period, taking into account performance against key financial and non-financial indicators as well as the share
price performance and the experience of shareholders and other stakeholders. The Committee also considered whether there had been a
significant negative event (such as an ESG event) which would warrant an adjustment. The Committee concluded the proposed pay-out outcomes
detailed above to be appropriate.
Overall, the Committee considers that the Remuneration Policy has operated as it intended during 2021.
Director’s pension entitlements
In lieu of pension contribution, a gross cash allowance of £103,530 was paid to Alan Williams. Nick Roberts receives 10% of salary paid as a mix of
pension contributions to the defined contribution scheme and a cash allowance.
Pension value in the year from company contributions to defined contribution scheme
Pension value in year from cash allowance (salary supplement in place of employer pension contributions)
Total pension benefit accrued
Nick Roberts
£000
Alan Williams
£000
£3,996
£59,634
£63,630
–
£103,530
£103,530
As previously advised from 1 January 2020 the Committee agreed with Alan Williams that his pension would be reduced to 20% of salary. This
monetary amount of £103,530 has been frozen at this fixed level and does not attract future salary increases. From 1 January 2023 Alan’s pension
will be reduced to the wider workforce rate of 10%.
Share interests awarded during the financial year
The Remuneration Committee made the first awards under the newly formed Restricted Share Plan in June 2021 following approval of the plan by
shareholders at the AGM held 27 April 2021.
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Award size
Before granting awards the Committee took into account shareholder guidance that where the share price has fallen significantly compared to prior
years awards should be scaled back. The Committee considered that the share price at grant was broadly comparable to prior years and therefore
thought that it was appropriate to continue to grant at the normal levels. In-line with best practice the Committee retains discretion to adjust the
vesting outturns if they are not considered to be reflective of the underlying financial or non-financial performance of the business or the individual
over the performance period or where the outcome is not considered appropriate in the context of the experience of shareholders and other
stakeholders.
Performance Share Plan
Date of award
Type of award
Basis
% Vesting at
lower target
Face value*
Performance period
Nick Roberts
14 June 2021 Restricted
Shares
125% of
Salary
n/a
Alan Williams
£795,373
(48,931 shares at
£16.26/share)
£647,047
(39,806 shares at
£16.26/share)
1 January 2021 to 31 December 2023 (for the
purposes of assessing underpins only).
Shares that vest after 3 years are subject to an
additional 2 year holding period post vesting
* Awards are increased at each dividend payment date to reflect the dividends that would have been paid on vested shares between grant and vesting.
Deferred Share Bonus Plan
As no bonus was earned in 2020 there were no share awards under the deferred bonus plan in 2021.
Director’s shareholding and share interests – Executive Directors
Formal shareholding requirements apply to Executive Directors and senior executives. The Committee may decide to scale back or withhold
participation in long-term incentives if the requirements are not met or maintained. Executive Directors are required to hold shares valued at two
times their annual salary within 5 years of appointment. As at 31 December 2021, Nick Roberts’ total shareholding was 70,265 (which includes DBP
and RSP shares calculated on a net of tax basis) and represents 1.69 times salary. Alan Williams’ total shareholding was 369,362 shares (which
includes DBP and RSP shares calculated on a net of tax basis) and represents 7.98 times salary based on the average share price for the last
quarter of 2021 which was £15.33.
Directors’ shareholdings and share interests as at 31 December 2021:
Conditional
shares
granted under
LTI
plans1
Conditional
shares
granted under
RSP
Unconditional
shares
granted under
LTI
plans2
Unvested
options
subject to
performance
conditions3
Beneficial
owner
Vested but
unexercised
options Total interests
Total
shareholding
including
shares
beneficially
owned and
DBP shares4
Total
shareholding
including shares
beneficially
owned, DBP and
RSP shares⁵
34,886
342,939
229,079
238,601
50,394
40,996
18,365
37,016
2,489
2,623
-
-
449,073
548,315
43,557
34,886
70,265
269,362
Executive Director
Nick Roberts
Alan Williams
1.
2.
Includes unapproved Performance Share Plan awards, Co-Investment Plan awards and buyout awards which are subject to performance conditions.
Includes awards made under Deferred Share Bonus Plan (which are not subject to further performance conditions), Sharesave and buyout awards not subject to
performance conditions.
3. Market value options awarded under the HMRC tax-advantaged CSOP element of the PSP. These awards are subject to the same performance conditions as the
corresponding PSP award.
4. Deferred Share Bonus Plan shares are calculated at the post-tax value (53%)
5.
Interests qualifying towards shareholding requirement comprise ordinary shares beneficially held at 31 December 2021 by the executive and their spouse/partner, vested but
unexercised SAYE options and the post-tax value (53%) of any other Deferred Share Bonus Plan and Restricted Share Plan Awards and share other options or awards which
have vested but have not been exercised.
There were no changes in Executive Directors’ share ownership between 31 December 2021 and 1 March 2022. Nick Roberts acquired an additional
20 shares through the all-employee Buy as you Earn scheme.
During 2021 the following awards were exercised:
Nick Roberts
Buyout award
Alan Williams
Performance Share Plan
Deferred Share Bonus Plan
Co-Investment Plan
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Travis Perkins plc Annual Report and Accounts 2021
Exercise date Number of shares
Price per share
22/09/2021
14,522
£17.25
Exercise date Number of shares
Price per share
24/05/2021
24/05/2021
24/05/2021
24,764
18,969
43,076
£16.15
£16.15
£16.15
Directors’ shareholding and share interests – Non-executive Directors
Non-executive Director
Jasmine Whitbread
Coline McConville
Pete Redfern
Marianne Culver
Heath Drewett
Jora Gill
Unaudited information
Beneficial
shareholding
(as at 31
December 2021)
Beneficial
shareholding
(as at 1 March
2022)
2,405
4,003
10,012
728
-
-
2,405
4,003
10,012
728
-
-
Service contracts
Each of the Executive Directors has a service contract, which will be available for inspection at the Annual General Meeting or at the Company’s
registered office. These contracts provide for 6 months notice from the Directors and 12 months notice from the Company. They do not specify any
particular level of compensation in the event of termination or change of control. Details of the Group’s policy on payments in respect of loss of
office are provided in the Group’s Directors’ Remuneration Policy.
The dates Executive Directors’ service contracts were entered into are as follows:
• Nick Roberts – 1 July 2019
• Alan Williams – 3 January 2017
Non-executive Directors do not have a service contract, but each has received a letter of appointment which will be available for inspection at the
Annual General Meeting or at the Company’s registered office. These appointments expire on the following dates:
Director
Jasmine Whitbread
Coline McConville
Pete Redfern
Marianne Culver
Heath Drewett
Jora Gill
Expiry of appointment letter
March 2030
February 2024
November 2023
November 2028
May 2030
August 2030
In accordance with best practice, the Non-executive Directors stand for re-election annually.
No compensation is payable on termination of the employment of Non-executive Directors, which may be with or without notice.
Outside appointments
Travis Perkins recognises that its Executive Directors may be invited to become non-executive directors of other companies. Such non-executive
duties can broaden a director’s experience and knowledge which can benefit Travis Perkins. Subject to approval by the Board, Executive Directors
are allowed to accept one non-executive directorship with a listed entity provided that the appointment will not lead to conflicts of interest, and they
may retain the fees received. Nick Roberts is a Director and Trustee of the Forces in Mind Trust. Nick receives no fee for this appointment. Alan
Williams held no external appointments during 2021.
Funding of equity awards
Both executive incentive arrangements and entitlements under the HMRC approved all colleague Sharesave scheme are satisfied by shares
purchased in the market. Shares purchased in the market are held by a trust and the voting rights relating to the shares are exercisable by the
Trustees in accordance with their fiduciary duties. At 31 December 2021, the Trust held 507,371 shares.
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Total shareholder return
300
250
200
150
100
50
0
Travis Perkins plc
FTSE 350
Jan 12
Dec 12
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
TSR is rebased to 100 from 1 January 2012
Performance graph and table
For comparative purposes, the FTSE 350 index has been selected as this is the index of which the Company was a member during the
reporting year.
Historic CEO pay
Single figure remuneration (£000)
Annual bonus payout (% of maximum)
Vesting of Performance Share Plan
(% of maximum)
Vesting of Co-Investment Plan
(% of maximum)
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
£3,506 £2,044 £2,634 £2,360 £2,575 £2,532 £2,258 £2,622
89%
89%
63%
35%
32%
27%
72%
24%
£696 £4,446
97%
0%
80%
37%
45%
97%
54%
40%
40%
46%
40%
94%
100%
0%
0%
44%
97%
100%
100%
100%
100%
100%
Data for 2019 relates to both Nick Roberts and John Carter reflecting their tenure in the role of CEO during 2019. 2014-2018 relates to John Carter,
earlier data relates to the previous CEO, Geoff Cooper.
CEO to all-employee-pay ratio
The following table provides pay ratio data in respect of the CEO’s total remuneration compared to the 25th, median and 75th percentile employee.
Financial Year
Method
2019
2020
2021
Option A
Option A
Option A
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
133
37
206
109
30
168
81
23
134
The employees used for the purposes of the table above were identified on a full-time equivalent basis as at 31 December 2021. Option A was
chosen as it is considered to be the most accurate way of identifying the relevant employees.
Employee Pay includes salary, allowances, overtime, bonus, commission, benefits and share plan proceeds. For the purpose of the calculation
employee pay has been standardised to the equivalent of a 40-hour working week and where employees have started mid-period the employee’s
pay has been restated on a full-year basis to ensure a like-for-like comparison.
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The following table provides salary and total remuneration information in respect of the employees at each quartile.
Financial year
Element of pay
2021
Salary
Total remuneration
25th percentile
employee
Median
employee
75th percentile
employee
£19,775
£21,617
£22,859
£26,462
£28,000
£33,116
The Board has confirmed that the ratio is consistent with the Company’s wider policies on employee pay, reward and progression.
There is a significant increase in the CEO pay ratio in 2021. This reflects the fact that during 2020 the CEO was in receipt of no bonus nor, due to
tenure, in receipt of any vesting long-term incentive awards. In addition, a pay cut was taken for 3 months during that year. The strong business
performance in 2021 is reflected in bonus and LTIP outurns. Also included in the CEO’s total remuneration is a significant element of his buyout
awards. Hence the ratio has increased.
There are no changes attributable to changes in the Company’s employment model nor in the methodology used to calculate the ratio.
Change in remuneration of Directors
Percentage change in
salary/fee earned
2020
Comparative employee group1
Executive Directors
CEO – N Roberts
CFO – A Williams
Non Executive Directors
Jasmine Whitbread4
Coline McConville
Pete Redfern
Marianne Culver
Blair Illingworth
Heath Drewett4
Jora Gill4
1.7%
(4.0)%
(3.5)%
n/a
(2.0)%
11.4%
n/a
n/a
n/a
n/a
Percentage change in
bonus opportunity earned
Percentage change in
taxable benefits received2
2020
(38.0)%
(89.0)%
(89.0)%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2021
69.0%
97.0%
97.0%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2020
8.4%
–
(5.0)%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2021
(8.5)%3
1.4%
(6.9)%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2021
1.5%
5.3%
5.3%
n/a
5.4%
(3.6)%
–
18.8%
n/a
n/a
1. The comparator group is all colleagues within the Trade Merchant businesses and central functions. Travis Perkins plc is a non-employing entity and so is not used for
comparative purposes.
2. Based on a matched sample across the two periods.
3. During the year the Group began to replace the company car fleet with a cash allowance. The reduction reflects the difference between the P11d value and the cash
allowance. The reality is that employees are, in the majority of cases, significantly better off receiving the cash allowance than receiving a company car and the associated
tax liability.
4. Jasmine Whitbread, Heath Drewett and Jora Gill were appointed part way through 2021.
Relative importance of the spend on pay
£1,000m
£750m
£500m
£250m
823
612
176
133
168
–
Distribution to
Shareholders
Capital
Investment
45
53
Corporation
Tax
Employee
Remuneration
2021
2020
Capital expenditure is shown, for comparison, as an indicator of investment by the Company in future growth. It includes funds invested in the
purchase of property, plant and equipment. Corporation tax is included as an indicator of wider societal contribution facilitated by the Company’s
operations and is the actual amount of corporation tax paid in the relevant reporting periods.
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Governance
During the year the Committee comprised Coline McConville (Chair), Peter Redfern, Marianne Culver and Christopher Rogers (until 27 April 2021),
all of whom are independent Non-executive Directors, and Stuart Chambers, Chairman of the Board (until 31 March 2021) and Jasmine Whitbread,
Chair of the Board (from 31 March 2021), who were independent on appointment.
Deloitte was appointed by the Committee in December 2015, following an interview process, to provide independent advice on executive remuneration.
Deloitte is a founding member of the Remuneration Consultants Code of Conduct and adhere to this Code in its dealings with the Committee.
The Committee is satisfied that the advice provided by Deloitte is objective and independent. The Committee is comfortable that the Deloitte
engagement partner and team that provides remuneration advice to the Committee do not have connections with the Company that may impair
their independence. The Committee reviewed the potential for conflicts of interest and judged that there were appropriate safeguards against
such conflicts.
Deloitte provided additional services to the Company in relation to remuneration including support in developing and implementing remuneration
proposals, compensation benchmarking and other tax and consulting services mainly in the area of digital strategy, innovation, operating model
design and change management.
Fees are charged on a time and materials basis. During the year Deloitte was paid £21,600 for the advice provided to the Committee.
In addition Nick Roberts (Chief Executive Officer), Alan Williams (Chief Financial Officer), Robin Miller (General Counsel & Company Secretary),
Emma Rose (Chief Human Resources Officer), Jon Erb (Director of Group Finance) and Paul Nelson (Reward Director) have assisted the
Committee in its work and attended Committee meetings where appropriate. No individual is involved in the setting of their own remuneration.
Responsibilities
The Remuneration Committee is responsible for developing and implementing the remuneration policy within the Company. It determines and
agrees with the Board the policy for the remuneration and benefits of the Chair of the Board, Executive Directors and the Group Leadership Team.
The Committee also oversees the administration of the Company’s share plans. The Committee’s terms of reference are available on the
Company website (www.travisperkinsplc.co.uk) or from the Company Secretary.
Key items discussed in 2021 meetings
In 2021 the Remuneration Committee formally met three times, with additional conference calls or meetings as required. The Committee
discussed amongst others the following matters:
Month
Key Issues Considered
February
• Review of 2020 performance against targets and determining annual and long-term incentive outcomes
• Annual bonus targets for 2021
• Restricted Share Plan design and approach
• All employee share plan review
• 2020 Directors’ Remuneration report
• Committee governance
March
November
• Bonus targets for 2021 finalisation
• Rules and implementation approach for Restricted Share Plan
Impact of Corporate Restructuring on In-flight LTIP measures
•
• 2021 short term bonus schemes update
• Committee terms of reference
Shareholder Voting
The following resolutions in relation to remuneration were put by the Company’s AGM (2020 Directors’ Remuneration report and 2020 Policy):
Resolution
Votes For
% For
Votes
Against
To receive and approve the Directors’ Remuneration report (2021 AGM)
To receive and approve the Directors’ Remuneration policy (2021 AGM)
195,827,987
178,947,921
97.81% 4,386,668
89.38% 21,267,740
% Against
2.19%
10.62%
Votes
Withheld
32,212
31,205
The Director’s Remuneration report has been approved by the Board of Directors and is signed on its behalf by:
Coline McConville
Chair of the Remuneration Committee
28 February 2022
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Travis Perkins plc Annual Report and Accounts 2021
Directors’ report
For the year ended 31 December 2021
The Directors present their annual report and audited accounts for the
year ended 31 December 2021. The Corporate Governance report on
pages 78 to 83 forms part of the Directors’ report.
The disclosable interests of Directors at 31 December 2021 including
holdings, if any, of spouses and of children under the age of 18 are
contained in the Directors’ Remuneration report on pages 91 to 104.
Business review
A review of the Group’s position, developments, activities in the field of
research and development and a review of the key events affecting the
Group in the last financial year can be found on pages 30 to 39. Whilst
the Group operates predominantly in the UK, it has a sourcing office in
China; a small number of branches in the Isle of Man and the Republic
of Ireland; and continued development of the Toolstation Europe
business now reaching 123 branches in Belgium, France and Holland.
Information to be disclosed under LR 9.8.4R
Listing rule
Detail
Page reference
Directors’ indemnities
Article 141 of the Company’s Articles of Association permits the
Company to indemnify any person who is or was a Director of the
Company or of any associated company in respect of any liability
incurred in relation to the affairs of the Company or any associated
company to the extent the law allows (including in connection with any
associated company’s activities as trustee of an occupational pension
scheme). The Company maintains Directors’ and Officers’ liability
insurance which gives appropriate cover for legal action brought against
its Directors. The Company has granted indemnities to its Directors and
Directors of associated companies to the extent permitted by law and
these remain in force in the year ended 31 December 2021.
9.8.4R (1-2)(5-11)(14) Not applicable
9.8.4R (4)
9.8.4R(12)
9.8.4R (13)
Long-term incentive schemes
Dividend waiver
Dividend waiver
98
147
147
Greenhouse gas emissions reporting
Details of the Group’s greenhouse gas emissions reporting can be
found in the Sustainability report on pages 60 to 61.
Articles of Association
The Company’s Articles of Association may only be amended by special
resolution at a general meeting of the Shareholders. The Company has
determined that all Directors should seek election or re-election at the
Annual General Meeting. The Articles of Association of the Company
further regulate the appointment and removal of directors, in addition to
the Companies Act 2006 and related legislation. The powers and
responsibilities of the Directors are described in the Corporate
Governance report on pages 78 to 83.
Board of Directors
The names of the Directors at 31 December 2021 and their biographical
details are set out on pages 76 to 77. The Directors who held office
during the period are listed on page 81. The Executive Directors have
rolling 12-month notice periods in their contracts. The Non-executive
Directors do not have service contracts but letters of appointment. In
light of the outcome of the evaluation of the Board’s effectiveness set
out on page 82, and due to the skills and experience that each Director
brings to their role, the Board concluded that each Director’s
contribution is and continues to be, important to the Company’s
long-term sustainable success.
Director’s conflict of interest
During the year, no Director had any material interest in any contract of
significance to the Group’s business. The Company has undertaken to
comply with best practice on approval of Directors’ conflicts of interest in
accordance with the Company’s Articles of Association.
These provisions have operated effectively. Under the Companies Act
2006 a Director must avoid a situation where he or she has, or can
have, a direct or indirect interest that conflicts or possibly may conflict
with the Company’s interests.
Results and dividends
The Group’s results for the year ended 31 December 2021 are set out in
the income statement on page 118 and the dividends for the year
ending 31 December 2021 are set out in note 21. The Directors are
recommending a final dividend of 26.0 pence per share for approval at
the Company’s AGM. If approved by shareholders, the final dividend
will be paid on 13 May 2022 to those shareholders on the register at the
close of business on 1 April 2022.
Balance sheet and post-balance sheet events
The balance sheet on page 119 shows the Group’s financial position. No
important events have occurred since the balance sheet date.
Principal risks and uncertainties
A review of the Group’s principal risks and uncertainties is set out in the
Strategic report which can be found on pages 40 to 46.
Financial risk management
Details of the Group’s approach to capital management and the
alleviation of risk through the use of financial instruments are given
in the Financial performance section on pages 38 to 39. Specific
quantitative information on borrowings and financial instruments
is given in notes 22 and 27 to the financial statements.
Employees
Statements on employee matters are contained in the Sustainability
section of the Annual Report on pages 52 to 71. Details of the number of
employees and related costs can be found in note 32 to the financial
statements. The Company is committed to equality of opportunity and
recognises the benefit of diversity within its workforce. Its approach to the
matter of diversity is set out in the Nominations Committee report on
pages 84 to 85 and in the Sustainability report on pages 52 to 71.
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Directors’ report continued
For the year ended 31 December 2021
Substantial shareholdings
Information provided to the Company pursuant to the Financial Conduct Authority’s (“FCA”) Disclosure Guidance and Transparency Rules (“DTRs”)
is published on a Regulatory Information Service and on the Company’s website. As at 31 December 2021, the following information had been
received, in accordance with DTR 5, from holders of notifiable interest in the Company’s issued share capital. The information provided below was
correct at the date of notification; however, the date received may not have been within the current financial year. It should be noted that these
holdings are likely to have changed since the Company was notified. However, notification of any change is not required until the next notifiable
threshold is crossed. All notifications in the table below were made prior to the 2021 share consolidation.
BlackRock, Inc.
Ninety One UK Limited
Investec Asset Management
Harris Associates L.P.
OppenheimerFunds, Inc.
Sanderson Asset Management LLP
Pzena Investment Management, Inc
Direct / indirect Number of shares
Voting rights
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Not disclosed
12,480,008
12,741,837
12,398,948
12,381,080
12,321,382
15,587,458
Less than 5%
4.95%
5.05%
4.92%
4.91%
4.89%
6.93%
In the period from 31 December 2021 to the date of this report, the Company received three further notifications in accordance with DTR 5 from
Sprucegrove Investment Management Ltd, the most recent of which was on 16 February 2022, disclosing a holding of 10,876,642 ordinary shares
(5.00%, direct interest).
The Company has an equal opportunities policy aimed at ensuring that
employment decisions are based on ability and potential regardless of
gender, race, colour, ethnic origin or sexual orientation, marital status,
pregnancy, gender reassignment, age or disability. In particular
applications for employment by disabled persons are always fully and
fairly considered, bearing in mind the aptitudes of the person concerned.
In the event of a member of staff becoming disabled, every effort is made
to ensure that their employment with the Group continues and that
appropriate training is arranged. It is the policy of the Company that the
training, career development and promotion of disabled persons should,
as far as possible, be identical to that of other employees.
The Group’s policies and practices have been designed to keep
employees informed on matters relevant to them as employees
through regular meetings and communications. There are various
channels utilised across the Group and these include listening groups;
colleague forums; workshops; conferences; internal newsletters and
newspapers; and online communities. Employee representatives are
consulted regularly on a wide range of matters affecting their interests
through various channels including colleague forums. To achieve a
common awareness of the financial and economic factors affecting the
performance of the Group, employees are briefed on the Group’s
financial performance and strategy. This is carried out through emails,
webcasts and personal briefings which take place during half-year and
full-year results announcements. All employees with more than three
months’ service are eligible to participate in the Company’s Sharesave
and Buy-As-You-Earn plans. Details can be found in the Directors’
Remuneration report on page 94. The Group conducts an annual
employee engagement survey which enables colleagues to give
anonymous feedback to the Group on issues affecting them. The
results of the surveys are shared with colleagues and action plans to
address issues of concern are prepared with colleagues and then
implemented. Colleague feedback from the engagement survey is used
to inform the Group’s approach to policies, the working environment,
working practices and diversity and inclusion, amongst other matters.
The latest survey “Your Voice Our Future” was conducted in June 2021.
In addition, as part of the Group’s approach to bringing the employee
voice into the boardroom under S172 of the Companies Act 2006, the
Company has a designated workforce engagement Non-executive
Director and details of his activities during the year can be found on
pages 72 to 73.
Modern slavery
The Group recognises the harmful impact that Modern Slavery and
human trafficking has on society and is committed to ensuring its
business and supply chain is free from this criminal activity. The Group
produces a slavery and human trafficking statement each financial year.
The latest statement can be found on the Group’s corporate website.
Political donations
The Group’s policy is not to make donations to political parties.
The Group did not give any money for political purposes nor did
it make any donations to political organisations or independent
candidates or incur any political expenditure during the year.
Auditor
KPMG LLP, appointed in 2015, is the Company’s auditor at the date of
this report. Resolutions will be proposed at the Annual General Meeting
to re-appoint KPMG LLP as the Company’s auditor and to authorise the
Audit Committee to set the auditor’s remuneration.
Statement on disclosure of information to the Auditor
Each of the persons who is a Director at the date of approval of this
report confirms that:
• so far as the Director is aware, there is no relevant audit information
•
of which the Company’s auditor is unaware; and
the Director has taken all reasonable steps that they ought to have
taken as a Director in order to make themselves aware of any
relevant audit information and to establish that the Company’s
auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with
the provisions of s.418 of the Companies Act 2006.
Share capital and change of control
As at 31 December 2021, the Company had an allotted and fully paid
share capital of 225,025,926 ordinary shares of 11.205105 pence each
with an aggregate nominal value of £25,214,392 (including shares
owned by the Travis Perkins Employee Share Ownership Trust). The
ordinary shares are listed on the London Stock Exchange and all shares
rank pari passu.
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Travis Perkins plc Annual Report and Accounts 2021
The rules governing the appointment and replacement of
Board members and changes to the Articles of Association
accord with usual English company law provisions. The
powers of the Company’s Directors are set out in the
Company’s Articles of Association. In particular, the Board
has the power to issue shares and to purchase the
Company’s own shares and is seeking renewal of these
powers at the forthcoming Annual General Meeting in
accordance with the restrictions and within the limits set out
in the notice of that meeting.
There are a number of agreements to which the Company
is a party that may take effect, alter or terminate upon a
change of control following a takeover bid. None of these
agreements are considered significant in the context of
the Company as a whole. The Company does not have
agreements with any Director or any employee that would
provide compensation for loss of office or employment
resulting from a takeover except for that provisions of the
Company’s share schemes and plans may cause options
and awards granted to employees under such schemes
and plans to vest on a takeover.
The Directors’ report has been approved by the Board of
Directors and is signed on its behalf by:
Robin Miller
General Counsel & Company Secretary
28 February 2022
Following completion of the sale of its Plumbing and Heating
distribution business on 30 September 2021, the Company
commenced a new non-discretionary share buyback programme
(“Buyback”) on 1 October 2021 to return some of the proceeds from the
sale to shareholders and to reduce share capital. During the period
1 October to 31 December 2021, 4,633,419 ordinary £0.11205105
shares of the Company were acquired by the Company through the
Buyback. They had a nominal value of £519,179, represented 2.1% of the
Company’s issued share capital as at 1 October 2021 and consideration
of £70,367,790 was paid for them. At 31 December 2021, 3,533,419
ordinary shares of the Company which had been acquired through the
Buyback were held by the Company in Treasury with a nominal value of
£395,923, representing 1.6% of the Company’s issued share capital at
31 December 2021.
This share buyback programme has taken place within the limitations
of the authority granted to the Board at the Company’s AGM held on
27 April 2021 (and the commitment made in the Explanatory Notes in
the Notice of AGM), pursuant to which the maximum number of shares
to be bought back by the Company is 22,502,592 being 10% of the
issued shares at 17 March 2021. This authority remains valid at
31 December 2021.
The rights and obligations attaching to its shares are set out in the
Company’s Articles of Association. Fully paid shares in the Company
are freely transferable. There are no persons that hold securities
carrying special rights with regard to the control of the Company.
Details of the structure of the Company’s share capital and changes in
the share capital during the year are also included in note 19 of the
financial statements.
As at 31 December 2021, the Travis Perkins Employee Share
Ownership Trust owned 507,371 shares in the Company (0.2% of the
issued share capital) for use in connection with the Company’s share
schemes. Any voting or other similar decisions relating to those shares
would be taken by the trustees, who may take account of any
recommendation of the Company. There are no rights attached to
shares under employee share schemes, save for the right to acquire
shares pursuant to options granted under those schemes in accordance
with and subject to their rules.
There are no restrictions on voting rights attaching to the Company’s
ordinary shares. The Company is not aware of any agreements
between holders of securities that may result in restrictions on the
transfer of securities or on voting rights.
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Financial statementsGovernanceStrategic report
Statement of Directors’ responsibilities
For the year ended 31 December 2021
The Directors are responsible for preparing the Annual Report and the
Group and parent Company financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and parent
Company financial statements for each financial year. Under that law they
are required to prepare the Group financial statements in accordance with
UK-adopted international accounting standards and applicable law and
have elected to prepare the parent Company financial statements in
accordance with UK accounting standards and applicable law, including
FRS 101 Reduced Disclosure Framework.
•
Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and parent Company and of the
Group’s profit or loss for that period. In preparing each of the Group
and parent Company financial statements, the Directors are required to:
• Select suitable accounting policies and then apply them
consistently;
Responsibility statement of the Directors in respect of the annual
financial report
We confirm that to the best of our knowledge:
•
The financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of
the assets, liabilities, financial position and profit or loss of the
company and the undertakings included in the consolidation
taken as a whole; and
The Strategic report which is incorporated into the Directors’
report includes a fair review of the development and performance
of the business and the position of the issuer and the undertakings
included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
We consider the annual report and accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Group’s position and performance,
business model and strategy.
• Make judgements and estimates that are reasonable, relevant,
reliable and prudent;
The Statement of Directors’ Responsibilities has been approved by the
Board and is signed on its behalf by:
Nick Roberts
Chief Executive Officer
28 February 2022
Alan Williams
Chief Financial Officer
28 February 2022
• For the Group financial statements, state whether they have been
prepared in accordance with UK-adopted international accounting
standards
• For the parent Company financial statements, state whether
applicable UK accounting standards have been followed, subject to
any material departures disclosed and explained in the parent
company financial statements;
• Assess the Group and parent Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern; and
• Use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to
cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the parent Company’s transactions
and disclose with reasonable accuracy at any time the financial position
of the parent Company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They are responsible
for such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error and have general
responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Group and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the Directors are also responsible
for preparing a Strategic report, Directors’ report, Directors’
Remuneration report and Corporate Governance Statement that
complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company’s website.
Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
108
Travis Perkins plc Annual Report and Accounts 2021
Financial statements
Group financial statements
110 Independent Auditor’s report
118 Consolidated income statement
118 Consolidated statement of
comprehensive income
119 Consolidated balance sheet
120 Consolidated statement of changes in equity
121 Consolidated cash flow statement
122 Notes to the consolidated financial statements
Company financial statements
161 Company balance sheet
162 Company statement of changes in equity
163 Notes to the Company’s financial statements
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Financial statementsGovernanceStrategic report
INDEPENDENT
AUDITOR’S REPORT
TO THE MEMBERS OF TRAVIS PERKINS PLC
1. Our opinion is unmodified
We have audited the financial statements of Travis Perkins plc (“the
Company”) for the year ended 31 December 2021 which comprise the
Consolidated Income Statement, the Consolidated Statement of
Comprehensive Income, the Consolidated and Company Balance
Sheets, the Consolidated and Company Statements of Changes in
Equity, the Consolidated Cash Flow Statement, and the related notes,
including the accounting policies.
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the
Group’s and of the parent Company’s affairs as at 31 December
2021 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
the parent Company financial statements have been properly
prepared in accordance with UK accounting standards, including
FRS 101 Reduced Disclosure Framework; and
•
the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are
described below. We believe that the audit evidence we have obtained
is a sufficient and appropriate basis for our opinion. Our audit opinion is
consistent with our report to the audit committee.
We were first appointed as auditor by the shareholders on 28 May
2015. The period of total uninterrupted engagement is for the seven
financial years ended 31 December 2021. We have fulfilled our ethical
responsibilities under, and we remain independent of the Group in
accordance with, UK ethical requirements including the FRC Ethical
Standard as applied to listed public interest entities. No non-audit
services prohibited by that standard were provided.
Overview
Materiality:
group financial statements
as a whole
Coverage
Key audit matters
Recurring risks
£13m (2020:£13m)
4.4% (2020: 4.4%) of Group profit
before tax and adjusting items*
94% (2020: 91%) of Group profit
before tax and adjusting items*
vs 2020
New: Accounting for
inventory
New: Gross defined
benefit obligations
Parent Company’s key
audit matter:
Recoverability of parent
Company’s investment
in subsidiaries
*From continuing operations, excluding adjusting items as disclosed on the face of the
income statement. In 2020, our materiality was based on a metric representing an
average of 5 years profit before tax and adjusting items.
110 Travis Perkins plc Annual Report and Accounts 2021
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include
the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We summarise below the key
audit matters, in decreasing order of audit significance, in arriving at our audit opinion above, together with our key audit procedures to address those
matters and, as required for public interest entities, our results from those procedures. These matters were addressed, and our results are based on
procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion
thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.
Following the demerger of Wickes and simplification of the Group’s supplier income arrangements, the previously identified key audit matters
relating to Wickes’ goodwill impairment and Deferral of supplier rebates into inventory are either no longer relevant or no longer considered to be
of most significance to the audit, respectively. The event-driven key audit matter identified in respect of the 2020 financial statements relating to
Valuation of trade receivables is no longer considered to be of most significance to the audit based on our assessment of the Group’s actual
experience. As such we no longer consider these three items to be key audit matters.
Our assessment of the risk of material misstatement arising from the new key audit matters below has not changed since the prior year, however
the simplification of the Group has resulted in a change in the relative significance of these matters in the audit, and they have now accordingly
been identified as key audit matters.
Accounting for inventory
(£727 million; 2020:
£841 million)
Refer to page 88 (Audit
Committee Report) and
page 138 (accounting policy
and financial disclosures).
The risk
Our response
Accounting for inventory (quantities, cost
(net of rebates) and provisions)
The Group holds a significant amount of
inventory across its large branch network
and a number of warehouses.
We performed the detailed tests below rather than seeking to
rely on any of the Group’s controls because our knowledge of
the design and implementation of these controls indicated that
we would not be able to obtain the required evidence to support
reliance on controls.
The Group’s inventory is comprised of a
very large number of products, typically
held in large quantities, with high inventory
turns. The Group conducts periodic
inventory counts and updates its inventory
records to reflect the results of the counts,
recognising a shrinkage provision to cater
for an estimate of inventory losses
between the count dates and the year-end.
Cost is based on a weighted average
purchase price, net of applicable rebates,
plus attributable overhead.
•
Our procedures included:
• Tests of detail: We counted a sample of inventory lines
across a sample of the Group’s branches and warehouses
and compared the results of our counts to the Group’s
inventory records. Where our counts were performed prior
to the year-end, we rolled forward our count results to the
year-end date and assessed any movements in inventory
quantities.
We evaluated the results of our count procedures using
statistical routines.
Independent reperformance: We recalculated the net
purchase prices attributed to individual inventory lines using
data and analytics and subjected any exceptions to
substantive tests of detail.
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Provision is made for obsolete and slow
moving items based on historical usage
and for when cost is expected to exceed
net realisable value on a specific item
basis.
Whilst inventory is not considered to
represent a significant risk of material
misstatement, it is one of the matters that
has the greatest effect on our overall audit
strategy; the allocation of resources in the
audit; and directing the efforts of the
engagement team in order to conclude.
• Assessing assumptions: We assessed whether the
overheads absorbed into cost amounts recorded for
inventory are attributable to bringing it into its current
location and condition and analysed the amount absorbed
based on our own expectation.
• Assessing methodology: We assessed the basis on which
provisions for obsolete, slow moving and net realisable value
have been established, considering the data sources used,
methods applied and assumptions adopted.
Our results:
We found the accounting for inventory to be acceptable (2020:
acceptable).
Travis Perkins plc Annual Report and Accounts 2021
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Financial statementsGovernanceStrategic report
Independent Auditor’s report continued
to the members of Travis Perkins plc
2. Key audit matters: our assessment of risks of material misstatement continued
The risk
Our response
Gross defined benefit
obligations
(£1,466 million; 2020:
£1,592 million)
Refer to page 88 (Audit
Committee Report), page 142
(accounting policy) and pages
142 to 145 (financial disclosures).
Recoverability of parent
Company’s investment in
subsidiaries
(£2,009 million; 2020:
£2,727 million)
Subjective valuation:
Small changes in the assumptions and
estimates used to value the Group’s
defined benefit obligations (before
deducting scheme assets) would have
a significant effect on the Group’s net
pension position.
The effect of these matters is that, as part
of our risk assessment, we determined
that the valuation of the gross defined
benefit obligations has a high degree of
estimation uncertainty, with a potential
range of reasonable outcomes greater
than our materiality for the financial
statements as a whole, and possibly
many times that amount. The financial
statements (note 18) disclose the
sensitivity estimated by the Group.
Low risk, high value
The carrying amount of the parent
Company’s investments in subsidiaries
represents 58% (2020: 60%) of the
parent Company’s total assets.
Refer to page 164 (accounting
policy and financial disclosures).
Their recoverability is not at a high risk
of significant misstatement or subject
to significant judgement.
However, due to their materiality in the
context of the parent Company financial
statements, this is considered to be the
area that had the greatest effect on our
overall parent Company audit.
We performed the tests below rather than seeking to rely on
any of the Group’s controls because the nature of the balance is
such that we would expect to obtain audit evidence primarily
through the detailed procedures described.
Our procedures included:
• Benchmarking assumptions: We challenged, with the support
of our own actuarial specialists, the key assumptions applied,
being the discount rate, inflation rate and mortality/life
expectancy against externally derived data.
• Assessing transparency: We considered the adequacy of
the Group’s disclosures in respect of the sensitivity of the
defined benefit obligations to these assumptions.
Our results:
We found the valuation of the pension obligations to be
acceptable (2020: acceptable).
We performed the tests below rather than seeking to rely on
any of the Group’s controls because the nature of the balance is
such that we would expect to obtain audit evidence primarily
through the detailed procedures described.
Our procedures included:
• Tests of detail: We compared the carrying amount of 100%
of investments with the relevant subsidiaries’ draft balance
sheet to identify whether their net assets, being an
approximation of their minimum recoverable amount, were
in excess of their carrying amount and assessing whether
those subsidiaries have historically been profit-making.
• Assessing subsidiary audits: We assessed the work
performed by the subsidiary audit teams on in scope
subsidiaries and considered the results of that work on those
subsidiaries’ profits and net assets.,
• Comparing valuations: For the investments where the
carrying amount exceeded the net asset value, we compared
the carrying amount of the investment with the expected
value of the business based on a suitable multiple of the
subsidiaries’ profit.
Our results:
We found the parent Company’s conclusion that there is no
impairment of its investments in subsidiaries to be acceptable
(2020: acceptable).
3. Our application of materiality and an overview of the scope of our audit
Materiality for the Group financial statements as a whole was set at £13m (2020: £13m), determined with reference to a benchmark of Group profit
before tax and adjusting items*. It represents 4.4% (2020: 4.4%) of the stated benchmark, which amounts to £299m in 2021 (2020: £297m as
112 Travis Perkins plc Annual Report and Accounts 2021
originally presented in that year’s financial statements before being
re-presented in 2021 for the discontinued operations).
Materiality for the parent Company financial statements as a whole was set
at £8.0m (2020: £6.5m), determined with reference to a benchmark of the
parent Company total assets, of which it represents 0.2% (2020: 0.1%).
In line with our audit methodology, our procedures on individual account
balances and disclosures were performed to a lower threshold,
performance materiality, so as to reduce to an acceptable level the risk
that individually immaterial misstatements in individual account balances
add up to a material amount across the financial statements as a whole.
Performance materiality was set at 65% (2020: 50%) of materiality for
the financial statements as a whole, which equates to £8.5m (2020:
£6.5m) for the Group and £5.2m (2020: £3.3m) for the parent
Company. We applied this percentage in our determination of
performance materiality based on the level of identified misstatements
in prior periods, the increase to 65% principally reflecting the impact of
the Group simplification.
Normalised PBT
Group materiality
Group revenue
Group materiality
£13m (2020: £13m)
£13m
Whole financial
statements materiality
(2020: £13m)
£11m
Range of materiality at 7
components (£3.0m to £11m)
(2020: £3.3m to £7.8m)
£0.5m
Misstatements reported to the
audit committee (2020: £0.5m)
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £0.5m (2020: £0.5m),
in addition to other identified misstatements that warranted reporting
on qualitative grounds.
The scope of the audit work performed was predominantly substantive
as we placed limited reliance upon the Group's internal control over
financial reporting.
Of the Group’s 33 (2020: 55) reporting components, we subjected 7
(2020: 10) to full scope audits for group purposes. The components
within the scope of our work accounted for the percentages illustrated
opposite. The remaining 3% (2020: 4%) of total group revenue, 6%
(2020: 9%) of the total profits and losses that made up the Group profit
before tax and adjusting items* and 9% (2020: 4%) of total Group
assets is represented by 26 (2020: 45) reporting components, none of
which individually represented more than 3% (2020: 5%) of any of total
Group revenue, the total profits and losses that made up the Group
profit before tax and adjusting items* or total group assets. For these
components, we performed analysis at an aggregated Group level to
re-examine our assessment that there were no significant risks of
material misstatement within these.
The Group team instructed component auditors as to the significant
areas to be covered, including the relevant risks detailed above and the
information to be reported back. The Group team approved the
component materialities, which ranged from £3.0m to £11.0m (2019:
£3.3m to £7.8m), having regard to the mix of size and risk profile of the
Group across the components. The work on 2 of the 7 components
(2020: 4 of the 10 components) was performed by component auditors
and the rest, including the audit of the parent Company, was performed
by the Group team. The Group team performed procedures on the
items excluded from adjusted Group profit before tax.
97%
(2020 96%)
96
97
Group total assets
91%
(2020 96%)
96
91
94%
(2020 91%)
91
94
94%
(2020 87%)
87
94
Full scope for group audit purposes 2021
Full scope for group audit purposes 2020
Residual components
*From continuing operations, excluding adjusting items as disclosed on the face of
the income statement. In 2020, our materiality was based on a metric representing
an average of 5 years profit before tax and adjusting items.
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Financial statementsGovernanceStrategic report
Independent Auditor’s report continued
to the members of Travis Perkins plc
4. The impact of climate change on our audit
We have considered the potential impacts of climate change on the
financial statements as part of planning our audit.
As the Group has set out on page 44, climate change has the potential
to significantly impact the construction sector during the transition to a
low carbon environment. The Group has stated their commitment to
help the industry to decarbonise and has set out its own commitments
to reduce carbon in line with a 1.5 degree pathway across the value
chain.
The areas of financial statements that are most likely to be potentially
affected by climate related changes and initiatives are balances subject
to forward looking assessments such as impairment tests and the
useful life of assets. The Group considered the impact of climate
change and the Group’s targets in the preparation of the financial
statements and concluded that this did not have a material effect on
the consolidated financial statements, as described on pages 133 in
relation to useful life of property, plant and equipment and 155 in
relation to impairment.
We performed a risk assessment, taking into account climate change
risks and the commitments made by the Group. This included
enquiries of management, consideration of the Group’s processes for
assessing the potential impact of climate change risk on the Group’s
financial statements assessing the TCFD scenario analysis performed
by the Group and reading the Group’s Carbon Disclosure Project
submission.
We held discussions with our own climate change professionals to
challenge our risk assessment.
Based on our risk assessment we determined that, taking into account
the extent of headroom on goodwill and the nature and life of property,
plant and equipment, balances in these financial statements are not at
significant risk in relation to climate. Hence we assessed that there is
not a significant impact on our audit for this financial year.
There was no impact of climate change on our key audit matters
included in section 2.
We have read the Group’s disclosure of climate related information in
the front half of the annual report as set out on pages 48 to 61 and
considered consistency with the financial statements and our audit
knowledge.
5. Going concern
The directors have prepared the financial statements on the going
concern basis as they do not intend to liquidate the Group or the parent
Company or to cease their operations, and as they have concluded that
the Group’s and the parent Company’s financial position means that
this is realistic. They have also concluded that there are no material
uncertainties that could have cast significant doubt over their ability to
continue as a going concern for at least a year from the date of approval
of the financial statements (“the going concern period”).
We used our knowledge of the Group, its industry, and the general
economic environment to identify the inherent risks to its business
model and analysed how those risks might affect the Group’s and
parent Company’s financial resources or ability to continue operations
over the going concern period. The risk that we considered most likely
to adversely affect the Group’s and parent Company’s available
financial resources and metrics relevant to debt covenants over this
period was adverse macroeconomic conditions resulting in lower than
expected trading volumes.
We considered whether these risks could plausibly affect the liquidity or
covenant compliance in the going concern period by comparing severe,
but plausible downside scenarios that could arise from these risks
individually and collectively against the level of available financial
resources and covenants indicated by the Group’s financial forecasts.
Our procedures also included:
• Evaluating how the Group’s risk assessment process identifies
business risks relating to events and conditions that may cast
significant doubt on the ability to continue as a going concern.
• Evaluating the models the Group uses in its assessment and
assessing how the information system captures events and
conditions that may cast significant doubt on ability to continue
as a going concern.
• Critically assessing the assumptions in the base case and downside
scenarios relevant to liquidity and covenant metrics, in particular in
relation to impacts of historical trends in severe economic situations and
overlaying knowledge of the entity' plans based on approved budgets
and our knowledge of the entity and the sector in which it operates.
We considered whether the going concern disclosure in the ‘General
Information’ section in the notes to the financial statements set out
on page 122 gives a full and accurate description of the directors’
assessment of going concern, including the identified risks and
dependencies.
Our conclusions based on this work:
– we consider that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is
appropriate;
– we have not identified, and concur with the directors’ assessment
that there is not, a material uncertainty related to events or
conditions that, individually or collectively, may cast significant
doubt on the Group’s or parent Company's ability to continue as
a going concern for the going concern period;
– we have nothing material to add or draw attention to in relation
to the directors’ statement in the ‘General Information’ section in
the notes to the financial statements set out on page 122 on the
use of the going concern basis of accounting with no material
uncertainties that may cast significant doubt over the Group and
parent Company’s use of that basis for the going concern period,
and we found the going concern disclosure in ‘General
Information’ section in the notes to be acceptable; and
– the related statement under the Listing Rules set out on page 83
is materially consistent with the financial statements and our
audit knowledge.
However, as we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent with
judgements that were reasonable at the time they were made, the
above conclusions are not a guarantee that the Group or the parent
Company will continue in operation.
114 Travis Perkins plc Annual Report and Accounts 2021
6. Fraud and breaches of laws and regulations – ability
to detect
Identifying and responding to risks of material misstatement due to
fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we
assessed events or conditions that could indicate an incentive or
pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:
Identifying and responding to risks of material misstatement due to
non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be
expected to have a material effect on the financial statements from our
general commercial and sector experience through discussion with the
directors and other management (as required by auditing standards), and
discussed with the directors and other management the policies and
procedures regarding compliance with laws and regulations.
• Enquiring of directors, the audit committee and internal audit and
inspection of policy documentation as to the Group’s high-level
policies and procedures to prevent and detect fraud, including the
internal audit function, and the Group’s channel for “whistleblowing”,
as well as whether they have knowledge of any actual, suspected or
alleged fraud.
• Reading Board, audit committee, remuneration committee and
nomination committee minutes.
• Considering remuneration incentive schemes and performance
targets for directors.
• Using analytical procedures to identify any unusual or unexpected
relationships.
We communicated identified fraud risks throughout the audit team and
remained alert to any indications of fraud throughout the audit. This
included communication from the Group audit team to component
audit teams of relevant fraud risks identified at the Group level and
request to component audit teams to report to the Group audit team
any instances of fraud that could give rise to a material misstatement at
the Group level.
As required by auditing standards, and taking into account possible
pressures to meet profit targets, we perform procedures to address the
risk of management override of controls, in particular the risk that
Group and component management may be in a position to make
inappropriate accounting entries. On this audit we do not believe there
is a fraud risk related to revenue recognition because sales are
individually low value (high volume) across a high number of
independently managed branches and there is no judgement in
applying the revenue recognition criteria.
We did not identify any additional fraud risks.
We performed procedures including:
•
Identifying journal entries to test for all full scope components
based on risk criteria and comparing the identified entries to
supporting documentation. These included those posted to unusual
accounts.
• Evaluated the business purpose of significant unusual transactions.
• Assessing whether the judgements made in making accounting
estimates are indicative of a potential bias.
We communicated identified laws and regulations throughout our team
and remained alert to any indications of non-compliance throughout the
audit. This included communication from the Group audit team to
component audit teams of relevant laws and regulations identified at the
Group level, and a request for component auditors to report to the Group
audit team any instances of non-compliance with laws and regulations
that could give rise to a material misstatement at the Group level.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly affect the
financial statements including financial reporting legislation (including
related companies legislation), distributable profits legislation, taxation
legislation and pensions legislation and we assessed the extent of
compliance with these laws and regulations as part of our procedures
on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements, for
instance through the imposition of fines or litigation. We identified the
following areas as those most likely to have such an effect: health and
safety, anti-bribery, employment law, climate change and import
compliance. Auditing standards limit the required audit procedures to
identify non-compliance with these laws and regulations to enquiry of
the directors and other management and inspection of regulatory and
legal correspondence, if any. Therefore if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or
regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk
that we may not have detected some material misstatements in the
financial statements, even though we have properly planned and
performed our audit in accordance with auditing standards. For example,
the further removed non-compliance with laws and regulations is from
the events and transactions reflected in the financial statements, the less
likely the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of non-
detection of fraud, as these may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal controls. Our
audit procedures are designed to detect material misstatement. We are
not responsible for preventing non-compliance or fraud and cannot be
expected to detect non-compliance with all laws and regulations.
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115
Financial statementsGovernanceStrategic report
Independent Auditor’s report continued
to the members of Travis Perkins plc
7. We have nothing to report on the other information in the
Annual Report
The directors are responsible for the other information presented in the
Annual Report together with the financial statements. Our opinion on the
financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except as explicitly
stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the
financial statements or our audit knowledge. Based solely on that work
we have not identified material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic report
•
•
and the directors’ report;
in our opinion the information given in those reports for the financial
year is consistent with the financial statements; and
in our opinion those reports have been prepared in accordance with
the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration report to be
audited has been properly prepared in accordance with the Companies
Act 2006.
Disclosures of emerging and principal risks and longer-term viability
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ disclosures in respect of
emerging and principal risks and the viability statement, and the
financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw
attention to in relation to:
•
•
•
the directors’ confirmation within the viability statement on page 39
that they have carried out a robust assessment of the emerging and
principal risks facing the Group, including those that would threaten
its business model, future performance, solvency and liquidity;
the Principal Risks disclosures describing these risks and how
emerging risks are identified, and explaining how they are being
managed and mitigated; and
the directors’ explanation in the viability statement of how they have
assessed the prospects of the Group, over what period they have
done so and why they considered that period to be appropriate, and
their statement as to whether they have a reasonable expectation
that the Group will be able to continue in operation and meet its
liabilities as they fall due over the period of their assessment,
including any related disclosures drawing attention to any necessary
qualifications or assumptions.
We are also required to review the viability statement, set out on page
39 under the Listing Rules. Based on the above procedures, we have
concluded that the above disclosures are materially consistent with the
financial statements and our audit knowledge.
Our work is limited to assessing these matters in the context of only the
knowledge acquired during our financial statements audit. As we
cannot predict all future events or conditions and as subsequent events
may result in outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the absence of anything to
report on these statements is not a guarantee as to the Group’s and
Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ corporate governance
disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements and our
audit knowledge:
•
•
•
the directors’ statement that they consider that the annual report
and financial statements taken as a whole is fair, balanced and
understandable, and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy;
the section of the annual report describing the work of the Audit
Committee, including the significant issues that the audit committee
considered in relation to the financial statements, and how these
issues were addressed; and
the section of the annual report that describes the review of the
effectiveness of the Group’s risk management and internal control
systems.
We are required to review the part of the Corporate Governance
Statement relating to the Group’s compliance with the provisions of the
UK Corporate Governance Code specified by the Listing Rules for our
review. We have nothing to report in this respect.
8. We have nothing to report on the other matters on which
we are required to report by exception
Under the Companies Act 2006, we are required to report to you if, in
our opinion:
• adequate accounting records have not been kept by the parent
•
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
the parent Company financial statements and the part of the
Directors’ Remuneration report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are
not made; or
• we have not received all the information and explanations we require
for our audit.
We have nothing to report in these respects.
116 Travis Perkins plc Annual Report and Accounts 2021
9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 108, the
directors are responsible for: the preparation of the financial statements
including being satisfied that they give a true and fair view; such internal
control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether
due to fraud or error; assessing the Group and parent Company’s ability
to continue as a going concern, disclosing, as applicable, matters related
to going concern; and using the going concern basis of accounting
unless they either intend to liquidate the Group or the parent Company
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue our opinion in an auditor’s
report. Reasonable assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually
or in aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
10. The purpose of our audit work and to whom we owe our
responsibilities
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them in
an auditor’s 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 and the Company’s members, as a body, for
our audit work, for this report, or for the opinions we have formed.
Anthony Sykes (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square,
Canary Wharf,
London,
E14 5GL
28 February 2022
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Travis Perkins plc Annual Report and Accounts 2021
117
Financial statementsGovernanceStrategic report
Consolidated income statement
For the year ended 31 December 2021
Revenue
Adjusted operating profit
Adjusting items – operating
Amortisation of acquired intangible assets
Operating profit
Share of associates’ result
Interest on lease liabilities
Other finance costs
Finance income
Profit/(loss) before tax
Adjusting items – deferred tax
Tax on adjusting items
Other tax
Total tax
Profit / (loss) from continuing operations
Profit from discontinued operations
Profit / (loss) for the year
Attributable to:
Owners of the Company
Non-controlling interests
Earnings / (loss) per ordinary share:
Adjusted basic earnings per share
Basic
– from continuing operations
– total
Diluted
– from continuing operations
– total
Notes
1
2(a)
3
2(a)
6(a)
6(a)
6(a)
3
7(a)
8
20(b)
20(a)
20(a)
20(a)
20(a)
2021
4,586.7
2020
(re-presented1)
3,697.5
352.8
6.8
(11.1)
348.5
–
(21.1)
(25.7)
3.9
305.6
(4.7)
(1.6)
(58.5)
(64.8)
240.8
38.1
278.9
278.9
–
278.9
107.3p
103.9p
120.3p
102.6p
118.8p
128.3
(92.7)
(8.6)
27.0
0.1
(21.2)
(37.1)
10.9
(20.3)
(9.0)
20.9
(26.7)
(14.8)
(35.1)
13.2
(21.9)
(22.4)
0.5
(21.9)
21.0p
(14.3)p
(9.0)p
(14.3)p
(9.0)p
1 Figures for the year ended 31 December 2020 have been re-presented to exclude the results of the Retail and Plumbing & Heating segments, which are now presented as
discontinued operations.
The accompanying notes form an integral part of these financial statements.
Consolidated statement of comprehensive income
For the year ended 31 December 2021
£m
Profit / (loss) for the year
Items that will not be reclassified subsequently to profit and loss:
Actuarial gain on defined benefit pension schemes
Income tax relating to other comprehensive income
Items that may be reclassified subsequently to profit and loss:
Foreign exchange differences on retranslation of foreign operations
Total other comprehensive income for the year net of tax
Total comprehensive income for the year
Total comprehensive income for the year attributable to the owners of the Company arises from:
Continuing operations
Discontinued operations
All other comprehensive income is attributable to the owners of the Company.
118 Travis Perkins plc Annual Report and Accounts 2021
Notes
18(b)
7(b)
2021
278.9
94.9
(34.3)
2.9
63.5
342.4
304.3
38.1
342.4
2020
(re-presented)
(21.9)
113.1
(22.2)
(2.0)
88.9
67.0
53.8
13.2
67.0
Consolidated balance sheet
As at 31 December 2021
£m
Assets
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use assets
Investments
Other receivables
Deferred tax asset
Retirement benefit asset
Total non-current assets
Current assets
Inventories
Derivative financial instruments
Trade and other receivables
Tax debtor
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Capital and reserves
Issued share capital
Share premium account
Merger reserve
Revaluation reserve
Own shares
Foreign exchange reserve
Retained earnings
Total equity
Non-current liabilities
Interest-bearing loans and borrowings
Lease liabilities
Deferred tax liabilities
Long-term provisions
Total non-current liabilities
Current liabilities
Lease liabilities
Derivative financial instruments
Trade and other payables
Tax liabilities
Short-term provisions
Total current liabilities
Total liabilities
Total equity and liabilities
Notes
2021
2020
9(a)
9(b)
10
11(a)
30
16
18(c)
12
27
14
23(b)
19
19
19
19
19
19
19
22
11(a)
16
15
11(a)
27
17
15
853.0
125.7
800.1
439.8
–
0.7
13.9
275.8
1,358.5
312.0
830.4
1,145.5
9.2
–
–
178.4
2,509.0
3,834.0
724.4
0.2
706.7
–
459.8
1,891.1
4,400.1
25.2
545.6
326.5
10.5
(61.4)
4.1
1,387.3
2,237.8
575.2
414.7
140.4
6.8
1,137.1
74.5
–
921.1
0.4
29.2
1,025.2
2,162.3
4,400.1
840.7
–
892.7
6.5
505.6
2,245.5
6,079.5
25.2
545.6
326.5
14.3
(39.5)
1.2
1,840.5
2,713.8
575.7
1,168.3
77.2
21.9
1,843.1
158.8
1.6
1,304.2
–
58.0
1,522.6
3,365.7
6,079.5
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The financial statements of Travis Perkins plc, registered number 824821, were approved by the Board of Directors on 28 February 2022 and
signed on its behalf by:
Nick Roberts
Director
Alan Williams
Director
Travis Perkins plc Annual Report and Accounts 2021
119
Financial statementsGovernanceStrategic report
Consolidated statement of changes in equity
For the year ended 31 December 2021
Foreign
exchange
reserve
Retained
earnings
Other
Total equity
before
non-
controlling
interest
Non-
controlling
interest
(4.1) 1,722.6
2,582.7
(22.4)
(22.4)
90.9
88.9
4.9
(4.9)
£m
Share
capital
Share
premium
Merger
reserve
Revaluation
reserve
At 1 January 2020
25.2
545.6
326.5
14.5
Own
shares
(50.8)
Loss for the year
Other comprehensive income
for the year net of tax
Total comprehensive (loss)/
income for the year
Sale of own shares
Option on non-controlling
interest
Adjustments in respect of
revalued fixed assets
Exercise of options over
non-controlling interest
Adjustment to IFRS 16 – Leases
transition
Equity-settled share-based
payments
Tax on equity-settled share-
based payments
Tax on revalued assets
Own shares movement
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.2)
–
–
–
–
–
–
–
–
–
6.4
–
–
–
–
–
–
–
4.9
At 1 January 2021
25.2
545.6
326.5
14.3
(39.5)
Profit for the year
Other comprehensive income
for the year net of tax
Total comprehensive income for
the year
Demerger dividend
Other dividends
Adjustments in respect of
revalued fixed assets
Shares purchased in share
buyback and held as treasury
shares (note 19)
Shares purchased in share
buyback and held as own shares
by ESOT (note 19)
Sale of own shares
Own shares movement
Equity-settled share-based
payments
Tax on equity-settled share-
based payments
Tax on revalued assets
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1.1)
–
–
–
–
–
–
(2.7)
–
–
–
–
–
–
(53.8)
(16.7)
17.4
31.2
–
–
–
3.2
–
(2.0)
(2.0)
–
–
–
–
–
–
–
–
–
1.2
–
2.9
2.9
–
–
–
–
–
–
–
–
–
68.5
–
4.9
0.2
4.1
(4.1)
–
–
–
–
–
40.3
15.6
(1.7)
(0.9)
(4.9)
– 1,840.5
278.9
60.6
339.5
(679.7)
(105.4)
1.1
–
–
–
(31.2)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
66.5
6.4
–
–
40.3
15.6
(1.7)
(0.9)
–
2,713.8
278.9
63.5
342.4
(679.7)
(105.4)
–
(53.8)
(16.7)
17.4
–
23.2
23.2
(0.7)
–
(0.7)
(2.7)
Total
equity
2,587.1
(21.9)
88.9
67.0
6.4
–
–
–
40.3
15.6
(1.7)
(0.9)
–
2,713.8
278.9
63.5
342.4
(679.7)
(105.4)
–
(53.8)
(16.7)
17.4
–
23.2
(0.7)
(2.7)
2,237.8
4.4
0.5
–
0.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At 31 December 2021
25.2
545.6
326.5
10.5
(61.4)
4.1
– 1,387.3
2,237.8
120 Travis Perkins plc Annual Report and Accounts 2021
Consolidated cash flow statement
For the year ended 31 December 2021
£m
Cash flows from operating activities
Operating profit
Adjustments for:
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of internally-generated intangibles
Amortisation of acquisition-related intangibles
Share-based payments
Foreign exchange
Gain on disposal of property, plant and equipment
Purchase of tool hire assets
(Increase) / decrease in inventories
(Increase) / decrease in receivables
Increase / (decrease) in payables
Payments in respect of adjusting items in excess of the income statement charge
Pension payments in excess of the income statement charge
Cash generated from operations
Interest paid and debt arrangement fees
Interest on lease liabilities
Current income taxes paid
Net cash inflow from continuing operating activities
Net cash inflow from discontinued operating activities
Net cash from operating activities
Cash flows from investing activities
Interest received
Proceeds on disposal of property, plant and equipment
Purchase/development of computer software
Purchases of freehold land and buildings
Purchases of other property, plant and equipment
Acquisition of subsidiary, net of cash acquired
Disposal of subsidiaries
Disposal of other investments
Dividends received from other investments
Net cash inflow / (outflow) from continuing investing activities
Net cash (outflow) / inflow from discontinued investing activities
Net cash inflow / (outflow) from investing activities
Cash flows from financing activities
Bank facility fee
Shares purchased in share buyback
Sale of own shares
Repayment of lease liabilities
Payments to pension scheme
Dividends paid
Financing transactions with discontinued operations
Bond issue
Repayment of borrowings
Net cash outflow used in continuing financing activities
Net cash outflow used in discontinued financing activities
Net cash used in financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December (note 23b)
2021
2020
(re–presented)
348.5
69.2
80.0
9.7
11.1
19.1
(0.2)
(48.9)
(11.2)
(204.5)
(171.5)
224.2
(27.4)
–
298.1
(15.1)
(21.1)
(59.9)
202.0
127.3
329.3
1.4
82.2
(2.2)
(80.9)
(81.6)
(32.3)
266.9
1.0
1.6
156.1
(13.3)
142.8
(0.5)
(70.5)
17.4
(75.5)
(3.6)
(105.4)
(127.4)
–
(12.0)
(377.5)
(140.4)
(517.9)
(45.8)
505.6
459.8
27.0
60.0
78.0
11.5
8.6
17.3
2.0
(9.2)
(6.4)
70.0
500.4
(373.0)
27.7
(11.5)
402.4
(29.6)
(21.2)
(27.7)
323.9
162.0
485.9
1.3
55.4
(2.5)
(21.6)
(78.2)
–
1.3
–
–
(44.3)
36.6
(7.7)
(2.9)
–
6.4
(73.2)
(3.4)
–
76.3
248.5
(260.0)
(8.3)
(172.2)
(180.5)
297.7
207.9
505.6
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o
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Travis Perkins plc Annual Report and Accounts 2021
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Financial statementsGovernanceStrategic report
Notes to the consolidated financial statements
For the year ended 31 December 2021
General information
Overview
Travis Perkins plc is a Company incorporated in the United Kingdom under the Companies Act 2006. The address of the registered office is given
on page 176. The nature of the Group’s operations and its principal activities are set out in the Strategic report on pages 1 to 74.
These financial statements are presented in pounds sterling, the currency of the primary economic environment in which the Group operates.
Basis of accounting
The Group financial statements have been prepared in accordance with UK-adopted international accounting standards. The Company has elected
to prepare its Parent Company financial statements in accordance with FRS 101; these are presented on pages 161 to 169.
Basis of preparation
The financial statements have been prepared on the historic cost basis, except that derivatives, other financial instruments and contingent
consideration arising from business combinations are stated at fair value through profit and loss and designated financial instruments are stated at
fair value through other comprehensive income. The consolidated financial statements include the accounts of the Company and all entities
controlled by the Company (its subsidiaries, together referred to as “the Group”) from the date control commences until the date that control
ceases. Control is achieved where the Company:
• Has power over the investee
•
• Has the ability to use its power to affect its returns
Is exposed or has rights to a variable return from the involvement with the investee
As such, the results of subsidiaries acquired during the year are included in the consolidated income statement from the effective date of acquisition.
Foreign currencies
Transactions denominated in foreign currencies are recorded at the rates ruling on the date of the transaction.
At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at that
date. Foreign exchange differences arising on translation are recognised in the income statement.
Going concern
After reviewing the Group’s forecasts and risk assessments and making other enquiries, the Board has formed the judgement at the time of
approving the financial statements that there is a reasonable expectation that the Group has adequate resources to continue in operational
existence for the 12 months from the date of signing this Annual Report and Accounts. For this reason the Board continues to adopt the going
concern basis in preparing the financial statements.
In arriving at their opinion the Directors considered:
• The Group’s cash flow forecasts and revenue projections
• Reasonably possible changes in trading performance
• The committed debt facilities available to the Group and the covenants thereon
• The Group’s robust policy towards liquidity and cash flow management
• The Group’s ability to successfully manage the principal risk and uncertainties outlined on pages 40 to 47 during periods of uncertain economic
outlook and challenging macroeconomic conditions
The downside scenarios tested, outlining the impact of severe but plausible adverse scenarios based on a severe recession and housing market
weakness, show that there is sufficient headroom for liquidity and covenant compliance purposes for at least the next 12 months from the date of
approval of these financial statements.
Significant accounting policies
The principal accounting policies adopted in preparing the financial statements are provided throughout the notes to the financial statements.
Key judgements and estimates
The preparation of financial statements requires the Directors to make estimates and assumptions about future events that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities. Future events and their effects cannot be determined with
certainty. Therefore, the determination of estimates requires the exercise of judgement based on various assumptions and other factors such as
historical experience and current and expected economic conditions. The Directors frequently re-evaluate these significant factors and make
adjustments as facts and circumstances dictate.
Some financial information is produced by finance systems that were first implemented by the Group over 30 years ago. As the business has
grown, these have been amended to cope with significantly higher transaction levels and more complicated ways of doing business. This has made
the systems unwieldy and could result in a material misstatement in the information calculated by those systems in areas such as supplier income
and inventories. There are processes and controls in place to mitigate these risks.
122 Travis Perkins plc Annual Report and Accounts 2021
Key estimates including those that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within
the next financial year are found in the following notes:
Page
144
Note
18
Description
Pension assumptions
Notes to the financial statements
The notes are organised into the following sections:
Income and expenses: Provides a breakdown of individual line items in the income statement and summarises the accounting policies, judgements
and estimates relevant to understanding these items.
Assets and liabilities: Provides a breakdown of individual line items in the balance sheets and summarises the accounting policies, judgements and
estimates relevant to understanding these items.
Capital: Provides information about the capital management practices of the Group and shareholder returns for the year.
Risks: Discusses the Group’s impairment testing and the exposure to various financial risks, explains how these affect the Group’s financial position
and performance and what the Group does to manage these risks.
Group structure: Explains aspects of the Group structure and how changes have affected the financial position and performance of the Group.
People: Provides information about people’s costs.
Other: Provides information on items which require disclosure, but are not considered critical in understanding the financial performance or position
of the Group.
Significant items
During the year ended 31 December 2021 the following significant items took place that are relevant to the understanding of the Group’s results
and financial position:
• Demerger of Wickes in April 2021
• Disposal of Plumbing & Heating Segment in September 2021
The Retail and Plumbing & Heating segments have been classified as discontinued operations and are excluded from the results of the Group from
continuing operations. As required by IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations, the Income Statement and Cash
Flow Statement figures for the year ended 31 December 2020 have been re-presented to show the results of the discontinued operations
separately. The Balance Sheet remains as reported in the 2020 Annual Report, as per the requirements of this accounting standard.
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Income and expenses
1. Revenue
Accounting policy
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. Performance obligations to the customer in respect of sales of goods are satisfied on delivery or collection by
customer. Payments are typically due from credit customers not later than the last day of the month following the month of delivery. Revenue is
measured at the transaction price 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 sale of services comprise tool hire. Tool hire revenue is recognised on a straight-
line basis over the period of hire.
Customer rebates
Where the Group has rebate agreements with its customers, the value of variable income with respect to customer rebates is calculated in
accordance with the agreements in place so that the amount recognised as revenue in the year is based on the amount which is highly probable not
to reverse.
a. Revenue
£m
Sale of goods
Sale of services
2021
4,443.2
143.5
4,586.7
2020
(re-presented)
3,583.0
114.5
3,697.5
Travis Perkins plc Annual Report and Accounts 2021
123
Financial statementsGovernanceStrategic report
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Income and expenses continued
1. Revenue contiued
b. Revenue reconciliation and like-for-like sales
£m
2020 revenue (re-presented)
Network change
Trading days
2020 like-for-like revenue (re-presented)
Like-for-like change
2021 revenue
Network change
2021 like-for-like revenue
Like-for-like revenue %
Merchanting
Toolstation
3,064.8
(104.8)
(13.4)
2,946.6
879.5
3,826.1
(47.7)
3,778.4
28.2%
632.7
(6.2)
(1.5)
625.0
135.6
760.6
(58.7)
701.9
12.3%
Total
3,697.5
(111.0)
(14.9)
3,571.6
1,015.1
4,586.7
(106.4)
4,480.3
25.4%
Like-for-like sales are a measure of underlying sales performance for two successive periods. Branches and stores contribute to like-for-like sales
once they have been trading for more than 12 months. Revenue included in like-for-like 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.
2. Profit
a. Operating profit
£m
Revenue
Cost of sales
Gross profit
Selling and distribution costs
Administrative expenses
Profit on disposal of properties
Other operating income (note 4b)
Operating profit
Adjusting items (note 3)
Amortisation of acquired intangible assets
Adjusted operating profit
Profit on disposal of properties
Adjusted operating profit before property disposals
b. Adjusted profit
£m
Profit/(loss) before tax
Adjusting items (note 3)
Amortisation of acquired intangible assets
Adjusted profit before tax
Total tax
Tax on adjusting items
Adjusting items – deferred tax (note 3)
Tax on amortisation of acquired intangible assets
Adjusted profit after tax
Adjusted profit excludes adjusting items and amortisation of acquired intangible assets.
124 Travis Perkins plc Annual Report and Accounts 2021
2021
4,586.7
(3,277.9)
1,308.8
(729.6)
(291.3)
48.9
11.7
348.5
(6.8)
11.1
352.8
(48.9)
303.9
2021
305.6
(6.8)
11.1
309.9
(64.8)
1.6
4.7
(2.7)
248.7
2020
(re-presented)
3,697.5
(2,661.3)
1,036.1
(712.1)
(314.8)
9.2
8.5
27.0
92.7
8.6
128.3
(9.2)
119.1
2020
(re-presented)
(20.3)
92.7
8.6
81.0
(14.8)
(20.9)
9.0
(1.6)
52.6
3. Adjusting items
Accounting policy
Adjusting items are those items of income and expenditure that, by reference to the Group, are material in size and unusual in nature or incidence
and that in the judgement of the Directors should be disclosed separately on the face of the financial statements (or in the notes in the case of a
segment) to ensure both that the reader has a proper understanding of the Group’s financial performance and that there is comparability of
financial performance between periods.
Items of income or expense that are considered by the Directors for designation as adjusting items include, but are not limited to, significant
restructurings, onerous contracts, write-downs or impairments of current and non-current assets, the costs of acquiring and integrating businesses,
gains or losses on disposals of businesses and investments, re-measurement gains or losses arising from changes in the fair value of derivative
financial instruments to the extent that hedge accounting is not achieved or is not effective, material pension scheme curtailment gains and the
effect of changes in corporation tax rates on deferred tax balances.
£m
Adjusting items – operating
Branch closures and restructuring
IT-related settlement and impairment charge
Adjusting items – tax
Recognition of deferred tax assets
Deferred tax rate change
2021
2020
(re-presented)
(6.8)
–
(6.8)
(9.6)
14.3
4.7
96.9
(4.2)
92.7
–
9.0
101.7
Branch closures and restructuring
In 2021 the Group has been able to exit the leases of a number of branches closed in 2020 for less than the contractual lease liability, which has
generated a credit of £6.8m.
Adjusting items – tax
The tax charge includes an adjusting charge of £14.3m arising from the increase in the rate of UK corporation tax from 19% to 25% wffective on
1 April 2023 (2020: charge of £9.0m arising from the increase in the rate from 17% to 19% effective on 1 April 2020) and an adjusting credit of
£9.6m arising from the recognition of a deferred tax asset in respect of losses in the Toolstation Netherlands business (see note 16).
2020 adjusting items
In June 2020 the Group announced the closure of 144 branches and the restructuring of distribution, administrative and sales functions. Costs
recognised in 2020 in relation to these closures were as follows:
• £46.2m of property costs arising on the closure of branches and office locations, including a £19.1m impairment charge in respect of
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right-of-use assets
• £29.7m of redundancy and other restructuring costs
• £9.1m of fixed asset impairments
• £11.9m of inventory provisions in respect of closed branches and associated restructuring
The 2020 gain of £4.2m was the result of the full and final settlement of claims in relation to the cancelled replacement of the Group’s merchant
ERP system.
4. Expenses and other income
a. Operating profit
Operating profit has been arrived at after charging/(crediting):
£m
Movement of provisions against inventories
Cost of inventories recognised as an expense
Government grants from furlough scheme
Pension costs in administrative expenses
Pension costs in selling and distribution costs
(Reversal of impairment)/impairment losses for trade receivables (note 14)
Gain on disposal of property, plant and equipment
2021
(0.6)
3,119.5
–
6.5
12.2
(5.7)
(48.9)
2020
(re-presented)
9.2
2,652.1
(30.6)
4.9
9.1
15.2
(9.2)
In 2020, the UK Government offered a range of financial support packages to help companies affected by Covid-19, with the Group benefiting
from £30.5m of business rates relief and £30.6m of grants under the furlough scheme. The Group elected to deduct the grants from the furlough
scheme in reporting the related administrative expense. The Group did not directly benefit from either of these support packages in 2021.
Travis Perkins plc Annual Report and Accounts 2021
125
Financial statementsGovernanceStrategic report
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Income and expenses continued
4. Expenses and other income continued
b. Other operating income
£m
Rental income
Transitional Service Agreement income
Profit on disposal of business/subsidiary (note 31)
2021
6.6
5.1
–
11.7
2020
(re-presented)
5.3
–
3.2
8.5
The “Transition Service Agreement” income represents amounts received in respect of specific services provided to businesses the Group has sold
or demerged in order to maintain business continuity in those businesses.
c. Auditor’s remuneration
During the year the Group incurred the following costs for services provided by the Company’s auditor:
£000
Fees payable to the Company’s auditor for audit services:
Audit of the Company’s annual accounts
Auditor for the audit of the Company’s subsidiaries
Additional fees payable for the prior period audit
Fees paid to the Company’s auditor for other services:
Audit-related assurance services
Services relating to corporate finance transactions
2021
2020
220
1,447
153
75
695
2,590
210
1,382
65
125
475
2,257
A description of the work of the Audit Committee is set out in the Audit Committee report on pages 86 to 90 and includes an explanation of how
auditor objectivity and independence is safeguarded when the auditor provides non-audit services.
5. Business 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, to assess performance and allocate capital.
Segment result represents the result of each segment without allocation of certain central costs, finance costs and tax. Adjusted segment result is
the result of each segment before adjusting items and property profits. Unallocated segment assets and liabilities comprise financial instruments,
current and deferred tax, cash, borrowings and pension scheme assets and liabilities.
Both operating segments sell building materials to a wide range of customers, none of which are dominant, and operate almost exclusively in the
United Kingdom.
The Wickes business was demerged on 27 April 2021 and the Plumbing & Heating segment was disposed on 30 September 2021 and therefore
are excluded from the segmental analysis. Information about these discontinued operations is provided in note 8.
126 Travis Perkins plc Annual Report and Accounts 2021
a. Segment information
£m
Revenue
Segment result
Amortisation of acquired intangible assets
Adjusting items
Adjusted segment result
Less property profits
Adjusted segment result excluding property profits
Adjusted segment margin
Adjusted segment margin excluding property profits
Average capital employed
Segment assets
Segment liabilities
Consolidated net assets
Capital expenditure
Amortisation of acquired intangible assets
Depreciation and amortisation of software
£m
Revenue
Segment result
Amortisation of acquired intangible assets
Adjusting items
Adjusted segment result
Less property profits
Adjusted segment result excluding property profits
Adjusted segment margin
Adjusted segment margin excluding property profits
Average capital employed
Segment assets
Segment liabilities
Consolidated net assets
Capital expenditure
Amortisation of acquired intangible assets
Depreciation and amortisation of software
Merchanting
Toolstation
Unallocated
Consolidated
2021
3,826.1
760.6
369.8
6.1
(6.8)
369.1
(48.9)
320.2
9.6%
8.4%
16.9
5.0
–
21.9
–
21.9
2.9%
2.9%
–
(38.2)
–
–
(38.2)
–
(38.2)
–
–
4,586.7
348.5
11.1
(6.8)
352.8
(48.9)
303.9
7.7%
6.6%
2,055.8
486.4
(36.1)
2,506.1
2,933.2
(1,121.5)
1,811.7
142.9
6.1
68.2
694.2
(307.1)
387.1
30.4
5.0
10.7
772.7
(733.7)
39.0
–
–
–
4,400.1
(2,162.3)
2,237.8
173.3
11.1
78.9
Merchanting
Toolstation
Unallocated
Consolidated*
2020 (re-presented)
3,064.8
632.7
65.7
6.2
89.1
161.0
(9.2)
151.8
5.0%
4.6%
4.3
2.4
0.9
7.6
–
7.6
1.2%
1.2%
–
(43.0)
–
2.7
(43.0)
–
(40.3)
–
–
3,697.5
27.0
8.6
92.7
128.3
(9.2)
119.1
3.2%
3.2%
2,084.4
430.1
(70.7)
2,443.8
2,583.5
(963.5)
1,620.0
68.4
6.2
65.5
567.5
(271.2)
296.3
17.1
2.4
5.5
739.7
(689.9)
49.8
26.2
–
2.5
3,890.7
(1,924.6)
1,966.1
111.7
8.6
73.5
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* Consolidated numbers excluding discontinued operations. The net assets of discontinued operations for the year ended 31 December 2020 were £747.7m, totalling
£2,713.8m.
Travis Perkins plc Annual Report and Accounts 2021
127
Financial statementsGovernanceStrategic report
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Income and expenses continued
5. Business segments continued
b. Unallocated segment assets and liabilities
Unallocated segment assets and liabilities comprise the following:
£m
Assets
Financial instruments
Property, plant and equipment
Investments
Cash and cash equivalents
Retirement benefit surplus
Unallocated corporate assets
Deferred tax asset
Liabilities
Financial instruments
Tax liabilities
Deferred tax liabilities
Interest-bearing loans, borrowings and loan notes
Unallocated corporate liabilities
2021
2020
4.9
17.6
–
459.8
275.8
0.7
13.9
772.7
–
(0.4)
(140.4)
(575.2)
(17.7)
(733.7)
2.8
35.2
9.2
505.6
178.4
2.0
6.5
739.7
(3.5)
–
(77.2)
(575.7)
(33.5)
(689.9)
Non-current assets owned by Toolstation Europe Limited are located in foreign countries.
c. Reportable segments
Segmental operating profit represents the profit earned by each segment without allocation of certain central costs, finance income and costs and
income tax expense. Inter-segment trading is eliminated. Unallocated segment assets and liabilities comprise financial instruments, current and
deferred taxation, cash and borrowings and pension scheme assets and liabilities.
6. Net finance costs
a. Finance costs and finance income
£m
Interest on bank loans and overdrafts
Interest on bonds
Amortisation of issue costs of bank loans
Accelerated interest on repayments of 2014 bond (note 22)
Unwinding of discounts – property provisions
Unwinding of discounts – pension SPV loan
Net loss on remeasurement of foreign exchange
Net loss on remeasurement of derivatives at fair value
Finance costs before lease interest
Interest on lease liabilities
Finance costs
Net gain on remeasurement of foreign exchange
Net gain on remeasurement of derivatives at fair value
Other finance income – pension scheme
Interest receivable
Finance income
Net finance costs
2021
(0.6)
(20.0)
(1.2)
–
(0.1)
(2.0)
(1.3)
(0.5)
(25.7)
(21.1)
(46.8)
–
–
2.4
1.5
3.9
(42.9)
2020
(re-presented)
(3.0)
(19.5)
(2.3)
(10.0)
(0.2)
(2.1)
–
–
(37.1)
(21.2)
(58.3)
6.4
1.4
1.1
2.0
10.9
(47.4)
The charge caused by the unwinding of discounts relates to the property provisions (note 15) and the pension scheme SPV loan (note 18).
128 Travis Perkins plc Annual Report and Accounts 2021
b. Interest for non-statutory measures
£m
Interest on bank loans and overdrafts
Interest on bonds
Amortisation of issue costs of bank loans
Unwinding of discounts – liability to pension scheme
Interest in discontinued operations
Interest for non-statutory measures
2021
0.6
20.0
1.2
2.0
-
23.8
2020
3.0
29.5
2.3
2.1
0.1
37.0
7. Tax
Accounting policy
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because
it excludes items of income and expense that are taxable or deductible in other years and it further excludes items which are never taxable or
deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the balance
sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit. This is accounted for using the balance sheet
liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction (other than
in a business combination) that affects neither the taxable profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on tax laws
and rates that have been enacted or substantially enacted at the balance sheet date. Deferred tax is charged or credited in the income statement,
except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt within equity.
a. Tax charge in income statement
£m
Current tax:
Current year
Prior year
Total current tax
Deferred tax:
Current year
Prior year
Total deferred tax
Total tax charge
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
2021
62.1
0.6
62.7
1.9
0.2
2.1
64.8
2020
(re-presented)
16.0
3.6
19.6
(4.9)
(0.1)
(4.8)
14.8
The differences between the total tax charge and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax
for the Group is as follows:
Profit/(loss) before tax
Tax at the UK corporation tax rate
Tax effect of expenses/credits that are not deductible/taxable
Depreciation of non-qualifying property
Share-based payments
Deferred tax rate change
Losses
Property profits
Gain on disposal of business
Current period deferred tax rate differential
Prior period adjustment
Tax expense and effective tax rate for the year
2021
£m
305.6
58.1
(0.4)
2.8
(0.2)
14.3
(4.8)
(2.0)
–
(3.8)
0.8
64.8
%
19.0
21.2
2020 (re-presented)
£m
(20.3)
(3.9)
(1.5)
2.4
1.9
9.0
3.4
–
(0.2)
–
3.7
14.8
%
19.0
(72.9)
Travis Perkins plc Annual Report and Accounts 2021
129
Financial statementsGovernanceStrategic report
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Income and expenses continued
7. Tax continued
b. Tax charge in the statement of comprehensive income
The following amounts relating to tax have been recognised in other comprehensive income:
£m
Items that may not be reclassified:
Deferred tax charge on actuarial movement
Income tax relating to other comprehensive income
c. Tax credited directly to equity
The following amounts of tax have been recognised in equity:
£m
Current tax: Excess tax deductions for share-based payments on exercised options
Deferred tax: Revaluation reserve
Deferred tax: Share-based payments
2021
2020
(34.3)
(34.3)
(22.2)
(22.2)
2021
0.7
(2.7)
(1.4)
(3.4)
2020
–
(0.9)
(1.7)
(2.6)
8. Discontinued operations
During the year ended 31 December 2021 the Group completed the demerger of the Wickes business and disposal of Plumbing & Heating
business. As a result, the Plumbing & Heating and Retail segments are presented as part of discontinued operations and the figures for the year
ended 31 December 2020 have been re-presented.
The Wickes business was demerged on 27 April 2021. In accordance with IFRIC 17 – Distributions of Non-cash Assets to Owners, the Group
recognised the distribution at fair value of £679.7m, as measured by the volume-weighted average price on the day the demerged business was
admitted to the market. The difference between the fair value of the Wickes business and the carrying amount of the assets distributed has been
recognised as an expense. The loss on the revaluation of the Wickes business that was distributed to shareholders was £69.4m.
The Plumbing & Heating business was sold to H.I.G. Capital on 30 September 2021 for cash consideration of £303.4m. Total net assets sold were
£210.4m and transaction costs were £12.0m, generating a profit on disposal of £81.0m. The Company received cash from discontinued operations
of £28.7m in 2021 (2020: £nil) from the Plumbing & Heating business before the completion of the sale.
a) Results of discontinued operations
£m
Revenue
Operating profit
Net finance costs
Profit before tax
Tax
Profit for the period of discontinued operations
Pre-tax profit on disposal of P&H and loss after tax recognised on the remeasurement of assets held for
distribution for Wickes
Profit for the period from discontinued operations
Year ended
31 December
2021
Year ended
31 December
2020
1,469.2
2,460.0
56.0
(18.4)
37.6
(11.1)
26.5
11.6
38.1
50.1
(37.5)
12.6
0.6
13.2
–
13.2
The revenue for the year ended 31 December 2021 of £1,469.2m (2020: £2,460.0m) consists of £921.3m (2020: £1,068.8m) relating to the
Plumbing & Heating business and £547.9m (2020: £1,391.2m) relating to Wickes. The operating profit of £56.0m (2020: £50.1m) consists of
£28.4m (2020: loss of £1.0m) relating to the operation and sale of the Plumbing & Heating business and £27.6m (2020: £51.1m) relating to the
Wickes business and its demerger.
130 Travis Perkins plc Annual Report and Accounts 2021
b. Net assets distributed and disposed
£m
Assets
Property, plant and equipment
Right-of-use assets
Goodwill
Intangible fixed assets
Inventory
Trade and other current receivables
Deferred tax asset
Cash and cash equivalents
Total assets
Liabilities
Trade and other payables
Lease liabilities
Provisions
Total liabilities
Net Assets
c. Cash flows relating to discontinued operations
£m
Net cash from operating activities
Net cash (outflow) / inflow from investing activities
Net cash used in financing activities
Net cash flows for the year for discontinued operations
137.1
674.3
522.7
181.4
347.9
321.7
4.8
263.9
2,453.8
(631.4)
(841.1)
(21.8)
(1,494.3)
959.5
2020
162.0
36.6
(172.2)
26.4
2021
127.3
(13.3)
(140.4)
(26.4)
Net cash flows used in investing activities represent the purchase of tangible fixed assets, offset in 2020 by proceeds of £52.4m from the
disposal of Primaflow F&P, the Plumbing & Heating business’ wholesale operation.
Net cash used in discontinued financing activities in 2021 consists of the repayment of £29.8m of lease liabilities, dividend payments from P&H
to the continuing Group of £28.7m, the settlement of intra-group debt of £156.1m and £238.0m of cash and cash equivalents within Wickes at
the date of its demerger. Net cash used in discontinued financing activities in 2020 represents the £6.0m purchase of a non-controlling
interest, the repayment of £89.9m of lease liabilities and the settlement of intra-group debt. Within the continuing cash flow statement,
financing transactions with discontinued operations in 2021 represents an outflow of £127.4m for £156.1m settlement of intra-group debt and
the dividend payment from P&H of £28.7m. In 2020, the £76.3m inflow represented settlement of intra-group debt.
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Assets and liabilities
9. Goodwill and other intangible assets
Accounting policy
Goodwill
Goodwill arising on acquisition represents the excess of the cost of acquisition over the share of the aggregate fair value of identifiable net assets (including
intangible assets) of a business or a subsidiary at the date of acquisition. All material intangible fixed assets obtained on acquisition have been recognised
separately in the financial statements. Goodwill is initially recognised as an asset and allocated to cash-generating units or groups of cash-generating units that
are expected to benefit from the synergies of the combination and is then reviewed at least annually for impairment. Any impairment is recognised immediately
in the income statement and is not reversed. Goodwill is accordingly stated in the balance sheet at cost less any provisions for impairment in value.
Goodwill arising on acquisitions before the date of transition to IFRS (1 January 2004) has been retained at the previous UK GAAP carrying value
subject to being tested for impairment at that date. Goodwill written off to reserves prior to 1998 under UK GAAP has not been reinstated and
would not be included in determining any subsequent profit or loss on disposal. Intangible assets identified as part of the assets of an acquired
business are capitalised separately from goodwill if the fair value can be measured reliably on initial recognition.
a. Goodwill by reportable segment
£m
Merchanting
Retail
Toolstation
At 1 January 2020
Effect on movement in exchange rates
At 1 January 2021
Eliminated on disposal/demerger
Recognised on acquisition (see note 31(c))
Effect on movement in exchange rates
At 31 December 2021
661.0
–
661.0
–
21.5
–
682.5
455.2
–
455.2
(455.2)
–
–
–
175.4
(0.6)
174.8
–
–
(4.3)
170.5
Plumbing &
Heating
67.5
–
67.5
(67.5)
–
–
–
Total
1,359.1
(0.6)
1,358.5
(522.7)
21.5
(4.3)
853.0
Travis Perkins plc Annual Report and Accounts 2021
131
Financial statementsGovernanceStrategic report
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Assets and liabilities continued
9. Goodwill and other intangible assets continued
b. Other intangible assets
Accounting policy
Intangible assets are amortised to the income statement on a straight-line basis over a maximum of 20 years except where they are considered to
have an indefinite useful life. In the latter instance, they are reviewed annually for impairment.
The directly attributable costs incurred for the development of computer software controlled by and for use within the business are capitalised and
written off over their estimated useful life, which ranges from three to ten years.
Interfaces are amortised over the lower of the remaining estimated useful lives of the systems they operate between. Costs relating to research,
maintenance and training are expensed as they are incurred. No amortisation is charged on assets in the course of construction.
Amounts paid to third parties in respect of the development of assets not controlled by the Group are expensed over the period where the Group
receives the benefit of the use of these assets. Licence fees for using third-party software are expensed over the period the software is in use.
Acquired customer relationships are amortised over their estimated useful lives, which range from 5 to 15 years. The remaining lives of amortised
customer relationships range from one to seven years. No amortisation is charged on computer software under construction.
£m
Cost or valuation
At 1 January 2020
Additions
Transfers between categories
Derecognition
At 1 January 2021
Additions
Additions from acquired business
Transfers between categories
Disposals
At 31 December 2021
Amortisation
At 1 January 2020
Charged on acquired intangibles
Charged on internally generated intangibles
At 1 January 2021
Charged on acquired intangibles
Charged on internally generated intangibles
Disposals
At 31 December 2021
Net book value
At 31 December 2020
At 31 December 2021
Brand
318.7
–
–
–
318.7
–
–
–
(168.3)
150.4
70.0
2.9
–
72.9
3.6
–
(5.1)
71.4
245.8
79.0
Computer
software
Customer
relationships
Assets under
construction
126.2
4.1
2.5
–
132.8
2.2
0.5
0.2
(34.2)
101.5
83.1
–
16.6
99.7
1.7
12.3
(22.1)
91.6
33.1
9.9
145.2
–
–
–
145.2
–
9.4
–
(3.0)
151.6
108.4
6.3
–
114.7
5.8
–
(3.0)
117.5
30.5
34.1
4.0
1.3
(2.5)
(0.2)
2.6
0.3
–
(0.2)
–
2.7
–
–
–
–
–
–
–
–
2.6
2.7
Total
594.1
5.4
–
(0.2)
599.3
2.5
9.9
–
(205.5)
406.2
261.5
9.2
16.6
287.3
11.1
12.3
(30.2)
280.5
312.0
125.7
Where a brand has not been established for a significant period of time the Directors do not have sufficient evidence to support a contention
that it will have an indefinite useful life. Accordingly for Toolstation and certain product-related brands the Directors have decided it is
appropriate to amortise their brand costs over their estimated useful lives. The useful lives of those brands being amortised range from 10 to
20 years. The Directors consider that the other brands, which are also all leading brands in their sectors with significant histories and significant
growth prospects, have an indefinite useful life. They are reviewed annually for impairment; details of impairment tests are shown in note 28.
The amortisation charge during the year related to discontinued operations is £2.6m.
132 Travis Perkins plc Annual Report and Accounts 2021
c. Cash-generating units
The Directors consider that each branch or distribution network in the Group is an individual cash-generating unit (“CGU”). Goodwill and intangible
fixed assets with indefinite useful lives have been allocated and monitored for impairment testing purposes to groups of individual CGUs within the
same brand. The following table analyses goodwill and intangible fixed assets with indefinite useful lives by CGU grouping.
£m
CGU grouping
Merchanting
CCF
Keyline
BSS Industrial
TF Solutions
Travis Perkins
Staircraft (note 31c)
Retail
Wickes
Toolstation
Toolstation UK
Toolstation Europe*
Toolstation Benelux
Toolstation France
Plumbing & Heating
City Plumbing Supplies
Plumbnation
Underfloor Heating Store
National Shower Spares
2021
2020
Intangibles
Goodwill
Total
Intangibles
Goodwill
Total
–
–
49.3
–
–
–
–
–
–
–
–
–
–
–
–
43.6
100.2
26.8
7.8
482.6
21.5
–
103.4
–
57.9
9.2
–
–
–
–
43.6
100.2
76.1
7.8
482.6
21.5
–
–
49.3
–
–
–
–
162.5
103.4
–
57.9
9.2
–
–
–
–
–
–
–
–
–
–
–
43.6
100.2
26.8
7.8
482.6
–
455.2
103.4
71.4
–
–
51.5
1.7
11.2
3.1
43.6
100.2
76.1
7.8
482.6
–
617.7
103.4
71.4
–
–
51.5
1.7
11.2
3.1
49.3
853.0
902.3
211.8
1,358.5
1,570.3
* The Toolstation Europe CGU grouping has been separated into distinct Toolstation Benelux and Toolstation France CGU groupings as their supply chains, leadership teams
and back-office functions have been separated and this now represents the lowest level at which the Group monitors goodwill.
10. Property, plant and equipment
Accounting policy
Property, plant and equipment is stated at cost or deemed cost less accumulated depreciation and any impairment in value. Assets are depreciated
to their estimated residual value on a straight-line basis over their estimated useful lives as follows:
• Buildings – 50 years or, if lower, the estimated useful life of the building or the life of the lease
• Leasehold improvements - the life of the lease
• Plant and equipment – 4 to 10 years
• Freehold land is not depreciated
The estimated useful lives are estimated taking into consideration the potential impact of climate change.
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sale proceeds net of expenses and
the carrying amount of the asset in the balance sheet and is recognised in the income statement. Where appropriate, the attributable revaluation
reserve remaining in respect of properties revalued prior to the adoption of IFRS is transferred directly to retained earnings.
Travis Perkins plc Annual Report and Accounts 2021
133
Financial statementsGovernanceStrategic report
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Assets and liabilities continued
10. Property, plant and equipment continued
£m
Cost or deemed cost
At 1 January 2020
Additions
Disposals
Disposals through business combinations
Reclassifications from current assets
Effect of movements in exchange rates
At 1 January 2021
Additions related to continuing operations
Additions related to discontinued operations
Acquired through business combinations
Disposals
Derecognition on demerger and disposal of subsidiaries
Reclassification
Effect of movements in exchange rates
At 31 December 2021
Accumulated depreciation
At 1 January 2020
Charged in the year
Disposals
Disposals through business combinations
Effect of movements in exchange rates
At 1 January 2021
Charged in the year on continuing operations
Charged in the year on discontinued operations
Disposals
Derecognition on demerger and disposal of subsidiaries
Reclassifications
Effect of movements in exchange rates
At 31 December 2021
Net book value
At 31 December 2020
At 31 December 2021
Freehold
Long
leasehold
Leasehold
improvements
Plant and
equipment
453.8
12.3
(43.8)
–
–
–
422.3
66.9
0.2
19.8
(32.0)
(2.6)
9.3
–
483.9
51.9
9.7
(2.5)
–
–
59.1
7.1
–
(16.6)
(0.8)
–
–
48.8
363.2
435.1
34.5
–
(0.4)
–
–
–
34.1
–
–
–
(0.9)
(1.2)
–
–
32.0
14.6
1.0
(0.3)
–
–
15.3
0.7
–
(0.9)
(0.9)
–
–
14.2
18.8
17.8
237.9
44.7
(18.0)
(1.5)
–
1.0
264.1
52.6
3.8
–
(10.5)
(145.7)
(9.1)
(0.4)
154.8
85.1
11.8
(10.8)
(1.1)
0.5
85.5
10.2
2.4
(1.3)
(90.3)
–
(0.1)
6.4
178.6
148.4
852.7
44.5
(63.2)
(14.6)
0.7
0.6
820.7
53.5
5.4
7.8
(27.9)
(353.8)
3.0
(0.3)
508.4
545.3
67.1
(53.9)
(8.1)
0.5
550.9
51.2
9.9
(27.9)
(274.2)
(0.3)
–
309.6
269.8
198.8
The cost element of the tangible fixed assets carrying value is analysed as follows:
£m
At deemed cost
At cost
Freehold
20.2
463.7
483.9
Long
leases
3.6
28.4
32.0
Leasehold
improvements
–
154.8
154.8
Plant and
equipment
–
508.4
508.4
Total
1,578.9
101.5
(125.4)
(16.1)
0.7
1.6
1,541.2
173.0
9.4
27.6
(71.3)
(503.3)
3.2
(0.7)
1,179.1
696.9
89.6
(67.5)
(9.2)
1.0
710.8
69.2
12.3
(46.7)
(366.2)
(0.3)
(0.1)
379.0
830.4
800.1
Total
23.8
1,155.3
1,179.1
Included within freehold property is land with a value of £194.5m (2020: £182.7m) which is not depreciated. No assets are pledged as security for
the Group’s liabilities, other than 16 freehold properties, as disclosed in note 18.
134 Travis Perkins plc Annual Report and Accounts 2021
11. Leases
Accounting policy
IFRS 16 – Leases establishes principles for the recognition, measurement, presentation and disclosure of leases, with the objective of ensuring that
lessees and lessors provide relevant information that faithfully represents those transactions.
Identifying a lease
At the inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if it conveys the right
to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the Group has both the right to
direct the identified asset’s use and to obtain substantially all the economic benefits from that use.
At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease
component on the basis of their relative stand-alone prices. However, for fleet leases in which it is a lessee, the Group has elected not to separate
non-lease components and account for the lease and non-lease components as a single lease component. For each lease or lease component, the
Group follows the lease accounting model as per IFRS 16 – Leases, unless the recognition exceptions can be used.
Recognition exceptions
The Group has elected to account for lease payments as an expense on a straight-line basis over the lease term or another systematic basis for the
following two types of leases:
i)
ii)
leases with a lease term of 12 months or less and containing no purchase options – this election is made by class of underlying asset
leases where the underlying asset has a low value when new – this election can be made on a lease-by-lease basis
For leases where the Group has taken short-term lease recognition exemption and there are any changes to the lease term or the lease is modified,
the Group accounts for the lease as a new lease.
Lessee accounting
Upon lease commencement the Group recognises a right-of-use asset and a lease liability.
Initial measurement
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at
or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is located, less any lease incentives received. The lease liability is initially measured at the
present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease if that can be readily determined. If that
rate cannot be readily determined, the Group uses the incremental borrowing rate.
Variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability and are initially measured
using the index or rate as at the commencement date. Amounts expected to be payable by the lessee under residual value guarantees are also
included. Variable lease payments that are not included in the measurement of the lease liability are recognised in profit or loss in the period in
which the event or condition that triggers payment occurs, unless the costs are included in the carrying amount of another asset under another
accounting standard.
Subsequent measurement
After lease commencement, the Group measures right-of-use assets using a cost model. Under the cost model a right-of-use asset is measured at
cost less accumulated depreciation and accumulated impairment.
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
The lease liability is subsequently remeasured to reflect changes in:
•
•
•
•
the lease term (using a revised discount rate)
the assessment of a purchase option (using a revised discount rate)
the amounts expected to be payable under residual value guarantees (using an unchanged discount rate)
future lease payments resulting from a change in an index or a rate used to determine those payments (using an unchanged discount rate)
The remeasurements are matched by adjustments to the right-of-use asset. Lease modifications may also prompt remeasurement of the lease
liability unless they are determined to be separate leases.
Depreciation
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the
useful life of the right-of-use asset or the end of lease term. The estimated useful lives of right-of-use assets are determined on the same basis as
those of property, plant and equipment. In addition the right-of-use asset is reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The payments related to leases are presented under cash flows from financing activities and cash flows from operating activities in the cash
flow statement.
Travis Perkins plc Annual Report and Accounts 2021
135
Financial statementsGovernanceStrategic report
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Assets and liabilities continued
11. Leases continued
Lessor accounting
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance or operating lease. To classify each lease, the
Group makes an overall assessment of whether the lease transfers substantially all the risks and rewards incidental to ownership of an underlying
asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain
indicators such as whether the lease is for the major part of the economic life of the asset.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease
classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head
lease is a short-term lease to which the Group applies the recognition exemption, then it classifies the sub-lease as an operating lease.
If an arrangement contains a lease and non-lease components, the Group applies IFRS 15 – Revenue from Contracts with Customers to allocate
the consideration in the contract.
The Group recognises operating lease payments as income on a straight-line basis over the lease term as part of “other income”. The Group
recognises finance income over the lease term of a finance lease, based on a pattern reflecting a constant periodic rate of return on the
net investment.
Sale and leaseback transactions
To determine whether the transfer of an asset is accounted for as a sale an entity applies the requirements of IFRS 15 – Revenue from Contracts
with Customers for determining when a performance obligation is satisfied.
If an asset transfer satisfies the requirements to be accounted for as a sale the seller measures the right-of-use asset at the proportion of the
previous carrying amount that relates to the right-of-use retained. Accordingly, the seller only recognises the amount of gain or loss that relates to
the rights transferred to the buyer.
If the fair value of the sale consideration does not equal the asset’s fair value, or if the lease payments are not market rates, the sales proceeds are
adjusted to fair value, either by accounting for prepayments or additional financing.
a. Amounts recognised in the balance sheet
Right-of-use assets:
£m
Land and buildings
Plant and equipment
At 31 December
2021
425.3
14.5
439.8
2020
1,103.3
42.2
1,145.5
Additions to the right-of-use assets during the 2021 financial year end were £92.4m (2020: £92.5m) in respect of continuing operations and
£2.0m (2020: £6.8m) in respect of discontinued operations. Right-of-use assets with the carrying amount of £674.3m were derecognised in the
year as a result of the demerger of Wickes and disposal of the Plumbing & Heating business.
Lease liabilities:
Lease liabilities included in the statement of financial position at 31 December:
£m
Current
Non-current
As a result of demerger and disposal total lease liabilities of £841.1m were derecognised during the year.
Maturity analysis – contractual undiscounted cash flows:
£m
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities at 31 December (note 27f)
2021
74.5
414.7
489.2
2021
93.5
270.9
247.0
611.4
2020
158.8
1,168.3
1,327.1
2020
211.1
700.1
754.5
1,665.7
136 Travis Perkins plc Annual Report and Accounts 2021
b. Amounts recognised in the statement of profit and loss
The statement of profit and loss shows the following amounts relating to leases:
£m
Depreciation of right-of-use assets
Interest expense (included in finance costs)
Expense relating to short-term leases
Expense relating to leases of low-value assets
(Reversal of impairment) / impairment of right-of-use assets
Gains on lease terminations
Gains arising from sale-and-leaseback transactions
All impairments of right-of-use assets relate to land and buildings.
Depreciation of right-of-use assets by class of asset:
£m
Land and buildings
Plant and equipment
2021
80.0
21.1
4.5
1.8
(4.3)
–
–
2020
(re-presented)
78.0
21.2
2.8
3.2
19.1
(0.9)
(0.2)
2021
66.7
13.3
80.0
2020
(re-presented)
67.4
10.6
78.0
The total cash outflow for leases in 2021 was £96.7m (2020 re-presented: £94.5m).
c. The Group’s leasing activities and how these are accounted for
The Group leases various properties, motor vehicles and equipment. Rental contracts are typically made for fixed periods but may have extension
options as described below. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.
Leases are recognised as a right-of-use asset with a corresponding liability at the date at which the leased asset is available for use by the Group.
Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the
shorter of the asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the
following lease payments:
• Fixed payments (including in-substance fixed payments), less any lease incentives receivable
• Variable lease payments that are based on an index or a rate
• Amounts expected to be payable by the lessee under residual value guarantees
• The exercise price of a purchase option if the lessee is reasonably certain to exercise that option
• Payments of penalties for terminating the lease if the lease term reflects the lessee exercising that option
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing
rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic
environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
• The amount of the initial measurement of lease liability
• Any lease payments made at or before the commencement date less any lease incentives received
• Any initial direct costs
• Restoration costs
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss.
Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise mainly IT equipment, vending machines and
paint-mixing machines.
Extension and termination options
Extension and termination options are included in a number of property and equipment leases across the Group. These terms are used to
maximise operational flexibility.
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that includes renewal options and
break clauses. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, and therefore the
amount of lease liabilities and right-of-use assets recognised.
O
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Travis Perkins plc Annual Report and Accounts 2021
137
Financial statementsGovernanceStrategic report
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Assets and liabilities continued
11. Leases continued
c. The Group’s leasing activities and how these are accounted for continued
Judgements in determining the lease term
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension
option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is
reasonably certain to be extended (or not terminated).
For property leases the following factors are normally the most relevant:
• The profitability of the leased store/warehouse and future plans for the business
•
If there are significant penalties to terminate (or not extend), the Group is typically reasonably certain to extend (or not terminate).
Most termination options on leases with impaired right-of-use assets are considered as reasonably certain to be exercised and therefore the lease
liabilities were calculated only to the break-clause date.
The Group as lessor
The Group leases a number of ex-trading properties and surplus units in trade parks owned by the Group to third parties. Property rental income
earned during the year in respect of these properties was £6.6m (2020: £5.3m).
At the balance sheet date, the Group had contracts with lessees for the following undiscounted future minimum lease payments:
£m
Within one year
One to two years
Two to three years
Three to four years
Four to five years
After five years
2021
6.2
5.1
4.6
4.0
3.5
18.7
42.1
2020
4.5
3.9
3.5
3.1
2.8
8.7
26.5
12. Inventories
Accounting policy
Inventories, which consist of goods for resale, are stated at the lower of average weighted cost and net realisable value. Cost comprises direct
materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present
location and condition. Net realisable value is the estimated selling price less the estimated costs of disposal.
£m
Inventories
2021
724.4
2020
840.7
13. Supplier income
Accounting policy
Supplier income comprises fixed price discounts, volume rebates and customer sales support.
Fixed price discounts and volume rebates received and receivable in respect of goods which have been sold are initially deducted from the cost of
inventory and therefore reduce cost of sales in the income statement when the goods are sold. Where goods on which the fixed price discount or
volume rebate has been earned remain in inventory at the year end, the cost of that inventory reflects those discounts and rebates.
The Group receives customer sales support payments that are made entirely at the supplier’s option, that are requested by the Group when a
specific product is about to be sold to a specific customer and for which payment is only received after the sale has been completed.
All customer sales support receipts received and receivable are deducted from cost of sales when the sale to the third party has been completed,
i.e. when the customer sales support payment has been earned.
Supplier income receivable is netted off against trade payables when there is a legally binding arrangement in place and it is management’s
intention to do so, otherwise amounts are included in other receivables in the balance sheet.
Other supplier income relates to customer sales support received in respect of sales of specific products to specific customers which is included in
the income statement when the relevant sale occurs, i.e. when all conditions for it to be earned have been met.
138 Travis Perkins plc Annual Report and Accounts 2021
Supplier income balances included within the Group balance sheet are as follows:
£m
Other receivables
Trade payables
Inventories
Net balance sheet position
2021
84.9
70.6
(42.0)
113.5
2020
171.0
36.0
(91.0)
116.0
14. Trade and other receivables
Accounting policy
Trade and other receivables
The Group’s trade and other receivables at the balance sheet date are comprised principally of amounts receivable from the sale of goods,
amounts due in respect of rebates in relation to unbilled work in progress and sundry prepayments.
Impairment of financial assets
Trade receivables are subject to the expected credit loss model in IFRS 9 – Financial Instruments.
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. To measure the expected credit losses trade receivables have been grouped
based on shared credit risk characteristics and the days past due.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery
include the failure of a debtor to engage in a repayment plan with the Group and the commencement of legal proceedings.
£m
Current:
Trade receivables
Allowance for doubtful debts
Other receivables
Other financial assets – loan notes
Prepayments and accrued income
Trade and other receivables
2021
2020
558.8
(13.7)
545.1
122.3
4.7
34.6
706.7
664.4
(30.6)
633.8
187.9
2.8
68.2
892.7
The Directors consider that the only class of asset containing material credit risk is trade receivables. The average credit term taken for sales of
goods is 57 days (2020: 59 days). No interest is charged on the trade receivable from the date of the invoice until the date the invoice is classified
as overdue according to the trading terms agreed between the Group and the customer. Thereafter, the Group retains the right to charge interest at
4% pa above the clearing bank base rate on the outstanding balance.
Movement in the allowance for doubtful debts
£m
At 1 January
Amounts written off during the year
(Release) / charge in the year
Derecognised on demerger/disposal of the business
At 31 December
2021
30.6
(7.0)
(5.7)
(4.2)
13.7
2020
20.1
(8.9)
19.4
–
30.6
The methodology applied in the calculation of expected credit loss in the year ended 31 December 2020 took into account the risks associated with
the Covid-19 outbreak and resulted in the additional provision. Those judgements have been revised and the additional provision was released
during the year ended 31 December 2021.
O
t
h
e
r
i
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f
o
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m
a
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i
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Travis Perkins plc Annual Report and Accounts 2021
139
Financial statementsGovernanceStrategic report
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Assets and liabilities continued
14. Trade and other receivables continued
Expected credit loss assessment
The following table provides information about the exposure to credit risk and expected credit losses for trade receivables as at 31 December 2021.
£m
Current (not past due)
Days overdue:
1–30
31–60
61–90
91–120
More than 120
Gross carrying
amount
Weighted average
loss rate
Net loss
allowance
Credit
impaired
516.4
17.8
6.8
3.1
0.8
13.9
558.8
0.4%
13.3%
22.1%
45.5%
82.0%
82.9%
(1.5)
(0.9)
(0.8)
(0.6)
(0.3)
(9.6)
(13.7)
No
No
No
No
No
Yes
Loss rates are based on actual credit loss experience over the past five years.
The following table provides information about the exposure to credit risk and expected credit losses for trade receivables as at 31 December 2020.
£m
Current (not past due)
Days overdue:
1–30
31–60
61–90
91–120
More than 120
Gross carrying
amount
Weighted average
loss rate
Loss
allowance
Credit
impaired
609.2
17.5
6.0
3.5
5.7
22.5
664.4
1.0%
12.6%
20.7%
49.9%
90.0%
90.0%
(5.1)
(1.8)
(1.0)
(1.5)
(4.3)
(16.9)
(30.6)
No
No
No
No
No
Yes
15. Provisions
Accounting policy
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation because of a past event, and it is
probable that an outflow of economic benefits will be required to settle the obligation. Provisions are measured at the Directors’ best estimate of the
expenditure required to settle the obligation at the balance sheet dates, and are discounted to present value.
Should a provision ultimately prove to be unnecessary then it is credited back into the income statement. Where the provision was originally
established as an adjusting item, any release is shown as an adjusting credit.
The Group has a number of vacant and partly sublet leased properties. Where necessary a provision has been made for the residual commitments
for rates and other payments after taking into account existing and anticipated subtenant arrangements. The Group recognises provisions for the
cost of reinstating certain Group properties at the end of their lease term, based on the conditions set out in the terms of the individual leases. The
timing of the outflows will match the ends of the relevant leases, which range from two to 10 years.
It is Group policy to self insure using policies with a high excess against claims arising in respect of damage to third party assets, or due to
employers or public liability claims. The nature of insurance claims means they may take some time to be settled. The insurance claims provision
represents management’s best estimate, based upon external advice of the value of outstanding claims against it where the final settlement date is
uncertain, in line with IAS 37.
£m
At 1 January 2020
Charge to income statement
Utilisation of provision
At 1 January 2021
(Release) / charge to income statement
Derecognised following demerger or disposal
Utilisation of provision
At 31 December 2021
Included in current liabilities
Included in non-current liabilities
140 Travis Perkins plc Annual Report and Accounts 2021
Property
21.2
27.4
(6.8)
41.8
(3.3)
(9.0)
(13.6)
15.9
9.1
6.8
15.9
Insurance
32.7
2.1
(3.5)
31.3
4.1
(9.7)
(5.6)
20.1
20.1
–
20.1
Restructuring
14.5
36.3
(44.0)
6.8
(0.8)
(3.1)
(2.9)
–
–
–
–
Total
68.4
65.8
(54.3)
79.9
–
(21.8)
(22.1)
36.0
29.2
6.8
36.0
The restructuring provision relates to the 2020 branch closures and restructuring activities treated as adjusting items in that year. It excludes property-
related provisions and inventory and trade creditor amounts which are separately classified. The 2021 credit to property provisions of £3.3m is
presented after a credit of £4.8m relating to the release of property provisions originally created through adjusting items.
The following table details the Group’s liquidity analysis of its provisions, based on the undiscounted net cash outflows.
£m
2021:
Property
Insurance
2020:
Property
Insurance
Restructuring
0–1 year
1–2 years
2–5 years
5+ years
9.1
20.1
29.2
19.9
31.3
6.8
58.0
0.3
–
0.3
7.1
–
–
7.1
4.4
–
4.4
10.6
–
–
10.6
2.1
–
2.1
4.2
–
–
4.2
Total
15.9
20.1
36.0
41.8
31.3
6.8
79.9
16. Deferred tax
The following are the major deferred tax assets and liabilities recognised by the Group and movements thereon during the current and prior
reporting periods.
£m
(Asset)/liability:
Trading losses
Deferred tax asset
Capital allowances
Trading losses
Revaluation of property
Share-based payments
Provisions
Properties acquired in business combinations
Brand
Pension scheme asset (note 18)
Deferred gains on property disposals
Leases
Deferred tax liability
Net deferred tax
£m
(Asset)/liability:
At 1 Jan
2021
Acquisitions
Disposals and
demerger
Recognised
in income
Recognised
in equity
Recognised in other
comprehensive income
At 31 Dec
2021
–
–
(5.7)
(2.3)
8.5
(8.3)
2.8
4.8
52.5
33.9
28.0
(37.0)
77.2
77.2
–
–
1.5
–
–
–
–
5.0
2.3
–
–
–
8.8
8.8
–
–
1.2
–
–
1.3
1.2
–
(31.2)
–
–
27.5
–
-
(13.9)
(13.9)
5.8
2.3
(0.3)
1.8
0.6
3.6
0.6
4.8
(3.2)
16.0
2.1
–
–
–
–
2.7
1.4
–
–
–
–
–
–
4.1
4.1
–
–
–
–
–
–
–
–
–
34.3
–
–
34.3
34.3
(13.9)
(13.9)
2.8
–
11.2
(5.9)
5.8
10.4
27.2
68.8
32.8
(12.7)
140.4
126.5
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
At 1 Jan 2020
Recognised in income
Recognised in equity
Recognised in other
comprehensive income
At 31 Dec
2020
Capital allowances
Trading losses
Revaluation of property
Share-based payments
Provisions
Properties acquired in business combinations
Brand
Pension scheme asset (note 18)
Deferred gains on property disposals
Leases
Deferred tax
(0.9)
(1.9)
7.6
(9.8)
1.5
4.9
48.4
9.0
27.1
(23.2)
62.7
(4.8)
(0.4)
–
(0.2)
1.3
(0.1)
4.1
2.9
0.9
(13.8)
(10.1)
–
–
0.9
1.7
–
–
–
-
–
–
2.6
–
–
–
–
–
–
–
22.0
–
–
22.0
(5.7)
(2.3)
8.5
(8.3)
2.8
4.8
52.5
33.9
28.0
(37.0)
77.2
In 2021 the Group recognised an additional deferred tax asset of £9.6m in respect of the Toolstation Netherlands business, as the test in IAS 12
– Income Taxes for the recognition of a deferred tax asset is now met. This has been disclosed as an adjusting item (note 3). No deferred tax asset
has been recognised on losses of £39.0m in the Group’s other European Toolstation businesses as there is currently insufficient evidence that
these losses would be utilised. This position will be reviewed annually.
An increase in the UK corporation rate from 19% to 25% (effective 1 April 2023) was substantively enacted on 24 May 2021. This will increase the
company’s future current tax charge accordingly. The deferred tax liability at 31 December 2021 has been calculated based on these rates,
reflecting the expected timing of reversal of the related temporary/timing differences (2020: 19%).
Travis Perkins plc Annual Report and Accounts 2021
141
Financial statementsGovernanceStrategic report
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Assets and liabilities continued
17. Trade payables and other liabilities
Accounting policy
Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs and are measured at amortised cost.
The Directors consider that the carrying amount of trade payables approximates to their fair value. The Group has financial risk management
policies in place to ensure that all payables are paid within the credit time frame.
£m
Trade payables
Other taxation and social security
Other payables
Accruals and deferred income
Trade and other payables
2021
642.0
65.0
88.0
126.1
921.1
2020
892.7
50.1
124.1
237.3
1,304.2
Included in trade payables at 31 December 2021 are amounts of £107.0m (2020: £89.8m) which are due for settlement under supplier financing
arrangements with third-party banks. Suppliers choose to enter into these arrangements which provide access to the option of early settlement of
invoices at interest rates based on Travis Perkins’ credit rating. If suppliers do not elect for early payment, invoices are settled on the date agreed in
the existing payment terms. In some cases, Travis Perkins has agreed extensions to payment terms with suppliers who regularly access the
scheme, with the longest payment terms in place of 93 days, an extension of 31 days.
The total net amount outstanding where terms have been extended at 31 December 2021 was £9.9m (2020: £18.3m). These arrangements do not
provide the Group with a significant benefit of additional financing and have been put in place for the benefit of the Group’s suppliers, providing
them with access to cost-efficient third-party funding. As such outstanding balances are classified as trade payables and form part of the operating
cash flows movement in the Consolidated cash flow statement. There are no significant judgements applied in the calculation of supplier finance
balances.
18. Pension arrangements
The Group has a number of historical defined benefit pension schemes, all of which are closed to new members and future accruals. The Group
operates four final salary schemes being The Travis Perkins Pensions and Dependants’ Benefit Scheme (“the TP DB scheme”), the BSS Defined
Benefit Scheme (“the BSS DB Scheme”), the immaterial Platinum pension scheme and the immaterial BSS Ireland Defined Benefit Scheme. The
reconciliations and disclosures are presented as an aggregation of all schemes as each scheme is subject to similar risk characteristics.
Accounting policy
The cost of providing benefits under defined benefit pension schemes is determined using the projected unit credit method with actuarial
valuations being carried out at the end of each reporting period. Remeasurement comprising actuarial gains and losses, the effects of asset ceilings
and minimum funding payments and the return on scheme assets (excluding interest) are recognised immediately in the balance sheet with a
charge or credit to the statement of comprehensive income. Remeasurement recorded in the statement of comprehensive income is not recycled.
Net interest is calculated by applying a discount rate to the net defined benefit liability or asset. Net interest expense or income is recognised within
finance costs.
a. Expected future cash flows
The Directors have agreed with the BSS DB Scheme’s Trustees and the TP DB Scheme’s Trustees that, following the elimination of the deficits in
these schemes, no further contributions from the Group are currently required. The Group continues to fund the management and administrative
expenses of the BSS DB schemes, whilst the TP DB scheme now funds its management and administrative expenses.
142 Travis Perkins plc Annual Report and Accounts 2021
b. Balance sheet position and movements during the year
The amount included in the balance sheet arising from the Group’s obligations in respect of all of its defined benefit schemes and the movements
during the year:
£m
At 1 January actuarial asset/(deficit)
2021
2020
Gross
assets
Gross
obligations
1,770.8
(1,592.4)
Net
178.4
Gross
assets
Gross
obligations
1,582.0
(1,529.4)
Amounts recognised in income:
Current service costs and administrative expenses
Interest income/(interest cost)
Other movements:
Contributions from sponsoring companies
Foreign exchange
Benefits paid
Amounts recognised in other comprehensive income:
Return on plan assets (excluding amounts included in net interest)
Actuarial (loss)/gain arising from changes in demographic
assumptions
Actuarial gain/(loss) arising from changes in financial assumptions
Actuarial gain arising from experience adjustments
(1.6)
24.4
1.9
(0.5)
(50.6)
(2.2)
–
–
–
(0.3)
(21.9)
–
0.5
50.6
(1.9)
2.5
1.9
–
–
(1.2)
31.2
13.0
0.6
(48.1)
(0.4)
(30.1)
–
(0.5)
48.1
–
(2.2)
193.3
–
193.3
(15.5)
93.5
19.1
(15.5)
93.5
19.1
–
–
–
60.5
(163.5)
22.9
Gross pension asset/(liability) at 31 December
1,742.2
(1,466.4)
275.8
1,770.8
(1,592.4)
Net
52.6
(1.6)
1.1
13.0
0.1
–
60.5
(163.5)
22.9
178.4
The assets valuation of £1,742.2m (2020: £1,770.8m) at 31 December 2021 consists of the TP DB Scheme £1,334.5m (2020: £1,359.7m) and the
BSS DB Scheme £407.7m (2020: £411.1m). The obligation valuation of £1,466.4m (2020: £1,592.4m) consists of the TP DB Scheme £1,115.8m
(2020: £1,214.1m) and the BSS DB Scheme £350.6m (2020: £378.3m).
The actual return on scheme assets of £22.2m (2020: £224.5m) is represented by the interest income and ‘return on plan assets (excluding
amounts included in net interest)’ figures above.
The deferred tax liability of £68.8m (2020: £33.9m) has been recognised at the standard rate of corporation tax and not the 35% rate applicable
for refunds from pension schemes, as this rate best reflects the rate at which the liability will unwind. The pension surplus, net of deferred tax, as at
31 December 2021 is £207.0m (2020: £144.5m). There are no restrictions on the current realisability of the pension surplus.
c. Defined benefit scheme obligations
i. Valuation of scheme obligations
Full actuarial valuations of the TP DB scheme and the BSS DB scheme have been carried out as at 30 September 2020. The IAS 19 valuations
have been based upon the results of the 30 September 2020 valuations, updated to 31 December 2021 by a qualified actuary.
The defined benefit pension schemes expose the Group to actuarial risks such as investment risk, interest rate risk and longevity risk. A summary
of the risks and the management of those risks is given below and continued overleaf.
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Investment risk
Interest risk
Longevity risk
The present value of the defined benefit liabilities of the schemes is calculated using a discount rate predetermined by
reference to high-quality corporate bond yields. If the return on scheme assets is below this rate it may create a plan deficit.
A decrease in corporate bond yields will increase the schemes’ liabilities, but the effect will be partially offset by an increase
in the return on the schemes’ bond and gilt assets.
The present value of the liabilities of the schemes is calculated by reference to the best estimate of mortality of pension
scheme members both during and after their employment. An increase in the life expectancy of the schemes’ members
will increase the schemes’ liabilities.
ii. Major actuarial assumptions
Rate of increase of pensions in payment (post 2006 entitlement)
Rate of increase of pensions in payment 1997–2006
Discount rate
Inflation assumption – RPI
Inflation assumption – CPI
At 31 December 2021
At 31 December 2020
2.05%
3.00%
1.95%
3.10%
2.50%
1.95%
2.70%
1.40%
2.75%
2.15%
Travis Perkins plc Annual Report and Accounts 2021
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Financial statementsGovernanceStrategic report
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Assets and liabilities continued
18. Pension arrangements continued
c. Defined benefit scheme obligations continued
ii. Major actuarial assumptions continued
The yield curve used in setting the discount rate, which includes bonds with an average AA rating and excludes bonds which are sub-sovereign or
issued by universities to reflect the credit risk of the defined benefit schemes. In respect of longevity, the valuation adopts the S3PA year of birth
tables with improvements in life expectancy to continue in the medium term, with base year appropriate to the member’s date of birth.
The weighted average life expectancy of 65-year-old members for the mortality tables used to determine pension liabilities at 31 December 2021
was 21.5 years for men and 23.6 years for women (2020: 21.3 years for men and 23.4 years for women). The mortality assumptions have not
been updated to reflect the potential effects of COVID-19 as a result of the uncertainty of the impact on long-term mortality rates.
iii. Maturity profile of obligations
The weighted average duration of the obligations of the defined benefit pension schemes is 21.1 years, with c.90% of the obligations expected to
mature by 2060 and the benefits to be paid on a broadly straight-line basis over the period to 2060.
iv. Sensitivities
Key estimate over pension assumptions
The Group has chosen to adopt assumptions that the Directors believe are generally in line with comparable companies. If the difference between
actual inflation is greater than assumed, or if long-term interest rates are lower than assumed, or if the average life expectancy of pensioners
increases, then the pension surplus could be materially greater/lower than currently stated in the balance sheet. Where the pension obligation is
included in the balance sheet at the net present value of the minimum funding payments then the impact on the balance sheet of changes in these
assumptions is reduced.
The estimated effects of changing the key assumptions (discount rate, inflation and life expectancy) on the IAS 19 – Employee Benefits (revised
2011) balance sheet position as at 31 December 2021 is given below.
£m
Assumption
Discount rate
Inflation
Longevity
Increase of 0.1%
Decrease of 0.1%
Increase of 0.1%
Decrease of 0.1%
Increase of 1 year
Decrease of 1 year
TP
Schemes
BSS
Schemes
(20)
21
11
(11)
50
49
(6)
6
5
(4)
15
(15)
d. Scheme assets
i. Scheme assets and investment strategy
The assets of the TP DB Scheme and the BSS DB Scheme are held separately from those of the Group in funds under the control of the
schemes’ trustees.
In June 2010, an agreement was reached with the Trustees of the TP DB scheme to fund £34.7m of the funding deficit using a Group-controlled
special purpose vehicle (“SPV”). The pension scheme is entitled to receive the income of the SPV for a period of up to 20 years. This income is
backed by the security of 16 Travis Perkins’ freehold properties. As the SPV is consolidated into the Travis Perkins plc Group accounts, advantage
has been taken of Regulation 7 of The Partnership (Accounts) Regulations 2008 and accounts for the SPV will neither be audited or filed.
The investment strategy for the UK scheme is controlled by the trustee in consultation with the Company. The scheme assets do not include any of
the Group’s own financial instruments. Following a review of the investment strategy, a derisking exercise is currently being undertaken with a
higher proportion of the largest two pension schemes’ assets being invested in gilts and corporate bonds (“liability driven investments”). Currently
the schemes have investments in equity securities, secured finance assets, bonds, debt instruments and real estate. Due to the long-term nature of
the scheme liabilities the trustees of the pension funds previously considered it appropriate that a reasonable portion of the scheme assets should
be invested in equities.
All fair values are provided by the fund managers. Where available, the fair values are quoted prices (eg listed equity, sovereign debt and corporate
bonds). Unlisted investments (eg private equity) are included at values provided by the fund manager in accordance with relevant guidance. Other
significant assets are valued based on observable inputs such as yield curves. The liability driven investments, which comprise fixed interest and
index-linked gilts, futures, interest and inflation rate swaps, repurchase agreements and liquidity funds, are all daily priced and traded.
144 Travis Perkins plc Annual Report and Accounts 2021
ii. Fair value of scheme assets
The major categories and fair values of scheme assets at the end of the reporting period for each category are as follows:
£m
Level 1:
Cash
Level 2:
Equities
Secured finance
Corporate bonds
Diversified growth fund
Liability driven investments
Repurchase agreements
Property funds
Level 3:
SPV asset
At 31 December
2021
At 31 December
2020
4.3
10.1
4.1
235.6
534.1
1.0
1,965.9
(1,037.3)
0.4
34.1
1,742.2
4.4
226.2
542.9
36.9
1,831.4
(1,044.2)
129.0
34.1
1,770.8
e. Defined contribution schemes
The Group operates two defined contribution schemes for all qualifying colleagues. The pension cost, which represents contributions payable by
the Group, amounted to £16.8m (2020: £21.4m)
f. Pension scheme contributions for the year
The total charge to the income statement disclosed in note 4 of £18.7m (2020 re-presented: £14.0m) comprises defined benefit scheme current
service costs of £1.9m (2020: £1.6m) and £16.8m (2020 re-presented: £12.4m) of contributions payable to the defined contribution schemes.
Capital
19. Share capital and reserves
Accounting policy
Equity instruments represent the ordinary share capital of the Group and are recorded at the proceeds received, net of directly attributable
incremental issue costs.
Consideration paid by the Group for its own shares is deducted from total shareholders’ equity. Where such shares vest to colleagues under the terms
of the Group’s share incentive schemes or the Group’s Sharesave schemes or are sold, any consideration received is included in shareholders’ equity.
a. Share capital
Ordinary shares
At 1 January 2020 and 1 January 2021
Share consolidation
At 31 December 2021
Authorised, Issued and fully paid
No.
252,143,923
(27,117,997)
225,025,926
£m
25.2
–
25.2
The Company has one class of ordinary share that carries no right to fixed income. The holders of ordinary shares are entitled to receive dividends as
declared and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
Share consolidation
On 29 April 2021 the Group completed a consolidation of its shares at a ratio of 0.8925 new ordinary shares for each share held at the record time in
order to maintain broad comparability with the Company’s share price before the demerger of Wickes. Each ordinary share has a nominal value of
11.2p. Before the share consolidation each ordinary share had a nominal value of 10.0p.
Share buy-back
Following the disposal of the Plumbing & Heating business on 30 September 2021, the Company announced a special dividend of £78.5m and a
share buyback programme of £170.0m. The Directors’ intention is to extend the share buyback programme in 2022 in order to distribute the full net
proceeds of the sale. The share buyback is taking place within the limitations of the authority granted to the Board at the Company’s annual general
meeting held on 27 April 2021. Whilst the intention was to extend the programme in 2022, the contract for the share buy back arrangement
specifically states that the programme is cancellable, and therefore no liability has been recognised for the remaining shares that were not yet
purchased at 31 December 2021.
A total of 4.6m shares were purchased in 2021, of which 3.5m are held as treasury shares and 1.1m were transferred to the Employee Share Ownership
Trust with further transactions expected in 2022. The shares were acquired at an average price of £15.19 per share, with prices ranging from £14.58 to
£15.76. The total cost of £70.5m, including £0.3m of after-tax transaction costs, was deducted from shareholder’s equity.
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Financial statementsGovernanceStrategic report
Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Capital continued
19. Share capital and reserves continued
b. Own shares
No.
At 1 January
Share consolidation
Shares purchased in share buyback and held as own shares by ESOT
Shares purchased in share buyback and held as treasury shares
Reissued
At 31 December
2021
2020
Treasury shares
ESOT shares
Total
ESOT shares
–
–
–
3,533,419
–
3,533,419
2,879,021
(309,495)
1,100,000
–
(3,162,155)
2,879,021
(309,495)
1,100,000
3,533,419
(3,162,155)
3,944,144
–
–
–
(1,065,123)
507,371
4,040,790
2,879,021
The own shares held by the Employee Share Ownership Trust are to satisfy options under the Group’s share option schemes. None of the own
shares have been allocated to grants of executive options and all rights attaching to the shares are suspended until the shares are reissued.
As at 31 December 2021 the 3.5m of own shares were held as treasury shares with the value of £53.8m, representing 2% of issued share capital. It
is the Group’s intention to cancel those shares during 2022.
Details of all movements in reserves for both the Group and Company are shown in their respective Statement of Changes in Equity.
The cumulative total of goodwill written off directly to reserves for acquisitions from December 1989 to December 1998 is £40.1m. The aggregate
information for the accounting periods prior to this period is not available.
c. Reserves
A description of the nature and purpose of each reserve is given below:
• The share premium represents the amounts above the nominal value received for shares sold
• The merger reserve represents the premium on equity instruments issued as consideration for the acquisition of BSS
• The revaluation reserve represents the revaluation surplus that arose from property revaluations in 1999 and prior years
• The own shares reserve represents the cost of shares purchased in the market and held by the Employee Share Ownership Trust to satisfy
options under the Group’s share option schemes
• Foreign exchange reserve represents the exchange differences recognised on translation of the assets and liabilities of the foreign operations
that have a functional currency different from the Group
• Retained earnings represents cumulative results for the Group
20. Earnings per share
a. Basic and diluted earnings per share
£m
Profit/(loss) attributable to the owners of the parent
– from continuing operations
– from discontinued operations
Weighted average number of shares for the purposes of basic earnings per share
Dilutive effect of share options on potential ordinary shares
Weighted average number of ordinary shares for the purposes of diluted earnings per share
Earnings/(loss) per share
– from continuing operations
– from discontinued operations
– total
Diluted Earnings/(loss) per share
– from continuing operations
– from discontinued operations
– total
2021
240.8
38.1
2020
(re-presented)
(35.6)
13.2
221,766,613
2,967,694
248,566,317
–
234,734,307
248,566,317
103.9p
16.4p
120.3p
102.6p
16.2p
118.8p
(14.3)p
5.3.p
(9.0)p
(14.3)p
5.3p
(9.0)p
The re-presentation within this note is only for the profit / (loss) attributable to the owners of the parent and subsequent calculation of earnings /
(loss) per share. No re-presentation was made with respect to the number of shares following share consolidation.
6,545 share options (2020: 382,770 share options) had an exercise price in excess of the average market value of the shares during the year. As a
result, these share options were excluded from the calculation of diluted earnings per share. Share options that would be anti-dilutive due to the
Group generating a loss have also been excluded from the calculation.
146 Travis Perkins plc Annual Report and Accounts 2021
b. Adjusted earnings per share
Adjusted earnings per share is calculated by excluding the effect of adjusting items and amortisation of acquired intangible assets from earnings.
£m
Earnings for the purposes of earnings per share
Adjusting items
Amortisation of acquired intangible assets
Tax on adjusting items
Adjusting deferred tax
Tax on amortisation of acquired intangible assets
Earnings for adjusted earnings per share
Adjusted earnings per share
Adjusted diluted earnings per share
2021
240.8
(6.8)
11.1
1.6
4.7
(2.7)
248.7
107.3p
105.9p
2020
(re-presented)
(35.6)
92.7
8.6
(20.9)
9.0
(1.6)
52.2
21.0p
21.0p
21. Dividends
Accounting policy
Dividends proposed by the Board of Directors and unpaid at the period end are not recognised in the financial statements until they have been
approved by shareholders at the Annual General Meeting.
Amounts were recognised in the financial statements as distributions to equity shareholders as follows:
£m
Final dividend for the year ended 31 December 2020 of nil pence (2020: nil pence) per ordinary share
Interim dividend for the year ended 31 December 2021 of 12.0 pence (2020: nil pence) per ordinary share
Special dividend of 35.0 pence (2020: nil pence) per ordinary share
Total dividend recognised during the year
2021
–
26.9
78.5
105.4
2020
–
–
–
The Directors are recommending a final dividend of 26.0p in respect of the year ended 31 December 2021. The anticipated cash payment in
respect of the proposed final dividend is £58.5m (2020: £nil).
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Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Capital continued
22. Borrowings
Accounting policy
Interest-bearing bank loans and overdrafts, loan notes and other loans are recognised in the balance sheet at amortised cost. Finance charges
associated with arranging non-equity funding are recognised in the income statement over the life of the facility. All other borrowing costs are
recognised in the income statement in accordance with the effective interest rate method.
A summary of the Group’s objectives, policies, procedures and strategies with regard to financial instruments and capital management can be
found in the Strategic report on pages 38 to 39. At 31 December 2021 all borrowings were denominated in sterling (2020: sterling).
a. Summary
£m
Liability to pension scheme
Sterling bonds
Finance charges netted off borrowings
Current liabilities
Non-current liabilities
b. Analysis of other borrowings
£m
Borrowings repayable:
On demand or within one year
More than one year, but not more than five years
More than five years
Gross borrowings
Unamortised fees
c. Facilities
At 31 December 2021, the following facilities were available:
£m
Drawn facilities:
£250m sterling bond (2020)
£300m sterling bond
Undrawn facilities:
Five year committed revolving credit facility
Bank overdrafts
2021
28.5
550.0
(3.3)
575.2
–
575.2
575.2
2020
30.1
550.0
(4.4)
575.7
–
575.7
575.7
2021
2020
–
550.0
28.5
578.5
(3.3)
575.2
–
550.0
30.1
580.1
(4.4)
575.7
2021
2020
250.0
300.0
550.0
400.0
15.0
415.0
250.0
300.0
550.0
400.0
30.0
430.0
The Group’s £400m banking facility with a syndicate of banks was extended in 2020, with £54m maturing in January 2024 and the remaining
£346m maturing in April 2025. The disclosures in note 22(c) do not include leases or the effect of finance charges netted off bank debt.
In November 2020, the Group raised £250m via a long five-year public bond issuance at a coupon of 3.75%.
148 Travis Perkins plc Annual Report and Accounts 2021
d. Interest
The weighted average interest rates received on assets and paid on liabilities were as follows:
%
Assets:
Short-term deposits
Liabilities:
£250m sterling bond (2026)
£300m sterling bond
Bank loans and overdrafts
2021
2020
0.1
3.8
4.5
1.9
0.3
3.8
4.5
1.2
In respect of income earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates at the
balance sheet date.
£m
Assets:
Short-term deposits
Liabilities:
£250m sterling bond (2026)
£300m sterling bond
2021
Effective
interest rate
0.2%
3.8%
4.5%
2020
Effective
interest rate
0.1%
3.8%
4.5%
£m
455.0
250.0
300.0
550.0
£m
435.0
250.0
300.0
550.0
e. Fair values
For both the Group and the Company the fair values of financial assets and liabilities have been determined based on the market prices at
31 December. There were no material differences between book and fair values on this basis and therefore no further information is disclosed.
Details of the fair values of derivatives are given in note 27.
f. Guarantees and security
There are cross guarantees on the overdrafts between Group companies.
Travis Perkins Trading Company Limited, Travis Perkins (Properties) Limited, TP Property Company Limited, Keyline Civils Specialist Limited,
Toolstation Limited, CCF Limited and The BSS Group Limited are guarantors of the following facilities advanced to Travis Perkins plc:
• £250m sterling bond
• £300m sterling bond
• £400m revolving credit facility
• Currency derivatives (note 27)
The Group companies have entered into other guarantee and counter-indemnity arrangements in respect of guarantees issued in favour of Group
companies by several banks amounting to approximately £32m (2020: £25m).
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Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Capital continued
23. Net debt
Accounting policy
Cash and cash equivalents comprise cash balances and cash deposits with an original maturity of three months or less held by the Group and
Company, net of overdrafts. The carrying amount of these assets approximates to their fair value.
a. Movement in net debt
£m
At 1 January 2020
Additions to leases
Disposals of leases
Cash flow
Finance charges movement
Amortisation of swap cancellation receipt
Discount unwind on liability to pension scheme
Discount unwind on lease liabilities
At 1 January 2021
Additions to leases
Disposals of leases
Debt taken on following acquisition
Cash flow
Derecognition of lease liabilities on the demerger and
disposal of subsidiaries
Finance charges movement
Discount unwind on liability to pension scheme
Discount unwind on lease liabilities
31 December 2021
b. Covenant net debt
£m
Cash and cash equivalents
Non-current interest-bearing loans and borrowings
Non-current lease liabilities (note 11a)
Current lease liabilities (note 11a)
Net debt
Less: Liability to pension scheme
Less: Lease liabilities
Covenant net debt
Cash and cash
equivalents
(207.9)
–
–
(297.7)
–
–
–
–
(505.6)
–
–
–
45.8
–
–
–
–
(459.8)
Leases
1,412.3
99.3
(21.4)
(222.1)
–
–
–
59.0
1,327.1
92.4
(13.6)
–
(96.7)
(841.1)
–
–
21.1
489.2
Term loan,
revolving credit
facility and loan
notes
Sterling bonds
Liability to
pension scheme
(2.1)
–
–
(0.5)
0.6
–
–
–
(2.0)
–
–
12.0
(12.5)
–
1.0
–
–
553.9
–
–
–
(0.5)
(5.8)
–
–
547.6
–
–
–
–
–
0.6
–
–
31.5
–
–
(3.4)
–
–
2.0
–
30.1
–
–
–
(3.6)
–
–
2.0
–
(1.5)
548.2
28.5
2021
459.8
(575.2)
(414.7)
(74.5)
(604.6)
28.5
489.2
(86.9)
Cash and cash equivalents comprises short term deposits of £435.0m (2020: £455.0m) and cash of £24.8m (2020: £50.6m).
Total
1,787.7
99.3
(21.4)
(523.7)
0.1
(5.8)
2.0
59.0
1,397.2
92.4
(13.6)
12.0
(67.0)
(841.1)
1.6
2.0
21.1
604.6
2020
505.6
(575.7)
(1,168.3)
(158.8)
(1,397.2)
30.1
1,327.1
(40.0)
24. Free cash flow
£m
Adjusted operating profit
Less: Profit on disposal of properties
Adjusted operating profit excluding property profit
Share-based payments
Other net interest paid
Interest on lease liabilities
Income tax paid
Movement on working capital
Depreciation of property, plant and equipment
Amortisation and impairment of internally-generated intangibles
Capital expenditure excluding freehold purchase
Disposal of plant and equipment
Free cash flow
150 Travis Perkins plc Annual Report and Accounts 2021
2021
352.8
(48.9)
303.9
19.1
(13.7)
(21.1)
(59.9)
(151.8)
69.2
9.7
(95.0)
4.4
64.8
2020
(re-presented)
128.3
(9.2)
119.1
12.2
(28.3)
(21.3)
(27.6)
197.4
60.0
11.5
(87.1)
5.4
241.3
Risk
25. Net debt to adjusted EBITDA
£m
Operating profit
Depreciation and amortisation
EBITDA
Adjusting operating items (note 3)
Share of associates’ results
Adjusted EBITDA
Net debt (note 23b)
Net debt to adjusted EBITDA
Memo: Net debt excluding discontinued operations to adjusted EBITDA
26. Return on capital ratios
Group return on capital employed is calculated as follows:
£m
Operating profit
Amortisation of acquired intangible assets
Adjusting items (Note 3)
Adjusted operating profit
Opening net assets
Net pension surplus
Net debt
Less: net assets of discontinued operations
Less: net borrowings of discontinued operations
Opening capital employed
Closing net assets
Net pension surplus
Net debt
Less: net assets of discontinued operations
Less: net borrowings of discontinued operations
Closing capital employed
Average capital employed
Group return on capital employed is calculated as follows:
£m
Adjusted operating profit
Average capital employed in continuing operations
Return on capital employed
2021
348.5
170.0
518.5
(6.8)
–
511.7
604.6
1.2x
1.2x
2021
348.5
11.1
(6.8)
352.8
2,713.8
(144.5)
1,397.2
(747.7)
(842.1)
2,376.7
2,237.8
(207.0)
604.6
–
–
2,635.4
2020
(re-presented)
27.0
158.1
185.1
92.7
0.1
277.9
1,397.2
5.0x
2.0x
2020
(re-presented)
27.0
8.6
92.7
128.3
2,587.1
(43.7)
1,787.7
(902.3)
(918.7)
2,510.1
2,713.8
(144.5)
1,397.2
(747.7)
(842.1)
2,376.7
2,506.1
2,443.4
2021
352.8
2,506.1
14.1%
2020
(re-presented)
128.3
2,443.4
5.3%
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Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Risk continued
27. Financial instruments
Accounting policy
Investments and other financial assets classification
The Group classifies its financial assets in the following measurement categories:
• Those to be measured subsequently at fair value (either through Other Comprehensive Income ‘‘FVOCI’’, or through profit or loss “FVTPL”)
• Those to be measured at amortised cost.
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
changes.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at 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.
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:
• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and
interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest
rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in finance income or finance costs,
together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the income statement.
• FVTPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVTPL. A gain or loss on a debt instrument that is
subsequently measured at FVTPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises.
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 when the Group’s right to receive
payments is established.
Changes in the fair value of financial assets at FVTPL are recognised in finance income or finance costs in the income statement 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.
Derivative financial instruments
The Group uses derivative financial instruments to hedge its exposure to interest rate and foreign exchange risks arising from financing activities.
The Group does not enter into speculative financial instruments. In accordance with its treasury policy, the Group does not hold or issue derivative
financial instruments for derivative trading purposes. Derivative financial instruments are stated at fair value. The fair value of derivative financial
instruments is the estimated amount the Group would receive or pay to transfer to a market participant the derivative at the balance sheet date,
taking into account current interest and exchange rates and the current creditworthiness of the counterparties.
Foreign currency forward contracts are marked-to-market at the balance sheet date, with any gains or losses being taken through the
income statement. Derivatives embedded in commercial contracts are treated as separate derivatives when their risks and characteristics are not
closely related to those of the underlying contracts, with unrealised gains or losses being reported in the income statement.
152 Travis Perkins plc Annual Report and Accounts 2021
a. The carrying value of categories of financial instruments
£m
2021
2020
Financial assets:
Mandatorily at FVTPL
Loans and receivables (including cash and cash equivalents) at amortised cost
Designated instrument-by-instrument as either FVTPL or FVOCI
Financial liabilities:
Mandatorily at FVTPL
Borrowings (note 22a)
Trade and other payables at amortised cost (note 17)
0.2
1,131.9
–
1,132.1
–
575.2
730.0
1,305.2
2.8
1,327.3
4.7
1,334.8
1.6
575.7
1,016.8
1,594.1
Loans and receivables exclude prepayments of £34.6m (2020: £68.2m). Trade and other payables exclude taxation and social security and
accruals and deferred income totalling £191.1m (2020: £287.4m). The carrying amount of financial assets recorded in the financial statements,
which is net of impairment losses, represents the Group’s maximum exposure to credit risk. The Group has considered the impact of credit risk on
its financial instruments and because the counterparties are banks with strong credit ratings considers its impact to be immaterial. The issuer credit
ratings of the banks where the Group’s deposits are held ranges from A to A+ (S&P), A2 to Aa3 (Moody’s), and A- to A+ (Fitch)
b. Fair value of financial instruments
Financial assets and financial liabilities designated as FVTPL comprise foreign currency forward contracts and are measured using quoted forward
exchange rates.
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:
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset
or liability either directly (ie as prices) or indirectly (ie derived from prices)
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on
observable market data (unobservable inputs)
There were no transfers between levels during the year.
£m
Included in assets:
Level 1: Foreign currency forward contracts at fair value through profit and loss
Included in liabilities:
Level 2: Foreign currency forward contracts at fair value through profit and loss
2021
2020
0.2
–
–
1.6
c. Interest risk management
The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed by the
Group by maintaining an appropriate mix between fixed and floating rate borrowings and by the use of interest rate swap contracts and forward
interest rate contracts when appropriate. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite,
ensuring optimal hedging strategies are applied, by either positioning the balance sheet or protecting interest expense through different interest rate
cycles. At 31 December 2021 no interest rate risks were hedged (2020: none).
d. Currency forward contracts
The Group acquires goods for sale from overseas, which when not denominated in sterling are paid for principally in US dollars and euros. The
Group has entered into forward foreign exchange contracts (all of which are less than one year in duration) to buy US dollars and euros to hedge the
exchange rate risk arising from these anticipated future purchases. At the balance sheet date the total notional value of contracts to which the
Group was committed was EUR11.0m and US$20.5m (2020: US$85.0m). The fair value of these derivatives was £0.2m (2020: £1.6m liability).
These contracts are not designated cash flow hedges and accordingly the fair value movement has been reflected in the income statement.
e. Interest rate sensitivity analysis
A sensitivity analysis has been determined based on the exposure to interest rates for both derivatives and non-derivative financial instruments at the
balance sheet date. For floating rate liabilities, the analysis is prepared assuming that the amount of liability outstanding at the balance sheet date was
outstanding for the whole year. A 1.0% increase or decrease is used when reporting interest rate risk internally to key management personnel.
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Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Risk continued
27. Financial instruments continued
At 31 December 2021 the Group had no floating rate liabilities. There was £435m on short-term deposit at 31 December 2021 (2020: £455m).
A 1.0% increase/decrease in interest rates, with all other variables held constant, would have the following impact on:
• Profit before taxation for the year ended 31 December 2021 would have increased/decreased by £4.4m (2020: increased/decreased by £4.6m)
due to the short-term deposits
• Net equity would have increased/decreased by £3.5m (2020: increased/decreased by £3.7m)
f. Liquidity analysis
The following table details the Group’s liquidity analysis for its derivative financial instruments and other financial liabilities. The table has been
drawn up based on the undiscounted net cash flows on the derivative instruments that settle on a net basis and the undiscounted gross cash flows
on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed has been determined
by reference to the projected interest and foreign currency rates as illustrated by the yield curves existing at the reporting date.
2021
£m
0–1 year
1–2 years
2–5 years
5+ years
Total gross settled: foreign exchange forward contracts
Total derivative financial instruments
Net settled:
Borrowings
Trade and other payables at amortised cost (note 27a)
Leases (note 11a)
Total financial instruments
(25.2)
(25.2)
–
(730.0)
(93.5)
(848.7)
–
–
–
–
(151.5)
(151.5)
£m
0–1 year
1–2 years
Total gross settled: foreign exchange forward contracts
Total derivative financial instruments
Net settled:
Borrowings
Trade and other payables at amortised cost (note 27a)
Finance leases
Total financial instruments
(64.7)
(64.7)
–
(1,016.8)
(211.1)
(1,292.6)
–
–
–
–
(200.9)
(200.9)
–
–
(550.0)
–
(119.4)
(669.4)
2020
2–5 years
–
–
(550.0)
–
(499.2)
(1,049.2)
–
–
(28.5)
–
(247.0)
(275.5)
5+ years
–
–
(30.1)
–
(754.5)
(784.6)
Total
(25.2)
(25.2)
(578.5)
(730.0)
(611.4)
(1,945.1)
Total
(64.7)
(64.7)
(580.1)
(1,016.8)
(1,665.7)
(3,327.3)
28. Impairment
Accounting policy
Impairment of tangible and intangible assets
The carrying amounts of the Group’s tangible and intangible assets with a definite useful life are reviewed at each balance sheet date to determine
whether there is any indication of impairment to their value. If such an indication exists, the asset’s recoverable amount is estimated and compared
to its carrying value. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable
amount of the CGU to which the asset belongs. The recoverable amount of an asset is the greater of its fair value less disposal cost and its
value-in-use (the present value of the future cash flows that the asset is expected to generate). In determining value in use the present value of
future cash flows is discounted using a pre-tax discount rate that reflects current market assessments of the time value-of-money in relation to the
period of the investment and the risks specific to the asset concerned.
Where the carrying value exceeds the recoverable amount a provision for the impairment loss is established with a charge being made to the
income statement. When the reasons for a write down no longer exist the write down is reversed in the income statement up to the net book value
that the relevant asset would have had if it had not been written down and if it had been depreciated.
For intangible assets that have an indefinite useful life the recoverable amount is estimated on an annual basis.
Measuring recoverable amounts
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 CGU groupings that
are not reflected in the cash flow projections. In developing these assumptions, management has considered the potential impacts of climate risks, as
set out in the ‘Statement of principal risks and uncertainties’ and the Group’s planned responses to climate change, per the ‘Sustainability report’.
154 Travis Perkins plc Annual Report and Accounts 2021
At the end of the financial year the recoverable amount of goodwill and intangible assets with indefinite useful lives in all segments was in excess of
their book value. In the absence of a binding agreement to sell the assets and active reference market on which fair value can be determined, the
recoverable amount of the goodwill and intangible assets with indefinite useful lives was determined according to value-in-use. The value-in-use
calculations require the use of assumptions.
Key assumptions
The key financial assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the key assumptions represent
management’s assessment of current market conditions and future trends and have been based on historical data from both external and internal sources.
Pre-tax discount rate
Long-term growth rate
2021
8.9%-10.2%
1.7%
2020
8.2-11.8%
1.5%
Management determined the values assigned to these financial assumptions as follows:
• Pre-tax discount rates: these are calculated by reference to the weighted average cost of capital (“WACC”) of the Group and reflect specific risks
relating to the Group’s industries and the countries in which the Group operates. The pre-tax discount rate is adjusted for risks not adjusted for in
the cash flow forecasts, including risks related to the size and industry of each CGU.
• Long-term growth rate: This is the weighted average growth rate used to extrapolate cash flows beyond the budget period. This represents the
forecast GDP growth for the final year considered in the Office for Budget Responsibility’s most recent Economic and Fiscal Outlook report.
Cash flow forecasts are derived from the most recent Board-approved strategic plans. The key operating assumptions used in the estimation of
future cash flows are:
• Sales market volume growth on which the approved corporate plans are based are derived from a variety of sources including construction and
consumer outlook reports, current and forecast housing market transaction numbers and mortgage approval levels. The Directors consider this to be
the principal operating assumption as it determines management’s approach to the interlinked factors underlying the operating margin percentage.
• Operating margin percentage is forecast in the context of the sales market volume assumptions and is based on historical experience of
operating margins, adjusted for the impact of changes to product costs and cost-saving initiatives.
Cash flows beyond the corporate plan period (2025 and beyond) have been determined using the long term growth rate.
Impairment charge
At the end of 2021 financial year the recoverable amount of goodwill and intangible assets with indefinite useful lives in all segments was in excess
of their book value and therefore no impairment has been recognised. The impairment reviews have shown that none of the CGUs were sensitive
to changes in the assumptions used in the impairment review.
29. Capital commitments
£m
Contracted for but not provided in the accounts
30. Investments
£m
Equity investments designated as FVTPL:
Investment in property entity
Shares held in invested entities
Loans receivable at amortised cost:
Loans to property entities
Loans to invested entities
2021
51.9
2020
39.2
2021
2020
–
–
–
–
–
1.2
3.5
0.8
3.7
9.2
During the year the property entity investment, representing a minority holding in a property-owning entity that acquired assets from the Group in
2006 and 2015, was liquidated following the distribution of its assets. Loans to invested entities were derecognised, following the acquisition of
Staircraft business. On 30 December 2021, the Group’s 34% shareholding in The Mosaic Tile Company Limited was sold for cash consideration of
£1.0m and £3.1m of vendor loan notes.
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Notes to the consolidated financial statements continued
For the year ended 31 December 2021
Group structure
31. Business combinations and disposals
Accounting policy
All business combinations are accounted for using the acquisition method. The consideration transferred for the acquisition of a subsidiary
comprises the:
• Fair values of the assets transferred
• Liabilities incurred to the former owners of the acquired business
• Equity interests issued by the Group
• Fair value of any asset or liability resulting from a contingent consideration arrangement
• Fair value of any pre-existing equity interest in the subsidiary
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 – Business Combinations
are recognised at their fair value at the acquisition date except that:
• Deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance
with IAS 12 – Income Taxes and IAS 19 – Employee Benefits respectively
• Liabilities or equity instruments related to the replacement by the Group of an acquiree’s share-based payment awards are measured in
accordance with IFRS 2 – Share-based Payments
The excess of the consideration transferred, amount of any non-controlling interest in the acquired entity, and acquisition-date fair value of any
previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill.
The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the
non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Acquisition-related costs are expensed as incurred.
Where a business combination is achieved in stages, the Group’s previously held interest in the acquired entity is remeasured to fair value at the
acquisition date and the resulting gain or loss, if any, is recognised in the income statement.
Liabilities for contingent consideration are classified as fair value through profit and loss.
a. Demerger of Wickes
On 27 April 2021 Wickes business was demerged, as described in note 8. As a result of this transaction, £455.2m of goodwill and £162.5m of
intangible fixed assets were derecognised by the Group.
b. Disposal of Plumbing & Heating
On 30 September 2021 the Group sold the Plumbing & Heating distribution business to an affiliate of H.I.G. Capital, as described in note 8. As a
result of this transaction, £67.5m of goodwill was derecognised by the Group.
c. Acquisition of Staircraft business
On 26 October 2021 the Group acquired an additional 85% of the ordinary share capital of P. H. Properties Limited (“Staircraft”) for consideration
of £48.0m, giving the Group a 100% equity share of the business. Staircraft is a market-leading business that provides integrated stair, floor and
door solutions. This acquisition expands the Group’s customer proposition by adding digital component design, timber engineering and
production capability.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Cash consideration paid
Financial liabilities assumed from the seller
Settlement of pre-existing loans
Fair value of pre-existing equity investments
Total consideration
£m
38.2
0.8
2.3
6.7
48.0
156 Travis Perkins plc Annual Report and Accounts 2021
Fair values ascribed to the identifiable assets and liabilities acquired and the goodwill recognised are:
Property, plant and equipment (note 10)
Intangibles
Intangible assets – R&D (note 9)
Intangible assets – customer relationships (note 9)
Inventory
Trade and other receivables
Cash
Deferred tax liability (note 16)
Trade and other payables
Provisions
Loans
Net identifiable assets acquired
Goodwill (note 9)
Net assets acquired
The goodwill recognised is principally made up of the value of the assembled workforce. It will not be deductible for tax purposes.
Outflow of cash to acquire subsidiary, net of cash acquired:
Cash consideration
Less: cash acquired
Net outflow of cash – investing activities
£m
27.6
0.5
2.0
7.4
9.3
9.1
5.9
(8.8)
(13.5)
(1.0)
(12.0)
26.5
21.5
48.0
£m
38.2
(5.9)
32.3
Revenue and profit contribution
In 2021 the acquired business contributed revenue of £10.2m and a net loss of £0.3m to the Group results. If the acquisition had occurred on
1 January 2021, the Group’s revenue for the year ended 31 December 2021 would have been £49.4m higher and the Group’s profit for the year
would have been £3.9m higher.
These amounts have been calculated using the subsidiary’s results and adjusting them for:
• differences in the accounting policies between the Group and Staircraft, and
•
the additional depreciation and amortisation that would have been charged assuming the fair value adjustments to property,
plant and equipment and intangible assets had applied from 1 January 2021, together with the consequential tax effects.
Acquisition-related costs
Acquisition-related costs of £0.2m are included in administrative expenses in the statement of profit or loss and in operating cash flows in the
statement of cash flows.
d. 2020 acquisitions and disposals
On 31 January 2020, the Group sold the Primaflow F&P wholesale business for cash consideration of £50.1m. Total net assets sold were £48.3m
generating profit on disposal of £1.8m. As a result of this transaction, £2.9m of goodwill was derecognised by the Group. On 30 September 2020,
the Group sold Tile Giant Limited for a total consideration of £6.1m generating profit on disposal of £1.4m. Total consideration consisted of cash
consideration of £3.3m and loan notes of £2.8m.
On 30 October 2020, the Group acquired an additional 10% of the issued share capital of The Underfloor Heating Store Limited for cash
consideration of £6.0m, resulting in the Group controlling 100% of the issued share capital. On 17 December 2020, the Group acquired an
additional 10% of the issued share capital of TFS Holdings Limited for consideration of £1.9m, resulting in the Group controlling 100% of the issued
share capital.
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Notes to the consolidated financial statements continued
For the year ended 31 December 2021
People
32. Staff costs
a. Average number of persons employed
The average monthly number of persons employed (including Executive Directors):
No.
Sales and distribution
Administration
2021
17,415
1,418
18,833
2020
(re-presented)
16,249
1,263
17,512
The average monthly number of persons employed (including Executive Directors) in 2021 including the discontinued operations was 24,136
(2020: 29,288).
b. Aggregate remuneration
£m
Staff costs – wages and salaries
Staff costs – social security costs
Staff costs – other pension costs (note 18)
Share-based payments (note 33)
2021
544.5
48.6
18.7
19.1
630.9
2020
(re-presented)
443.5
43.7
18.4
12.5
518.1
The total staff costs including the discontinued operations were £793.0m (2020: £839.8m).
Director’s remuneration, including pension contributions and Long Term Incentive (LTI) plan awards, is set out in the Single Total Figure of
Remuneration table in the Directors’ Remuneration report on page 97.
The total amounts received or receivable by directors under long term incentive schemes in respect of qualifying service in the year is £278,000
(2020: £275,000). The aggregate of gains made by the directors in the year on the exercise of share options equated to £nil (2020: £8,000).
Details with respect to share options exercised in the year are set out on page 99.
33. Share-based payments
Accounting policy
The Group issues equity-settled share-based payments to colleagues (long-term incentives, executive share options and Save As You Earn). These
payments are measured at fair value at the date of grant using the Black Scholes option-pricing model taking into account the terms and conditions
upon which the options were granted. The cost of equity-settled awards is recognised on a straight-line basis over the vesting period, based on the
Group’s estimate of the number of shares that will eventually vest.
a. Fair value of options
The Black-Scholes option-pricing model is used to calculate the fair value of the options and the amount to be expensed. The probability of the
performance conditions being achieved was included in the fair-value calculations. The inputs into the model for options granted in the year
expressed as weighted averages are as follows:
£m
Share price at grant date (pence)
Option exercise price (pence)
Volatility (%)
Option life (years)
Risk-free interest rate (%)
Expected dividends as a dividend yield (%)
2021
SAYE Nil price options
1,518.5
1,411.0
44.3%
3.1
0.5%
1.3%
1,610.6
–
45.7%
2.1
0.1%
1.3%
Executive
options
1,148.5
1,143.5
42.5%
2.2
(0.1%)
2.5%
2020
SAYE
1,204.0
898.0
40.7%
3.9
(0.0%)
2.5%
Nil price
options
1,110.8
–
42.5%
2.2
(0.1%)
2.5%
Volatility is based on historic share prices over a period equal to the vesting period. Option life used in the model has been based on options being
exercised in accordance with historical patterns. For executive share options the vesting period is three years.
If options remain unexercised after a period of ten years from the date of grant, these options expire. Options are forfeited if the colleague leaves
the Group before options vest. SAYE options vest after three or five years and expire three and a half or five and a half years after the date of grant.
158 Travis Perkins plc Annual Report and Accounts 2021
The risk-free interest rate of return is the yield on zero-coupon UK Government bonds on a term consistent with the vesting period. Dividends used
are based on actual dividends where data is known and future dividends estimated using a dividend cover of three times (within the Board’s
target range).
The expected life of options used in the model has been adjusted, based upon management’s best estimate, for the effect of non-transferability,
exercise restrictions and behavioural considerations.
b. Income statement charge and shares granted
A description of the share schemes operated by the Group is contained in the remuneration report on pages 94 to 100. The estimated fair values of
the shares under option granted under the Group’s share schemes in 2021 are as follows:
Share scheme
Executive Retention Award (nil-price options)
Executive Bridging Award (nil-price options)
Performance Share Plan (nil-price options)
Restricted Share Plan (nil-price options)
Save As You Earn – Sterling
Save As You Earn – Euro
Grant date
20 January 2021
12 February 2021
19 February 2021
14 June 2021
5 October 2021
5 October 2021
Fair value for
the Group
£m
0.2
0.3
0.2
7.5
4.9
0.4
The Group charged £23.2m (2020: £15.6m) to the income statement in respect of equity-settled share-based payment transactions, of which
£19.1m related to continuing operations and £4.1m related to discontinued operations.
c. Share options for the Group
The number and weighted average exercise price of share options is as follows:
In thousands of options
Outstanding at the beginning of the year
Forfeited during the year
Exercised during the year
Granted during the year
Outstanding at the end of the year
Exercisable at the end of the year
2021
Number
of options
6,233
(1,303)
(1,808)
1,064
4,185
326
The Group
Number
of nil price
options
Weighted
average
exercise price
(pence)
4,265
(541)
(1,255)
529
2,997
51
1,092
1,081
1,167
908
947
1,563
Weighted
average
exercise
price (pence)
947
969
955
1,411
1,054
1,579
2020
Number
of options
4,356
(874)
(554)
3,304
6,233
225
Number
of nil price
options
3,597
(429)
(454)
1,550
4,265
304
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Details of the options outstanding at 31 December 2021 are as follows:
Range of exercise prices (pence)
Weighted average exercise price (pence)
Number of shares (thousands)
Weighted average expected remaining life (years)
Weighted average contractual remaining life (years)
Executive
options
2021
SAYE
743-1,958 898-1,616
1,042
3,953
2.6
2.7
1,183
221
0.8
8.3
The Group
Nil price
options
Executive
options
2020
SAYE
– 743-1,958 898-1,616
926
–
5,798
3,127
2.3
1.0
2.4
8.4
1,298
347
1.4
8.3
Nil price
options
–
–
4,373
1.2
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Travis Perkins plc Annual Report and Accounts 2021
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Notes to the consolidated financial statements continued
For the year ended 31 December 2021
People continued
33. Share-based payments continued
d. Impact of vesting and exercise
If all 0.2m outstanding executive options vest and then are exercised on the date of vesting, or in the case of SAYE all 3.6m shares are acquired on
the first possible day, 3.8m of shares will be issued for a consideration of £40.5m in the years below:
Options
SAYE
2022
2023
2024
2025
2026
No. m
0.1
0.1
£m
1.3
0.7
No. m
£m
No. m
0.1
2.1
1.4
18.6
-
0.9
£m
-
13.1
No. m
-
0.4
£m
-
3.7
No. m
-
0.1
£m
-
1.7
The table above shows theoretical amounts. For the Company to receive the cash indicated in the periods shown, the following must occur:
• All performance conditions on executive share options must be fully met
• Options must be exercised on the day they vest (option holders generally have a seven year period post vesting to exercise the option)
• The share price at the exercise date for SAYE options must exceed the exercise price and every holder must exercise
• All option/SAYE holders must remain with the Company, or leave on good terms
If none of the requirements are met then the Company will receive no consideration.
34. Key management personnel
The remuneration of the key management personnel of the Group is set out below in aggregate for each of the categories specified in IAS 24 –
Related Party Disclosures.
£m
Short-term employee benefits
Post-employment benefits
Share-based payments
2021
10.9
0.4
11.5
22.8
2020
11.3
0.4
7.8
19.5
35. Related party transactions
The Group has a related party relationship with its subsidiaries, its Directors and with its pension schemes (note 18). Transactions between Group
companies, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Other
36. Impact of new standards and interpretations
A number of new or amended standards became applicable for the current reporting period and as a result the Group has applied the
following standards:
• Covid-19 Related rent concessions (Amendments to IFRS 16)
•
Interest Rate Benchmark Reform; Phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
The above requirements did not have a material impact on the Group and have been adopted without restating comparatives.
IFRS 17 – Insurance Contracts
At the date of the approval of these financial statements, the following standards and interpretations, which have not been applied in these financial
statements, were in issue, but not yet effective:
•
• Property, Plant and Equipment – proceeds before intended use (Amendments to IAS 16)
• Reference to the Conceptual Framework (Amendments to IFRS 3)
• Onerous Contracts – cost of fulfilling a contract (Amendments to IAS 37)
• Annual improvements to IFRS Standards 2018-2020
• Classification of liabilities as current or con-current (Amendments to IAS1)
• Disclosure of accounting policies (Amendments to IAS 1 and IFRS Practice Statement 2)
• Definition of accounting estimates (Amendments to IAS 8)
• Deferred tax related to assets and liabilities arising from a single transaction (Amendments to IAS 12)
Based on the initial assessment, the Directors anticipate that adoption of these standards and interpretations in future periods will not have a
material impact on the financial statements of the Group.
160 Travis Perkins plc Annual Report and Accounts 2021
Company balance sheet
As at 31 December 2021
£m
Assets
Non-current assets
Tangible assets
Investment in subsidiaries
Investments
Deferred tax asset
Total non-current assets
Current assets
Debtors
Derivative financial instruments
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Capital and reserves
Issued capital
Share premium account
Merger reserve
Own shares
Accumulated profits
Total equity
Non-current liabilities
Interest-bearing loans and borrowings
Amounts due to subsidiaries
Total non-current liabilities
Current liabilities
Derivative financial instruments
Amounts due to subsidiaries
Other creditors
Total current liabilities
Total liabilities
Total equity and liabilities
Notes
2021
2020
2
3
4
5
9
6
7
8
9
8
10
0.2
2,008.9
–
3.1
2,012.2
981.5
0.2
440.4
1,422.1
3,434.3
25.2
545.6
326.5
(61.4)
1,373.2
2,209.1
546.7
642.0
1,188.7
–
13.1
23.4
36.5
1,225.2
3,434.3
0.2
2,726.9
6.7
4.5
2,738.3
1,317.6
–
461.1
1,778.7
4,517.0
25.2
544.3
326.5
(39.5)
2,191.6
3,048.1
545.6
744.7
1,290.3
1.6
160.0
17.0
178.6
1,468.9
4,517.0
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
The Company’s loss for the year was £24.0m (2020: Profit for the year £1,253.4m).
The financial statements of Travis Perkins plc, registered number 824821, were approved by the Board of Directors on 28 February 2022 and
signed on its behalf by:
Nick Roberts
Director
Alan Williams
Director
Travis Perkins plc Annual Report and Accounts 2021
161
Financial statementsGovernanceStrategic report
Company statement of changes in equity
For the year ended 31 December 2021
£m
At 1 January 2020
Profit and total comprehensive income for the year
Sale of own shares
Own shares movement
Equity-settled share-based payments
Tax on equity-settled share-based payments
Options on non-controlling interest
Share
capital
25.2
Share
premium
544.3
Merger
reserve
326.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Own
shares
(50.8)
–
6.4
4.9
–
–
–
At 31 December 2020
25.2
544.3
326.5
(39.5)
Profit and total comprehensive loss for the year
Demerger dividend
Other dividends
Shares purchased in share buyback and held as
treasury shares
Shares purchased in share buyback and held as own
shares by ESOT
Sale of own shares
Own shares movement
Equity-settled share-based payments
Other movement
At 31 December 2021
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.3
–
–
–
–
–
–
–
–
–
25.2
545.6
326.5
–
–
–
(53.8)
(16.7)
17.4
31.2
–
–
(61.4)
Other
(4.1)
Retained
earnings
Total equity
931.9
1,773.0
–
–
–
–
–
4.1
–
–
–
–
–
–
–
–
–
–
–
1,253.4
–
(4.9)
15.6
(0.3)
(4.1)
1,253.4
6.4
–
15.6
(0.3)
–
2,191.6
3,048.1
(24.0)
(679.7)
(105.4)
(24.0)
(679.7)
(105.4)
–
(53.8)
–
–
(31.2)
23.2
(1.3)
(16.7)
17.4
–
23.2
–
1,373.2
2,209.1
162 Travis Perkins plc Annual Report and Accounts 2021
Notes to the Company’s financial statements
For the year ended 31 December 2021
General information
Overview
Travis Perkins plc is the ultimate parent of the Travis Perkins plc Group (“the Group”). The nature of the Group’s operations and its principal
activities are set out in the Strategic report on pages 1 to 74. The Company is incorporated and is domiciled in the United Kingdom as a public
limited company under the Companies Act 2006. The address of the registered office is given on page 176.
These financial statements are presented in pounds sterling, the currency of the primary economic environment in which the Group operates.
Basis of accounting
The Company meets the definition of a qualifying entity under Financial Reporting Standard 100 and as such these financial statements have been
prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”). In preparing these financial statements,
the Company applies the recognition, measurement and disclosure requirements of UK-adopted international accounting standards, but makes
amendments where necessary in order to comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure
exemptions has been taken.
As permitted by section 408 of the Companies Act 2006, the income statement of the Company has not been presented.
The Company has taken advantage of the following disclosure exemptions under FRS 101:
• The requirements of IFRS 2 Share Based Payments in respect of group settled share-based payments;
• The requirements of IFRS 7 “Financial Instruments: Disclosures”
• The requirements of paragraphs 91 to 99 of IFRS 13 “Fair Value Measurement”
• The requirement in paragraph 38 of IAS 1 “Presentation of Financial Statements” to present comparative information in respect of
paragraph 79(a)(iv) of IAS 1
• The requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D, 111 and 134 to 136 of IAS 1 “Presentation of
Financial Statements”
• The requirements of IAS 7 “Statement of Cash Flows”
• The requirements of paragraphs 30 and 31 of IAS 8 “Accounting Policies, Changes in Accounting Estimates and Error”
• The requirements of paragraphs 17 and 18A of IAS 24 “Related Party Disclosures”
• The requirements in IAS 24 “Related Party Disclosures” to disclose related party transactions entered into between two or more members of a
group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member
• The requirements of paragraphs 130(f)(ii), 130(f)(iii), 134(d) to 134(f) and 135(c) to 135(e) of IAS 36 “Impairment of Assets”.
Where required, equivalent disclosures are given in the consolidated financial statements of Travis Perkins plc.
Basis of preparation
The financial statements have been prepared on the historic cost basis, except that derivative and other financial instruments and contingent
consideration arising from business combinations are stated at fair value through profit and loss and also designated financial instruments are
stated at fair value through other comprehensive income.
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
Foreign currencies
Transactions denominated in foreign currencies are recorded at the rates ruling on the date of the transaction.
At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at that
date. Foreign exchange differences arising on translation are recognised in the income statement.
Going concern
After reviewing the Group’s forecasts and risk assessments and making other enquiries, the Board has formed the judgement at the time of
approving the financial statements that there is a reasonable expectation that the Company has adequate resources to continue in operational
existence for the 12 months from the date of signing this Annual Report and Accounts. For this reason the Board continues to adopt the going
concern basis in preparing the financial statements.
In arriving at their opinion the Directors considered:
• The Group’s cash flow forecasts and revenue projections
• Reasonably possible changes in trading performance
• The committed debt facilities available to the Group and the covenants thereon
• The Group’s robust policy towards liquidity and cash flow management
• The Group’s ability to successfully manage the principal risk and uncertainties outlined on pages 40 to 46 during periods of uncertain economic
outlook and challenging macroeconomic conditions
The downside scenarios tested, outlining the impact of severe but plausible adverse scenarios based on a severe recession and housing market
weakness, show that there is sufficient headroom for liquidity and covenant compliance purposes for at least the next 12 months from the date of
approval of these financial statements.
Significant accounting policies
The principal accounting policies adopted in preparing the financial statements are provided throughout the notes to the financial statements.
Travis Perkins plc Annual Report and Accounts 2021
163
Financial statementsGovernanceStrategic report
Notes to the Company’s financial statements continued
For the year ended 31 December 2021
Standards issued but not yet effective
New standards, amendments and interpretations which are in issue but not yet effective are not expected to have a material impact on the
Company’s financial statements.
Key judgements and estimates
The preparation of financial statements requires the Directors to make estimates and assumptions about future events that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities. Future events and their effects cannot be determined with
certainty. Therefore, the determination of estimates requires the exercise of judgement based on various assumptions and other factors such as
historical experience and current and expected economic conditions. The Directors frequently re-evaluate these significant factors and make
adjustments as facts and circumstances dictate. There are no significant judgements and estimates involved in the preparation of the
financial statements.
Income statements disclosures
1.
The audit fee for the Company and the consolidated financial statements is disclosed in note 4c of the Group consolidated financial statements.
Fees payable to KPMG LLP for audit and non-audit services to the Company are not required to be disclosed because the Group financial
statements disclose such fees on a consolidated basis. Details of the Company’s policy on the use of auditors for non-audit services, the reasons
why the auditor was used rather than another supplier and how the auditor’s independence and objectivity were safeguarded are set out in the
Audit Committee report on pages 86 to 90.
Dividend disclosures are provided in note 21 to the consolidated financial statements.
Staff costs (including Directors):
£m
Wages and salaries
Social security costs
Other pension costs
Share-based payments (note 12)
The average monthly number of persons employed including Directors during the year was 70 (2020: 60).
2. Investments in subsidiaries
Accounting policy
Investments in subsidiaries are carried at cost less impairment.
£m
Cost
At 1 January
Additions
Reclassification from other investments
Derecognised on demerger
At 31 December
Provision for impairment
At 1 January
Impairment charge
Derecognised on demerger
At 31 December
Net book value at 31 December
2021
7.5
1.0
0.2
10.0
18.7
2020
6.9
0.8
0.2
7.0
14.9
2021
2020
4,047.9
49.5
1.0
(1,168.3)
2,930.1
(1,321.0)
(88.8)
488.6
(921.2)
2,008.9
3,945.7
106.1
–
(3.9)
4,047.9
(356.2)
(964.8)
–
(1,321.0)
2,726.9
The additions to investments in 2021 represent the capitalisation of a £37.9m (2020: £73.3m) intercompany loan with Toolstation Europe Limited,
other additions recorded as part of the Group’s ongoing project to simplify its legal structure and share-based payments to employees of subsidiary
undertakings. The reclassification from other investments of £1.0m relates to the Staircraft Group, which the Group obtained control of in 2021
having previously held a 15% investment.
On 27 April 2021, the Wickes business was distributed to the Company’s shareholders. The previous carrying value of the Company’s investment
in Wickes of £768.5m has been derecognised, with the fair value of the assets distributed recognised as a movement in equity and the remaining
balance of £88.8m recognised as an impairment. See Group note 31.
In 2020, following distributions made from certain non-trading subsidiaries as part of the ongoing simplification of the Group, there was a reduction
in net asset values and accordingly the Company recognised impairments of £964.8m.
A full listing of all related undertakings is provided in note 13.
164 Travis Perkins plc Annual Report and Accounts 2021
3. Investments
£m
Equity investments designated as FVTPL: shares held in invested entities
Loans receivable at amortised cost: loans to invested entities
2021
–
–
–
2020
3.0
3.7
6.7
4. Deferred tax
£m
Liability/(asset):
Share-based payments
Other timing differences
At 1 Jan
2020
Recognised
in income
Recognised
in equity
At 1 Jan
2021
Recognised
in income
At 31
Dec 2021
(3.5)
(0.4)
(3.9)
(0.9)
–
(0.9)
0.3
–
0.3
(4.1)
(0.4)
(4.5)
1.2
0.2
1.4
(2.9)
(0.2)
(3.1)
5. Debtors
Accounting policy
Debtors are originally recognised at fair value. Subsequent to the initial recognition they are measured at amortised cost using the effective interest
rate method.
£m
Current:
Amounts owed by subsidiaries
Other financial assets – loan notes
Other debtors
2021
2020
881.5
4.7
95.3
981.5
1,261.4
2.8
53.4
1,317.6
Amounts owed by subsidiaries include loans and other balances. The loans are interest-free and repayable on demand.
6. Share capital and reserves
Accounting policy
Equity instruments represent the ordinary share capital of the Company and are recorded at the proceeds received, net of directly attributable
incremental issue costs.
a. Share capital
Ordinary shares of 10p (authorised, issued and fully paid)
At 1 January 2020 and 1 January 2021
Share consolidation
At 31 December 2021
No.
252,143,923
(27,117,997)
225,025,926
£m
25.2
–
25.2
O
t
h
e
r
i
n
f
o
r
m
a
t
i
o
n
The Company has one class of ordinary share that carries no right to fixed income. The holders of ordinary shares are entitled to receive dividends as
declared and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets. See
Group note 19 for the explanation of movements in share capital and own shares.
b. Own shares
No.
At 1 January
Share consolidation
Shares purchased in share buyback and held as own shares by ESOT
Shares purchased in share buyback and held as treasury shares
Reissued
At 31 December
2021
2020
Treasury shares
ESOT shares
Total
ESOT shares
–
–
–
3,533,419
–
3,533,419
2,879,021
(309,495)
1,100,000
–
(3,162,155)
2,879,021
(309,495)
1,100,000
3,533,419
(3,162,155)
3,944,144
–
–
–
(1,065,123)
507371
4,040,790
2,879,021
The own shares held by the Employee Share Ownership Trust are to satisfy options under the Group’s share option schemes. None of the own
shares have been allocated to grants of executive options and all rights attaching to the shares are suspended until the shares are reissued.
As at 31 December 2021 3.5m of own shares were held as treasury shares with a value of £53.8m, representing 2% of issued share capital. It is the
Group’s intention to cancel those shares during 2022.
Travis Perkins plc Annual Report and Accounts 2021
165
Financial statementsGovernanceStrategic report
Notes to the Company’s financial statements continued
For the year ended 31 December 2021
6. Share capital and reserves (continued)
c. Reserves
A description of the nature and purpose of each reserve is given below:
• The share premium represents the amounts above the nominal value received for shares sold
• The merger reserve represents the premium on equity instruments issued as consideration for the acquisition of BSS
• The own shares reserve represents the cost of shares purchased in the market and held by the Employee Share Ownership Trust to satisfy
options under the Group’s share option schemes
• Retained earnings represents cumulative results for the Company.
Distributable reserves
The distributable reserves accessible to the Company approximate total of £1,243.3m (2020: £2,070.8m). When required the Company can
receive dividends from its subsidiaries to increase the available distributable reserves.
Interest bearing loans and borrowings
7.
Accounting policy
Interest-bearing bank loans and overdrafts, loan notes and other loans are recognised in the balance sheet at amortised cost. Finance charges
associated with arranging non-equity funding are recognised in the income statement over the life of the facility. All other borrowing costs are
recognised in the income statement in accordance with the effective interest rate method.
£m
Sterling bonds
Finance charges netted off borrowings
Current liabilities
Non-current liabilities
£m
Borrowings repayable:
More than one year, but not more than five years
More than five years
Unamortised fees
2021
550.0
(3.3)
546.7
–
546.7
546.7
2020
550.0
(4.4)
545.6
–
545.6
545.6
2021
2020
550.0
–
(3.3)
546.7
550.0
–
(4.4)
545.6
At 31 December 2021 all borrowings were denominated in sterling (2020: sterling).
In respect of income earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates at the
balance sheet date.
Assets:
Short-term deposits
Liabilities:
£250m sterling bond
£300m sterling bond
2021
Effective
interest
rate
0.2%
3.8%
4.5%
£m
435.0
250.0
300.0
550.0
Details of the sterling bonds are given in note 22 to the consolidated financial statements.
8. Amounts due to subsidiary undertakings
£m
Amounts due to subsidiary undertakings – non current
Amounts due to subsidiary undertakings – current
2020
Effective
interest
rate
0.8%
3.8%
4.5%
2021
642.0
13.1
655.1
£m
455.0
250.0
300.0
550.0
2020
744.7
160.0
904.7
Amounts due to subsidiary undertakings relate to loans and other balances. These loans are interest-free except for a £170m loan bearing interest
at 1.2% above the base rate.
166 Travis Perkins plc Annual Report and Accounts 2021
9. Financial instruments
a. The carrying value of categories of financial instruments
£m
2021
2020
Financial assets:
Mandatorily at FVTPL
Loans and receivables (including cash and cash equivalents) at amortised cost
Designated instrument-by-instrument as either FVTPL or FVOCI
Financial liabilities:
Mandatorily at FVTPL
Borrowings (note 7)
Trade and other payables at amortised cost
0.2
1,421.9
–
1,422.1
–
546.7
677.6
1,224.3
2.8
1,726.2
3.0
1,732.0
1.6
545.6
920.3
1,467.5
b. Liquidity analysis
The following table details the Company’s liquidity analysis for its derivative financial instruments and other external financial liabilities. The table
has been drawn up based on the undiscounted net cash flows on the derivative instruments that settle on a net basis and the undiscounted gross
cash flows on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed has been
determined by reference to the projected interest and foreign currency rates as illustrated by the yield curves existing at the reporting date.
£m
0–1 year
1–2 years
Total gross settled: foreign exchange forward contracts
Total derivative financial instruments
Net settled:
Borrowings
Trade and other payables at amortised cost
Total financial instruments
–
–
–
(22.5)
(22.5)
–
–
–
–
–
£m
0–1 year
1–2 years
Total gross settled: foreign exchange forward contracts
Total derivative financial instruments
Net settled:
Borrowings
Trade and other payables at amortised cost
Total financial instruments
(1.6)
(1.6)
–
(15.6)
(15.6)
–
–
–
–
–
2021
2–5 years
–
–
(546.7)
–
(546.7)
2020
2–5 years
–
–
(545.6)
–
(545.6)
5+ years
–
–
–
–
–
5+ years
–
–
–
–
–
Total
–
–
(546.7)
(22.5)
(569.2)
Total
(1.6)
(1.6)
(545.6)
(15.6)
(561.2)
10. Other creditors
Accounting policy
Other creditors are measured at amortised cost. The Company has financial risk management policies in place to ensure that all payables are paid
within the credit time frame.
O
t
h
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r
i
n
f
o
r
m
a
t
i
o
n
£m
Other creditors
Accruals
2021
22.5
0.9
23.4
2020
15.6
1.4
17.0
Travis Perkins plc Annual Report and Accounts 2021
167
Financial statementsGovernanceStrategic report
Notes to the Company’s financial statements continued
For the year ended 31 December 2021
11. Related undertakings
The registered office of all subsidiary undertakings is Lodge Way House, Lodge Way, Harlestone Road, Northampton NN5 7UG except for
companies with a superscript where the registered office is given after the list of subsidiary companies and investments.
Active subsidiary companies (100% ownership
and UK registered)
CCF Limited
Hunter Estates Limited
Independent Construction Technologies Limited1
Keyline Civils Specialist Limited2
Staircraft Group Limited1
The BSS Group Limited
The Cobtree Scottish Limited Partnership1
Tools & Fasteners Solutions Limited
Toolstation Holdings Limited
Toolstation Limited
TP Property Company Limited
Travis Perkins Group Holdings Limited
Travis Perkins (Properties) Limited
Travis Perkins (PSL2015) Limited
Travis Perkins Acquisitions Company Limited
Travis Perkins Finance Company Limited
Travis Perkins Financing Company No.2 Limited
Travis Perkins Group Holdings Limited
Travis Perkins Leasing Company Limited
Travis Perkins P&H Group Holdings Limited
Travis Perkins P&H Partner Limited
Travis Perkins Trading Company Limited
Wickes Developments Limited
Wickes Properties Limited
Dormant & non-trading subsidiary companies
(100% ownership and UK registered)
B. & G. (Heating & Plumbing) Limited
Baird Lindsay Limited3 *
Benchmarx Kitchens and Joinery Limited
Blandford Builders & Decorators Merchants
Limited4 *
BMSS Limited
Bondco 909 Limited4 *
Bonham Lilley Timber Limited4 *
Boston (2011) Limited4 *
British Steam Specialties (International)
Limited (The)
British Steam Specialties Limited(The)4 *
Bss (UK) Limited
BSS GPS Trustee Limited
Builders Mate Limited
Building Integrated Solutions Limited1
Built For Trade Limited
Burt Boulton (Timber) Limited
Carmichael Browne Associates Limited4 *
Chandler Forest Products Limited4 *
Christie & Vesey Limited4 *
City Plumbing Supplies Limited
Cobtree Nominees Limited
Commercial Ceiling Factors Limited4 *
County Landscape Products Limited4 *
Curran Sawmills Limited (The)5
Downpatrick Timber Slate and Coal Company
Limited5
Edward Henthorne and Company Limited4 *
Edward Jones (Crowthorne) Limited4 *
E. East & Son Limited
E. Salisbury Limited4 *
Elecnation Limited4 *
Fry & Pollard Limited
Gammon & Smith Limited4 *
Garratt Timber Supplies Limited4 *
Gestion Toolstation inc.6
Harrison Trenery Limited
Harvey Building Supplies (Scotland) Limited4 *
HT (1995) Limited
HTG (1996) Limited4 *
Hunter Limited4 *
IJM Enterprises Limited
IJM Holdings Limited
James Ladd & Sons (Property) Limited4 *
James Ladd & Sons Limited4 *
J S Towell Limited4 *
J T Stanton & Co. Limited4 *
John Clements (Builders Merchants) Limited4 *
John Dove & Co. Limited4 *
Kisling Limited4 *
M & H (North East) Limited4 *
Malden Timber (West) Limited4 *
May & Hassell (Cumbria) Limited4 *
May & Hassell (Scotland) Limited7 *
May & Hassell Limited4 *
MD (1995) Group Limited7 *
MD (1995) Limited4 *
MD (Park Street) Limited4 *
MD-DOR3 Limited
MD-DOR4 Limited
Monteith Building Services Limited1
Norman Mackenzie (Building Supplies) Limited7 *
P H Properties Limited1
P.T.S. Plumbing Trade Supplies Limited
Primaflow (Birmingham) Limited4 *
Property Newco Two Limited
R A Thomas (Joinery) Limited4 *
Renpye Limited4 *
Rudridge Limited
Sharpe & Fisher (1989) Limited4 *
Sharpe & Fisher (Building Supplies) Limited4 *
Sharpe & Fisher (Properties) Limited4 *
Sharpe & Fisher Limited4 *
Staircraft Integrated Solutions Limited1
Staircraft Limited1
Stearns (Shipton Green) Limited4 *
Tavistock Building Supplies Limited4 *
Terant Supplies Limited
TFS Holdings Limited
The BSS EBT Company Limited
Tile Giant Holdings Limited
T J Willets (Timber) Limited4 *
The Yard Building Supplies Limited4 *
Tile It All (UK) Limited4 *
Tile Magic Limited4 *
TP Directors Ltd
TP General Partner (Scotland) Limited1
TP Shelfco No.2 Limited4 *
TP Shelfco No.3 Limited4 *
TPG Management Services Limited
Travis & Arnold Limited
Travis Perkins Bridge Properties LLP4 *
Travis Perkins Capital Partner Limited
Travis Perkins Financing Company No.3 Limited
Travis Perkins Installation Services Limited
Travis Perkins Merchant Holdings Limited
Travis Perkins Plumbing & Heating LLP
Travis Perkins Quest Trustees Limited4 *
Tricom Group Limited
Tricom Supplies Limited
Trubuildingsystems Limited1
T & T (Sussex) Plant Hire Limited4 *
UGS Limited4 *
Vaner Holdings Limited4 *
W. Gaunt Limited4 *
W.A. Hawke & Son Limited4 *
Whittaker & Co. (Builders Merchants) Limited4 *
Wickes Group Trustees Limited4 *
Wickes Retail Sourcing Limited4 *
William Bird Holdings Limited4 *
William Bloore & Son Limited4 *
* companies in voluntary liquidation
168 Travis Perkins plc Annual Report and Accounts 2021
Other subsidiary companies
Company Name
BSS (Ireland) Limited9
City Investments Limited10
Toolexpert Benelux BV11
Toolstation BV11
Investments
Company Name
Toolstation Europe BV11
Toolstation Europe Limited
Toolstation GmbH13
Toolstation Netherlands BV11
Toolstation NV/SA12
Toolstation SAS14
Travis Perkins Hong Kong Limited15
Travis Perkins Sourcing (Shanghai) Ltd16
Registered
% ownership
Status
Active
Active
London Distribution Park Management Company Limited17
Hermitage Park Management Company Limited18
United Kingdom
United Kingdom
20
25
17 Clarendon Road, Belfast, BT1 3BG, United Kingdom
107–127 Grosvenor Road, Belfast, BT12 4GT, United Kingdom
Registered offices (not Lodge Way House)
1 Ryehill House Ryehill Close, Lodge Farm Industrial Estate, Northampton, England, NN5 7UA, United Kingdom
2 50 Mauchline Street, Glasgow, G5 8HQ, United Kingdom
3 C/O Mazars Llp, Restructuring Services Apex 2, 97 Haymarket Terrace, Edinburgh, EH12 5HD, United Kingdom
4 C/O MAZARS LLP, 1st Floor Two Chamberlain Square, Birmingham, B3 3AX, United Kingdom
5
6 5303 boul. Saint-Laurent, Montréal Québec H2T1S5, Canada
7 C/O Mazars Llp, Restructuring Services Apex 2, 97 Haymarket Terrace, Edinburgh, EH12 5HD, United Kingdom
8
9 White Heather Industrial Estate, South Circular Road, Dublin, 8, Ireland
10 Ogier House, The Esplanade, St Helier, JE4 9WG, Jersey
11 Touwbaan 40, 2352CZ Leiderdorp, Netherlands
12 Boomsesteenweg 58, 2630 Aarlselaar, Belgium
13 Regus Building, Kranhaus 1, Business Centre GmbH Co KG, Im Zollhafen 18, 50678 Koln, Germany
14 61 Route de Grenoble, 69800 Saint Priest, Lyon, France
15 Suite 2401, 24/F, China Insurance Group Building, 141 Des Voeux Road, Central, Hong Kong
16 Building No.17, No. 800 Changde Road, JingAn District, Shanghai 200040
17 The Old Post Office Station Road, Congresbury, Bristol, England, BS49 5DY
18 C/O Bruton Knowles Llp 2 Paris Parklands, Railton Road, Guildford, Surrey, United Kingdom, GU2 9JX
12. Share-based payments
The Company operates a number of share incentive plans. A description of the share schemes operated by the Group, including that of the
Company, is contained in the remuneration report on pages 93 to 104 and in note 33 to the consolidated financial statements.
13. Related party transactions
The Company has a related party relationship with its subsidiaries, its Directors and with its pension schemes. In addition the remuneration of the
Directors, and the details of their interests in the share capital of the Company are provided in the audited part of the remuneration report on pages
97 to 101. Other than the payment of remuneration there have been no related party transactions with Directors.
Details of balances outstanding with subsidiary companies are shown in notes 5 and 8 and in the balance sheet on page 161.
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Financial statementsGovernanceStrategic report
170 Travis Perkins plc Annual Report and Accounts 2021
C_GEN_PageC_GEN_PageL2C_GEN Section Other information
C_GEN Section
C_GEN_Page
Other information
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172 Five year summary
174 Climate change report
176 Other shareholder information
Travis Perkins plc Annual Report and Accounts 2021
171
Financial statementsGovernanceStrategic reportC_GEN_PageC_GEN_PageL2C_GEN Section
Five-year summary
Consolidated income statement
£m
Revenue
Operating profit before amortisation and adjusting items
Amortisation
Adjusting items – operating
Operating profit
Adjusting items – business acquisitions
Share of associates’ results
Net finance costs
Profit/(loss) before tax
Adjusting items – deferred tax
Income tax expense
Net profit/(loss) from continuing operations
Net profit from discontinued operations
Profit/(loss) for the period
Basic earnings/(loss) per share from continuing operations
Basic earnings per share from discontinuing operations
Adjusted earnings per share
Dividend declared per ordinary share
Number of branches at 31 December (includes associates)
Average number of colleagues
2021
4,586.7
352.8
(11.1)
6.8
348.5
–
–
(42.9)
305.6
(4.7)
(60.1)
240.8
38.1
278.9
103.9
16.4p
107.3
73.0p
1,513
18,833
* The results for 2019, 2018 and 2017 have not been re-presented for discontinued operations
Consolidated free cash flow statement
£m
Adjusted operating profit
Less: Profit on disposal of properties
Adjusted operating profit excluding property profit
Depreciation of property, plant and equipment
Amortisation of internally generated intangibles
Share-based payments
Movement on working capital
Other net interest paid
Interest on lease liabilities
Income tax paid
Capital expenditure excluding freehold purchase
Disposal of plant and equipment
Free cash flow
2021
352.8
(48.9)
303.9
69.2
9.7
19.1
(151.8)
(13.6)
(21.2)
(59.9)
(95.0)
4.4
64.8
2020
(re-presented)
3,697.5
128.3
(8.6)
(92.7)
27.0
–
0.1
(47.4)
(20.3)
(9.0)
(5.8)
(35.1)
13.2
(21.9)
(14.3p)
5.3p
21.0p
–
1,389
17,512
2020
(re-presented)
128.3
(9.2)
119.1
60.0
11.5
12.2
197.4
(28.3)
(21.3)
(27.6)
(87.1)
5.4
241.3
* The comparative numbers for 2019, 2018 and 2017 were not re-presented for discontinued operations
2019*
6,955.7
441.5
(9.0)
(200.4)
232.1
40.3
(4.3)
(87.3)
180.8
(27.1)
(30.9)
122.8
–
112.8
48.9
–
112.7p
48.5p
2,154
30,059
2019*
441.5
(20.6)
420.9
97.5
23.5
19.9
(128.7)
(26.2)
(57.0)
(52.9)
(120.9)
19.4
195.5
2018*
6,740.5
374.5
(9.5)
(386.7)
(21.7)
–
(4.0)
(23.7)
(49.4)
–
(34.1)
(83.5)
–
(83.5)
(34.4p)
–
114.5p
47.0p
2,091
29,748
2018*
374.5
(26.8)
347.7
102.0
15.5
19.6
(107.1)
(25.5)
–
(55.1)
(143.1)
13.8
167.8
2017*
6,433.1
380.1
(12.3)
(40.9)
326.9
–
(2.2)
(35.0)
289.7
–
(55.7)
234.0
–
234.0
93.1p
–
92.2p
46.0p
2,076
30,251
2017*
380.1
(29.4)
350.7
102.0
12.6
15.6
(76.5)
(27.1)
–
(57.2)
(166.0)
–
154.1
172 Travis Perkins plc Annual Report and Accounts 2021
C_GEN_PageC_GEN_PageL2C_GEN Section Consolidated balance sheet
£m
2021
2020
2019
2018
2017
Assets
Non-current assets
Property, plant and equipment
Goodwill and other intangible assets
Right-of-use assets
Interest in associates
Other receivables
Retirement benefit asset
Investment property and other investments
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Tax debtor
Derivative financial instruments
Cash and cash equivalents
Assets held for sale
Total assets
Capital and reserves
Issued capital
Share premium account
Merger reserve
Own shares
Other reserves
Accumulated profits
Equity attributable to owners of the Company
Non-controlling interests
Total equity
Non-current liabilities
Interest-bearing loans and borrowings
Lease liability
Derivative financial instruments
Retirement benefit obligations
Long-term provisions and other payables
Deferred tax liabilities
Current liabilities
Interest-bearing loans and borrowings
Lease liability
Derivative financial instruments
Trade and other payables
Tax liabilities
Short-term provisions
Total liabilities
Liabilities held for sale
Total equity and liabilities
800.1
978.7
439.8
–
0.7
275.8
–
13.9
724.4
706.7
–
0.2
459.8
–
4,400.1
25.2
545.6
326.5
(61.4)
14.6
1,387.3
2,237.8
–
2,237.8
575.2
414.7
–
–
6.8
140.4
–
74.5
–
921.1
0.4
29.2
2,162.3
–
4,400.1
830.4
1,670.5
1,145.5
–
–
178.4
9.2
–
840.7
892.7
6.5
–
505.6
–
6,079.5
25.2
545.6
326.5
(39.5)
15.5
1,840.5
2,713.8
–
2,713.8
575.7
1,168.3
–
–
21.9
77.2
–
158.8
1.6
1,304.2
–
58.0
3,365.7
–
6,079.5
882.0
1,691.7
1,276.8
1.9
–
57.5
6.7
–
937.8
1,239.7
–
–
207.9
138.0
6,440.0
25.2
545.6
326.5
(50.8)
13.6
1,722.6
2,582.7
4.4
2,587.1
583.3
1,253.6
–
4.9
8.0
62.7
–
158.7
2.5
1,613.9
13.4
60.4
3,761.4
91.5
6,440.0
913.2
1,674.6
–
34.2
43.3
81.2
6.6
–
855.3
1,253.8
–
–
255.4
–
5,117.6
25.2
545.4
326.5
(47.8)
9.1
1,847.5
2,705.9
11.8
2,717.7
605.2
–
0.9
–
18.4
77.8
3.8
4.7
1,603.2
25.9
60.0
2,399.9
–
5,117.6
932.0
1,926.3
–
20.3
30.4
–
9.5
–
816.3
1,130.2
–
–
276.8
–
5,141.8
25.2
543.4
326.5
(15.3)
10.8
1,958.0
2,848.6
11.7
2,860.3
612.1
–
4.9
28.3
17.1
61.0
6.2
1.2
1,453.6
44.5
52.6
2,281.5
–
5,141.8
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173
Financial statementsGovernanceStrategic reportC_GEN_PageC_GEN_PageL2C_GEN Section
ESG data report (including SASB data)
All data is for ongoing businesses only. Sold and demerged businesses have been removed from current and retrospective data.
Energy and fuel
Total energy consumed
Total energy consumed
Grid energy
Renewable energy
Fuel consumption
Waste
Non-hazardous waste
Hazardous waste
Landfilled waste
Recycled waste
Incinerated waste
Total waste
Data security
Data breaches
Involving personally-identifiable information
Customers affected
Description of approach to identifying and
addressing data security risks
Labour practices
Unit of
measure SASB reference
N/A (SECR
2021
2020
2019
2018
2017
kWh
GJ
%
%
Litres
compliance) 364,826,976 339,716,233 415,844,450 521,115,345 495,870,758
1,785,135
24.74
-
28,068,903 31,306,429 29,538,882
1,497,040 1,876,015
24.10
-
CG-MR-1.30a.1
CG-MR-1.30a.1
CG-MR-1.30a.1
N/A
1,313,377
28.35
5.83
22,650,200
1,222,978
33.35
-
21,430,651
27.40
-
Tonnes N/A
Tonnes N/A
Tonnes N/A
Tonnes N/A
Tonnes N/A
Tonnes N/A
28,175
229.0
1,492
10,084
16,829
28,404
#
%
#
CG-MR-230a.2
CG-MR-230a.2
CG-MR-230a.2
–
–
–
18,946
236.4
1,353
9,614
8,216
19,182
1
100
9
27,561
457.4
1,773
11,535
14,710
28,018
1
100
4
39,514
467.9
2,121
15,033
22,828
39,982
–
–
–
31,210
460
2,370
11,427
17,873
31,670
–
–
–
Text
CG-MR-230a.1 See text below the table
£
Average hourly wage
In-branch colleagues earning minimum
wage by region
Voluntary turnover rate for in-branch colleagues Rate
Involuntary turnover rate for in-branch
colleagues
Total amount of monetary losses as a results of
legal proceedings associated with labor law
violations
Rate
£m
%
Workforce Diversity and Inclusion
Gender
Management
Female
Male
Not available or not disclosed
All other employees
Female
Male
Not available or not disclosed
Ethnic group
Management
Asian
Black or african-american
Hispanic or latino
White
Other
Not available or not disclosed
All other employees
%
%
%
%
%
%
%
%
%
%
%
%
Asian
Black or african-american
Hispanic or latino
White
Other
Not available or not disclosed
Monetary losses as a result of legal proceedings
associated with employee discrimination
%
%
%
%
%
%
£m
CG-MR-310a.1
CG-MR-310a.1
CG-MR-310a.2
13.74
1.2%
19.7%
13.33
12.99
12.68
12.42
10.9%
20.8%
6.3%
28.1%
11.6%
31.8%
16.2%
42.4%
CG-MR-310a.2
5.7%
3.3%
5.1%
3.8%
3.5%
CG-MR-310a.3
0.02
–
0.04
–
–
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
20.6%
79.4%
–
25.7%
74.3%
–
1.9%
0.5%
0.9%
82.5%
0.4%
13.7%
2.6%
1.0%
1.6%
64.3%
0.7%
29.8%
18.3%
81.7%
–
20.7%
79.3%
–
2.0%
0.3%
0.7%
85.9%
0.5%
10.7%
2.0%
0.7%
1.4%
67.8%
0.7%
27.4%
19.6%
80.4%
–
19.6%
80.4%
–
2.0%
0.3%
0.6%
74.3%
0.3%
22.5%
1.5%
0.6%
1.2%
60.3%
0.5%
36.0%
20.0%
80.0%
–
22.8%
77.3%
–
2.2%
0.3%
0.4%
77.2%
0.5%
19.4%
1.7%
0.6%
1.2%
67.5%
0.7%
28.3%
CG-MR-330a.2
–
–
0.02
–
17.9%
82.1%
–
22.3%
77.7%
–
2.7%
0.3%
0.6%
91.7%
0.6%
4.2%
1.9%
0.6%
1.2%
73.4%
0.7%
22.1%
–
174 Travis Perkins plc Annual Report and Accounts 2021
C_GEN_PageC_GEN_PageL2C_GEN Section Product sourcing, packaging and marketing
Revenue from products third-party
certified to environmental and/or social
sustainability standards
Discussion of processes to assess and
manage risks and/or hazards associated
with chemicals in product
Discussion of strategies to reduce the
environmental impact of packaging
Water consumption
Water consumption
Unit of
measure SASB reference
2021
2020
2019
2018
2017
£m
CG-MR-410a.1
£555
£386
£445
–
–
Text
CG-MR-410a.2 See text below the table
Text
CG-MR-410a.3 See text below the table
m3
N/A
316,852
281,050
260,845
264,601
280,801
CG-MR-230a.1: Description of approach to identifying and addressing data security risks
Travis Perkins approaches the identification of vulnerabilities in its information systems that pose a data security risk through a combination of
people, process and technology, and is aligned to the NIST Cyber Security Framework.
The activities of building, procuring, deploying and managing IT systems (all of which are carried out from time to time) are conducted in
accordance with a policy and standard framework, the currency of which is maintained through periodic review. Any exceptions to policies or
standards are risk-assessed, managed and monitored. The organisation continually allocates specific funding for delivery of security-related
projects to improve our security posture and manage risk within board appetite.
Annual colleague data protection and cyber awareness training is compulsory. Furthermore, colleagues are targeted regularly with phishing
campaign testing with the outcome of this testing used to inform regular organisation-wide communication to raise awareness of the threat.
State-of-the-art technology is deployed across the IT estate to both protect and detect against cyber threats and attacks, such as firewalls,
antivirus, web proxies, data loss prevention and Security Information and Event Management (SIEM). Security events are monitored 24/7/365.
From a testing perspective, regular penetration tests and vulnerability scans are performed on the IT infrastructure and systems to identify
any exploitable vulnerabilities. The Group also conducts breach simulation testing in an automated and manual fashion, utlising the
experience of independent third parties. Vulnerabilities are prioritised and addressed in line with the timescales defined by criticality.
CG-MR-410a.2: Disscusion of processes to assess and manage risks and/or hazards associated with chemicals in product
The Group requires its suppliers to adhere to its published ‘‘Supplier Commitments’’ (https://www.travisperkinsplc.co.uk/sites/travis-perkins/
files/supplier-commitments.pdf). Suppliers are required to notify immediately where any product supplied contains substances of very high
concern (SVHCs), explosives precursors or poisons or has other restrictions on sale and to take steps to replace any products that contain
restricted substances or SVHCs with suitable alternatives. For such products, suppliers are required to provide a Safety Data Sheet (SDS). The
business undertakes supplier assessments either via an Online Risk Assessment or via factory audits, based on risk, to assess adherence to the
Supplier Commitments. The supplier assessment programme covers both private label and branded product suppliers. Restricted products are
flagged within the business sytems, triggering processes at point of sale to ensure they’re not sold to underage customers (i.e. solvents). This
includes, for example, – corrosive products, under the Offensive Weapons Act 2019, including acids and chemicals which may burn the skin
but not normal strength household bleach and cleaners); and - solvents, under the Psychoactive Substances Act 2016, including glues and
adhesives, flammable products such as fire lighter fluid, solvent cement, paint stripper, thinners, essentially any substances which are capable
of producing a psychoactive effect in a person who consumes it and it is not an exempted substance; and - spray paint and aerosols; under the
Anti-Social Behaviour Act 2003.
There is a requirement in the Group Supplier Manual (https://www.travisperkinsplc.co.uk/sites/travis-perkins/files/supplier-manual-july-2021.
pdf) for suppliers delivering to the Group’s sites to provide a safety data sheet for all substances delivered which are harmful to health.
CG-MR-410a.3: Discussion of strategies to reduce the environmental impact of packaging
The Group is committed to reducing its environmental impact relating to packaging. For more information on objectives and progress, please
refer to page 67. The Group held supplier webinars during 2021 requesting assistance with packaging reductions and reviewing packaging
materials to begin to elimate single use plastic, increase the amount recycled content and improve recyclability. Throughout 2021, the Group
worked with the direct sourcing team to optimise the amount of material used, achieving packaging reductions and improvements. With one
key supplier in 2021, a working group was established including packaging, sourcing, safety and quality colleagues to ensure that packaging
changes being introduced would not compromise safety in handling, product protection or product quality. The EU Directive on Packaging and
Packaging Waste (94/62/EC) has been adopted into UK law and the Group’s suppliers are required to comply with all relevant legislations.
Packaging data collected from suppliers is differentiated by packaging levels; primary, secondary and tertiary, and by material type. The Group’s
Packaging Compliance Manager and the newly appointed Sustainable Materials Manager will be working with the supply chain to ensure that
packaging materials are being designed for reuse, optimising recycled content and recyclability. Travis Perkins and BSS branches backhaul
cardboard, plastic, wood and metal supplier packaging to their distribution centres to bale and send for reprocessing.
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Financial statementsGovernanceStrategic reportC_GEN_PageC_GEN_PageL2C_GEN Section
Other shareholder information
Financial diary
Ex-dividend date
Record date
Annual General Meeting
Trading statement
Payment of final dividend
31 March 2022
1 April 2022
29 April 2022
29 April 2022
13 May 2022
Annual General Meeting (“AGM”)
The AGM will be held on 29 April 2022 at 9:30am.
Registrars
For information about shareholdings and dividends and to report
changes to your address, bank details or any other account information
please contact the Company’s registrars:
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Shareholder portal: www.travisperkins-shares.com
Email: enquiries@linkgroup.co.uk
Telephone: +44 (0) 371 664 0300*
Shareholder portal
You can view and manage your shareholder account online via the
shareholder portal www.travisperkins-shares.com. You will need to
register to use this service and to do so you will require your unique
investor code (“IVC”), which can be found on your share certificate
or dividend confirmation.
Dividends
It is more secure to have your dividends paid directly into your bank
account than by cheque. If you do not already have your dividends paid
directly into your account and would like to do so, you can do
this on the shareholder portal www.travisperkins-shares.com or you can
contact Link Group and they will send you the relevant form
to complete.
Shareholder communications
Company website
Travis Perkins plc Annual and Interim Reports, results announcements
and presentations are available on the Investor Relations section of our
website www.travisperkinsplc.co.uk. The website also carries a range of
information about the Group and its principal brands, products and
services which can be accessed via the “Our Businesses” section.
Annual Report
The Annual Report is published on our website and a hard copy
will be posted to shareholders who have requested it. All other
shareholders will be notified of its availability on the website, either
in writing or by email. A paper copy is available by writing to the
Company Secretary at the registered office:
Lodge Way House
Lodge Way
Harlestone Road
Northampton
NN5 7UG
Email: cosec@travisperkins.co.uk
Electronic shareholder communications
The Company prefers that you receive your shareholder
communications electronically. This is a faster, more environmentally-
friendly and more effective way to communicate with you. If you
have received a paper copy of this report or notification of its availability
by post and would like to receive fully electronic communication, please
register your preference on the shareholder portal www.travisperkins-
shares.com.
Shareholder services
The Company’s registrars provide a number of other services that,
as a shareholder, might be useful to you:
Duplicate share register accounts
If you are receiving more than one copy of our report, it may be that
your shares are registered in two or more accounts on our register
of members. If that is not your intention you may wish to consider
merging the accounts into one single entry. Please contact Link Group
who will be pleased to help you.
Dividend Re-Investment Plan (“DRIP”)
This is a scheme which allows you to use your dividends to buy
shares in Travis Perkins. For any shareholders who wish to re-invest
dividend payments in the Company, a facility is provided by Link Market
Services Trustees Limited in conjunction with the Company’s Registrar.
Full details are available by calling Link Asset Services on +44 (0) 371
664 0381. Alternatively, you can sign up for this service on the
shareholder portal (by clicking on “Manage your account” followed by
“Dividend payments” and following the on-screen instructions).
Share-dealing services
Share-dealing services are available from the Company’s Registrar:
On-line dealing: www.linksharedeal.com
Telephone dealing: +44 (0) 371 664 0445*
These services are only available to private shareholders resident in
the UK.
176 Travis Perkins plc Annual Report and Accounts 2021
* Calls will be charged at the standard geographic rate and will vary by provider. Calls
from outside the United Kingdom will be charged at the applicable international rate;
lines are open 9.00am to 5.30pm, Monday to Friday with the exception of
share-dealing lines which are open from 8.00am to 4.30pm.
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Our apprentices
Sophie Green – CCF
Dave King – Travis Perkins General Merchant
Emily Griggs – Keyline
Elizabeth Sloan – Toolstation
Adriane Kisamba – BSS
Jessica Young – Travis Perkins General Merchant
Natasha Poppleton-Roy – Benchmarx
Oliver Clarke – Keyline
Travis Perkins plc
Lodge Way House, Harlestone Road,
Northampton. NN5 7UG
01604 752424
www.travisperkinsplc.com