Leading partner
to the construction
industry
Annual Report and Accounts 2022
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Our ambition
To be the leading partner
to the construction industry
Who we are
We’re here to help build
better communities and
enrich lives. We enable our
customers to build, repair
and maintain the buildings
and infrastructure that touch
all of our lives every day.
Travis Perkins plc Annual Report and Accounts 2022
Contents
Strategic report
2 Highlights
4 Chair’s statement
6 Overview
8 At a glance
10
Investment case
12 Market overview
14 Business model
16 Strategy
26 Key performance indicators (KPIs)
28 Chief Executive’s statement
30 Sustainability report
50 Climate-related financial disclosure
62 Section 172 statement
66 Business performance and priorities
71 Financial performance
75
Statement of principal risks
and uncertainties
82 Non-financial information statement
Governance
84 Board of Directors
86 Corporate governance report
91 Nominations Committee report
93 Audit Committee report
98 Directors’ Remuneration report
117 Directors’ report
120 Directors’ statement of responsibilities
Financial statements
122 Independent Auditor’s report
129 Consolidated income statement
129 Consolidated statement of
comprehensive income
130 Consolidated balance sheet
131 Consolidated statement of
changes in equity
132 Consolidated cash flow statement
133 Notes to the consolidated
financial statements
171 Company balance sheet
172 Company statement of
changes in equity
173 Notes to the Company’s
financial statements
182 Five-year summary
Other information
184 ESG data report
186 Other shareholder information
For more and the latest information
please visit our website at:
www.travisperkinsplc.co.uk
Travis Perkins plc Annual Report and Accounts 2022
1
Financial statementsOther informationGovernanceStrategic report Highlights
2022
Revenue growth
8.9%
2021: 24.0%
Adjusted EPS
Basic EPS
94.6p
2021: 107.3p
90.8p
2021: 103.9p
Revenue
Covenant net debt
Return on capital employed
£4,995m
£279m
10.8%
2021: £4,587m
2021: £87m
2021: 14.1%
Adjusted operating profit
Profit after tax
£295m
2021: £353m
£192m
2021: £241m
Financial highlights
• Robust revenue growth with elevated levels of
materials cost inflation diligently managed
• Proactive cost actions to deliver benefits of
around £25m in 2023
• Adjusted operating profit of £295m,
impacted principally by lower year-on-year
property profits and a £15m charge relating
to restructuring activities in Q4
• Good cash conversion at 67%. Lease-
adjusted leverage (net debt / EBITDA)
of 1.8x remains comfortably within
target range
• Adjusted earnings per share of 94.6p, with
lower operating profit partially offset by
reduced share count
• Total ordinary dividend increased to
39.0p per share (2021: 38.0p per share)
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Travis Perkins plc Annual Report and Accounts 2022
Operational highlights
• Solid performance in the Travis Perkins
General Merchant, with further share gains,
driven by focus on enhancement of digital
capability and expansion of value-added
services primarily across Hire, Benchmarx
kitchens and Managed Services
• Continued strong performance from
the Group’s specialist distributors: BSS,
Keyline and CCF. Staircraft now integrated
and enhancing the Group’s housebuilder
proposition
• Toolstation returned to good growth in H2
after tough prior year comparatives in H1.
Significant investment in expanding
infrastructure in the UK and Europe
• Positive progress on sustainability targets,
notably a 34% reduction in Scope 1 & 2
carbon emissions during the year
Travis Perkins plc Annual Report and Accounts 2022
3
Financial statementsOther informationGovernanceStrategic report Chair’s statement
Distribution to shareholders
In 2021 the Group laid out clear guidance on shareholder
returns and I am pleased to reiterate those principles here.
The Group will deliver returns to shareholders by:
• Achieving the best earnings number available given
market conditions and in accordance with our values
and long-term views.
• Paying out 30–40% of those (adjusted) earnings each
year as an ordinary dividend.
• Ensuring that we fund this through strong cash
conversion, disciplined capital allocation and remaining
within our published leverage targets of 1.5–2 times
net debt / EBITDA.
We have achieved these goals and announced a final
dividend of 26.5p pence per share which, when combined
with the interim dividend paid in November 2022 of 12.5p
per share, will result in a total distribution of £82m for 2022.
In addition to this, the Group completed the return to
shareholders of the proceeds from the sale of the Plumbing
and Heating Division in 2021. A total of £321m has now
been returned, comprising the special dividend of £78m
and a share buy-back of £71m in 2021 and a further share
buy-back of £172m in 2022, keeping the Group in the
middle of our leverage target range.
Go to page 115 to see more
Section 172 statement
Working together with our stakeholders towards shared goals
is part of how we deliver long-term sustainable success.
Go to page 62 to see more
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Travis Perkins plc Annual Report and Accounts 2022
It brings me great pleasure to
introduce the Annual Report for
2022. It has been a challenging year
for businesses and many people in
our society and I am proud that
Travis Perkins has shown character
and resilience throughout the year.
Jasmine Whitbread
Chair
Introduction
It has been a challenging year for business in 2022 as the full
implications of the war in Ukraine have become apparent. The bright
start to the year seems a long time ago and we have needed to adapt
to a period of significant inflation and more cautious end markets.
This has led to a difficult period for the share price, albeit one which
has been sector and market wide. Throughout 2022 we have needed
to remain focused on the fundamentals of the model laid out at our
Capital Markets Update in September 2021 and I am proud of the
response across the Group. We have taken the right decisions to
help our customers, care for our people and be fair to our suppliers.
Our Purpose and Values guide us through difficult times and this has
given the Group a clear direction and sense of the right things to do.
People and Culture
The Group continued efforts building a culture of healthy sustainable
performance, one where its 20,000 colleagues are successful
individually and as a team, and are working together to create
a fully inclusive and healthy workplace.
As I have visited the operations I have observed how the refreshed
Group values have been developed, launched and integrated into our
language and are also being demonstrated in actions and behaviours
across the Group. Colleagues were at the heart of the development of
the updated values, which reflect every part of the business and every
colleague group. In a year of great workforce and workplace challenges
the Group has rightly maintained keen attention on colleague voice
and engagement. A group-wide engagement survey was completed
and colleagues participated in the ESG materiality assessment.
Pete Redfern continued as the designated workforce engagement
Non-executive Director and his colleague listening focus was on drivers
and new starters. Key feedback themes have included safety, belonging,
equal opportunity, customer focus and corporate citizenship. Further
progress on diversity, equity and inclusion (DEI) has been evident with
continued improvement in overall gender balance and the extension
of existing family policies.
Dividend per share
Total cash to shareholders
39.0p
£254m
Board and Leadership
I am pleased to report further strengthening of the Board and Executive
Leadership Teams.
In January 2023 we welcomed Louise Hardy to the Board, increasing
the range of experience and talent available to help steer and shape
the Group. A civil engineer by background, Louise has wide-ranging
experience across the construction sector from the delivery of major
projects at the London 2012 Olympics through to the governance of
large businesses in the sector in her role as Non-executive Director at
Balfour Beatty plc and Crest Nicholson plc. In addition to her business
roles, Louise is a keen volunteer within the industry as a STEM
ambassador and diversity champion. Louise will make a broad
contribution to the Group and we look forward to working with her.
The Executive leadership team under Nick Roberts continues to deliver
experienced and high-quality leadership through the challenging
macroeconomic conditions. I have been impressed by the way that
the Executive team has risen to the challenge of leading the agenda
on a variety of issues that support the need to change our industry.
In January 2023, the Group announced that Kieran Griffin, Managing
Director of Travis Perkins would leave the Group after 28 years of
valued service, to be replaced by James MacKenzie, currently the
Managing Director of Toolstation. James’ role at Toolstation will be filled
by Angela Rushforth, who is currently Managing Director of BSS. I look
forward to working with these talented individuals in their new roles.
Decarbonising our industry
The Group has demonstrated its ambition to play a leading role in the
creation of a more sustainable construction industry with investments
in skills, knowledge and capabilities to support the modernisation and
decarbonisation of the sector. The integration of ESG into the Group’s
strategy is driving a number of commercial-opportunity-led initiatives
directly addressing customer needs in reducing waste and in reporting
and reducing their carbon use. In 2022 positive progress was made
against existing carbon reduction targets and the Group set interim
targets for buildings, fleet and Scope 3 emissions engagement by 2027.
Summary and looking forward
I take two perspectives in looking forward. Firstly, from a macro
perspective it is hard to look forward without some uncertainty. At the
time of writing it is difficult to predict the shape of the UK economy in
2023 and the route it will take to recover from the current low point.
The second perspective I take is on whether the Group is in good shape
to meet and overcome these challenges. Here I am confident,
convinced that we have the right strategy, the right skills and the
high-quality leadership to ensure we win and grow our share of an
exciting and attractive market.
Travis Perkins plc Annual Report and Accounts 2022
5
Financial statementsOther informationGovernanceStrategic report Overview
Our purpose
We’re here to help build better
communities and enrich lives
Our ambition
To be the leading partner to
the construction industry
Sustainability Priority
Decarbonising the industry
Building for better
Changing the game
Modernising
construction
Sourcing
responsibly
Operating
sustainably
Developing the
next generation
Doing the Right Thing
Safety and wellbeing | Colleague voice
Diversity, equity and inclusion | Reward
Charity and volunteering | Legal compliance
Modern slavery and human rights
6
Travis Perkins plc Annual Report and Accounts 2022
Our strategy
Our strategy is to grow the share of our market-leading businesses by
offering our customers attractive propositions which means they spend
more with the Group. We seek to elevate our customer relationships
through the addition of value added services, solving customer pain
points and moving us along the value chain. In addition we are deepening
our relationships by winning a greater share of customer spend, through
the addition of digital channels, new ranges and highly relevant offers.
Our values
Our values reflect what matters to us and how we do things.
ELEVATING
RELATIONSHIPS
Professional
trades and
general
builders
OUR
STRATEGY
Larger
contractors
and
developers
DEEPENING
RELATIONSHIPS
Delivering shareholder value
WE CARE
WE GIVE OUR BEST
TO BE THE BEST
WE’RE BETTER
TOGETHER
Travis Perkins plc Annual Report and Accounts 2022
7
Financial statementsOther informationGovernanceStrategic report At a glance
Travis Perkins is the largest
distributor of building materials
in the UK
A trade-focused Group, serving generalist and specialist trades
with products and services that are designed to help customers to
grow their businesses in new and established markets.
Large and varied
customer base
Broad geographical
spread in the UK
Engaged colleagues in
the UK and Europe
Evolving branch
network
20 0k £5bn
Trade credit customers
Revenue
20k
Colleagues
1,488
Branches
Merchanting
Toolstation
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 committed
customer service ethos, Toolstation is
changing the purchasing experience of
trade and DIY customers. Toolstation
operates from over 550 branches
across Great Britain and is growing
quickly in the Netherlands, Belgium
and France.
Go to page 33 to see more
The market-leading general merchant,
offering a destination for heavyside
products, complemented by lightside
convenience. Serving general trades
and specialist contractors with 60%
delivered products from c. 550 national
locations. Contains a comprehensive
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 50 branches and
two bespoke distribution centres. Offers
customers a tailored 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.
Go to pages 68-69 to see more
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 branches 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 Hire.
8
Travis Perkins plc Annual Report and Accounts 2022
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
Product
mix
South East
Midlands
North and Scotland
Wales and South West
Europe
32%
24%
22%
20%
2%
Heavyside
Lightside
Plumbing & Heating
Timber
48%
22%
17%
13%
Channel
100%
75%
50%
25%
63%
37%
0%
Collect
Deliver
Payment method
100%
75%
50%
25%
0%
29%
Cash
71%
Credit
Travis Perkins plc Annual Report and Accounts 2022
9
Financial statementsOther informationGovernanceStrategic report Investment case
The Group’s ambition is to
be the leading partner to
the construction industry
A compelling investment proposition
01
02
Well-invested businesses with
market leading positions
Long-term structural
growth drivers
04
05
03
Merchanting returns
driven by network
investment and value
added services
06
Substantial Toolstation
growth potential
Robust balance sheet
providing financial flexibility
Attractive returns
for shareholders
10
Travis Perkins plc Annual Report and Accounts 2022
A compelling investment proposition
Well-invested businesses with
Long-term structural
market leading positions
growth drivers
02
05
03
Merchanting returns
driven by network
investment and value
added services
06
01
04
Substantial Toolstation
Robust balance sheet
Attractive returns
growth potential
providing financial flexibility
for shareholders
Robust balance
sheet and
focused allocation
of capital
Merchanting
leadership and
Toolstation expansion
driving above
market growth
Incremental cash
release from
freehold property
development
Strong cash
conversion from
disciplined
working capital
management
A strong, dynamic model
Well set for future earnings growth
Ordinary dividend of 30–40% adjusted earnings
Potential for additional return of surplus capital
Travis Perkins plc Annual Report and Accounts 2022
11
Financial statementsOther informationGovernanceStrategic report Market overview
The Group operates in a £78bn market
The market for construction materials is approximately £78bn,
with £60bn coming through distribution channels. The Group
serves four major end-markets, with just over half of revenues
coming from private domestic housing and the balance being split
between the commercial & industrial market and the public sector.
Private domestic new build
Private domestic repair, maintenance
and improvement (“RMI”)
Market mix
22%
Market mix
14%
Group revenue mix
Group revenue mix
19%
Growth drivers:
• Growth in households and population
• Ongoing housing supply shortage
• Drive for more energy efficient homes
• Sales incentives and support
for first-time buyers
• Ongoing desirability of home
ownership vs renting
35%
Growth drivers:
• Disrepair of housing stock
• ECO+ insulation scheme
• Requirement for retrofit and
cladding remediation works
• Need for decarbonisation and improvement
for EPC ratings for rented sector
• Reconfiguring homes for more
space and home working
• “Don’t move, improve!” – given costs of
moving and challenge of finding new homes
12
Travis Perkins plc Annual Report and Accounts 2022
Commercial and industrial*
Public sector**
Market mix
24%
Group revenue mix
22%
Market mix
40%
Group revenue mix
24%
Growth drivers:
• Growth in warehousing and logistics space
Growth drivers:
• Hospital and school rebuilding programmes
• Refurbishment of office and retail space around
• Nine-year backlog of essential road repairs and major
hybrid working and new patterns of retail
new-build schemes
• Cladding remediation work on commercial buildings
• Major projects eg HS2, Hinkley Point C, Thames Tideway
• Repair and maintenance work increases when less
• Offshore wind growth
new space is coming into the market
• Ongoing requirements for Public sector affordable housing
• Significant requirements to improve the condition and
thermal efficiency of existing public sector housing via
retrofit programmes
*
Includes commercial and industrial new build and private
non-housing R&M
**
Includes infrastructure, public new building (housing and non-housing)
and public housing RMI and non-housing R&M.
Travis Perkins plc Annual Report and Accounts 2022
13
Financial statementsOther informationGovernanceStrategic report Business model
People are at the heart of the business model. The Group’s
businesses bring together customers, suppliers and colleagues
into mutually beneficial relationships which can last many
years. The Group cares deeply for the people within its broader
community and for the impact it has on the environment.
Inputs
Competitively advantaged resources and relationships
What we do
Collaborative value chain
• Deep customer
relationships 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 the ability
to connect to customers
across the country
Customers
Resources
Suppliers
Requirements
• Collaborate, specify
and quote
• Negotiate, convert and sell
• Range and source
• Assort and procure
• Fulfil, collect and deliver
Products and services
Go to pages 16 to 25 to see more
Underpinned by
Responsible and sustainable approach
Go to page 30 to see more
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Travis Perkins plc Annual Report and Accounts 2022
What we do
Collaborative value chain
Outputs
Self-reinforcing model generating
growth and value for stakeholders
Purpose goals
Decarbonising
the industry
• Fulfilled customers
• Engaged colleagues
• Enriched communities
• Satisfied shareholders
• Valued suppliers
Modernising
construction
Sourcing
responsibly
Operating
sustainably
Developing the
next generation
Group ambition
Leading partner to the
construction industry
Go to pages 16 to 25 to see more
Sound corporate governance
Robust risk management
Go to page 86 to see more
Go to page 75 to see more
Travis Perkins plc Annual Report and Accounts 2022
15
Financial statementsOther informationGovernanceStrategic report Strategy
The strategy is to grow through elevating
customer relationships by offering value
added services and deepening relationships
to win a greater share of customer spend.
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 serve them in the most effective way.
ELEVATING
RELATIONSHIPS
Professional trades and
general builders
Typically smaller customers who value local
relationships and who serve domestic and light
commercial markets for mostly RMI work.
OUR
STRATEGY
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
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 make the
purchasing process as smooth and integrated as possible.
16
Travis Perkins plc Annual Report and Accounts 2022
Overview of strategic initiatives
• Tool hire growth
• Managed Services
expansion
• BSS
– Intelligent Solutions launch
– TF Solutions growth
• Travis Perkins and
• Keyline
Benchmarx cross-selling
– Economic infrastructure support
• Regional housebuilders
proposition development
• CCF
– Technical sales capability
– Carbon reporting launch
• Staircraft
– Capacity investment
• Increased app
penetration
• Launch of trade credit
• New distribution
capacity in the UK and
Netherlands
ELEVATING
RELATIONSHIPS
DEEPENING
RELATIONSHIPS
• Leverage digital
investments
• Network investment
• Own-brand investments
• Increased trade-focused range
• Ongoing digital
investment
• Network rollout
Travis Perkins plc Annual Report and Accounts 2022
17
Financial statementsOther informationGovernanceStrategic report Strategy in action
Hire: getting the job done
Developing the Travis Perkins Hire proposition to
offer more services to customers and to take a
larger share of wallet
Strong growth in Hire sales
Hire sales have increased over 30% since 2018.
Hire sales growth
2019
2020
2021
2022
Deepening customer relationships
Hire sales have grown through a number of initiatives.
The key target is to help customers complete their projects
and this means targeting Travis Perkins General Merchant
customers with relevant Hire offers to help them get the
job done. Success here is measured by the increase in
penetration of customer accounts using Hire products.
Percentage of customers using Hire
Q4
2020
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Q1
2022
Q2
2022
18
Travis Perkins plc Annual Report and Accounts 2022
Expanding the network, maintaining efficiency
Hire equipment has been rolled out to more of the Travis Perkins network
to ensure that the right kit is available for customers when they need it.
The team has been working hard on achieving the balance between
deploying equipment into branches and maintaining a strong and
responsive supply chain to ensure that capital efficiency is maintained.
The right equipment in the right place
Having the right equipment available in the right place is vital for growing
the Hire business. To ensure success Travis Perkins has been working hard on
enabling local collaboration between branches to ensure that the kit is pooled
to give the best possible availability. There has been significant investment in
new tools and equipment, both in high-volume smaller tools and in specialist
equipment aimed at different key customer segments.
Building sales capabilities
Key to growing account penetration is to ensure that as many colleagues
as possible are confident to talk to customers about the Hire offer.
This includes training and developing branch colleagues and recruiting
specialist sales and account managers.
Travis Perkins plc Annual Report and Accounts 2022
19
Financial statementsOther informationGovernanceStrategic report Strategy in action
Toolstation: developing
the trade offer
The Toolstation offering is open to all customers, but it is
targeted primarily at the trade, offering trade-ready brands,
in the right quantities for the job, at trade prices.
Toolstation ‘Trade Account’
In 2022 Toolstation rolled out the Trade Account, offering
customers credit on their purchases to help manage their
cash flow, plus a series of unique discounts to recognise
their regular spending and support. This is working well
in the UK and in the Netherlands.
Improving distribution capability
The build and fit out of the new Toolstation distribution
facility in Pineham Northampton has continued over 2022
and it remains on schedule to come on stream in 2023.
The new facility will provide significant additional capacity
to allow customers to access more products wherever
they need them.
The site can hold a range of over 25,000 products and
will allow Toolstation even further scope to upweight their
trade focused ranges.
Toolstation Netherlands has also invested in a substantial
improvement in distribution capacity with a new distribution
centre which went live in Q3 2022.
More trade brands
Offering the right brands to tradespeople is vital in
persuading them to change their supplier. Over the course
of 2022 Toolstation has added more than 4,000 new
products, expanding the range of trade recognised brands.
Top brands
New in
20
Travis Perkins plc Annual Report and Accounts 2022
Travis Perkins plc Annual Report and Accounts 2022
21
Financial statementsOther informationGovernanceStrategic report Strategy in action
Staircraft
Expanding the capacity of the Staircraft business,
allowing more housebuilders to benefit from superior
quality products that make installation quicker, simpler
and safer and result in fewer home-owner issues.
Products that improve the
sustainability of the sector
Staircraft’s product designs allow
customers to reduce material use
and waste on site, eg uniquely,
chipboard flooring is factory-cut,
typically reducing waste by 25–30%.
Products to drive improvements
in health and safety
Staircraft’s innovations help to reduce risks
on-site. For example:
• Factory-applied, slip-resistant, peel-clean
tread protection
• Precision-manufactured components that
offer a simpler and safer installation
22
Travis Perkins plc Annual Report and Accounts 2022
Travis Perkins plc Annual Report and Accounts 2022
Innovative digital tools
Innovative digital tools, such as the Staircraft Call-Off
app, create efficiencies in the order, manufacture,
delivery and installation processes.
Our Call-Off app
eliminates phone
calls and chaser
emails and keeps
you updated,
ultimately saving
you time and
money!
Our information
portal gives install
guidance: including
a QR scanner with
interactive product
images and
brochures
Travis Perkins plc Annual Report and Accounts 2022
23
Financial statementsOther informationGovernanceStrategic report Strategy in action
The Group’s property portfolio is
a source of value, profit and cash
Creating value through property
The property strategy is a key part of the Group’s overall
strategy, ensuring that the businesses have the space to add
value to customers and earn a greater share of their spend,
supporting the efficient allocation of capital and maximising
returns. The scale of the Group gives a competitive advantage
in negotiating terms and being a group gives flexibility over site
usage, with the opportunity to switch sites between brands and
so mitigate risk. The Group’s strong balance sheet ensures
access to funding at better financing terms and gives flexibility
in using sale-and-leasebacks at competitive yields to access
funds for investment.
Freehold property portfolio market value and net book value (NBV £m)
Since 2010 the market value of the
Group’s freehold estate has grown by
almost £600m and the book value has
grown by £240m. During this period the
portfolio has also generated net proceeds
after reinvestment of £100m and profits
of £300m.
This highly capable management of the
property portfolio enables the Group
to access the best operational sites,
generate cash and release profits.
A self-reinforcing cycle
Select and acquire
•
Identify optimal locations using
data and local expertise
• Secure sites as freehold
or leasehold
Ensure long-term occupation of the
best operational assets that generate
cash and profit
Recycle and reinvest
• Assess strategic drivers for holding
or selling the property freehold
• Release capital through sale or sale-and-
leaseback and reinvest or distribute
Develop and transform
• Enhance existing sites
through redevelopment
and switching brands
• Develop freehold sites
24
Travis Perkins plc Annual Report and Accounts 2022
Creating value through development
Relocating Bristol St Philips
In February 2022 this branch moved from a below-standard 0.8 acre site to a newly refurbished 24,000 sq ft warehouse on a 2.7 acre site.
Getting the right site in the right location, supported by net freehold investment of £2.8m and the investment of £2.3m in fit-out, vehicles and
incremental working capital, has already seen sales more than double at a branch margin of over 10% with a target return on capital at maturity
of over 40%.
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Investing in carbon reduction
To achieve the Group’s target of an 80% reduction in carbon from buildings by 2035, considerable investment in decarbonisation is underway
in new and existing branches. Retrofitting existing branches will be essential to achieving this goal through a combination of:
£4 million invested in the
roll-out of LED lighting,
saving 2,000 tonnes of
carbon annually
Utilisation of ‘Building
Management Systems’ and
‘Internet of Things’ controls
to reduce out-of-hours
energy use
Roll-out of electric vehicle
charging points at DCs,
offices and branches
Working with landlords to
improve insulation and
glazing at branches to make
them more efficient
Gas boilers changed for air-source heat pumps
where possible to decarbonise heating
Installation of charge points
to facilitate the electrification
of fork-lift trucks
Solar PV installed on roof of
DCs and large branches,
funded by ‘Power Purchase
Agreements’ where possible
Interim target: Achieve a 40% reduction in emissions from our buildings by 2027.
Travis Perkins plc Annual Report and Accounts 2022
25
Key performance
indicators (KPIs)
Operational
Adjusted operating profit*
Sales growth
2022
2021
2020†
2019
2018
£295m
£353m
2022 8.9%
2021
24.0%
£128m
2020†
(10.8)%
2019
2018
£442m
£375m
2019 3.2%
2018 4.9%
Definition (note 2a)
Profit before tax, financing charges and
income, amortisation of acquired intangibles
and adjusting items.
Reason
Adjusted operating profit excludes adjusting
items and the amortisation of other
intangible assets arising on the acquisition
of a business, so management can monitor
the Group’s underlying performance.
Definition (note 1b)
Total revenue growth. This KPI is now based
on total revenue, not ‘like-for-like’ revenue.
Reason
Sales growth helps management monitor
the performance trend of the business and
gives a good indication of its overall health
compared to its competitors. Using growth
in total revenue ensures that actions such as
the consolidation of branches do not distort
the KPI and better reflects the nature of the
Group following the demerger of Wickes.
26
Travis Perkins plc Annual Report and Accounts 2022
Financial
Leverage ratio*
2022
2021
2020†
2019
2018
Free cash flow
Return on capital employed*
1.8x
1.2x
2.0x
2.5x
2.7x
2022
2021
2020†
2019
2018
£95m
£65m
2022
2021
£241m
2020†
£195m
£168m
2019
2018
10.8%
14.1%
5.3%
10.1%
10.5%
Definition (note 25)
The ratio of net debt to earnings before tax,
interest, depreciation, amortisation and
adjusting items (“EBITDA”). The figure
for 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 excluding pension assets. The figure
for 2018 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.
Non-financial
Accident frequency rate
Carbon emissions
2022
2021
2020†
2019†
2018†
2022
2021
2020
4.7
5.6
5.4
5.4
7.8
9,945
10,220
9,766
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, 2 and 3 carbon emissions
(megatonnes of CO₂e). Data is presented
for 2020 onwards as that is the period for
which sufficiently accurate Scope 3 data
is available. 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 the business. This KPI
now includes Scope 3 in addition to Scope 1
and 2, as Scope 3 represents over 99% of
the Group’s carbon footprint and the Group
has set a target of reducing Scope 3
emissions by 63% 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 2018 and 2019 include these segments.
Travis Perkins plc Annual Report and Accounts 2022
27
Financial statementsOther informationGovernanceStrategic report Chief Executive’s statement
Our year in review
– Solid performance in the Travis Perkins
General Merchant, driven by focus on
digital capability and value-added
services, including Hire, Benchmarx
kitchens and Managed Services
– Continued strong performances from
the Group’s specialist distributors,
BSS, Keyline and CCF. Staircraft now
integrated and enhancing the Group’s
housebuilder proposition
– Toolstation returned to good growth
after a tough prior year comparatives in
H1, as we look to maximise Toolstation’s
growth potential in the UK and Europe
– Good progress towards purpose goals,
notably a 34% reduction in Scope 1 & 2
carbon emissions
– Expansion of our apprenticeship
offering to the wider industry with
the 1,000th graduate in 2022, a
major milestone as we develop
the next generation of the UK
construction workforce
28
Travis Perkins plc Annual Report and Accounts 2022
I am extremely proud of the way that our
colleagues have responded to a challenging
year – one characterised by increasing
macroeconomic uncertainty and volatile
market conditions. The dedication of our
team and uniqueness of our business has
enabled us to outperform our markets and
deliver a resilient performance.
Nick Roberts
Chief Executive Officer
Overview
Reflecting on the year as a whole, 2022 will ultimately be remembered
as a challenging period during which the increased operational agility
resulting from the recent simplification of the Group was once again
tested. After a strong start to the year, with elevated levels of activity
in the residential sector, both consumer and business confidence were
eroded by the impact of rapidly rising energy and commodity prices
driven by the war in Ukraine and the rise in interest rate expectations
following September’s “mini-budget”. Alongside a weakening demand
outlook, our teams have had to carefully manage unprecedented
levels of materials cost inflation and steeply rising overhead costs.
Our team remains one of our greatest strengths. I would like to take this
opportunity to thank each of our colleagues for their continued diligence,
hard work and exceptional focus on delivering for our customers despite
many intense pressures. We recognise the impact that the sharply
increasing cost of living is having on our colleagues and have offered
financial wellbeing support and additional benefits where we can as
well as maintaining a strong focus on building a culture where everyone
returns home safe and well everyday.
Towards the end of the year, as it became apparent that 2023 is likely
to see reduced activity levels in the construction sector, we made some
tough decisions to ensure that our cost base is aligned to expected
market conditions. As always, we have sought to manage this
difficult process in a way that is fair for all concerned.
It is through the combination of the market leading service provided by
our colleagues and our ability to flex our approach to respond quickly
to changing market dynamics that the Group has been able to deliver
a resilient financial performance in 2022. Despite the uncertainty
ahead, we remain well placed to continue to outperform our
markets and deliver long term value for all our stakeholders.
Operational review
The Group’s merchant businesses delivered a robust performance
and continue to outperform their end markets. This outperformance
is driven by a focus on further enhancing our market leading
propositions through our strategy of both deepening and elevating
our customer relationships. To provide our customers with simple
and convenient ways of doing business with us, we continue to invest
in larger destination branches and develop our digital channels.
Revenue
£5.0bn
2021: £4.6bn
Adjusted operating profit
£295m
2021: £353m
Furthermore, our value-added services, such as Hire and Managed
Services, reduce the time, complexity, cost and carbon associated with
customers’ projects.
Toolstation had a challenging year as the elevated levels of DIY volume
during the pandemic unwound. The business encouragingly returned to
growth in the second half of the year and the focus on developing the
proposition for our trade customers remains unchanged. Our European
business continues to expand, with revenues having more than doubled
in the last three years, seeking to build on the first-mover advantage in
Benelux and France.
Strategic progress
The Group has made good progress during the year to both deepen
and elevate relationships with customers. In the challenging trading
environment we have had to prioritise activity but it is encouraging
to see the development of some truly differentiating propositions as
well as the ongoing growth in our more established service oriented
platforms. In this Annual Report we highlight the growth in our Hire
business which is performing exceptionally well and helping customers
to remove cost and complexity from their projects. In addition we
highlight the differentiation that comes from the addition of Staircraft
to the Group, a market leading innovator in environmental and safety
performance, that brings significant benefits to our customers.
Building a sustainable business
To further inform the Group’s focus on building a sustainable business,
the Group conducted a thorough sustainability materiality assessment
with qualitative and quantitative input from all key stakeholder groups.
The assessment identified that carbon is the principal area of focus
for stakeholders and as a result decarbonisation will be the Group’s
sustainability priority. This assessment will inform governance,
investment, communication and engagement decisions in the coming
years. In 2022 we made positive progress against existing carbon
reduction targets and the Group continues to engage in decarbonisation
by setting science-based interim targets for our buildings, fleet and Scope
3 emissions engagement for 2027. I have personally had the pleasure of
leading engaging Scope 3 discussions with both some of our national
housebuilder customers and largest product suppliers. I am optimistic
about the shared purpose, creativity and desire for collaboration that
exists across our value chain, which we will build on in the years to come.
Developing the next generation
A key enabler of a more sustainable construction industry in the UK will
be the development of future skills. The Group has continued to expand
its apprenticeship offering, creating new jobs and new pathways for
career progression guided by a strategic focus to attract and retain
more diverse talent and to address the challenges faced by both
the Group and sector around digital skills, data, carbon reduction
and changes to construction methods. The Group has opened
its sector-leading Apprenticeship infrastructure to supply chain
partners in the construction sector and is now the Early Careers
and Apprenticeship provider to the Builders Merchant Federation.
We currently have 340 Apprentices from outside the Group enrolled
on a Travis Perkins delivered apprenticeship, through organisations like
the Builders Merchant Federation. By the end of 2022 we reached the
milestone of our 1000th graduated apprentice. To mobilise the Group
and industry partners on the role of apprenticeships and skills as a key
driver of diversity and key enabler of the UK’s green transition, the
Group has set a long-term target of 10,000 completed apprenticeships
by 2030.
Outlook
The outlook across our end markets remains uncertain and, in our
planning for 2023, it has been necessary for us to adopt a balanced
approach, maintaining the focus on executing our strategy to lead in
our markets but also recognising that it will be necessary to manage
our cost base and capital spend plans appropriately in the shorter
term to reflect the expectations of a weaker volume environment.
The long-term structural drivers in our end markets remain robust
with the need to decarbonise the UK’s built environment becoming
ever more pressing due to rising energy costs and the impacts of
climate change. The shortage of both public and private housing in
the UK also remains a significant growth opportunity. We continue
to position our businesses to support the delivery of these key
objectives and, in doing so, create sustainable long-term value
for our shareholders.
Travis Perkins plc Annual Report and Accounts 2022
29
Financial statementsOther informationGovernanceStrategic report Sustainability report
With sustainability at the heart of the
Group’s strategy, we are committed
to lead on Environmental, Social and
Governance (“ESG”) through our
“Building for Better” agenda
Making strides towards our commitments
In 2022 we made progress towards our ambitious carbon
reduction targets, reducing Scope 1 & 2 carbon by 34% and
Scope 3 by 2% compared to 2021. Against our 2020 target
baseline this represents a 35% improvement (Scope 1 & 2) and a
2% deterioration (Scope 3). Scope 3 carbon emissions compared
to inflation-adjusted revenue improved by 16% against the 2020
baseline. 342 colleagues and industry partners graduated in
apprenticeships facilitated by LEAP, the Group’s Early Careers
and Apprenticeship provider. This sets a strong foundation for
the Group’s new skills goal of 10,000 graduated apprentices by
2030. Our work in all other focus areas has moved forward and
progress is reported in the following pages.
PURPOSE
We’re here to help build
better communities and enrich lives
AMBITION
Leading partner to the construction industry
SUSTAINABILITY PRIORITY
Decarbonising the industry
BUILDING FOR BETTER
Changing the game
Modernising
construction
Provide sustainable
products and services
to support Modern
Methods of Construction,
retrofit, energy efficiency,
decarbonisation, climate
resilience, biodiversity,
nature, water and waste.
Sourcing
responsibly
Ensure safe and quality
products from ethical,
traceable and resilient
supply chains. Support
the Golden Thread
of data.
Operating
sustainably
Lead by example within
our own operations.
Deliver net zero
carbon and reduce
operational waste.
Developing the
next generation
Upskill our people and
the wider industry in
Green and Future skills
to equip the sector
for change.
Doing the right thing
Safety & Wellbeing | Diversity, Equity & Inclusion | Colleague Voice | Reward
Charity & Volunteering | Modern Slavery & Human Rights | Legal Compliance
30
Travis Perkins plc Annual Report and Accounts 2022
This agenda is a key driver in achieving our Group Purpose and
Ambition. We are uniquely able to convene the supply chain to
collaborate and co-create solutions, influencing and supporting the
sustainability changes our industry needs, because of the Group’s
market-leading businesses and our position in the supply chain
between thousands of suppliers and thousands of customers.
Prioritising the most material focus areas
In 2022 an in-depth ESG materiality assessment was undertaken,
engaging with stakeholders to deepen the Group’s understanding
of the ESG issues that matter most to a range of different audiences.
The findings guide the Group’s strategic choices and reporting and
ensure we remain focused on the most important issues. While
the assessment confirmed that the focus areas within the previous
framework remain relevant, it demonstrated that carbon is the principal
issue for stakeholders, making it the Group’s sustainability priority
moving forwards. The assessment also confirmed that broader ESG
topics and those related to core business responsibilities are important
for many stakeholders.
The materiality assessment was supported by a third-party expert
and involved three steps:
1. Refinement of key ESG topics: Desktop research and internal
consultation to challenge and evolve the list of ESG topics. The
review was informed by “societal megatrends”, the UN Sustainable
Development Goals (SDGs) and the Group’s top and emerging risks.
2. Stakeholder engagement: 43 individual and group interviews were
carried out with 65 customers, colleagues, suppliers, investors,
communities and other stakeholders. A quantitative survey with
over 3,600 respondents was conducted to explore the relative
importance of the ESG topics and included a specialist sample
of opinion formers, as well as UK consumers and Travis Perkins
Group customers and suppliers.
3. Strategic analysis: Analysis was conducted on the qualitative
and quantitative findings and the relationships between them,
giving an understanding of the ESG topics and their importance
to stakeholders.
The Materiality Map illustrates key priorities for the Group based
on ‘Double Materiality’:
The Group will continue to review the material focus areas to ensure
that the most important topics for the business and for stakeholders
are in scope.
DECARBONISING THE INDUSTRY
DECARBONISING THE INDUSTRY
MODERNISING
CONSTRUCTION
MODERNISING
CONSTRUCTION
SOURCING
RESPONSIBLY
SOURCING
RESPONSIBLY
OPERATING
SUSTAINABLY
OPERATING
SUSTAINABLY
DEVELOPING THE
NEXT GENERATION
DEVELOPING THE
NEXT GENERATION
DOING THE RIGHT THING
DOING THE RIGHT THING
Identified as a top ten priority for impact in,
i.e. issue that can materially impact
Travis Perkins plc.
Identified as a top ten priority for impact out,
i.e. issue that Travis Perkins plc has a material
impact on.
Identified as a top ten priority for impact in,
i.e. issue that can materially impact
Travis Perkins plc.
Identified as a top ten priority for impact out,
i.e. issue that Travis Perkins plc has a material
impact on.
Access to sustainable and resilience-improving solutions
Access to sustainable and resilience-improving solutions
Biodiversity, nature and forestry
Biodiversity, nature and forestry
Water use
Water use
Product packaging and circularity
Product packaging and circularity
Responsible sourcing and relationships with suppliers
Responsible sourcing and relationships with suppliers
Human rights and modern slavery
Human rights and modern slavery
Data use and responsibility
Data use and responsibility
Product safety and quality
Product safety and quality
Carbon emissions
Operational waste management
Carbon emissions
Air quality
Operational waste management
Developing skills and knowledge in the community
Air quality
Skills, apprenticeships and training
Developing skills and knowledge in the community
Employee safety and wellbeing
Skills, apprenticeships and training
Culture and purpose
Employee safety and wellbeing
Responsible and transparent business
Culture and purpose
Responsible marketing and selling
Pay and reward
Responsible and transparent business
Employee engagement and relations
Responsible marketing and selling
Diversity, equity and inclusion
Pay and reward
Community impacts of our business and operations
Employee engagement and relations
Diversity, equity and inclusion
Community impacts of our business and operations
Travis Perkins plc Annual Report and Accounts 2022
31
Financial statementsOther informationGovernanceStrategic report Sustainability report continued
Building for Better: Commitments and progress
Strategic
sustainability priority
Decarbonising
the industry
1.5 degree-aligned,
SBTi-approved
carbon reduction
targets
Good progress
Some progress
Material focus areas
Long-term
commitments
2022 key actions
2022
progress
2023 key actions
Supporting the
Group’s strategy
Delivering against
the SDGs1
Modernising construction
Sustainable products and services
to support MMC, retrofit, energy
efficiency, decarbonisation, climate
resilience, biodiversity, nature, water
and waste.
Sourcing responsibly
Safe and quality products from
ethical, traceable and resilient supply
chains. Supporting the Golden
Thread of data.
Operating sustainably
Net zero carbon and reduced
operational waste. Leading by
example within our own operations.
Developing the next generation
63% reduction in
Scope 3 carbon
by 2035
Develop a retrofit proposition to support social
landlords with the decarbonisation of their properties.
Increase engagement with stakeholders, with
particular focus on suppliers, to reduce Scope 3
carbon emissions.
Evolve the Group’s due diligence approach to bring
into scope remaining product suppliers and
“goods-not-for-resale” suppliers, on a risk-basis.
Net zero for Scope
1&2 carbon by
2035 (with at least
80% reduction)
Extend hydrotreated vegetable oil (HVO) fuel use
from 12 to 200 vehicles.
Reduce the amount of plastic waste the Group
produces by engaging with suppliers and seeking
alternative, sustainable packaging solutions.
Upskilling our people and the wider
industry in Green and Future skills to
equip the sector for change.
10,000 graduated
apprentices by
2030
Deliver a curriculum offering career development
opportunities to all colleagues enabling the
development of the next generation workforce.
Doing the Right Thing (underpinning the Changing the Game focus areas above)
Safety & wellbeing: Getting everyone home safe and well,
every single day.
Diversity, equity & inclusion: Creating an environment
where everyone can be themselves.
Colleague voice: Listening to colleagues to make better
decisions and drive engagement.
Charity & volunteering: Taking pride in helping others
and making positive change happen.
Reward: Improving the financial health of colleagues.
Modern slavery & human rights: Eliminating modern
slavery from our business and supply chains.
Legal compliance: Complying with all relevant laws.
Continue to drive a culture of “Calling it out”, taking
time to “Stop, Step Back, Think. Then Act” by ensuring
daily team briefings take place at all locations.
Create a DE&I policy that reflects the Group’s vision
“You be you, it’s what makes us, us”. Educate the
business and implement the policy effectively.
Engage all colleagues in the Group’s purpose, values
and strategy, with focus on what this means at a local
business level.
Put charity and community partnerships in place that
support the Group purpose, engage colleagues,
strengthen collaboration and delivery on the
Group’s strategy and impact goals.
Further develop financial wellbeing support to
colleagues by launching new services with the
Group’s partner “Wagestream”.
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.
Refresh of mandatory Group-wide baseline
training covering key legal compliance areas,
improving awareness of reporting channels
and completeness monitoring.
Continue with Scope 3 and Product Sustainability supplier
By providing sustainable products and
engagement programme, supporting suppliers to calculate
value-add services to customers, the Group
their carbon footprint.
can both deepen and elevate relationships,
earning a greater share of spend and
becoming a key partner.
Continue to evolve the Group’s due diligence approach to bring
The depth of customer relationships are
into scope the next phase of lower-spend product suppliers and
underpinned by trust in the Group to source
“goods-not-for-resale” suppliers.
responsibly and to meet changing data
transparency requirements.
Launch internal Carbon Change-Makers campaign to influence
All of the Group’s stakeholders expect
colleague behaviour.
credible action on operational carbon and
waste. Performance can influence the
Explore opportunities to enable the reuse of unwanted
outcome of customer tenders.
construction materials in the business.
Deliver a development curriculum aligned to our talent
management processes that offer career development
To best support customers in a changing
market, green and future skills are critical.
opportunities to all colleagues enabling the development of the
As a trusted and leading partner to the
next generation workforce and helping to change construction.
construction industry, customers value
our expertise and advice.
Continue to drive a culture of “Calling it out”, taking time to “Stop,
Step Back, Think. Then Act” by ensuring daily team briefings take
place at all locations.
To put in place the foundations that will help us to build the skills,
knowledge and behaviours of our leaders to enable them to
create the conditions for a diverse and inclusive workplace.
Continue to engage all colleagues in our purpose, values and
strategy, leveraging the Group story to build colleague connection
to their role in the future success of the Group.
Use the experience we have gained from 2022 to deepen and
elevate our existing partnerships.
Further the reach and impact of financial wellbeing and employee
benefits support to colleagues, particularly those on the front-line.
In 2023 the Group will continue to roll out ID checks for third
parties coming to site, addressing higher risk organisation
types first.
Further awareness raising and training to make sure the Code
of Conduct, policies and tools that have been launched are
fully understood and embedded across the Group.
Doing the Right Thing deepens relationships
with customers as expectations around
responsible business increase.
1. More information on the United Nations Sustainable Development Goals (“SDGs”) is included on page 35.
32
Travis Perkins plc Annual Report and Accounts 2022
Strategic
sustainability priority
Decarbonising
the industry
1.5 degree-aligned,
SBTi-approved
carbon reduction
targets
Modernising construction
Sustainable products and services
to support MMC, retrofit, energy
efficiency, decarbonisation, climate
resilience, biodiversity, nature, water
and waste.
Sourcing responsibly
Safe and quality products from
ethical, traceable and resilient supply
chains. Supporting the Golden
Thread of data.
Operating sustainably
Net zero carbon and reduced
operational waste. Leading by
63% reduction in
Scope 3 carbon
by 2035
Develop a retrofit proposition to support social
landlords with the decarbonisation of their properties.
Increase engagement with stakeholders, with
particular focus on suppliers, to reduce Scope 3
carbon emissions.
Evolve the Group’s due diligence approach to bring
into scope remaining product suppliers and
“goods-not-for-resale” suppliers, on a risk-basis.
example within our own operations.
2035 (with at least
Net zero for Scope
Extend hydrotreated vegetable oil (HVO) fuel use
1&2 carbon by
from 12 to 200 vehicles.
80% reduction)
Reduce the amount of plastic waste the Group
produces by engaging with suppliers and seeking
alternative, sustainable packaging solutions.
Developing the next generation
Upskilling our people and the wider
10,000 graduated
Deliver a curriculum offering career development
industry in Green and Future skills to
apprentices by
opportunities to all colleagues enabling the
equip the sector for change.
2030
development of the next generation workforce.
Doing the Right Thing (underpinning the Changing the Game focus areas above)
Safety & wellbeing: Getting everyone home safe and well,
Continue to drive a culture of “Calling it out”, taking
every single day.
time to “Stop, Step Back, Think. Then Act” by ensuring
daily team briefings take place at all locations.
Diversity, equity & inclusion: Creating an environment
Create a DE&I policy that reflects the Group’s vision
where everyone can be themselves.
“You be you, it’s what makes us, us”. Educate the
business and implement the policy effectively.
Colleague voice: Listening to colleagues to make better
Engage all colleagues in the Group’s purpose, values
decisions and drive engagement.
and strategy, with focus on what this means at a local
Charity & volunteering: Taking pride in helping others
Put charity and community partnerships in place that
and making positive change happen.
business level.
support the Group purpose, engage colleagues,
strengthen collaboration and delivery on the
Group’s strategy and impact goals.
colleagues by launching new services with the
Group’s partner “Wagestream”.
Reward: Improving the financial health of colleagues.
Further develop financial wellbeing support to
Modern slavery & human rights: Eliminating modern
Expand in-person ID checks, currently conducted on
slavery from our business and supply chains.
higher-risk labour agency workers, to include other third
parties working at the Group’s sites, based on risk.
Legal compliance: Complying with all relevant laws.
Refresh of mandatory Group-wide baseline
training covering key legal compliance areas,
improving awareness of reporting channels
and completeness monitoring.
Material focus areas
Long-term
commitments
2022 key actions
2022
progress
2023 key actions
Supporting the
Group’s strategy
Delivering against
the SDGs1
Continue with Scope 3 and Product Sustainability supplier
engagement programme, supporting suppliers to calculate
their carbon footprint.
By providing sustainable products and
value-add services to customers, the Group
can both deepen and elevate relationships,
earning a greater share of spend and
becoming a key partner.
Continue to evolve the Group’s due diligence approach to bring
into scope the next phase of lower-spend product suppliers and
“goods-not-for-resale” suppliers.
The depth of customer relationships are
underpinned by trust in the Group to source
responsibly and to meet changing data
transparency requirements.
Launch internal Carbon Change-Makers campaign to influence
colleague behaviour.
Explore opportunities to enable the reuse of unwanted
construction materials in the business.
All of the Group’s stakeholders expect
credible action on operational carbon and
waste. Performance can influence the
outcome of customer tenders.
Deliver a development curriculum aligned to our talent
management processes that offer career development
opportunities to all colleagues enabling the development of the
next generation workforce and helping to change construction.
To best support customers in a changing
market, green and future skills are critical.
As a trusted and leading partner to the
construction industry, customers value
our expertise and advice.
Continue to drive a culture of “Calling it out”, taking time to “Stop,
Step Back, Think. Then Act” by ensuring daily team briefings take
place at all locations.
To put in place the foundations that will help us to build the skills,
knowledge and behaviours of our leaders to enable them to
create the conditions for a diverse and inclusive workplace.
Continue to engage all colleagues in our purpose, values and
strategy, leveraging the Group story to build colleague connection
to their role in the future success of the Group.
Use the experience we have gained from 2022 to deepen and
elevate our existing partnerships.
Further the reach and impact of financial wellbeing and employee
benefits support to colleagues, particularly those on the front-line.
In 2023 the Group will continue to roll out ID checks for third
parties coming to site, addressing higher risk organisation
types first.
Further awareness raising and training to make sure the Code
of Conduct, policies and tools that have been launched are
fully understood and embedded across the Group.
Doing the Right Thing deepens relationships
with customers as expectations around
responsible business increase.
Travis Perkins plc Annual Report and Accounts 2022
33
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r
a
t
e
g
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r
e
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o
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t
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Sustainability report continued
Engaging with Stakeholders
The Group actively engages
with stakeholders to share
progress, inform plans, listen
to feedback and seek views.
The materiality assessment and stakeholder
sentiment analysis in 2022 highlighted four
key themes:
• Partnership and collaboration: Stakeholders
see the Group as a convenor, bringing
together supply chain partners up and
down the value chain.
• Influence and leadership: The Group is
an industry-leader and is expected to
lead the way.
• Communications: Stakeholders wanted
the Group to share more information
about the sustainability journey, not
only the successes but also the
journey and challenges.
• Transparency: Stakeholders would like
to see more sharing of data to support
improved confidence and accelerated
sustainability outcomes.
The key stakeholder groups, their key ESG concerns and the Group’s engagements with them in 2022 are detailed in the table below.
Stakeholder Group
Key ESG concerns
Engagements in 2022
Customers
Colleagues
Suppliers
Investors
Communities
Carbon
Sustainable products
Responsible sourcing
Social value
Packaging
Safety
Safety and Wellbeing
Skills
Diversity and Inclusion
Responsible sourcing
Modern slavery
Carbon
Carbon
Quality (UKCA)
Responsible sourcing
Sustainable products
Packaging
Safety
Modern slavery
Carbon
Responsible sourcing
Carbon
Sustainable products
Safety
Quality
Skills
Responsible sourcing
Two ESG forums were hosted for the UK’s top 15 National House Builders.
Two ESG forums were hosted for groups of Social Housing Landlords in Norfolk and
the Midlands.
An ESG Survey was issued with responses from 1,006 customers and 1,505 DIY consumers
and interviews were held including ten customers as part of the 2022 materiality assessment.
An ESG Survey was issued (responses from 321 colleagues) and interviews were held
(including 35 colleagues) as part of the 2022 materiality assessment.
Training sessions were delivered for 725 colleagues on ESG overall and Sustainable
products in particular, including colleagues from sales, commercial and Group functions.
ESG was added as a module to all apprenticeships to build wider colleague understanding.
ESG was an integral part of the Group Story launched across all businesses in 2022.
Net Zero Carbon Live week hosted by the ESG team with a panel discussion involving the
property, fleet and commercial teams discussing our decarbonisation plans. A range of
questions submitted by colleagues from across the Group were answered and debated.
The Group’s CEO hosted a Decarbonisation dinner for the CEOs of seven critical
manufacturers to share successes and challenges and agree upon priorities to collaborate on.
Sustainability workshops were run for and attended by circa 750 suppliers across April,
July and September covering Sustainability overall, Environmental sustainability and
Social sustainability.
An ESG Survey was issued with responses from 176 suppliers and interviews were held with
five large suppliers as part of the 2022 materiality assessment.
193 investor meetings were held in 2022.
15 interviews were held with investors and five interviews with sell-side analysts, covering
50% of actively managed funds in the shareholder register, as part of an Investor
Perceptions Study.
An ESG Survey was issued (responses from 550 ‘Catalyst’ opinion formers and consumers
with an interest in sustainability) and interviews were held with the think tank Quality of Life
Foundation and a journalist as part of the 2022 materiality assessment.
Extended partnership with Volunteer It Yourself (VIY) and the Northampton Saints.
Engagement with the Group’s 7 core charity partners.
Partnership with Northampton University continued, including attendance of the
Northampton Sustainability Forum by the Group Head of Environment, James Vance,
to share knowledge on ISO 14001, packaging and carbon.
Hosted a webinar showcasing our decarbonisation journey at the Reading Climate Festival
as part of The Great Big Green Week.
34
Travis Perkins plc Annual Report and Accounts 2022
Stakeholder Group
Key ESG concerns
Engagements in 2022
Government
Carbon
Skills
Sustainable products
Governance
ESG interviews were held with the Construction Leadership Council (CLC), Department
for Business, Energy and Industrial Strategy (BEIS) and a local MP as part of the 2022
materiality assessment.
The Group’s Head of Fleet, Karl Wilshaw, contributed to the Department for Transport’s
Low Carbon Fuels Strategy call for ideas.
Dialogue with officials from BEIS/CLC with regard to Industry Sponsorship of the CLC’s
People and Skills workstreams.
Trade bodies
Carbon
Skills
Sustainable products
Governance
Travis Perkins Group COO, Frank Elkins, sits on the Board of the Builders Merchants
Federation (“BMF”), representing the Group at key events on ESG. In 2022, Frank presented
with Andy Rayner, Director of Apprenticeships and Early Careers, at the BMF Members
Conference, on the skills challenge for the sector.
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The Group continues to be a CO2nstructZero Business Champion, the Construction
Leadership Council’s framework for net zero in the construction industry, submitting
case studies to the CLC to share best practices.
ESG interviews were held with the Builders Merchants Federation, the Federation
of Master Builders and Logistics UK as part of the 2022 materiality assessment.
The Group’s HSE and Fleet Director, Richard Byrne, is Chair of the BMF’s Health and
Safety Committee.
The Group’s Head of Fleet, Karl Wilshaw, sits on Logistics UK’s strategic road freight council
(regional & national), Logistics UK’s Environment Working Group and the FORS Governance
and Standards Advisory Group.
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 and Corporate Affairs Director trialled membership
with the Sustainable Energy Association (SEA) for three months.
Professional bodies
Carbon
Waste
Retrofit
Net zero construction
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 and 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. The Stay Safe Committee of the Board oversees
performance in health and safety. Objectives and 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 13 years, including a financial assessment
of climate-related risks and opportunities. The Group has prepared its
second full disclosure against the Task Force for Climate-related
Financial Disclosure (“TCFD”) recommendations on pages 50 to 61.
During 2022 the Group further enhanced its climate risk and
opportunity assessment and engaged Inspired ESG to support in
developing climate scenarios and assessing impacts on the Group.
Alignment to UN Sustainable Development Goals
Through the Building for Better ESG agenda, the Group directly
supports delivery of a number of the 17 UN Sustainable Development
Goals (“SDGs”). Following a review of the detailed targets underpinning
each of the UN SDGs in 2022, six goals are most relevant and are
detailed in the table on page 32.
With the Group’s sustainability priority being to ‘Decarbonise the
Industry’, Goal 13 on Climate Action is taken into account across
all ESG focus areas and influences decision making. Other SDGs
are more directly aligned to one specific focus area.
Whilst several of the remaining SDGs have some relevance to the
Group, such as Good Health and Well-being, on review of the specific
UN targets underpinning the goals these were determined to be less
directly aligned to the Group’s work and therefore are not listed.
Travis Perkins plc Annual Report and Accounts 2022
35
Sustainability report continued
Modernising construction
Providing sustainable products and services to
support Modern Methods of Construction,
retrofit, energy efficiency, decarbonisation,
climate resilience, biodiversity, nature, water
and waste.
Supporting our purpose and sustainability priority
To help to change construction and to decarbonise the construction
industry, the Group needs to provide the right products, data and
services to customers. With 99% of the Group’s carbon footprint
in the supply chain, due to manufactured carbon and in-use product
emissions, innovation is essential. Enabling sustainable construction
and retrofit supports the building of better communities and improves
the living standards and comfort of all.
Progress in 2022
A core objective for 2022 was to develop a retrofit proposition to
support social landlords with the decarbonisation of their properties.
Progress on this and other key initiatives is set out below, with further
information available on the website www.travisperkinsplc.co.uk.
Enabling retrofit of the UK’s housing stock
A new working group was established in 2022 to better understand
social housing landlord requirements in order to retrofit their housing
estates. This team conducted in-depth research with a broad range of
customers, gained insight into the basket of goods needed to retrofit
different properties and mapped out the role that the Group can
play in delivering the housing improvements that are required.
New products have been listed and supply chains established in order
to give customers a one-stop-shop for their retrofit materials. Strategic
partnerships are being explored to support landlords and homeowners
in understanding the measures that need to be taken and to upskill the
trade in qualifications required to deliver retrofit in line with regulatory
requirements. The breadth of products is shared on the websites of the
most relevant businesses in the Group, along with guidance on funding
opportunities currently available from the Government.
Progress against the Group’s Scope 3 carbon reduction target
The Group’s absolute Scope 3 carbon reduced by 2% in 2022,
as compared to 2021. Against the 2020 target baseline, absolute
Scope 3 carbon has increased by 2%. Having seen a 5% increase in
absolute Scope 3 carbon in 2021, the 2022 performance shows the
Group’s first steps towards Scope 3 carbon reduction. This may be
due to a change in product mix or lower volumes in some categories.
This will be investigated further during 2023 as supplier and product
level emissions are reviewed in further detail. Scope 3 carbon data
was assured for 2022 and the certificate can be seen on the
travisperkinsplc.co.uk website, along with the breakdown of the
Scope 3 footprint and the Group’s Scope 3 reduction roadmap.
36
Travis Perkins plc Annual Report and Accounts 2022
Supporting efficiency for customers through
“Intelligent Solutions”
BSS has launched a new flagship service, “Intelligent Solutions”, to the
market. The services offered to clients, currently mostly in the public
sector, provide significant benefits including improved visibility of their
asset portfolios, financial planning, and effective maintenance and
renewal. Through a programme of integrated services using the latest
in site capture technology, platform development, building information
modelling and deepening our existing technical knowledge, BSS is
transforming the way they work with clients, both now and in the future.
The transformation will allow BSS to support clients on their journey
to net zero through a combination of efficient products such as pumps
and boilers, all the way through to reconfiguring existing spaces to
use carbon cutting technologies such as heat pumps. BSS has also
launched a Smart Building Management System product which, when
used with the Intelligent Solutions service, will enable clients to further
optimise their operations.
Convening the industry to
collaborate on decarbonisation
The Group acts as a convenor within the industry to enable the
construction value chain to share challenges and successes and
to co-create solutions. In 2022 this included two half day sessions
with groups of social housing landlords, two evening forums with the
top 15 national house builders, a workshop with a group of regional
house builders and a half day session with a group of drylining
contractors. The Group took the opportunity to share the ways in
which it can support customers on sustainability and listened to
customers about their own pain points or ideas. These collaborative
sessions allow for bespoke projects and actions to be agreed
which enable either faster, more cost efficient or more impactful
sustainable outcomes. See page 38 to read about decarbonisation
collaboration with manufacturers.
Data to support customers with their
sustainable product choices
A data request went to over 200 manufacturers in 2022 to ask
them to share data on the sustainability of their products. For example,
embodied carbon (backed up by Environmental Product Declarations),
recycled content, recyclability at end of life, certifications and much
more. Whilst this type of information is not often available at this stage,
where the data is available the Group is starting to collect and share
this with key customers. Large contractors, developers and landlords
increasingly request information on sustainable alternatives in product
ranges and more sustainability information on products. Guidance has
been shared with marketing, category, communications and sales
teams in the businesses to ensure that sustainability information is
vetted and underpinned by evidence prior to sharing it with customers
or others. The Group is committed to responsibly sharing information
relating to sustainability in order to avoid greenwashing or breaching
environmental claims regulations.
Sustaining progress in certified timber
99% of timber purchased by the Group in 2022 was certified.
The business continues to operate a robust timber chain of custody
system in order to pass the Chain of Custody safely on to customers.
’ indicates that the data point has been assured. Please see page 41
‘
for more information.
What’s next?
A core objective for 2023 is to continue with the Scope 3 and
product sustainability supplier engagement programme, supporting
suppliers to calculate their carbon footprint.
FSC® or PEFC™ certified timber purchased in 2022
99%
100%
75%
50%
25%
0%
96%
98%
99%
38%
49%
29%
58%
49%
70%
2020
2021
2022
PEFC
FSC
Travis Perkins plc Annual Report and Accounts 2022
37
Financial statementsOther informationGovernanceStrategic report Sustainability report continued
Sourcing responsibly
Ensuring safe and quality products from
ethical, traceable and sustainable supply
chains. Supporting the Golden Thread
of Data.
Supporting our purpose and sustainability priority
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 and
decarbonise supply chains. Improved data and traceability
of products will bring more accountability and effective
decision-making to the construction sector.
Progress in 2022
A core objective for 2022 was to evolve the Group’s due diligence
approach to bring into scope remaining product suppliers and
“goods-not-for resale” suppliers, on a risk-basis. Progress on this
and other key initiatives is set out below, with further information
available on the website www.travisperkinsplc.co.uk.
Extending the reach of supplier assessments
During 2022 an additional 284 suppliers submitted Online Risk
Assessments (ORAs) raising the number of suppliers of goods for
resale which have been assessed, or are in assessment, to in excess
of 1,300 suppliers. Own brand sites are subject to in-person ethical
and technical audits, with all ethical audits completed by a third-party
auditor. In 2022, 139 factory audits were completed. The supplier
assessment programme covers suppliers to BSS, CCF, Keyline,
Travis Perkins and Toolstation. Where issues are identified, time-bound
corrective action plans are used to support suppliers to resolve these.
Plans were developed during the year to bring remaining product
suppliers into the scope of assessment. A regional trial of the “lite”
version of the assessment for lower spend suppliers was launched
in 2022. This will be expanded into further regions during 2023. A
bespoke assessment for suppliers of “Goods Not For Resale” (GNFR)
and service providers was also finalised in 2022, with input from key
technology suppliers to refine the approach. This will be launched to
suppliers in 2023 on a risk-basis.
Supporting suppliers to operate more sustainably
Workshops were held in April, July and September to engage circa 750
manufacturers with the Group’s sustainability roadmap. The purpose of
the sessions was to build awareness of key priorities for the sector and
why there is a need for change. Clear requests were made of suppliers
during the online workshops but underpinned by guidance and advice
to better enable suppliers to change. Suppliers had the opportunity to
ask questions and the sessions provided an opportunity for best
practice sharing.
A CEO roundtable to collaborate with suppliers on Scope 3 carbon
The Group’s CEO hosted a dinner with the CEOs of several
large manufacturers, including Ibstock plc, British Gypsum,
Wienerberger UK, Knauf UK & Ireland, Wavin UK and AkzoNobel.
Collaboration is key to achieving supply chain emissions reduction.
CEO Nick Roberts said: “It was great to get some of our key
suppliers round the table to discuss the challenges we face to
deliver on our net zero targets. It was a rich conversation
that covered a lot of ground; from public policy to inspiring
and motivating our workforce, and overcoming the skills gap
we collectively face. I was struck by the energy in the room and
the clear desire and commitment we all have to accelerate action
and make a positive difference.”
Angela Rushforth – MD, BSS Group
Jose Antonio Jimenez Lozano – MD, AkzoNobel UK and Ireland
Mike Chaldecott – Chief Executive, Saint-Gobain UK and Ireland
Frank Elkins – COO, Travis Perkins plc
Megan Adlen – Group Sustainability Director, Travis Perkins plc
Mike Chaldecott – Chief Executive, Saint-Gobain UK and Ireland
Simon Paz-Uceira – Commercial Director UK, Metsa Wood
38
Travis Perkins plc Annual Report and Accounts 2022
New and improved training for colleagues
New Responsible Sourcing colleague training was developed and will be
launched to colleagues across the Group in 2023. The training module
provides an in-depth insight to responsible sourcing and is targeted to
colleagues in Commercial, Purchasing and Service Management teams.
The module is hosted in the new Knowledge Management System,
Thrive, which offers a whole new way to share learning, knowledge,
skills, expertise and best practice (see page 40).
Industry collaboration to drive efficiency
The Group is collaborating with the industry to inform and guide
the development of a responsible sourcing database for our sector,
recognising the duplication and inefficiency of the industry’s current
approach. The Group’s Head of Ethical and Responsible Sourcing and
Group Sustainability Director have consulted with trade federations,
customers and suppliers with valuable learnings shared across all
parties. The focus in 2023 will be to collaborate further, learning and
working together towards a solution that supports transparency of
the sustainability of organisations operating in our supply chains.
What’s next?
In 2023 the Group will continue to evolve the Group’s due diligence
approach to bring into scope the next phase of lower-spend product
suppliers and “goods-not-for-resale” suppliers. These assessments
provide insights and progress not only on ethical behaviours in
the supply chain, but also environmental performance and
carbon footprints.
Travis Perkins plc Annual Report and Accounts 2022
39
Financial statementsOther informationGovernanceStrategic report Decarbonising the Group’s estate
The decarbonisation of the Group’s property portfolio in the last two
years was largely driven by the renewable energy tariff which came
into effect in October 2021, with nine months of the annualised benefit
falling into 2022. In addition the LED light roll out continued with over
300 branches completed to date, 61 of which in 2022. A Net Zero
Carbon assessment was completed at the Group’s main distribution
centre (DC) in Northampton which has resulted in a business case being
developed to install solar panels across the DC roof. ‘Profile alerts’ were
trialled at 20 sites to help save energy through improved colleague use
of energy at site. The property and energy teams for the Group manage
a Buildings Decarbonisation Roadmap which is published on the Group
website (www.travisperkinsplc.co.uk) and for which an interim target was
developed and approved by the Board during 2022. The interim target
is to achieve a 40% reduction against the 2020 baseline by 2027.
Decarbonising the Group’s fleet
A Hydrotreated Vegetable Oil (HVO) diesel-replacement trial has
now been fully mobilised across 34 sites, supplying the low carbon
fuel to 215 vehicles and saving approximately 1.4m litres of diesel
per year. HVO plays an important role as a transition fuel until the
infrastructure for electric vehicles improves and the development
of more long-term solutions such as hydrogen become a reality.
The Group uses HVO from waste oils, not virgin plants, and from
certified sustainable sources. In addition, the Group introduced 34
new high-efficiency Volvo trucks in 2022, with another 146 planned
in 2023. The new vehicles form an integrated part of the Group’s
fleet decarbonisation roadmap, with each one benefitting from
the latest Euro VI Step E diesel engine technology – engineered
to reduce emissions and help save fuel without compromising
performance – and with the capability to run on HVO. HVO ‘Driver
days’ training has been delivered to raise awareness of the benefits
of HVO. The Group Leadership Team also approved a contract to
transition all remaining Fork Lift Trucks from diesel to electric
or HVO by the end of 2024. A new interim target has been
approved by the Board for the Fleet Decarbonisation Roadmap
which is published on the plc website (www.travisperkins.co.uk).
The interim target is to achieve a 27% reduction against the
2020 baseline by 2027.
Sustainability report continued
Operating sustainably
Leading by example within our own
operations. Delivering net zero carbon
and reducing operational waste.
Supporting our purpose and sustainability priority
The Group has committed to reduce Scope 1 and 2 carbon
(relating to the Group’s fleet and estate) by 80% by 2035, offsetting any
remaining emissions thereafter. Whilst 99% of the Group’s footprint is
in the supply chain, to have integrity in asking suppliers and customers
to decarbonise, the Group must also address its own direct emissions.
The Group generates waste from its operations, primarily relating to
added packaging or obsolete products, and takes its role in preventing,
reusing, recycling or recovering waste very seriously in order to protect
the natural environment and the communities within which it operates.
Progress in 2022
Core objectives in 2022 included increased engagement with
stakeholders, with particular focus on suppliers to reduce Scope 3
carbon emissions, and the reduction of plastic waste by engaging
with suppliers and seeking alternative, sustainable packaging solutions.
Progress on these and other key initiatives is set out below, with further
information available on the website www.travisperkinsplc.co.uk.
Positive progress against the Group’s Scope 1 and 2 target
The Group’s Scope 1 and 2 footprint reduced by 34% in 2022
(compared to 2021), which is a 35% reduction against the
2020 baseline. Details on the initiatives behind this reduction
are provided in the sections below on decarbonising the estate and
fleet. For further detail on Scope 1 and 2 carbon, please see page 30.
2
&
1
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e
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-
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A
(
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Tonnes of CO2e (Absolute) – Scopes 1 & 2
100,000
80,000
53,981
56,465
60,000
40,000
20,000
25,111
21,284
2020*
0
2021
* Baseline year for new target
45,062
6,498
2022
Absolute carbon
reduction 2020
to 2022 – Scopes
1 and 2
35%
Transport
Buildings
2035 Target (total)
Engaging colleagues on decarbonisation
The Group Head of Environment, Technical Fleet Director, Group
Energy Manager and Head of Commercial (sustainability) co-hosted a
live online panel discussion on decarbonisation, answering questions
from colleagues during ‘Net Zero Carbon Week’. Colleagues from each
of the businesses’ commercial teams also joined the online workshops
hosted for suppliers to support them with their decarbonisation (see
page 52). An introductory training course on carbon is available to all
colleagues through the Group’s new Knowledge Management system,
Thrive. Engagement of all colleagues to understand and take
responsibility for their role in achieving the Group’s carbon
reduction goals remains an important focus for the Group.
40
Travis Perkins plc Annual Report and Accounts 2022
Total tonnes of waste
30,000
25,000
20,000
15,000
10,000
5,000
e
t
s
a
w
f
o
s
e
n
n
o
t
l
a
t
o
T
26,912
25,913
17,829
Waste diverted
from landfill
2022
94%
1,353
1,492
1,622
Landfilled Waste
Recycled/Recovered Waste
0
2020
2021
2022
Reducing waste impacts in 2022
The Group produced 27,535 tonnes of waste in 2022. This was a 3%
reduction in tonnage as compared to 2021. In addition 94% of waste
was diverted from landfill (95% in 2021).
Innovative solutions to drive out waste
The businesses are working to eliminate waste streams or find
alternative materials or solutions to minimise the impact of operational
waste and product packaging. CCF has introduced a reusable pallet
hood to prevent wrapping with single-use materials. Travis Perkins
and Keyline now use a Bulk Bag which contains 30% recycled content.
Partnering with innovative suppliers helped the Group to be the first
builders’ merchant in the UK to use the new sustainable bags. “Using
a minimum of 30% recycled content in our bulk bags also means
we don’t need to pay the new Plastic Packaging Tax on them,” said
John Duffy (Senior Category Manager for Aggregates and Blocks),
“It means we’ve saved the business around £350,000 each year
by doing what matters.”
Toolstation tackling product packaging
Toolstation tracks packaging by product and by packaging type, giving
their category teams visibility of over-packaged products or those using
more harmful packaging types. And these insights are driving action.
While the volume of packaging materials increased in 2022 due
to business growth and a changing product mix, Toolstation has
eliminated 190 tons of plastic and has avoided additional cost from
the new plastic tax, remaining below the de minimis volumes for the
tax to apply. The business has eliminated unnecessary packaging
on own brand products with around 95% now being plastic free. In
replacing single-use plastic, other packaging material types increased
such as steel and aluminium, however both of these can be infinitely
recycled and can also be collected from bottom ash within the local
authority recycling streams. Polystyrene packaging is close to being
eliminated from the Toolstation business with less than 0.1% of
products remaining with some polystyrene. All businesses in the Group
participate in a packaging working group, also meeting at manufacturer
sites or specialist packaging suppliers to improve their knowledge.
Environment Incidents
In 2022 the Group recorded 19 environmental incidents with seven
classed as ‘reportable’ and 12 ‘non-reportable’. Of the 12, four were
a result of ‘3rd party’ sources (such as spillages from supplier or
customer vehicles). Most incidents related to spillages such as
hydraulic oil or paint.
Assurance
“Specific data points in the Sustainability (or “Building for Better”)
section, marked with the logo ‘
’, 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
www.travisperkinsplc.co.uk.
What’s next?
In 2023 the Group will launch an internal Carbon Change-Makers
campaign to upskill key colleagues in the businesses and Group
functions in order to influence colleague behaviour and expand the
network of expertise on sustainability and carbon in particular
across the Group.
Travis Perkins plc Annual Report and Accounts 2022
41
Financial statementsOther informationGovernanceStrategic report
Sustainability report continued
Doing the right thing
Supporting our purpose and sustainability priority
The establishment of the Group’s 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”. Whether managing key
compliance topics such as Anti-Bribery and Corruption, Anti-Money
Laundering, Data Protection or Anti-Competition, or reducing the
Group’s risks relating to Modern Slavery and Human Rights, the Group
underpins its work on the strategic sustainability focus areas with a
responsible approach to business. A number of “people” topics also
fall into this category of “Doing the Right Thing” and are covered
in the people section on pages 43 to 49.
Progress in 2022 – modern slavery and human rights
A primary objective in 2022 was to 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. This is
because the construction industry is one of the most exposed industries
to modern slavery. The Group’s work in this space helps to ensure the
fair treatment and protection of rights of all workers.
• The Group’s policies and procedures to tackle modern slavery are
described in the Modern Slavery Statement on the Group’s website,
www.travisperkinsplc.co.uk, including how the Group assesses risk
and carries out due diligence, along with policies on employee
recruitment and human rights.
• Businesses in the Group developed plans to expand in-person ID
checks to third parties (other than labour agencies who are already
in scope) working at the Group’s sites. In-person ID checks have
been introduced at the central Head Office site for third-party
cleaning staff. The trial will be expanded into other parts of
the Group during 2023 on a risk basis.
• In September a series of online sessions was delivered to raise
awareness of Modern Slavery, to highlight the red flags and to
signpost to both the Travis Perkins SpeakUp! Hotline and the
Modern Slavery & exploitation helpline. These were extended to both
suppliers and colleagues, with the sessions attended by 388 people.
• New Modern Slavery colleague training under the umbrella of “Licence
to Operate” was developed and will be rolled out to colleagues across
the Group in 2023. This comprises an in-depth module for high-risk
colleagues and a bite-sized module for all other colleagues.
What’s next?
In 2023 the Group will continue to roll out ID checks for third parties
coming to site, addressing higher risk organisation types first.
Progress in 2022 – legal compliance
A primary objective in 2022 was to refresh mandatory, Group-wide
baseline training covering key legal compliance areas, improving
awareness of reporting channels and completeness monitoring.
This helps to ensure stakeholders can rely on the Group to
continue to “Do the Right Thing”.
Building on the roll-out of refreshed training for Anti-Bribery
and Corruption and Competition Law in 2021, a new course on
Anti-Money Laundering was rolled out during 2022. In addition a
suite of modules forming mandatory new baseline training under the
umbrella of “Licence to Operate” was rolled out to all colleagues across
the Group in December 2022, covering the following topics:
• Code of Conduct and Speak Up (whistleblowing line)
• Anti-Bribery and Corruption
• Anti-Money Laundering
• Competition Law
• Corporate Criminal Offences
• Market Abuse/Insider Trading
• Sales of Restricted Products
What’s next?
Further awareness raising and training to make sure the
Code of Conduct, policies and tools that have been launched
are fully understood and embedded across the Group.
Modern Day Slavery
Doing the Right Thing
This is closer than we all
think so speak up
If you have any concerns or suspect someone
may be a victim of Modern Slavery then call
the SpeakUp Hotline.
Hotline 0800 890 011
then key in 833 331 1347
42
Travis Perkins plc Annual Report and Accounts 2022
Our people
“We are a business at the heart of our communities. Our team of 20,000
colleagues takes great pride in working closely with customers and suppliers,
and caring for each other and the communities where we live and work.
As we look to become the employer of choice, and help build the next
generation of talent across this sector, we remain committed to developing
a sense of belonging, to accelerate safety and wellbeing, and build new skills
that are needed to deliver a construction industry that is fit for the future”.
Emma Rose
Chief HR Officer
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Travis Perkins plc Annual Report and Accounts 2022
43
Sustainability report continued
Developing the next generation
Upskilling our people and the wider industry
in Green and Future skills to equip the
sector for change.
Supporting our purpose and sustainability priority
The Group is committed to building 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. New colleagues are being introduced to the
merchanting sector and often bring enhanced digital capability. The
Group is helping existing colleagues develop their digital skills to 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.
Progress in 2022
The core objective in 2022 was to 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.
A new long-term stretching target to support upskilling
The Group developed a new long-term skills target which was
approved by the Board during 2022. This target is for 10,000
successfully completed apprenticeships by 2030, delivered both
through the business and the wider industry (through the Group’s
partnership with the Builders Merchants Federation). This target
reflects the size of the challenge facing the sector to upskill and
supports the changes that the industry needs. A first of its kind
in the sector, this target underlines the Group’s commitment to
people development and to supporting the modernisation and
decarbonisation of the industry.
graduated with distinction. In order to help the wider construction
sector develop the next generation workforce that is needed, the Group
opened its Apprenticeship programmes to supply chain partners within
the wider Construction sector. As part of this work the Group has now
become the Early Careers and Apprenticeship provider to the Builders
Merchants Federation. All apprentices now have the option to become
student members of the Institute of Builders Merchants.
Travis Perkins Group was rated 33rd in the 2022 Top 100
Apprenticeship Employers list published by the National
Apprenticeship Service, and was also rated 11th Top Employer
in the “Rate My Apprenticeship” rankings which are voted on
by the apprentices themselves. 2022 highlights included:
• 260 new Travis Perkins apprentices recruited with increased levels
of diversity.
• 470 current Travis Perkins colleagues enrolled on an apprenticeship
to further develop their career.
• A further 340 colleagues working for supply chain partners or within
the wider construction sector were enrolled on a Travis Perkins
delivered apprenticeship.
• 160 of these colleagues were also supported to achieve new English
and Maths qualifications.
• 270 Travis Perkins colleagues completed their apprenticeship
and graduated.
• 100 Apprentices from supply chain partners or within the wider
Construction sector completed their apprenticeship and graduated.
• A further 291 young people gained work experience within the business
through the Kickstart scheme with 70% of those that completed the
scheme moving into permanent employment with the Group.
Embedding ESG into colleague learning
The apprenticeship team introduced a new ESG module to all
internally-managed apprenticeships during 2022 and will be used
as standard going forward. The purpose of the module is to introduce
colleagues to the concept of ESG, the ESG agenda for the Group, why
it is important, what we are committed to and how they can play their
part. Achievement of the Group’s Building for Better goals and the
Group purpose relies on colleague awareness, engagement and
empowerment to make changes for the better in their own roles.
Continuing the Group’s pedigree in apprenticeship and
Kickstart provision
During 2022 the Group continued to expand its apprenticeship offering
and now has an apprenticeship programme in place for all substantial
job roles across all areas of the Group. All apprenticeships are designed
to develop the next generation and address the challenges faced by the
sector, specifically around digital skills, data, carbon reduction and
changes to construction methods. 61% of the Group’s colleagues
44
Travis Perkins plc Annual Report and Accounts 2022
Developing leadership skills
In 2022 the Group launched its ‘At My Best’ leadership programme
aimed at building leadership capability by improving self awareness,
developing capability to have great conversations and fostering a
culture of two way feedback. The programme aims to equip leaders to
confidently hold positive, productive and energising discussions with
their teams. We expect our leaders to have great conversations with
their teams and to discuss colleague strengths as well as the challenges
they are facing to improve their performance. This is a foundational part
of building a high performance culture across the business. Leaders
now have a familiar language and toolkit to use to talk with their teams
about performing at their best at work, enabling a dialogue of feedback
and coaching to bring out the best in colleagues. Over 300 leaders
experienced the ‘At My Best’ leadership programme in 2022.
Raising the profile of the construction sector
In a fight for talent it is important to attract the best people into the
industry and retain them. In 2022 the Group continued to raise the
profile of construction offering a great career through various Early
Careers initiatives such as the recent Maddie Rose Campaign on hidden
careers in construction. Maddie Hollamby was a colleague who worked
for Keyline. She loved working in construction and was passionate about
highlighting the benefits of the sector to other young people, so that they
could develop through it as she had. The Maddie Rose Campaign was
set up in partnership with Construction Youth Trust as a lasting legacy
in celebration of her life, to inspire and enable young people to overcome
barriers and discover a career in the construction and built environment
sector. To support this initiative, colleagues from across the Group helped
to deliver the Construction Youth Trust Hidden Careers Programme to
inspire and support young people; to help them see construction as a
career choice rather than just a job, and provide them with access to
opportunities in the sector. This involved colleagues going into schools
to talk about their own career experiences, and providing work experience
placements, to give young people a greater understanding of what it’s like
to work in the builders merchanting industry. Also, the Group partners
with Volunteer It Yourself (VIY), a social enterprise which helps young
people to learn trade skills whilst helping their community. You can
read more about this partnership on page 49.
What’s next?
Continue to deliver a broad Group-wide development curriculum
aligned to our talent management processes offering career
development opportunities to all colleagues enabling the
development of the next generation workforce and helping
to change construction.
Cleo Fitzsimons
Assistant Store Manager, Toolstation
Cleo started out as a Customer Services Representative for Toolstation
on a Level 2 Apprenticeship and knew it would be worth going for the
Level 3 Management Apprenticeship when the opportunity arose.
Cleo has received great support from their manager. “Cleo is fantastic!
Cleo is also on an apprenticeship at the moment, so we’re able to
support one another and understand each other’s priorities.”
Cleo is a member of the Group’s Proud Network, which supports
colleagues who identify as LGBTQ+, and they are pleased this has
opened up new networks to them. “Being Assistant Store Manager
is my favourite role in the company so far; and being promoted
was the proudest moment in my professional journey”, said Cleo.
The role offers challenges and Cleo explained their recent joy in
achieving full marks for a health and safety audit, as they specifically
recognised the importance of this work.
Gary Kent
National Stock and Systems Manager, Travis Perkins
Gary is one of the first apprentices in the country to have
completed a Level 6 Apprenticeship in Leadership with the
Open University.
This apprenticeship, for which he achieved a Merit, took 48 months
and is the equivalent of a Bachelor’s Degree. It also has Chartered
Manager status with the Chartered Management Institute.
Gary is rightly proud to have completed it, especially whilst also balancing
work and studies with a busy family life: “My Manager asked if I would
be interested in this apprenticeship, and after attending a meeting to
hear more about, and what it involved, I knew it would be a challenge
and that I would have to make some sacrifices, but after discussing it
with my partner and my colleagues, I decided that the sacrifice was worth
the future benefit I would gain from the apprenticeship,” Gary explains.
“I really enjoyed learning about other departments and functions, and
I gained more confidence to ask questions as to “why” we complete
a task in a certain way, because I just had a better understanding of
how the business worked,” he continued.
“Still, I could not have completed the apprenticeship without the support
of my manager, the site, and my family, but I would really recommend
the apprenticeship scheme we have. My apprenticeship was a challenge,
but it was worth all the sacrifice and stress and has enabled me to
fulfil my potential and improve as a manager”, Gary concluded.
Travis Perkins plc Annual Report and Accounts 2022 45
Financial statementsOther informationGovernanceStrategic report Sustainability report continued
Diversity, equity and inclusion
Supporting our purpose and sustainability priority
• Leading the way in building a culture of belonging where everyone
has the skills, confidence and ambition to be their best;
• Creating diverse teams that will drive the diversity of thought needed
to help us and our industry to innovate and change quicker; and
• Redefining how we build for a brighter, more sustainable
future – building communities and enriching lives.
Progress in 2022
The core objective for 2022 was to create a Diversity, Equity and
Inclusion policy that reflects the Group’s vision “You be you, it’s what
makes us, us” and to engage with the business to educate and to
implement the policy effectively.
Diversity, Equity and Inclusion (DE&I) policy developed
Through engagement with all of the diversity networks in the Group
and the Diversity and Inclusion Advisory Board, a new DE&I policy was
developed and approved by the Group Leadership Team. Through this
process it became clear that the Group would need to build the skills,
knowledge and behaviours of its leaders to enable the effective roll out
and embedding of the new policy. Therefore the strategy for 2023 is
to build a better understanding of our DE&I strategy and purpose with
both colleagues and leaders to support the introduction of the policy.
The policy is supported by a Minimum Standard framework which
describes the actions that each of the businesses would be taking to
comply with the policy. This enables progress tracking and for the
businesses in the Group to learn from each other as they are at
different levels of maturity.
A new menopause policy launched
As part of the Group’s commitment to stop the stigma by starting to
talk openly about menopause, there is now a policy and managers’
guide in place. These aim to raise awareness of menopause and its
impact, as well as provide the resources and assistance needed to
support colleagues experiencing it or being otherwise affected by it.
On World Menopause Day, more than 80 colleagues joined a webinar
hosted by Dee Murray, who is founder of The Menopause Experts
Group. This gave colleagues the opportunity to find out more about
the menopause and its health impacts. A Google Community has
been set up to allow colleagues to have a ‘cuppa and a chat’.
Supporting disability, whether hidden or visible, through a
new adjustment policy
A new Travis Perkins Group Adjustment Policy defines the support and
actions we’ll take when a colleague with a disability requires reasonable
adjustments. Reasonable adjustments are the changes the business
considers to remove or reduce the effect of a colleague’s disability to
enable them to do their job, or for a candidate when applying for a job
– the adjustment could be to the workplace, to equipment, or working
arrangements. The new Adjustment Policy sets out how to request a
reasonable adjustment and what considerations will be taken into
account when reviewing a colleague’s request.
Measuring progress
Progress is measured both in diversity statistics and through colleague
perceptions on inclusion. For both of these, the latest figures are presented
below. Progress continues to be made with an improvement in overall
gender balance (25.2% in 2022, 25.0% in 2021), and an improvement
in women in senior management (26.7% in 2022, 24.8% in 2021).
From an inclusion perspective, the engagement survey in 2022
showed that 68% of colleagues felt a sense of belonging at this Company.
For full diversity statistics please see the data table on pages 184 to 185.
What’s next?
To put in place the foundations that will help us to build the skills,
knowledge and behaviours of our leaders to enable them to create
the conditions for a diverse and inclusive workplace ie inclusive
leadership programme, all colleague education, Network led thrive
content, allyship programme.
Gender diversity 2022 – by role type
Director (Board)1
Senior Manager (Grade M3+)
Colleague
Total
Gender diversity 2022 – by business segment
Central Services
Toolstation
Merchanting
Total
Female
3
73
4,815
4,891
Female
408
2,515
1,968
4,891
%
37.5
26.7
25.2
25.2
%
46.7
36.0
17.1
25.2
Male
5
200
14,289
14,494
Male
466
4,479
9,549
14,494
%
62.5
73.3
74.8
74.8
%
53.3
64.0
82.9
74.8
Total
8
273
19,104
19,385
Total
874
6,994
11,517
19,385
1. Louise Hardy joins the Board from 1 January 2023, taking the Board total to 9 and the female representation to 4 (44.4%)
46
Travis Perkins plc Annual Report and Accounts 2022
Safety and wellbeing
Supporting our purpose and sustainability priority
Keeping people safe and well is clearly aligned to the Group’s purpose.
It remains the Group’s number one priority. Without our colleagues, we
don’t have a business. Supporting and empowering colleagues to look
after their wellbeing has a positive impact on their lives both in and
outside of work and the communities around them.
Progress in 2022
The core objective for 2022 was to continue to drive a culture of
“Calling It Out”, taking time to “Stop, Step Back, Think. Then Act”
by ensuring daily 10B410 (10 minutes before 10am) team briefings
take place at all locations
Significant progress in performance and culture
Strong improvements have been made in the Group’s core safety
metrics (Lost Time Injury Frequency Rate and Severity Rate). This has
been driven by a number of factors including the fact that the 10B410
are becoming part of everyday routines. The Lost Time Incident to Near
Miss ratio, which is an indicator of colleague risk awareness, improved
by 19% as compared to 2021. This clearly shows colleague engagement
and commitment to keeping themselves and others safe.
Learning and changing
Our commercial vehicle fleet travels 34 million miles a year.
Regrettably, two fatal Road Traffic Accidents involving our vehicles
occurred in 2022. Both involved members of the public and are still
subject to ongoing Police investigations. The Group’s Incident Review
Boards continue to support the identification of organisational and
business specific learning opportunities. As the Group’s LTI Frequency
Rate has reduced, the ‘next level down’ of incidents – Significant
Near Misses – will now also be covered by the Review Boards.
Integration of Staircraft to the Group’s safety standards
Regrettably, a Staircraft colleague was seriously injured in a fall from
height in June 2021 (before the Group acquired ownership of the whole
of Staircraft in October 2021). In August 2022 Staircraft Group Ltd was
prosecuted and fined £200,000. As part of the Group Staircraft is
benefiting from the help, expertise and support of all the Group’s health
and safety and other resources. Lessons have been learned from the
incident and post acquisition, the Group is making good progress with
fully integrating Staircraft into its Safety Management System. The
colleague involved has been fully supported by Staircraft and we
are pleased to report that they are fully returned to work.
Industry leading approach to managing
safety in contracted works
Following a deep dive review of how safety is managed in contracted
works, the Group has developed and introduced new ways of working
which improves safety for both contractors and those in control of
branches in which contractors are working. Feedback and engagement
from all concerned has been positive and this will continue to be rolled
out across the Group in 2023 before talking with industry more widely
about the approach.
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Lost time incident frequency rate
5.37
5.53
4.67
2020
2021
2022
0.10
0.08
0.07
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8.0
6.0
4.0
2.0
0.0
Severity rate
0.125
0.100
0.075
0.050
0.025
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0.000
2020
2021
2022
Stronger wellbeing focus
During 2022 the Mental Health First Aider (MHFA) community
continued to provide support to colleagues across the Group.
Their work has ranged from providing support to colleagues
returning to work following a suicide attempt, to organising a
monthly ‘netwalking’ initiative where colleagues can take a walk
with a MHFA to discuss any issues they are currently facing in a
less formal or intimidating environment.
In addition, line managers have been equipped with practical skills
to build confidence in supporting colleague wellbeing. Rob Kuzemko
(Regional Director) said “Natalie’s session around raising awareness of
mental health and wellbeing was so powerful, insightful and absolutely
necessary considering how much we can all do to help our colleagues
who are struggling in this space. It enabled the BMs to take a far more
proactive approach in handling potentially difficult conversations and
turning them into positive outcomes”.
Financial wellbeing support was also provided (see page 48).
What’s next?
As colleague engagement on safety and wellbeing is so critical,
and is driving improvements, the objective for 2023 is to continue
to drive a culture of “Calling it out”, taking time to “Stop, Step Back,
Think. Then Act” by ensuring daily team briefings take place at
all locations.
Travis Perkins plc Annual Report and Accounts 2022
47
Sustainability report – our people continued
Colleague voice
Reward
Supporting our purpose and sustainability priority
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 colleagues’ needs.
Progress in 2022
In 2022 the core objective was to engage all colleagues in the Group’s
purpose, values and strategy, with focus on what this means at a
local business level. Our Group Story was used to help colleagues
to understand the journey we are on and the important role they play.
New values launched across the Group
A refreshed and consistent set of group values was launched across all
of the Group’s businesses in 2022. Colleague voice was at the heart of
the approach to developing the updated values. Over 500 colleagues
input into the development, reflecting every part of the business and
every colleague group from new starters to long servers, early career to
late career, those who see themselves as belonging to minority groups,
and colleagues from Business Units and Head Offices. The result was
three values which underpin the culture we continue to cultivate and
develop to ensure our ongoing success. They represent strengths from
our heritage that we want to build into the future as well as harnessing
new ways of working. The Group Leadership Team takes a visible
leadership role in ensuring that the values are firmly embedded across
the Group, and fully demonstrated in leader actions and behaviours.
New engagement survey allows for industry benchmarking
A confidential all-colleague survey was launched in 2022, working with
an independent partner who supported the administration and analysis
of the results. One of the key measures of engagement is participation
and 76% of colleagues shared their voice, up 9% compared to the
previous year. It is encouraging that so many colleagues took the time
and wanted to have their voices heard and by doing so helped to create
a colleague experience that is unrivalled in the sector. The Group’s key
strengths have been consistent since the prior year – a focus on safety
is the number one strength and the businesses’ approach to customer
focus is highly valued. The Group also scored above global benchmarks
on an authentic culture and creating equal opportunity for all.
The positive scores reflect the progress made in the last year.
For further information on colleague voice and colleague listening
by the Board, see pages 62 and 86.
What’s next?
To leverage the Group’s strategy, purpose and values – “Our Story”
– to build colleague’s connection to their role in the future success
of the Group.
Supporting our purpose and sustainability priority
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.
Progress in 2022
The core objective for 2022 was to further develop financial wellbeing
support to colleagues by launching new services with the Group’s
partner ‘Wagestream’.
Successful launch of Wagestream
Wagestream is a financial management and wellbeing app, providing
our colleagues with the ability to access a portion of their salary each
month before pay day or set up a savings fund direct from their pay
to earn a competitive interest rate. Colleagues can also access free
financial coaching and use the budgeting and payment tracking
services. Wagestream was successfully launched across the Group
in June 2022. Take-up across the Group at the end of 2022 was 32%.
At Toolstation, where the benefit was launched in 2021, take-up at the
end of 2022 was 62% which is higher than typical for the retail sector.
The vast majority of colleagues using Wagestream do so to track their
earnings and budget more effectively. One-third of users use the app
to stream their wages – most commonly to help with grocery costs and
bills – and a third of users are working towards achieving their savings
goals with over £500k saved by our colleagues to date. Nearly 3,000
colleagues have completed the in-app financial health check.
Continuing to support financial wellbeing
Increased communications and educational webinars on employee
benefits, discounts and offers have helped to raise awareness and
support colleagues with cost of living challenges, pensions and
mortgages. Spend through the ‘MyPerks’ retailer discounts and
cashback platform increased significantly compared to last year and
with savings typically at 6-7% of spend, this benefit continues to help
colleagues manage their household expenditure more cost-effectively.
In addition, the Group awarded a cost of living payment to the majority
of colleagues in January 2023.
Aligning reward to the Group’s decarbonisation goals
Scottish Widows has increased ESG integration into the default pension
investment strategy. The Group has partnered with Scottish Widows
to help develop ESG fund ratings and ESG member communications.
As ongoing members of the ‘Make My Money Matter’ campaign,
the Group is committed to investing money in a sustainable way.
What’s next?
Further the reach and impact of financial wellbeing and employee
benefits support to colleagues.
48
Travis Perkins plc Annual Report and Accounts 2022
Charity and volunteering
Supporting our purpose and sustainability priority
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.
Progress in 2022
The core objective for 2022 was to 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.
Delivering social value in our communities
The Group’s businesses held a varied and creative calendar of
fundraising initiatives with partner charities and the Group widened
its partnership with VIY (“Volunteer It Yourself”). VIY engages with
young people and supports them with training and skills in construction
through the renovation of community spaces and places. The Group
acted as VIY’s Kickstart Gateway Provider to optimise social impact in
the form of job opportunities in the communities where Travis Perkins
plc colleagues and customers live and work.
Ukraine appeal
Colleagues across the Group were touched by the events in Ukraine
and the impact on people both there and in neighbouring countries.
The business made it a priority to support colleagues, partners and
suppliers who were affected by events, and directly supported the
relief efforts in Ukraine with a £107,000 donation to The Disasters
Emergency Committee (DEC). The business set up a JustGiving page
for colleagues which raised over £7,000 in one month. Branches and
colleagues worked in their local communities to host fundraisers for
Ukraine. Some branches acted as drop-off points for donations to
support the Northampton Saints’ donations appeal for refugees
fleeing the conflict. Other colleagues donated their time and expertise
to provide employment support including CV writing and interview
techniques to Ukrainian refugees in the Northampton area.
Charity and social enterprise partners
2022 contributions
Volunteering pilots
In 2022 the Group piloted volunteering to help deliver on the Group’s
impact goals, connect colleagues with each other, and promote
sustainability, engagement and wellbeing. Projects included carrying
out gardening in the Cynthia Spencer Hospice woodland, local to the
Group’s head office in Northampton and a beach clean with the Marine
Conservation Society at Portishead, where nearly 5kg of rubbish was
cleared from a 100-metre long beach. These volunteering opportunities
have been popular amongst colleagues, and in the future volunteering
will form an important part of the Group’s employee value proposition.
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Macmillan Cancer Support
Centrepoint
Mind
Prostate Cancer UK
VIY
Variety
Cynthia Spencer
DEC Ukraine Appeal
£1m
£2k
£107k
£57k
£150k
£9k
£23k
£107k
What’s next?
Use the experience gained from 2022 to deepen and elevate
existing partnerships; scaling up cross-Group volunteering
opportunities with VIY and the Northampton Saints to
empower colleagues to take positive action, and improve
data capture to support social impact reporting.
Travis Perkins plc Annual Report and Accounts 2022
49
Climate-related financial disclosure
TCFD disclosure
Compliance statement
The following disclosure is consistent with the recommendations and recommended disclosures of the Taskforce for Climate-related Financial
Disclosures (TCFD) as stated in the listing rule LR 9.8.6(8)R. Similar content can be found in the Travis Perkins Group CDP Climate disclosure
which is available for public review.
The disclosure covers the whole business and its supply chain and all climate-related risk and opportunity types, over three time periods, all of which
is detailed in the pages that follow. This is the second year of disclosure under TCFD for the Group. Further improvements have been made and more
are planned to enhance the disclosure, including more in-depth scenario analysis to have greater insight to physical climate risks and opportunities in
the supply chain and to further assess transitional risks and opportunities. This will be shared in the 2023 Annual Report and TCFD Report.
The Company has not included disclosures consistent with TCFD recommendations and recommended disclosures in relation to Metrics and
Targets (disclosure a) due to ongoing work to develop a fuller set of KPIs and sub-targets to better align performance measures with the material
risks and opportunities identified in this disclosure. This will also be shared in the 2023 Annual Report.
TCFD disclosure requirement
Governance
Disclose the organisation’s
governance around climate
risks and opportunities
Strategy
Disclose the actual
and potential impacts
of climate-related risks
and opportunities on the
organisation’s businesses,
strategy, and financial
planning where such
information is material
Risk management
Disclose how the
organisation identifies,
assesses and manages
climate-related risks
Metrics and targets
Disclose the metrics and
targets used to assess
and manage relevant
climate-related risks and
opportunities where such
information is material
Location in Annual Report
Page(s)
Describe the Board’s oversight of climate-related
risks and opportunities
Describe management’s role in assessing and
managing climate-related risks and opportunities
TCFD report – Board Oversight and Engagement
Principal Risks report – Climate Change and
Carbon Reduction
TCFD report – Board Oversight and Engagement
Describe the climate-related risks and
opportunities the organisation has identified
over the short, medium and long term
TCFD report – Risk and Opportunity Management
Principal Risks report – Climate Change and
Carbon Reduction
52
79
52
55
79
Describe the impact of climate-related risks and
opportunities on the organisations businesses,
strategy and financial planning
Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios including a 2°
or lower scenario
Describe the organisation’s processes for
identifying and assessing climate-related risks
Describe the organisation’s processes
for managing climate-related risks
TCFD report – Risk and Opportunity Management
55
TCFD report – Scenario results
58
TCFD report – Risk and Opportunity Management
55
TCFD report – Risk and Opportunity Management
55
Describe how processes for identifying, assessing
and managing climate-related risks are integrated
into the organisation’s overall risk management
Disclose the metrics used by the organisation to
assess climate-related risks and opportunities in
line with its strategy and risk management process
TCFD report – Risk and Opportunity Management
Principal Risks report – Climate Change and
Carbon Reduction
TCFD report – Metrics and KPIs
Sustainability report – Operating Sustainably
55
79
60-61
40-41
Sustainability report – Modernising Construction
36
Disclose Scope 1, Scope 2 and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions, and
the related risks
Describe the targets used by the organisation to
manage climate-related risks and opportunities
and performance against targets
Remuneration Report
TCFD report – Metrics and KPIs
Sustainability report – Operating Sustainably
101–116
60–61
40–41
Sustainability report – Modernising Construction
36
TCFD report – Metrics and KPIs
Sustainability report – Operating Sustainably
60–61
40–41
Sustainability report – Modernising Construction
36
50
Travis Perkins plc Annual Report and Accounts 2022
Governance
Scope and sphere of influence
The Group’s addressable market for construction materials is £78bn
with three-quarters coming through distribution channels. The Group
has a 6% 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 £5bn and a fleet of 2,453 HGVs and LCVs.
Leadership role
Decarbonisation of our own business and our supply chain is the Group’s
sustainability priority. For further information see pages 32 to 33.
S
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PURPOSE
We’re here to help build
better communities and enrich lives
AMBITION
Leading partner to the construction industry
SUSTAINABILITY PRIORITY
Decarbonising the industry
BUILDING FOR BETTER
Changing the game
Modernising
construction
Sourcing
responsibly
Operating
sustainably
Developing the
next generation
Doing the right thing
Safety & wellbeing | Diversity, equity & inclusion | Colleague voice | Reward
Charity & volunteering | Modern slavery & human rights | Legal compliance
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 58.
By 2035 Travis Perkins will have reduced absolute Scope 1 & 2 GHG emissions by 80% and absolute Scope 3
emissions by 63% from a 2020 baseline.
The Metrics and KPIs section (page 60) provides details of the KPIs used by the Group to assess progress against these targets.
Travis Perkins plc Annual Report and Accounts 2022
51
Climate-related financial disclosure continued
(in line with TCFD guidelines)
Advocates for change
The Group is proactively engaging with the sector to drive forward
the decarbonisation agenda. During 2022 the Group hosted online
workshops for over 750 suppliers to support them to understand
the journey we are on and their role in delivering reduced carbon.
This included guidance on tools to use to calculate carbon and insights
to customer product and data needs. Sitting in the middle of the supply
chain, the Group recognises and takes seriously the role of convenor,
bringing the industry together to share best practices, collaborate and
co-create solutions. Two ESG forums were hosted by the Group for
the top National House Builders, bringing together Commercial
Directors and Sustainability Directors to agree and act upon key
priorities. Additionally, three events were hosted with groups of
Social Housing Landlords to support them with their decarbonisation
and retrofit agendas. The Group CEO hosted a Scope 3 dinner with
the CEOs of the suppliers representing the majority of the Group’s
Scope 3 carbon footprint. These business leaders discussed
successes, challenges and how we can win the hearts and
minds of colleagues and others in our industry to enable change.
The scenario analysis conducted by the Group during 2021 identified
that an early adoption pathway has the lowest risk and best financial
opportunities for the Group. Consequently the Group will continue
to advocate for progressive action on climate change in line with
these scenarios.
Accountabilities
Climate change is a Board room 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 along with nominated leads in each of the
Group’s businesses, including the Group Commercial Board.
The Managing Director for BSS Group, the largest contributor
to Scope 3 emissions in the Group due to the sale of commercial
gas boilers, is the Group Leadership Team sponsor for Scope 3
carbon reduction.
Board oversight and engagement
The management reporting cycle on the Group’s climate goals and
targets is at least quarterly, with nine sessions with the Group Leadership
Team or plc Board during 2022. The Group has developed carbon
roadmaps (Scope 1 and 2: Buildings and Fleet, and Scope 3: Product
Decarbonisation) against which progress is monitored by the Group
Leadership Team (GLT) and the Board. Moreover, the GLT and Board
consider the principal climate risks and opportunities identified via the
company’s risk identification activities. The company’s risk identification
activities consider risks emerging from three future scenarios and over
the short, medium and long term. 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 on how the Board is apprised of climate related
risks and opportunities, see the climate change principal risk on page 79.
The GLT and Board consider climate-related issues when reviewing
and guiding strategy, major plans of action, risk management policies,
annual budgets, and business plans as well as setting the organisation’s
performance objectives, monitoring implementation and performance,
and overseeing major capital expenditures, acquisitions and divestitures.
For example in 2022 the GLT and Board approved the move from three
purpose goals to a single sustainability priority; Decarbonising the
Industry. The GLT approved the costs to transition the remaining
diesel fuelled Mechanical Handling Equipment to electric or
Hydrotreated Vegetable Oil (HVO) by the end of 2024 and
continued investment in HVO for an additional 203 HGVs.
Alignment of incentives to carbon commitments
The 2022 bonus targets for the Group Leadership Team included a
Scope 3 carbon engagement target, aiming to increase the amount of
our spend which is with suppliers who have calculated and set reduction
targets for their carbon (see page 107). In addition, the new restricted
stock scheme includes a climate-related performance underpin
(see page 103).
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Travis Perkins plc Annual Report and Accounts 2022
Strategy
Principal risks and opportunities
Risks and opportunities are identified via an assessment approach which aligns not only with the Group principal risk process and rating tables but
also uses the risk drivers and types published by CDP. Internal stakeholders are invited to advise on the relevant risk and opportunity types, level
of impact and speed of risk materialisation. External stakeholders have shared their insights on what is material to them and where commercial
opportunities might exist in relation to the decarbonisation agenda. The impacts from risks and opportunities have been considered in relation
to products and services, supply chain and/or value chain, investment in research and development, operations (including type of operations and
location of facilities), acquisitions or divestments and access to capital. The risk and opportunity identification process is iterative and informed
by scenario analysis which the Group is developing but recognises is not yet complete. For more details on the principal risk process see page 75.
Across all three assessed time periods, geographies, scenarios and risk types the Group does not consider its direct operations to be very highly
exposed to impacts from climate change. The Group is predominantly a UK-based distributor of products, with limited non-UK activity and limited
manufacturing activity. Accordingly, the majority of the climate-related financial risks and opportunities relate to what is sold, rather than how it
moves through the Group’s businesses. The table below summarises the Group’s principal risks and opportunities.
Top climate-related financial
impacts
Description
Risk for
the Group*
Scenario in
which this
impacts
Time period
in which this
impacts
Parts of the value chain
most impacted
Risk – technology: Transitioning
to lower emissions technology
Decarbonisation of the HGV fleet
(c.1600 HGVs to transition away
from diesel)
High
Risk – physical: Rising sea levels
and extreme weather events
Decreased asset values
(assumes some branches affected)
Low
– Medium
Risk – regulation: Mandates on
and regulation of existing products
and services
Risk – Market: Changing
customer behaviour
Product carbon pricing
(assumes a small portion of
carbon-related cost price increases
are not passed through)
Obsolescence of product
(assumes some product lines are
no longer of interest to customers
aligning with net zero)
Low
Low
Opportunity – products
and services:
Development and or expansion of
low emission goods and services
Rising demand for new product mix
and new technologies
(to meet changing building regulations
and low-emission targets)
High
Opportunity – resource efficiency:
Use of more efficient modes of
transport
Opportunity – products and
services:
Development and or expansion of
low emission goods and services
Low
Low
Increased revenue opportunity
(assumes large customers move
business towards merchants with
decarbonised transport options)
Rising demand for new product
mix and new technologies
(to adapt to climate change (i.e.
strengthening flood resilience), and
to react to climate events (ie
extreme weather)
Proactive
Reactive
Proactive
Reactive
Inactive
Proactive
Reactive
5–15 years
In-house:
Travis Perkins Group
15–30 years
In-house:
Travis Perkins Group
5–15 years
Downstream and
Upstream:
Customers and
Manufacturers
Proactive
Reactive
3–15 years
Upstream: Manufacturers
(particularly
manufacturers of gas
boilers or high-carbon
building fabric materials)
Proactive
Reactive
1–15 years
In-house:
Travis Perkins Group
Proactive
Reactive
1–15 years
In-house:
Travis Perkins Group
Proactive
Reactive
1–15 years
In-house:
Travis Perkins Group
*Risk ratings are in line with those in the Principal Risks Section on pages 75 to 81.
A number of other less-material climate-related risks and opportunities are mapped and monitored internally.
Travis Perkins plc Annual Report and Accounts 2022 53
Financial statementsOther informationGovernanceStrategic report Climate-related financial disclosure continued
(in line with TCFD guidelines)
Timeline considered
The timelines considered and why they were selected are detailed in the table below.
Time horizon
Description
Why chosen
Short
Medium
Long
1–5 years
(2022–2027)
5–15 years
(2022–2037)
15–30 years
(2022–2052)
This time horizon was chosen to ensure impacts being felt now and their potential escalation are understood
This time horizon was chosen to reflect that scenarios show limited divergence prior to this point
The physical impacts from climate change will magnify over a longer time period than usual business planning
Strategic response to risks and opportunities
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
The Group’s 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) and
these now all include interim targets. Key activities include:
Reducing the embodied and in-use carbon of products sold
(Scope 3 represents 99% of the Group’s footprint with Category 1
(Purchased Goods and Services) and Category 11 (Use of Sold
Products e.g. gas boilers) representing 88% of this)
• 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.
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 as a transition fuel. An additional 191 HGVs were
moved to HVO in 2022.
• 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 eight electric vans.
• Taking action to improve the energy efficiency of both freehold and
leasehold buildings.
• 100% renewable energy tariff for all UK sites. This tariff was
introduced in October 2021.
• Continuing to move from gas boilers to air-source heat pumps
and other low-carbon technologies to heat the Group’s branches
and offices.
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Travis Perkins plc Annual Report and Accounts 2022
Risk and opportunity
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 page 75. 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. In addition,
risks and opportunities over the Group’s three chosen scenarios
(Proactive, Reactive and Inactive), as well as over three timelines (five
years, 15 years and 30 years) are added by referencing the results of
the scenario analysis. 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. A risk report is presented to the GLT and Board. The Group’s
principal risk list, which includes climate change risk, is also scrutinised by
the Board and the Group’s financial auditors. Details of 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 the impacts are considered via scenario
analysis which is detailed on the next page.
Sizing and scaling of risks and opportunities is performed in conjunction
with internal and external stakeholders and uses the outputs from the
Group’s scenario analyses, materiality assessments and the professional
judgement of the internal sustainability team together with external
advisers. Decisions to mitigate, transfer, accept, or control the risks are
made by the risk owners (nominated GLT members) with confidence to
make decisions provided by a clear carbon strategy, target and roadmaps.
In 2022 the Group followed up the initial PwC scenario analysis
undertaken in 2021 with a deep-dive investigation of the possible
physical climate impacts on its UK branch network and infrastructure,
in partnership with Inspired ESG. The focus on physical impacts from
climate change necessitated aligning the Group’s previous scenarios
with Representative Concentration Pathway (RCP) scenarios from the
IPCC fifth assessment report.
Travis Perkins plc Annual Report and Accounts 2022 55
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(in line with TCFD guidelines)
Scenarios and modelling process
The Group’s approach in 2021 had a greater emphasis on understanding transitional risks and impacts than physical risks and impacts (for which a
small number of higher risk locations were assessed). In 2022, to better understand physical risks, the Group selected three established RCPs from
the IPCC fifth assessment report that were most closely aligned to the scenarios used in 2021. The scenarios, previously referred to as Early action,
Late action and No additional action are now referred to as ‘Proactive, Reactive and Inactive’. The scenarios outline possible physical and transitional
impacts out to 2050. The transitional scenarios used are from the Network for Greening the Financial System (“NGFS”) 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.
The Group selected the scenarios below to illustrate the best and worst outcomes and the sensitivities involved when identifying future impacts
from changes to the climate and society’s response to that change.
Proactive
Early action
Reactive
Late action
Inactive
No additional action
Transitional
Action taken early and effectively. Global
net zero CO2 emissions are achieved by
2050. Transition risks are low.
Action is delayed until 2031 and is
more sudden and disorderly. 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. Transition risks are low.
<2 degrees
mean global warming
Between 2-3 degrees
mean global warming
>3 degrees
mean global warming
Using RCP 2.6.
Global CO2 emissions peak by 2020
and decline to around zero by 2080.
Concentrations in the atmosphere peak
at around 440 ppm in mid-century and
then start slowly declining.
Using RCP 4.5.
Emissions peak around mid century at
around 50% higher than 2000 levels
and then decline rapidly over 30 years
and then stabilise at half of 2000 levels.
CO2 concentration continues on trend to
about 520 ppm in 2070 and continues
to increase but more slowly.
Using RCP 8.5
Concentrations of CO2 in the
atmosphere accelerate and reach 950
ppm by 2100 and continue increasing
for another 100 years.
• The retention of current market share in all categories where the Group is active.
• The use of a blended construction and manufacturing GVA to project revenue. This assumes the sector moves from
unsustainable manufacturing processes to new, as yet unknown, processes and materials.
• A 0.5m rise in sea levels is effectively mitigated by sea defence adaptations.
• Cost price inflation caused by supply chain mitigation of physical and transitional risks can be substantially passed
on to customers.
• The 80 UK sites assessed for physical climate risk are representative of the Group’s UK sites and infrastructure and
inferences about the portfolio risk can be made from the sample.
• The expected number of days of business interruption from physical climate change impact are modelled with the Gumbel
distribution to best represent extreme events.
Full international implementation of
country-level commitments on climate
change action.
Price parity for non-fossil fuel delivery
will not be achieved before 2040.
Current commitments by countries
and businesses to GHG reductions
are not met.
Physical
Scenario
assumptions
which apply
to all three
scenarios
Scenario
assumptions
which apply
to specific
scenarios
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Travis Perkins plc Annual Report and Accounts 2022
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.
The Group selected the scenarios below to illustrate the best and worst outcomes and the sensitivities involved when identifying future impacts
from changes to the climate and society’s response to that change.
Risk lens
What was modelled
Infrastructure
risk
• Impacts from flooding, sea level rise, fires and weather extremes on key
physical locations across the supply chain including the Group’s own estate
• Including the largest ports, highest revenue and traffic sites
• Supply issues due to increasing frequency of weather extremes
Yet to be modelled
Full physical impacts on the supply
chain and the different nature and scale
of impacts depending on geographies
S
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Investment
risk
Energy and
utilities risk
• Costs of decarbonising the fleet
• Impacts from existing and emerging regulatory requirements
Technology assumptions as clear
alternative drivetrain to diesel fleet
does not yet exist
Macro-economic trends
• Electricity costs from switching to decarbonised vehicle fleet
Different Energy Pathways
• Charges for use of electricity and gas in the business
• Costs of diesel, Hydrogenated Vegetable Oil (HVO) fuel and electricity to power
the fleet
• Impacts from existing and emerging regulatory requirements
Technology assumptions
around energy generation
Product sales
risk
Increasing sales of sustainable products and raw materials to support
energy transition
No further modelling planned
at this stage
Changes in sales of carbon-heavy products
Introduction of emission tax on products
Impacts from existing and emerging regulatory requirements
Macro-economic trends and technological assumptions, as a clear alternative to
diesel drive trains for lorries does not yet exist.
Different energy pathways and technology assumptions around energy generation.
Travis Perkins plc Annual Report and Accounts 2022
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Climate-related financial disclosure continued
(in line with TCFD guidelines)
Scenario results
Resilience over the three Scenarios
Scenario
Proactive
Reactive
Inactive
Future costs
(resilience)
LOWEST
The proactive scenario aligns with the
Group’s own SBTi approved targets and
roadmaps. Transitional costs (fleet and
estate) have been considered in line with
this roadmap. Product-related carbon
costs are assumed to be substantially
passed through to the market. Costs
from physical impacts of climate change
are expected to be low to moderate.
HIGHER
The reactive scenario introduces more
risk as policy around climate change is
either too late or too weak, exposing the
Group to higher transitional costs and
a supply chain with less mandate to
change. Costs from physical impacts
remain low to moderate for the UK but
may be higher in the Group’s supply
chains (this will be modelled in 2023).
HIGHEST
The inactive scenario introduces
reputational risk around target
achievement as there would be no
further changes from the government,
leaving the Group unsupported by policy
to meet its SBTi targets. The Group’s UK
infrastructure will be impacted by rising
sea levels and flooding by 2050. There
will be supply chain disruption.
The Group’s exposure to financial stress from physical climate change or transitional climate change impacts can be successfully mitigated by
following the adopted strategy and roadmaps outlined in this disclosure. Transitional impacts are expected to be far greater than physical impacts
and 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 proactive scenario 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 pathway.
Total capital investment and maintenance cost for fleet
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
Summary of transitional risks
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.
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.
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 2022, £22m was invested in new delivery
vehicles and £0.26m in the transition to HVO low-carbon fuel use
(tank installation and surplus fuel costs). Transport-related carbon
reduced by 25% in 2022 as compared to 2021.
As a non capital-intensive business with 99% of emissions in the value
chain, an internal carbon price is not a tool that has been adopted by
the Group to date. The Group does take into account carbon taxes as
part of the business case process.
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Travis Perkins plc Annual Report and Accounts 2022
Summary of physical risks
The physical risk from climate change to the Group’s estate in the UK
is low to medium as the Group assets are large in number and
geographically spread providing resilience to the physical impact
from a changing climate.
The physical risk from climate change to the Group’s supply chain
(causing business interruption) is also forecast as low to medium due to
the Group’s ability to adapt to new supply routes and suppliers and the
assumption that transactions with customers are not lost but delayed
following physical impacts.
A deep-dive on physical risk to the Group’s UK estate
The scenario analysis for physical risks (temperature, precipitation,
fire and extreme weather) to the Group’s estate in the UK suggests
broadly similar impacts (low to moderate) for each of the three
warming scenarios. The likelihood of moderate risks increases in
reactive or inactive scenarios over time. The analysis suggests that
not all regions will be impacted equally by changing precipitation,
temperatures, wildfire risk or extreme weather events.
• Almost half the Group’s 1500 sites in the UK are at risk of flooding.
• The Groups latest impact assessment using the three selected
temperature scenarios suggests 49% of sites are at a high risk
of a one in 100 year river flooding event. Only one site from those
surveyed was at a medium or higher risk from a 1-in-500 year river
flooding event.
• A forecast 0.5m rise in sea levels would not impact on all Travis
Perkins, coastal sites and shipping ports used in the supply chain
equally. Sites and ports in the east of the UK are forecast to be the
most vulnerable to sea level rise. 22 Group sites could be impacted
by 2050 under the Inactive scenario.
Scenario
Proactive
Reactive
Inactive
2112
(90 years)
2082
(60 years)
2052
(30 years)
Timeframe
for 0.5m sea
level rise to
impact
• 15% of the Group’s current estate was at risk of impact from wildfires
within 10km of the branch between 2018 – 2022, although none
directly impacted the estate or operations. The Group will keep
monitoring wildfires as, whilst less common than flooding events,
they could have a higher impact per event.
Regions likely to experience the highest temperature increases under the three scenarios.
Average daily temperature projection by 2052 (°C)
Higher increases
in precipitation
Region
Reference period
(1980 – 2010)
London
10.86
Proactive
11.40 (5%)
East of England 10.42
10.96 (5%)
South East
10.67
South West
10.67
11.21 (5%)
11.21 (5%)
Reactive
11.69 (8%)
11.20 (7%)
11.50 (8%)
11.50 (8%)
Inactive
12.09 (11%)
11.65 (12%)
11.90 (11%)
11.90 (11%)
Higher sea level
rise impacts
Regions likely to experience the highest precipitation increases under the three
different scenarios.
Average precipitation projection by 2052 (mm/yr)
Proactive
Reactive
Inactive
Region
Wales
South West
Reference period
(1980 – 2010)
1143
950
North West
987
1150 (0.6%)
956 (0.6%)
993 (0.6%)
West Scotland
1335
1343 (0.6%)
1172 (2.5%)
975 (2.6%)
1015 (2.8%)
1369 (2.5%)
1164 (1.8%).
967 (1.8%)
1011 (2.4%)
1358 (1.7%)
Higher increases
in temperature
The analysis confirms that overall physical risk across the Group’s UK-based estate increases over time but never gets beyond medium in
any region. Once impacts are monetised and seen in the context of the entire estate, the overall impact is considered to be low to moderate.
Physical impact on community infrastructure and consequent business interruption was not fully modelled and will be returned to in future
risk assessment cycles, along with deeper assessment of physical risk in the Group’s supply chain.
The Group will use the insight provided by the scenario analysis to refine its property and insurance strategies.
Travis Perkins plc Annual Report and Accounts 2022 59
Financial statementsOther informationGovernanceStrategic report
Climate-related financial disclosure continued
(in line with TCFD guidelines)
Metrics and KPIs
The Group sets out performance against a number of environmental
KPIs below, including absolute carbon reduction and performance
against targets and additional detail on energy consumption. During
2022 the Group introduced interim targets to the three carbon
reduction roadmaps (buildings, fleet and Scope 3).
Work is planned for 2023 to determine KPIs and metrics which more
directly align to the material risks and opportunities set out in this
disclosure. Additional KPIs and metrics will consider activity measures
to complement the existing KPIs which are designed primarily to
monitor progress on GHG reductions to ensure the Group’s SBTi
approved reduction targets are met. The activity measures will be
aligned to the principal risk and opportunities disclosed above.
The 2022 Scope 3 engagement target for the GLT was achieved. In
total 54% of product spend was with suppliers who have calculated
and set reduction targets for their carbon. More detail on this target
can be found on page 107 in the Remuneration Report.
The existing KPIs are measured using the GHG protocol, are
independently verified by LRQA and accepted by the SBTi. More
details about the methodology can be found on the Group’s website
(www.travisperkinsplc.co.uk/sustainability).
The Group’s net zero target follows the UK government’s definition
of total Scope 1 & 2 carbon emissions that are equal to or less than
the emissions the Group removes from the environment.
UK
2022
Non-UK
Energy GWh
Total
UK
2021
Non-UK
Total
2020
Performance
Targets
Performance in 2022
in 2022 vs
(with 2020
against 2020 target
2021
baseline)
baseline year
UK
Non-UK
Total
%
Energy GWh
292
8
300
359
6
365
335
5
340
-18%
Carbon Dioxide Equivalent (CO2e) Tonnes
Carbon Dioxide Equivalent (CO2e) Tonnes
49,893
1,016
50,909
63,285
814
64,099
60,656
641
61,297
-21%
0
652
652
13,121
530
13,651
17,333
461
17,794
-95%
49,893
1,667
51,560
76,406
1,344
77,750
77,989
1,102
79,091
-34%
-35%
11.2
17.7
11.3
17.3
15.0
17.3
21.2
15.8
21.1
-35%
9,893,582
10,142,713
9,687,330
-2%
reduction by
+2%
Net zero by
2035 with a
minimum
80%
reduction
63%
2035
GWh energy
Annual energy use relating to gas,
purchased electricity and transport fuel (for
kWh data see the data table on page 184)
Scope 1
Direct emissions from
burning gas and solid fuel
for heating and from road
fuel use for distribution2
Scope 2
Indirect emissions from
our use of electricity
Scope 1 & 2 Absolute
Scope 1 & 2 Intensity3
Emissions from Scope 1
and 2 sources per £m of
inflation adjusted sales
Scope 3 Absolute4
Indirect emissions from the
supply chain. Including all
Scope 3 categories
Scope 3 Intensity3
Emissions from Scope 3
sources per £m of inflation adjusted sales
2,176
2,255
2,583
-3%
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
60
Travis Perkins plc Annual Report and Accounts 2022
2022
Non-UK
Energy GWh
2021
Non-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 DEFRA Conversion Factors for Company Reporting 2022
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 “
”,
have been assured against Lloyd’s Register verification procedures.
For a link to the assurance report see page 41.
1. The numbers reported include data for companies where Travis Perkins plc
has operational control.
2. Fugitive emissions from domestic refrigeration and building air conditioning
are included but 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 2022 Office of
National Statistics inflation data.
4. Scope 3 data quality improved in 2022, primarily due to a review of the
emissions factors allocated to product categories within Category 11: In-use
impact of products sold. The correction resulted in a material reduction to
the Scope 3 footprint. Therefore 2021 and 2020 Scope 3 data have been
rebaselined to ensure the trends published reflect progress,
not data amendments.
2020
Performance
in 2022 vs
2021
Targets
(with 2020
baseline)
Performance in 2022
against 2020 target
baseline year
2022 headline performance
GWh energy
Annual energy use relating to gas,
purchased electricity and transport fuel (for
kWh data see the data table on page 184)
Scope 1
Direct emissions from
burning gas and solid fuel
for heating and from road
fuel use for distribution2
Scope 2
Indirect emissions from
our use of electricity
Scope 1 & 2 Absolute
Scope 1 & 2 Intensity3
Emissions from Scope 1
and 2 sources per £m of
inflation adjusted sales
Scope 3 Absolute4
Indirect emissions from the
supply chain. Including all
Scope 3 categories
Scope 3 Intensity3
UK
Total
UK
Total
UK
Non-UK
Total
%
Energy GWh
292
8
300
359
6
365
335
5
340
-18%
Carbon Dioxide Equivalent (CO2e) Tonnes
Carbon Dioxide Equivalent (CO2e) Tonnes
49,893
1,016
50,909
63,285
814
64,099
60,656
641
61,297
-21%
0
652
652
13,121
530
13,651
17,333
461
17,794
-95%
49,893
1,667
51,560
76,406
1,344
77,750
77,989
1,102
79,091
-34%
11.2
17.7
11.3
17.3
15.0
17.3
21.2
15.8
21.1
-35%
9,893,582
10,142,713
Emissions from Scope 3
sources per £m of inflation adjusted sales
2,176
2,255
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
9,687,330
2,583
-2%
-3%
Net zero by
2035 with a
minimum
80%
reduction
-35%
63%
reduction by
2035
+2%
“Overall, 2022 saw
improvements across all three
carbon scopes, reflecting the
efforts the Group and
businesses are making to
achieve our SBTi-approved
carbon reduction targets.”
James Vance,
Group Head of Environment
Scope 1 & 2 absolute carbon
-34%
Scope 3 absolute carbon
-2%
Spend with suppliers
engaged on carbon
54%
Travis Perkins plc Annual Report and Accounts 2022
61
Financial statementsOther informationGovernanceStrategic report Section 172 statement
Engaging with stakeholders
Building positive relationships through strong engagement, collaboration
and dialogue with stakeholders who share our values is important to us.
Working together towards shared goals assists us in delivering long-term
sustainable success.
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 2022 was sent to 17,815
colleagues with a completion rate of 76%, representing the views of
13,540 colleagues. The engagement survey included detailed questions
around safety, belonging, equal opportunity, customer focus and
corporate citizenship.
Group diversity and inclusion networks with GLT sponsorship and the
Diversity and Inclusion Advisory Board continued to drive the Group’s
agenda 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 continued as the designated workforce engagement
Non-executive Director in 2022 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 2022, Pete engaged in
a programme of activities where he had the opportunity to gauge the
engagement levels of colleagues across our businesses with a specific
focus on our Driver and New Starter populations. Key themes emerging
from listening sessions in 2022 focused on safety, belonging, equal
opportunity, customer focus and corporate citizenship. Pete shared
key themes and feedback to the Board.
The Group also focused in 2022 on a storytelling process to deliver a
carefully crafted narrative that weaves together three elements which
in combination are designed to engage and inspire colleagues; (i) the
Group’s purpose; (ii) the Group’s updated values; and (iii) the strategy.
Group-level and business unit-specific narratives were designed to be
rolled out throughout the organisation by cascade and so have been
made to be easily communicable and capable of being brought to life
with personal stories from the tellers to make narratives both resonate
with the audience and be capable of being passed on. The cascade
started in January 2022 when the story was delivered by the GLT to
the senior leadership teams of Group’s business units and functions,
who in turn cascaded the story within their own teams, with further
rolling down to every colleague successfully completed by the
mid-point of 2022. The Board was updated regularly regarding
progress of this initiative which brought the Group’s purpose,
values and strategy to life.
Further information on how the Group engages with colleagues can
be found under “Colleague voice and engagement” on page 48.
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.
During summer 2022, the Group undertook an independent investor
perception study run by Rothschild & Co. This study included 15 major
investors, representing around half of the Group’s actively managed
shares, and also five sell-side analysts with a range of current views
on the business. This feedback was presented back to the Board by
Rothschild & Co during July 2022.
To ensure engagement, the Group also undertook around 200
investor interactions during 2022. These interactions build upon the
presentation by the Group of its ambition to become the leading partner
to the construction industry, which the Group set out at its Capital
Markets Update in 2021. The majority of these interactions were
held as in-person meetings as the management team believes
that this facilitates a better quality of conversation and helps
to build longer term relationships with our shareholders.
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Travis Perkins plc Annual Report and Accounts 2022
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 set a
new long-term target for people development during 2022; 10,000
successfully completed apprenticeships by 2030 (delivered both for
the Group’s own colleagues and those in the wider industry). We partner
with local charities and organisations at a site level to raise awareness
and funds. The Group’s impact on the environment is a key focus for
the Board. During 2022 interim carbon targets were set for buildings
and fleet (Scope 1 and 2) and for the supply chain (Scope 3) to
ensure credible milestones on the Group’s carbon roadmaps. Further
information is available in the Sustainability Report on pages 32 to 39.
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
during 2022 were around a national retrofit strategy, green skills,
decarbonisation of specialist fleets and health and safety. The Board
is updated on legal and regulatory developments and takes these into
account when considering future actions.
Customers
The success of the Group, both historically and into the future is
dependent on our ability to understand and meet the needs of our
customers. The Group has invested heavily in data capability to bring
a greater level of understanding to the behaviour of our customers
and when combined with the time spent discussing their needs and
perceptions this produces a significant amount of insight which we
use to guide our actions.
Taking a longer term view of customer needs has allowed different
business units to begin to develop and deploy a range of services which
are designed to go above and beyond the traditional model of supplying
materials. By looking forward and seeking to understand the potential
range of impacts, which may affect the business of our customers in
the future, we are able to assist in the development of some solutions
to bring mutual value, enabling, for example, customers to work with
changing environmental planning legislation to construct houses that
meet current and future standards.
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.
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.
Core suppliers joined the conferences hosted by the Group’s businesses
in 2022. Online workshops were held for suppliers in April, July
and September, focusing on decarbonisation, sustainable products,
responsible sourcing, packaging and quality assurance. Each series
of workshops was attended by in excess of 600 suppliers. 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.
Travis Perkins plc Annual Report and Accounts 2022 63
Financial statementsOther informationGovernanceStrategic report Section 172 statement continued
Decision-making in practice
One of the major decisions made by the Group this year was to commit to and publish a new industry-leading, skills target. This was to meet
increasing stakeholder concerns around the skills gap in the construction industry 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
Shareholders
Colleagues
Customers
Stakeholder views
Conclusions
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.
Our colleagues want the Group to offer them the
opportunity to develop and grow their careers.
For both current and future colleagues, the
opportunity to develop is a deciding factor in
who they work for and how engaged they feel.
Our customers want colleagues who are able to
help them and who use their in-depth knowledge
to identify solutions that meet their needs.
These needs are evolving and becoming more
complex as the industry addresses the challenges
of carbon reduction and modernisation.
Our customers are also facing their own
challenges with skills shortages. Apprenticeship
schemes are complex and customers are looking
for help in how to access them
Investors see companies with a strong focus on material
sustainability issues outperforming. With an ageing workforce one
of the key sustainability issues in the construction supply sector
and indeed the wider construction sector is the current skills gap.
The Group’s new skills target will go a long way to address this
skills gap and will also lead the approach for the wider industry.
The Group cares about its colleagues and wants to retain and
attract the best to the business and the industry. The Group’s ability
to offer these opportunities to colleagues not only helps with
attraction and retention but also gives the business a great talent
pool of colleagues to meet the future needs of both the business
and its colleagues.
The Group maintains regular communication with its customers,
consulting regularly with them on their changing needs. The
Group’s Apprenticeship Programmes underpin the skills target and
they not only give colleagues the knowledge, skills and behaviours
they need to function in the business today but are designed to give
them the capability to operate in a modern construction sector of
the future. As part of the new skills target the Group will be opening
up the opportunity for employees of its customers to complete
Apprenticeships and will be advising customers on this.
Suppliers
Our suppliers want us to have colleagues who
understand their products and are able to advise
customers on the best ways to use them.
They also are dealing with their own challenges
around skills shortages and are looking for ways
to address these challenges.
The business has worked closely with suppliers in designing
apprenticeship programmes to ensure they equip apprentices
with the knowledge needed on products. Some suppliers even
deliver elements of these programmes.
The Group has also offered Suppliers the opportunity for their
colleagues to complete TP Group’s apprenticeship programmes.
Construction supply
sector
The wider Construction supply sector faces
the same challenges as the Group over skills
shortages. They are also looking for solutions
that enable them to recruit and train colleagues
in a challenging market.
Communities
Our communities want our continued support
with local causes and issues.
Addressing the skills shortage for the Group does not solve
the wider challenge as this does not address the competitive
marketplace for trained colleagues. By opening up the Group’s
apprenticeship programmes to other organisations in the
Construction Supply Sector (many of which are SME’s, that
find it difficult to utilise apprenticeships) it is possible to grow
talent across the sector and reduce the skills gap.
All of the Group’s apprenticeship programmes encourage
colleagues to get involved with their local community often
in the form of local projects.
Government and
regulators
The government and regulators are very aware of
the skills crisis and have launched a number of
initiatives such as the Plan for Jobs to encourage
Employers to take an active role in training people
for work.
The Group is one of the few employers in the UK that designs and
delivers its own suite of apprenticeship programmes and what is
even more unique is that the Group also delivers these programmes
to other organisations. The Group is taking the lead in delivering the
Government’s agenda and receives positive feedback from
Government organisations.
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Travis Perkins plc Annual Report and Accounts 2022
Travis Perkins plc Annual Report and Accounts 2022 65
Financial statementsOther informationGovernanceStrategic report Business performance and priorities
Summary
2022 was a challenging year and the Group adapted well to the rapidly
changing conditions, making further progress towards its ambition of
being the leading partner to the construction industry. The Group will
continue to balance delivery of near term performance with longer term
strategic objectives as it focuses on outperforming its end markets and
generating strong cash flow.
2022 Performance
The Group delivered a resilient performance with revenue of £4,995m,
up 8.9% versus 2021. The Merchanting businesses delivered further
market share gains and Toolstation returned to good growth in the
second half of 2022 following tough comparatives in H1. The Group again
demonstrated its ability to recover significant levels of materials cost
inflation and continues to benefit from its diverse end market exposure.
While adjusted operating profit of £295m was £58m, or 16%, lower
than in 2021, this was predominantly driven by lower year-on-year
property profits (£24m) and £15m of restructuring charges associated
with the Group’s cost reduction actions which will deliver around
£25m benefit in 2023. Despite two fewer trading days (impacting
operating profit by around £9m), the Merchanting segment improved
its underlying operating profit performance with further market share
gains. Underlying performance was significantly lower in Toolstation
as the business continued to invest in its distribution and network
capability across both the UK and Europe to support future growth.
As outlined in the September 2021 strategic update, the Group is
focusing on elevating relationships with customers through the growth
of value-added services. This approach is paying dividends with the
value-added services representing around 16% of Group revenue.
• Robust revenue growth of 8.9% with elevated levels of materials
cost inflation diligently managed
• Adjusted operating profit of £295m, impacted principally by
lower year-on-year property profits and a £15m charge related
to restructuring activities in Q4
• Adjusted earnings per share of 94.6p with lower operating profit
partially offset by reduced share count
• Proactive cost actions to deliver cost benefits of around
£25m in 2023
• Good cash conversion of 67%. Lease-adjusted leverage (net
debt / EBITDA) of 1.8x remains comfortably within target range
• Total ordinary dividend increased to 39.0 pence per share
(2021: 38.0 pence per share)
• Solid performance in the Travis Perkins General Merchant, driven
by continued focus on enhancement of digital capability and
expansion of value-added services primarily across Hire,
Benchmarx kitchens and Managed Services
• Continued strong performance from the Group’s specialist
distributors: BSS, Keyline and CCF. Staircraft now integrated and
enhancing the Group’s housebuilder proposition
• Toolstation returned to good growth in the second-half of 2022
after tough prior year comparatives in the first-half. Significant
investment in expanding infrastructure in the UK and Europe
£m (unless otherwise stated)
Revenue
Adjusted operating profit
Adjusted operating profit before property
profits and restructuring charges
Adjusted earnings per share
Adjusted ROCE
Adjusted ROCE before property profits and
restructuring charge
Net debt / adjusted EBITDA
Ordinary dividend per share
Operating profit
Total profit after tax
Basic earnings per share
* For continuing businesses only
2022
4,995
295
285
94.6p
10.8%
10.5%
1.8x
39.0p
285
192
90.8p
2021*
4,587
353
304
107.3p
14.1%
12.1%
1.20x
38.0p
349
241
103.9p
66
Travis Perkins plc Annual Report and Accounts 2022
Maintaining operational agility and capital discipline
With the expectation of lower levels of activity in the UK construction
sector in the year ahead, management implemented a number of cost
reduction actions in Q4 2022 to ensure that the Group’s cost base
appropriately reflects the trading environment. These actions are
expected to deliver around £25m of cost savings in 2023, with
the cost to achieve those savings of £15m recognised in 2022.
These actions resulted in the closure of 19 branches in the General
Merchant and Benchmarx and a headcount reduction of approximately
400 across those branches and central support functions. These
changes represent an acceleration of plans to modernise the business
by exiting smaller branches and continuing to invest in larger, more
capable, destination branches which incorporate value-added
services such as Hire and kitchen showrooms.
The Group also flexed its capital investment programme in the year to
reflect the trading environment, with spend being around £15m lower
than medium-term guidance (of £125m p.a.). This prudent approach will
continue into 2023 with capital spend anticipated to be circa £25m lower
than medium-term guidance at around £100m.
Capital structure and shareholder returns
The Group has set a medium term leverage target of 1.5x–2.0x net
debt / adjusted EBITDA (on an IFRS 16 basis), this target range being
consistent with investment grade credit metrics. At the year-end, net
debt / adjusted EBITDA was in the middle of the target range at 1.75x
leaving the Group well positioned to navigate the current uncertain
market conditions. The current leverage position, together with the
cash generative nature of the business, allows the Group scope to
continue to invest in driving future growth while also returning surplus
capital to shareholders when at the lower end of this target range.
Given the strong balance sheet position and confidence in the medium
term potential of the Group, the Board has maintained the cash
distribution leading to an increased dividend of 39.0 pence per
share (2021: 38.0 pence per share).
Central costs
Central costs reduced by £3m year-on-year due principally to lower
management incentive payments.
Property
The Group generated a property profit of £25m in the year, in line with
the long run average, with £18m of cash proceeds. The majority of the
profit relates to a site sold in Cambridge for which consideration of
£22m is deferred to 2023 and 2024.
For 2023 the Group expects property profits of around £20m with
cash receipts in excess of that figure.
Outlook
The Group is mindful of the current macroeconomic uncertainty and,
in-line with industry forecasts, is planning for a decline in overall market
volumes in the mid to high single-digit range in 2023. This will vary
across end markets with private domestic new-build and RMI more
challenged, while the commercial, industrial and public sectors are
expected to remain more resilient.
Product-cost inflation is expected to moderate into 2023 although
management does not currently expect to see any notable deflation
in manufactured products. The Group therefore expects to see mid
to high single digit percentage product cost inflation overall driven by
the rollover of prior year increases and further new increases already
announced so far this year.
Whilst the expected market dynamics point to a challenging year ahead,
the Group continues to anticipate delivering a performance in line with
market expectations. The actions taken to create a more agile business,
with broad end market exposure, enable management to remain
confident in the Group’s ability to outperform its markets and deliver
attractive returns to shareholders over the medium term.
Technical guidance
The Group’s technical guidance for 2023 is as follows:
• Effective tax rate of 25%
• Base capital expenditure of around £100m
• Property profits of around £20m
Travis Perkins plc Annual Report and Accounts 2022
67
Financial statementsOther informationGovernanceStrategic report Business performance and priorities continued
Merchanting
Revenue
£4,220m
2021: £3,826m
Adjusted operating profit
£314m
2021: £320m
2023 priorities
• Regional housebuilder growth,
driven by innovative solutions that
reduce waste, complexity and the
need for specialist labour
• Continue to grow tool hire
penetration whilst maintaining
capital efficiency
• Selective investment in General
Merchant destination branches,
focused on major conurbations
• Tight management of the cost
base, in-line with market volumes
2022
2021
Change
Revenue
Adjusted operating profit*
Adjusted operating profit before restructuring charges*
Adjusted operating margin*
Adjusted operating margin before restructuring charges*
ROCE before restructuring charges*
Branch network
£4,220m
£314m
£329m
7.4%
7.8%
15%
767
£3,826m
£320m
£320m
8.4%
8.4%
16%
781
10.3%
(1.9)%
2.8%
(100)bps
(60)bps
(1)ppt
(18)
*Segmental adjusted operating profit excludes property profits
The Merchanting segment delivered a
robust performance overall with revenue
up by 10.3% and growth in operating profit
(before restructuring charges) of 2.8% to
£329m. After significant price increases
during 2021, driven by a rapid post-pandemic
recovery in demand, price inflation continued
to accelerate through 2022 before moderating
slightly in the fourth quarter. Increases were
mainly driven by manufacturers passing
through rising energy costs with prices
increasing by around 15% in H1, rising
to around 17% in H2. The Merchanting
businesses have again managed these
challenges well by focusing on providing
transparency on pricing to customers.
Since 2018, the significant programme of
work to evolve the customer proposition
and deliver empowerment to the branch
teams has delivered strong financial benefits.
Supported by a rationalisation of the network
and much improved data to aid decision
making, operating profit (excluding the current
year restructuring charge) has grown by 18%,
£95m of capital has been removed and
ROCE has moved forward by 280bps.
The Group is confident in its ability
to make further progress on these metrics.
From an end-market perspective, the
Merchanting segment benefits from broad
exposure providing an element of resilience
from volatility in any one end market.
The private domestic RMI market represents
approximately 35% of Merchanting revenue
and is primarily serviced by the Group’s
General Merchant business working with
smaller trade customers. Following a bright
start to the year, volume performance
weakened against a tough comparator period
and this was exacerbated in the second half by
high levels of materials inflation and increasing
macroeconomic uncertainty, leading to
home-owners delaying or reducing the
scope of improvement work. This challenging
backdrop is expected to continue into 2023.
For the smaller trade customers the focus
remains on the core elements of service; for
account customers the number of managed
accounts has been increased and for
non-account customers, who are more
transient in nature, further improvements
have been made to ensure transparent and
consistent pricing, complemented by the right
range and depth of stock in branch. This has
been backed up by further investments in our
hire fleet and sales team, driving increased
penetration, and in our digital proposition.
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Travis Perkins plc Annual Report and Accounts 2022
The public sector market represents
approximately 24% of Merchanting revenue
and covers projects across infrastructure,
public assets such as schools, hospitals and
prisons and social housing maintenance.
The market is primarily serviced by the
Group’s BSS, Keyline and Travis Perkins
Managed Services businesses. Demand
remained robust in this market throughout
the year with ongoing government backing
for investment in public buildings and
infrastructure alongside the continued catch
up in social housing maintenance and the
impact of tighter legislation on social housing
standards. These factors are expected to
continue to support demand into next year.
Adjusted operating margin excluding the
restructuring charge reduced by 60bps.
This was a result of the dilutive effect of very
high levels of inflation on the gross margin
percentage and also a shift in customer mix
towards larger accounts where gross margins
are lower. Although the Merchant businesses
experienced high levels of overhead inflation,
with significant increases in payroll, utility and
fuel costs leading to overall overhead inflation
of around 8%, this was well managed and the
cost to serve percentage remained in line with
prior year.
The private domestic new-build market
represents approximately 19% of Merchanting
revenue and is primarily serviced by Keyline,
CCF and Staircraft working with national and
regional housebuilders. The businesses
engage at different stages of the build process
with Keyline typically first on site
and CCF and Staircraft delivering at a later
stage of the process. While the housing
market deteriorated later in H2, this did
not feed through notably into volumes as
completions continued but will be seen in
2023 with new housing starts forecast to slow.
Within this sector, the Group continues to
enjoy long standing partnerships with the
major national housebuilders and to focus
growth initiatives on the regional housebuilder
market where the introduction of Staircraft
and the development of the Benchmarx
proposition are providing customers with
innovative solutions to reduce waste,
complexity and the need for specialist labour.
CCF and Keyline continue to enhance their
proposition in this market by using newly
developed data and delivery management
capability to provide data on embodied carbon
which is helping customers to manage
projects more effectively and win work.
The commercial and industrial market
represents approximately 22% of Merchanting
revenue and incorporates new build and
refurbishment activity across offices,
warehouses, multi occupancy and student
accommodation alongside industrial
maintenance. The market is primarily
serviced by the Group’s BSS and CCF
businesses. This sector held up well during
the year with a post-pandemic backlog of
work remaining and an increasing requirement
for logistics space and office remodelling, a
trend that is expected to continue.
Travis Perkins plc Annual Report and Accounts 2022 69
Financial statementsOther informationGovernanceStrategic report Business performance and priorities continued
Toolstation
Revenue
£775m
2021: £761m
Branch network
721
2021: 653
2023 priorities
• Open a highly-automated
500,000 ft2 distribution
centre in Northampton, initially
for direct customer dispatch
• Continued network growth with
a further 50 branches planned:
10 in the UK and 40 in Europe
• Further enhancements to the
trade customer proposition
• Leverage first-mover advantage
in Europe, with optimisation of
location and local market
plans and customer
proposition development
70
Travis Perkins plc Annual Report and Accounts 2022
Revenue
Like-for-like growth
Adjusted operating profit
Adjusted operating margin
ROCE
Branch network (UK)
Branch network (Europe)
Adjusted operating profit – UK
2022
£775m
(3.7)%
£(9)m
(1.1)%
(2)%
563
158
£21m
2021
£761m
12.3%
£22m
2.9%
5%
530
123
£42m
Change
1.9%
(140.9)%
(400)bps
(7)ppt
33
35
(50.0)%
2022 proved a challenging year for Toolstation
overall as financial performance reflected
further significant investment in network and
distribution capabilities to build the business
for the future alongside lower DIY-related
volumes following exceptional sales during
the pandemic. Despite weakening end
markets, performance improved through
the year with revenue growth in H2 of
8.9% compared to a fall of 4.6% in H1.
UK adjusted operating profit fell to £21m given
the volume impact described earlier, continued
investment in the network and distribution
capability and overhead inflationary pressures.
Toolstation will continue to focus its
propositional development on the trade
customer base given the higher frequency of
orders, larger basket size and better product
mix which provide a more predictable revenue
stream and a larger market opportunity.
A further 33 branches were added to the UK
network during 2022 taking the total to 563.
Reflecting macroeconomic conditions, the
pace of rollout was slowed and this will also
be the case in 2023 with around 10 new
branches planned to open. With 268 new
branches opened since 2017, only around
half of the network is mature. New sites
continue to perform at least in line with
mature cohorts and these branches have
the potential to add over £300m of revenue
over the next five years.
The Group has invested £28m to date (£17m in
year) in a new c.500,000 square foot distribution
centre in Pineham, Northamptonshire. The facility
incorporates automation technology and will
initially provide the capability to fulfil direct to
customer orders. The facility is due to be
fully operational in 2023 and is an important
strategic investment to both drive revenue
growth and increase operational efficiency.
The European business saw very similar
dynamics in terms of both revenue and operating
profit performance. Benelux continues to
progress well and, with 27 further branches
added to take the total to 113, is approaching the
“critical mass” required to take the business into
profitability. During the year the Group also
invested in a second distribution facility in the
Netherlands with around 200,000 square feet
of capacity. This facility which will provide the
capability to build the network out to around 250
branches. In France, where sales grew by 50%,
eight new branches were added to take the total
to 45 as the business continues to refine the
customer service proposition alongside optimising
the choice of location and local market plans.
With the European business investing for the
future and also experiencing similar volume
dynamics as the UK, losses for the year were
£30m. A similar outcome is expected in 2023
although this will reflect narrowing losses in the
Netherlands and the impact of increased
investment in France and Belgium.
Financial performance
Revenue analysis
As revenue comparatives normalised after the impacts of the pandemic, the Merchanting business and Toolstation saw contrasting dynamics
though 2022.
The Merchanting business saw strong overall growth driven by price inflation which accelerated rapidly through the year before slightly moderating
in the fourth quarter. With the Merchanting pricing model largely based around the pass through of materials cost price inflation, as manufacturer
increases picked up from the second quarter onward (due primarily to energy cost increases), this fed through into sales price inflation as the
Merchant businesses passed through these increases in a disciplined manner.
Overall volumes weakened sequentially throughout the year, notably in the smaller customer segment of the private domestic RMI market, with the
impact of inflation, normalisation of comparatives from a very strong market in 2021 and concerns over project affordability weighing on sentiment.
Toolstation experienced significant volume decline in the first half as the business lapped pandemic impacted comparatives before returning to
solid revenue growth in the second half with volumes broadly flat. Whilst the impact of materials cost inflation was not as pronounced on lightside
products as on heavyside, inflation was still notable at around 9%. The Toolstation team have had to carefully balance the requirement to recover
materials cost inflation with the desire to maintain value leadership with recent performance demonstrating that this has been managed well.
As a comparison to 2019 as a base year, Merchanting revenue was 14% ahead. Taking into account the reduction in space due to the 2020
restructuring and three-year cumulative inflation, Merchanting volumes were therefore broadly in line with 2019. Toolstation revenues are
around 74% ahead of 2019. On a similar basis and adjusting for the impact of consolidating Toolstation Europe, volumes are around 45%
higher than 2019.
Volume
Price and mix
Total revenue growth
Network changes, acquisitions and disposals
Trading days
Like-for-like revenue growth
Quarterly revenue analysis
Merchanting
Toolstation
Total Group
* Trading day adjusted
Q1
Q2
H1
Q3
Q4
H2
FY
Q1
Q2
H1
Q3
Q4
H2
FY
Q1
Q2
H1
Q3
Q4
H2
FY
Merchanting
Toolstation
(5.8)%
16.1%
10.3%
(2.4)%
0.8%
8.7%
(7.1)%
9.0%
1.9%
(5.9)%
0.3%
(3.7)%
Group
(6.0)%
14.9%
8.9%
(3.0)%
0.7%
6.6%
Total revenue*
Like-for-like revenue
2022
17.9%
9.2%
13.3%
11.5%
4.7%
7.3%
10.3%
(6.0)%
(3.2)%
(4.6)%
6.1%
12.7%
8.9%
1.8%
13.6%
7.1%
10.3%
10.7%
6.0%
7.5%
8.9%
2021
5.7%
87.8%
37.5%
15.1%
13.6%
14.4%
24.8%
49.8%
29.0%
38.7%
9.1%
1.7%
5.3%
20.2%
11.5%
74.6%
37.7%
14.1%
11.4%
12.8%
24.0%
2022
15.3%
8.5%
11.7%
8.7%
2.3%
5.6%
8.7%
(11.9)%
(9.2)%
(10.6)%
0.2%
7.2%
3.7%
(3.7)%
10.5%
5.6%
7.9%
7.4%
3.1%
5.3%
6.6%
2021
15.7%
94.1%
47.3%
15.2%
11.9%
13.7%
28.2%
42.1%
19.7%
29.8%
1.4%
(5.1)%
(2.0)%
12.3%
19.5%
76.9%
44.1%
13.1%
8.8%
11.0%
25.4%
Travis Perkins plc Annual Report and Accounts 2022
71
Financial statementsOther informationGovernanceStrategic report Financial performance continued
Operating profit
£m
Merchanting
Toolstation
Property
Unallocated costs
Adjusted operating profit
Amortisation of acquired
intangible assets
Adjusting items
Operating profit
2022
314
(9)
25
(35)
295
(10)
–
285
2021
320
22
49
(38)
353
(11)
7
349
Change
(2)%
(141)%
(49)%
8%
(16)%
1
(7)
(64)
There were no adjusting items in the year. During 2021, the Group
successfully exited the leases on a number of branches closed in 2020
for less than the contractual lease liability, which generated a £7m credit.
Finance charge
Net finance charges, shown in note 6, were £40m (2021: £43m) with
the reduction primarily due to favourable foreign exchange movements.
Taxation
The tax charge for 2022 was £53m (2021: £65m excluding
discontinued operations).
The tax charge for the year gives an effective tax rate (“ETR”) of 21.6%
(standard rate 19%, 2021 actual 19.7%). The ETR rate is higher than
the standard rate due to the effect of expenses not deductible for tax
purposes, the largest items being the depreciation of property and
unutilised overseas losses.
Earnings per share
The Group reported a total profit after tax of £192m (2021: £241m,
excluding discontinued operations) resulting in basic earnings per share
of 90.8 pence (2021: 103.9 pence, excluding discontinued operations).
Diluted earnings per share were 89.2 pence (2021: 102.6 pence
excluding discontinued operations).
Adjusted profit after tax was £200m (2021: £249m, excluding
operations) resulting in adjusted earnings per share (note 20(b))
of 94.6 pence (2021: 107.3 pence). Diluted adjusted earnings
per share were 92.9 pence (2021: 105.9 pence).
Cash flow and balance sheet
Free cash flow
£m
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 before
freehold transactions
Free cash flow before freehold
transactions
2022
2021
Change
270
97
(76)
(17)
(21)
(58)
195
304
(34)
98
(152)
(14)
(21)
(60)
155
(1)
76
(3)
–
2
40
(110)
(95)
(15)
10
95
5
65
5
30
The Group delivered good free cash flow conversion of 67% in the year
(2021: 51%). This included a working capital increase of £76m which
was largely driven by a decrease in trade creditors. Stock and debtors
were well controlled given the impact of high inflation with debtor days
reducing by one day and stock volumes reducing by a double-digit
percentage, partly attributable to high levels held in prior year given
supply chain concerns but also reflective of tight stock management.
Capital investment
£m
Strategic
Maintenance
IT
Base capital expenditure
Freehold property
Gross capital expenditure
Disposals
Net capital expenditure
2022
75
28
7
110
38
148
(23)
125
2021
66
20
9
95
81
176
(82)
94
Base capital expenditure in cash terms was £15m higher than the prior
year as the Group continued to invest in the strategic properties set
out in 2021. The total expenditure was below medium-term guidance
(of £125m pa) which reflects a more cautious approach during the
second half with greater macroeconomic uncertainty.
In line with the Group’s plan for growth, strategic capital expenditure
was almost exclusively focused on Toolstation (70 new branches
and distribution centre investments in the UK and the Netherlands),
Travis Perkins General Merchant new branches and investment in the
Group’s value-added services offerings, primarily Benchmarx and Hire.
72
Travis Perkins plc Annual Report and Accounts 2022
Maintenance capex increased by £8m as a result of 2021 being well
below the long-run average due to the redeployment of fleet assets
from the 2020 restructuring programme in lieu of new purchases.
With regards to freehold property activity, 2021 was an exceptional year
as the cash generated from the sale of properties vacated as part of the
restructuring programme was recycled into new Merchanting branches.
With property activity returning to more normal levels in the year, the
Group continued with this value-generative approach to managing its
property portfolio, using proceeds generated to purchase the freeholds
of several General Merchant branches in the South-East of England to
protect these key trading assets for the future.
Uses of free cash flow
£m
Free cash flow
Investments in freehold property
Disposal proceeds from
freehold transactions
Acquisitions / disposals
Dividends paid
Net purchase / sale of own shares
Cash payments on adjusting items
Drawdown of borrowings
Repayment of borrowings
Other
2022
2021
Change
95
(38)
12
–
(82)
(172)
(7)
75
(120)
–
65
(81)
78
249
(105)
(70)
(33)
–
–
(150)
(47)
30
43
(66)
(249)
23
(102)
26
75
(120)
150
(190)
Change in cash / cash equivalents
(237)
Cash and cash equivalents reduced by £237m in the year which
was predominantly a result of c.£170m of share repurchases funded
by the sale of the Group’s Plumbing & Heating business in 2021 (the
proceeds from which are reflected in the prior year disposals, net of
the acquisition cost of Staircraft).
The remainder of the movement principally relates to £120m of bonds
being repurchased early via a tender offer as part of the Group’s
ongoing management of its debt maturity profile. These bonds have
been partly replaced by a £75m term loan with details of this facility
outlined below. The “Other” category in the prior year contains around
£130m of cash used to capitalise the Wickes business upon demerger.
Dividend payments returned to normal levels in the year. The prior
year reflected a special dividend following the sale of the Plumbing &
Heating business and only an interim payment following the temporary
suspension of the dividend during the worst of the pandemic in 2020.
Net debt and funding
Net debt (under IFRS 16)
Net debt / adjusted EBITDA
Covenant metrics*
Covenant net debt
Covenant net debt / EBITDA
* Pre-IFRS 16 – Leases basis
2022
2021
Change Covenant
£819m £605m £175m
0.6x
1.2x
1.8x
£279m
0.8x
£87m £192m
0.6x
0.2x
<3.0x
Covenant net debt increased by £192m across the year to £279m.
This movement is principally a result of the 2021 closing position
including £170m of net proceeds from the sale of the Plumbing &
Heating business which were returned to shareholders via the share
buyback programme during 2022, with the balance related to an
inflation-driven working capital increase.
Funding
As at 31 December 2022, the Group’s committed funding of
£905m comprised:
• £180m guaranteed notes due September 2023, listed on the
London Stock Exchange
• £250m guaranteed notes due February 2026, listed on the
London Stock Exchange
• £75m bilateral bank loan due August 2027
• A revolving credit facility of £400m, refinanced in January 2019,
of which £54m matures in January 2024 and the remaining
£346m matures in April 2025
As at 31 December 2022, the Group had undrawn committed facilities
of £400m (2021: £400m) and deposited cash of £194m (2021:
£435m), giving overall liquidity headroom of £594m.
In April 2022, the Group completed a tender offer on the 2023
guaranteed notes, repurchasing £120m principal amount of notes
which were subsequently cancelled.
In August 2022, the Group entered into a £75m five-year bilateral loan
with one of its relationship banks, pari passu with existing facilities. The
bilateral loan bears a floating interest rate, which was fixed at the point
of issuance via an interest rate swap.
The Group’s credit rating from Fitch Ratings was affirmed at BBB- with
stable outlook following a review in October 2022.
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 has a revolving credit facility with a syndicate of eight banks
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.
Travis Perkins plc Annual Report and Accounts 2022
73
Financial statementsOther informationGovernanceStrategic report Financial performance continued
The Group has an upcoming maturity of Guaranteed Notes due
September 2023. The original size of this issuance was £300m.
To manage this refinancing risk, the Group took two steps in 2022.
In April 2022, a tender offer was successfully completed for £120m
principal value of the Notes, which were subsequently cancelled.
In August 2022, the Group issued a new £75m floating rate five-year
term loan with National Westminster Bank plc. This loan was swapped
to a fixed rate at the point of issuance via an interest rate swap. 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 a £75m interest rate swap outstanding
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. Forward contracts are purchased for
approximately 90% of six months’ forward committed requirements,
based on the firm placement of forward stock purchases. At 31
December 2022 the nominal value of currency forward contracts
was €10m (2021: €11m) and US$30m (2021: US$21m).
The Group is a substantial provider of credit to small and medium-sized
businesses in the UK and some of the UK’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 2022 was 0.3% (2021: 0.4%) 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 £200m 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 and term loan within comfortable margins
• Maintain the ratio of reported net debt to adjusted EBITDA in the
range of 1.5x to 2.0x. It was 1.8x (2021: 1.2x) 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,
except for the August 2022 loan agreement which has economically-
equivalent tests that incorporate the impact 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 cooperative 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 66 to 74 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 2023, the
month-end date closest to the approval of the 2022 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 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.
74
Travis Perkins plc Annual Report and Accounts 2022
to provide assurance to the Board that risk is being effectively managed
throughout the Group. Further details on the Group’s risk management
responsibilities and oversight are given in the Corporate Governance
Report on page 89.
Risk appetite
The Board accepts that, in order to achieve its strategic objectives, and
generate suitable returns for shareholders, it must accept, and actively
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 against a sliding scale 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, refreshed again in 2022, 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.
The Board also considered the principal risks in the context of its risk
appetite and assessed current and planned mitigating activities to
ensure that these key risks are managed within the stated appetite.
Risk assessment and reporting
The 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. Consideration of risk is also built into reporting for key
review and decision making processes including those related to
strategy, transformational programmes and regular business
performance reviews.
Risk mitigation and assurance
The Group are able to mitigate relevant risks by adopting different
strategies, informed by the Board’s appetite for risk, and by maintaining
a strong system of internal control which is routinely tested and assured.
The Group operates 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.
Statement of principal risks & uncertainties
Risk management is integral to building the
Group’s resilience and supporting delivery
of its strategic objectives, which will both
protect and create stakeholder value.
Heightened uncertainty in the external environment, alongside the need
to successfully implement a number of transformational programmes
internally, drive an increasingly dynamic risk landscape for the Group to
navigate, underlining the importance of maintaining effective and timely
risk management processes.
Risk management framework
The Group takes a balanced approach to manage risks in a proactive,
efficient and effective way. Risk assessment and mitigation is a key area
of focus for senior management and is embedded into broader review
and decision making processes.
The risk management framework has three pillars:
• Top down – activities at the Board and Group Leadership Team
levels, focused on material risks to the strategy, business models
and operations.
• Bottom up – activities across the Group that capture and assess risks
that are significant at a business unit, programme or functional level.
• Emerging risk – new and emerging risks are considered and tracked
through the regular risk activities above, the results of assurance
activities and, at least twice a year, through a process of horizon
scanning that includes assessment of our risk set against a diverse
set of external benchmarks.
The output from each pillar informs the process to determine the
Group’s principal risks.
In addition, the Risk function works in conjunction with the business to
undertake a rapid evaluation process where new or unexpected events
trigger changes to the Group’s risk profile, such as the Group-wide
impact analysis that was completed in early 2022, shortly before
Russia’s invasion of Ukraine.
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,
Line of Defence Source of assurance
Nature of assurance
1st
Business operations & operational
management
Branches & distribution centres
2nd
Central functions
Includes Safety, Fleet, Legal,
Finance, IT and HR
3rd
Independent reviews
Includes internal audit, external audit
and other third party reviews
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)
Independent assurance – Internal audit activities, external
audits and reviews that objectively assess the adequacy and
effectiveness of governance, risk management and controls
and support continuous improvement
Group Leadership Team
Stay Safe Committee
Audit Committee
Stay Safe Committee
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Financial statementsOther informationGovernanceStrategic report Statement of principal risks & uncertainties continued
Development of the Risk Management Framework in 2022
The Group’s 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. Particular focus has been placed this year on reviewing
potential disruptive forces, both in terms of a dynamic macroeconomic
and geopolitical environment and the challenges and changes facing
the construction industry more generally. The Board participated in a
disruption-focused workshop during 2022 to assess both strategic
resilience and further opportunities for the Group. The outputs of this
exercise have been assessed against existing mitigations and planned
initiatives to identify areas for ongoing review and focus.
At the end of 2022 the Group commissioned an external review of
our risk management framework. This confirmed that the Group have
made a marked improvement in the way risk is identified, considered
and reported in recent years. Ongoing work is required to continue
to evolve the framework, consistency of approach and risk culture
across the Group. This will be built into the findings into the Group’s
development plan, to ensure that risk management is fully leveraged
to drive insight, decision support and value for the Group as well as
meet the future requirements of UK corporate reforms.
Risk category
External
Strategic
Principal risks
1. Long term market trends
2. Macroeconomic volatility
3. Supply chain resilience
4. Managing change
5. Climate change & carbon reduction
Technological
6. Cyber threat and data security
Operational
7. Health, safety & wellbeing
8. Legal compliance
9. Critical asset failure
The Risk function has continued to deliver risk training and workshops
in 2022 with a particular focus on Toolstation Europe and supporting
the ongoing development of the risk assessments that underpin the
Group’s suite of minimum standards for ESG leading commitments
and strong core focus areas. This year Internal Audit has also enhanced
its reporting to assess findings against the Board’s risk appetite, to
ensure that action taken is proportionate to, and prioritised in line with,
the Board’s risk objectives.
Principal risks
The Group operates in an industry and markets which, by their nature,
are subject to a number of inherent risks. In common with most large
organisations, the Group is subject to general commercial, political
and economic risks, which moved rapidly and significantly in 2022.
The principal risks that are considered 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, or which are currently deemed immaterial, could
also have an adverse effect on the Group’s future operating results,
financial condition or prospects.
Strategic objective
2022
2021
Inherent risk
Risk trend
ABCD
AE
BC
ABCDE
D
D
D
D
BCD
N
N
N
High
High
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
Principal risks heat map:
After mitigating actions and controls
t
c
a
p
m
I
Likelihood
76
Travis Perkins plc Annual Report and Accounts 2022
D Leveraging the power of the Group
E Delivering attractive financial outcomes
N New
h
Increasing
i Decreasing
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 2022 the
Board has considered the risk environment and/or the selected
principal risks at five 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 and were the topic
of a dedicated Board workshop during 2022. The Group does not
currently consider any of these to be standalone principal risks. Several
of the risks set out below, particularly long-term market trends, include
elements that can be considered disruptive in nature, however they are
categorised in the table above according to the primary driver of the risk
for the Group.
Key changes in the year
The Board has made the following changes to the principal risks in 2022:
• Pandemic: Whilst Covid-19 remains a potential source of disruption
for the Group, the business has developed proven ways of working
through the initial years of the pandemic to continue to operate whilst
promoting the safety and wellbeing of it’s colleagues, customers and
suppliers as well as the general public. The Group’s national network
and extensive supply base means it is well placed to maintain
high levels of customer service should there be further localised
restrictions. The ongoing impact of the pandemic on global markets
is considered in the Group’s Macroeconomic Volatility risk. As a
result, the Board has removed the Pandemic risk from the principal
risk set but the Group remains vigilant in the ongoing assessment of,
and response, to public health concerns.
• Macroeconomic Volatility: This risk was introduced in 2021 in light
of availability challenges and early signs of inflation. Whilst the
former has resolved in 2022, this risk has been reshaped to focus
on the uncertain and volatile macroeconomic and geopolitical
environment, which the Board now considers to present a high
level of inherent risk to the Group, although action has been taken
on many fronts to manage and mitigate the impacts, as set out
below. Given the pace and breadth of change during 2022, in
the UK and globally, this risk is still considered to be increasing.
Long-term market trends
Emerging risks
The risk environment in which the Group operates will continue to
evolve and be impacted by future events, therefore awareness of
emerging risks forms part of the overall risk assessment process.
The Group seeks to capture and monitor areas of uncertainty that
do not currently present a significant risk but which have the potential
to adversely impact it in the future. This enables the Group to monitor
and understand the potential implications and build these into the
decision-making processes at the right time. The Group identifies
emerging risks from regular external risk benchmarks, alongside
perspectives on emerging risks collated from assessments made
by the business and functional leadership teams and the results
of assurance activities.
The potential for an escalation of hostilities in the war in Ukraine
continues to be monitored as an emerging risk. Immediate action was
taken at the start of the war to ensure compliance with sanctions and,
particularly, that timber purchases are from certified sources and do not
include timber sourced from Russia or Belarus. Any further escalation in
conflict in Europe could present further impacts to sourcing and supply
so this remains under regular review. Other areas of potential emerging
risk considered by the Board during 2022 include international relations
with China, which have the potential to influence our direct sourcing
operation, and renewed calls for a referendum on Scottish
Independence, which, dependent on the erms of an agreed
separation, could impact our network of branches and stores
in Scotland. These continue to be analysed and monitored.
Inherent risk: High
Change in risk level:
Relevance: Industry-wide
Description
The construction sector is changing, driven by both macro and sector-
specific factors. Whilst current macroeconomic conditions are creating a
varied picture across the Group’s customer base in terms of demand and
sentiment, the fundamental long-term market drivers are strong. 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 a move to modern methods of construction.
• A growing productivity challenge in the construction sector needs
to be addressed alongside an increasing scarcity of technical
knowledge and a more general labour shortage.
• Many customers want digitally-enabled solutions. The Group’s ability
to deliver platforms that meet customer demand and keep pace with
competitor developments will impact its longer-term growth and delivery
of the strategy.
• The Group’s ability to provide innovative fulfilment solutions combined
with digital models will be a key differentiator. This could also draw new
entrants into the market, operating models that differ significantly from
the traditional merchanting and online formats.
• Manufacturers of the materials and products that the business sells
may look to sell directly to end customers, diminishing their role as a
distributor. Disintermediation has the potential to increase in an economic
environment where customers are more price sensitive and proposition
differentiation becomes less important.
• ESG factors are becoming more fundamental to long-term success.
• New UK legislation drives a need to manage changing building standards
and the future framework for heat in buildings through the products and
services that the Group offers.
Mitigation
The long term fundamental drivers of the Group’s end markets remain
robust. The UK faces a shortage of new and affordable housing, alongside
a significant backlog of maintenance and improvement work on public
sector assets. The need to decarbonise an ageing housing stock is growing
in urgency given the sharp increase in energy costs and government policy
is supportive of investment in infrastructure.
The Group is well positioned to partner with the construction industry to
deliver on this agenda. Its balanced portfolio of businesses all hold #1 or #2
positions in their markets and benefit from a diverse end-market exposure,
from small independent builders to large national contractors.
The focus remains on deepening trade customer relationships by delivering
convenient service propositions, both physical and digital, and on elevating
customer relationships through the provision of solutions and value added
services that take time, cost and carbon out of customers’ construction
processes. To this end, further investments have been made in developing
Hire and Managed Services propositions and the Group is beginning to
support customers’ net zero plans by providing delivery carbon data.
The business continues to make progress in digitising key customer
journeys and building tools that complement the existing operations and offer
customers options to transact in ways that best suit their needs. The recently
implemented delivery management system and customer apps offer a
best-in-class digital customer experience and help drive internal efficiencies.
The Group has entered into a number of partnerships with companies
involved in modern methods of construction.
The Group maintains a comprehensive tracking system for lead indicators
that influence the market for 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
Travis Perkins plc Annual Report and Accounts 2022
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Financial statementsOther informationGovernanceStrategic report Statement of principal risks & uncertainties continued
Macroeconomic volatility
Inherent risk: High
Change in risk level: h
Relevance: Industry-wide
Description
The Group’s 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 the business to much wider
macroeconomic –and geopolitical– uncertainty. Global events in the last
18 months, including the war in Ukraine, and the continuing impact of the
pandemic and related lockdowns in some areas, have created an uncertain
and volatile macroeconomic situation that the Group is not alone in facing.
The UK is facing a range of macroeconomic challenges including, along
with many of the countries from which the Group sources products, the
highest level of inflation for 40 years. This is substantially impacting the
cost of goods sold and operating costs including fuel and energy, which
could continue to rise.
The performance is affected by both general economic conditions and
a number of specific drivers of construction, repairs, maintenance and
improvement and DIY activity. In the last year, the lead indicators, which
include the volume of housing transactions, house price inflation, and
consumer confidence, have been weakened by the cost of living
crisis and rising UK mortgage rates.
Whilst the central government in the UK has named infrastructure as its
second growth priority, any change in policy or investment levels could
impact the businesses that serve this sector.
Although the Group has shown resilience in the face of this range
of pressures, continued turbulence in the external environment could
negatively impact the Group’s ability to grow market share and deliver
an improved trading performance.
Mitigation
The Group is confident in its strategy, the strength of the Group and the
resilience of the diverse end-markets, however, like every business, the
Group has to navigate the current volatile macroeconomic conditions
carefully, continue to tightly manage costs and take the right decisions
in order to steward the business responsibly and sustainably. The actions
taken to simplify the Group’s operating structure in recent years have
created the flexibility to adapt to changing market conditions.
The Group remains focused on the recovery of elevated levels of input
cost inflation and continues to tightly manage the operating cost base.
The Group undertakes constant product price and availability monitoring
across the businesses. Pricing strategies across the Group are regularly
reviewed and the Group has been successful in 2022 in working with
customers to pass through higher input costs in the most transparent and
fair way possible. The market positions of the businesses and their strong
relationships with suppliers have been used in this uncertain period to ensure
that the Group maintains adequate stocks to meet demand during periods
of disruption.
Policy and legislative changes that may impact the 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.
The Group has a conservative hedging policy to reduce the exposure
to currency fluctuations.
In response to cost of living concerns, the Group is actively promoting
the comprehensive benefits package, discounts and support available
to colleagues. In addition, the majority of colleagues received a one off
additional support payment in January 2023.
Impact: Operational disruption; adverse effect on ranging and/or 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 customers and achieving
strategic objectives.
There is both breadth and depth to the Group’s 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. The smooth operation of this extensive supply chain may
be disrupted by many events and circumstances outside of the Group’s
direct control including public health crises and related responses at a
local, national or international level, geopolitical and macroeconomic
factors, industrial action and the status of transport networks.
In certain product categories, the Group faces risk in relation to key supplier
dependencies, where there are limited alternative options. The Group is
the largest customer to a number of suppliers and, in some cases, those
suppliers are material enough to cause significant difficulties and disruption
if they are unable to meet their supply obligations. Alternative sourcing may
be possible, but the volumes required and the production time needed could
impact availability.
ESG matters are increasingly important to the Group and its customers:
sourcing responsibly is a strategic focus area. This places additional
requirements on the supply chain, which may increase over time.
This helps the Group to assess supplier resilience but if suppliers
do not meet standards it could further restrict the supply options.
Mitigation
The Group maintains strong relationships with its key suppliers and work
closely with them to agree mutually beneficial contracts, conduct due diligence
in line with the Group’s commitment to responsible sourcing, and ensure a
continuous supply of quality materials.
The pandemic tested the ability to ensure continued supply and respond
quickly to changes in demand. The increased supplier liaison that the Group
introduced in preparation for Brexit helped them to successfully navigate a
period of significant uncertainty in collaboration with the key suppliers. Whilst
the pandemic-related supply issues experienced across the sector have
resolved, the Group continue to navigate uncertainty working in tandem with
suppliers. The Group moved quickly in 2022 to ensure that sanctions against
Russia were effective within the supply chain and, particularly, purchases
excluded timber sourced from Russia or Belarus.
To ensure continuity of supply, where possible, contracts exist with more than
one supplier for key products, to reduce the risks of dependency on a sole
supplier. The Group keeps stock levels under constant review and, helped
by the Group’s market position, has a track record of effectively managing
availability issues in conjunction with suppliers.
The Group has made a significant investment in its TP Asia office to support
direct sourcing. This allows the development of own brand products, reducing
the reliance on branded suppliers.
The Group has published Supplier Commitments that articulate its
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 impact on ranging and/or price, customer service and financial results
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Travis Perkins plc Annual Report and Accounts 2022
Managing change
Inherent risk: Medium
Change in risk level:
Relevance: Company specific
Description
Embracing and effectively navigating change is fundamental to the Group’s
future success.
Strategic change
The Group’s strategy is built upon innovation and some of the capabilities
needed are different from the traditional merchanting skill set. The Group
seeks to build new services, digitise its businesses and adapt to new ways
of working within the industry, all whilst maintaining a high level of service
to more traditional customers, for whom change will come more slowly. The
ability to attract, retain and develop colleagues, or add capability through
targeted acquisitions, is central to ensuring that the Group has the right skills
and experience to deliver strategic initiatives. The Group increasingly competes
for skills nationally and internationally and, in key areas such as data analytics,
the demand for skills may increase recruitment time and costs. It is a dynamic
labour market but these forces could make it harder to secure capabilities key
to strategic delivery.
Technology-enabled business change
The Group has embarked on a number of major technology projects to
underpin its operations, enable the 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, the Group needs to manage an extended transition period where
old and new technologies must successfully co-exist.
Against a backdrop of economic uncertainty, the pace of project delivery may
need to flex with available resources, which could lead to missed opportunities
or delays to access operational benefits or deliver on strategic priorities.
Mitigation
The Group has adopted a new Group-wide ‘Idea to Live’ change approach
this year to prioritise, approve and manage initiatives in a transparent
and consistent way. The Group creates dedicated teams to deliver major
programmes with external expertise added to support when necessary.
The strategic initiatives consider the related capability requirements and,
as needed, they will make bolt-on acquisitions to deliver a strategically
significant opportunity.
All major programmes are ultimately governed by the Group Programme
Review, overseen by the CEO, CFO and COO, with regular reporting to
the Board. This review considers the portfolio of programmes in terms of
progress, milestones, interaction, key decisions, risks and requirements. Major
programmes are also supported by defined governance structures, including
a dedicated sponsor from the Group Leadership Team and regular review by
a project Steering Committee.
The Group undertakes post-investment review exercises to assess the
success of change, in both financial and non-financial terms. If projects do
not deliver against expectations, the Group assesses the ‘lessons learned’ to
inform future programmes.
The Group has designated people development and diversity & inclusion to
be among its leading commitments and they are progressing delivery of the
pillars of “Our People” agenda: attract, belong, deliver, learn and grow. The
Group listens to colleagues’ voices through regular engagement surveys
with 76% of colleagues completing the 2022 survey.
The reward and recognition systems are actively managed and regularly
benchmarked to ensure that the offering is competitive and encourages
talent to join and remain with the Group.
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:
Relevance: Industry-wide
Description
Climate change could significantly impact the construction sector during the
transition to a low carbon environment. The nature, extent and scale of that
change remains unclear. The Group is 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
promotes a sustainable and value-generating business model, underpinning
the Group’s ambition to be the leading partner to the construction industry,
and, more fundamentally, aligns with its purpose, to build better communities
and enrich lives, fulfilling its responsibility to take action and influence the
wider industry to mitigate the significant threats posed by climate change.
The Group top climate-related risks in 2022 relate to:
• The move to a low-carbon fleet, as the Group has one of the largest UK
vehicle fleets
• Increasing costs of goods due to producer-country carbon-pricing
• The ability to transition to new lower-carbon product categories
• Product obsolescence for higher-carbon product categories
Delivering the industry-leading carbon reduction targets, approved by the
Science Based Targets initiative (SBTi), 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 colleagues, customers,
suppliers, investors and government, driving changes to demand, expectations
and information requirements, which the Group must identify and effectively
respond to.
Mitigation
The Group must regularly identify its most material climate-related
responsibilities and challenges in order to target investment and drive
effective mitigation. Related governance is led by the Board which, along
with the Group Leadership Team, receives regular reports on the most
material related risks and opportunities for the Group, the action taken
and the progress made.
The Group continues to make good progress against its SBTi accredited targets,
which are underpinned by clear roadmaps for delivery in each business.
The Group allocates capital to meet its commitments. A programme of
investment in the estate to install energy saving solutions, such as utilising LED
lighting and solar panels, is well underway. A number of fleet initiatives will
significantly reduce future carbon emissions, including the continued rollout
of electric fork lift trucks and sustainably sourced Hydrotreated Vegetable Oil
(HVO) as a low carbon alternative to diesel. The Group also announced this
year investment in a new fleet of 26-tonne trucks, which are engineered to
reduce emissions, reduce fuel consumption, and can also run on HVO.
A key element of the plans to address Scope 3 carbon emissions is
engagement throughout the whole supply chain. The Group has upskilled
colleagues in Sales and Commercial to support this and ran a series of
workshops with around 750 key suppliers to work with them on the collation
of carbon data. In CCF the focus on delivery carbon data has supported
reduced emissions and costs in CCF and allowed for detailed delivery
carbon reporting to customers.
Further information on progress made during the year can be found in the
Sustainability Report on pages 30 to 42.
Impact: Adverse effect on reputation, financial and/or operational performance; competitive disadvantage; less attractive as an
investment stock
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Cyber threat & 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. This risk is further heightened
by recent external events, such as Russia’s invasion of Ukraine and geopolitical
tensions and uncertainties more generally, where cyber warfare is a possibility.
Incidents impacting the confidentiality, integrity and availability of the Group’s
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 IT services, any
of which may have serious consequential impacts on the Group’s reputation,
ability to trade and compliance with regulations including GDPR.
The Group currently assesses its 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 the Group have seen a continued increase in
the volume, frequency and sophistication of attempted cyber-attacks.
As the Group continues to seek to meet 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. In executing the technology roadmap, the Group will move away from
legacy systems and transition to new cloud-hosted solutions that will change
the profile of information security and the cyber threat landscape for the Group.
Using personal data in a non-compliant manner (whether deliberately
or inadvertently) may exacerbate the impact of security incidents.
Mitigation
The Group takes its 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.
The Group assessed its potential vulnerabilities in advance of the war in
Ukraine and took steps to support its partners whilst ringfencing development
activities, with a regular re-assessment cadence as the situation evolved.
The Information Security team aligns the Group’s approach to the
National Institute of Standard and Technology CyberSecurity Framework.
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 test and measure the Group’s security posture and address any
vulnerabilities. All changes to technology solutions require Information
Security review and approval.
The Group continues to utilise a 24/7 security operations centre, designed to
monitor for suspicious activity and behaviours and work with resolver teams.
The cyber-incident response protocol is regularly updated with lessons
learned from attempted attacks and external cases. Third-party forensic
capability is in place, if needed, to support the Group’s response capability.
The Group continues to prioritise a number of initiatives to focus on the most
material opportunities to reduce risk associated with cyber threat and data
security, including a programme to support ongoing GDPR compliance.
Impact: Operational disruption; adverse effect on reputation; potential legal action, fines and penalties
Health, safety & wellbeing
Inherent risk: Medium
Change in risk level:
Relevance: Industry-wide
Description
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.
The Group expects everyone to go home safe and well, every single day.
The Group operates a large estate, with many sites running complex and
busy yards. The Group also operates one of the largest vehicle fleets in the
UK, distributing heavy and bulky materials. Certain products that are sold
pose health and safety risks. Poorly implemented safety practices on site,
on the road and at delivery locations could result in significant harm to
colleagues, customers and the wider community.
Full ownership of Staircraft has changed the Group’s safety risk profile, with
this business introducing risk of harm from the manufacturing process,
in a sector with different requirements and greater regulatory scrutiny.
The Group remains exposed to the impact of Covid-19, and any prolonged
public health threat, in its UK and European operations and across the
territories in which its suppliers are based, which may present different
challenges from those navigated so far.
Mitigation
Health, safety and wellbeing is fundamental to the Group’s values. The
Group continue to challenge current ways of thinking to de-risk the Group’s
operations and improve safety performance through the established ‘Stay
Safe’ brand. The Group fosters 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.
Staircraft is being integrated into the Group’s Safety Management System
and a dedicated Safety Manager has been appointed to support delivery
of a tailored safety improvement plan.
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. The Group Leadership team also
monitors the achievement of transport compliance requirements.
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.
The Group’s support for mental health and wellbeing has continued to
develop, with an inaugural Mental Health First Aider conference, expansion
of colleague resources in the online Stay Well Hub and the creation of
a wellbeing room for colleagues in the Group’s Northampton offices.
Further information on progress made during the year can be found
in the Safety and Wellbeing report on page 47.
Impact: Harm to colleagues, customers or the public; potential legal action, fines and penalties; adverse effect on reputation
80
Travis Perkins plc Annual Report and Accounts 2022
Legal compliance
Inherent risk: Medium
Change in risk level:
Relevance: Industry-wide
Description
The Group is 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 the Group operates
and gives rise to significant compliance costs, potential legal liability exposure
for non-compliance and potential limitations on the development of the
Group’s operations and strategy, if not managed correctly.
New requirements may also be placed on the Group as it delivers the new
services set out in the strategy.
Should the Group fail to deliver against its legal and regulatory obligations,
as well as broader responsibility commitments, this could significantly
undermine the Group’s reputation, result in legal exposure and adversely
impact operations and results.
Upcoming changes to UK corporate governance requirements, the continued
implementation of the Building Safety Act 2022 and the ongoing global
development of ESG frameworks and related reporting all require the
Group to assess current processes, controls and related assurance.
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 a comprehensive
framework of detailed policies, sets out the Group’s requirement for
all colleagues to do business in the right way with adherence regularly
monitored by the Group Leadership Team. This year the Group launched
a new suite of mandatory training to colleagues, Licence to Operate. This
delivers essential role-based learning that underpins the Code of Conduct
and core operating practices to support all colleagues to do the right thing.
The Group encourage colleagues to speak up whenever they see or suspect
activity that contravenes our values, Code of Conduct or policies. All cases
reported through the independent hotline are investigated.
The Group shares Supplier Commitments with suppliers to articulate
expectations and higher risk suppliers are assessed against these
requirements using an Online Risk Assessment.
Good progress is being made in the first phase of the finance modernisation
programme, which will underpin the Group’s journey to demonstrate
compliance with the UK’s upcoming corporate governance reforms.
The Group continues to make progress in the product provenance strategic
workstream to track the ‘golden thread’ of product data from source through
the supply chain to a customer’s project.
Further information on the Group’s climate disclosures in line with TCFD
guidelines can be found on pages 50 to 61.
Impact: Adverse effect on reputation, financial and/or operational performance; potential legal action, fines and penalties;
diversion of management attention
Critical Asset Failure
Inherent risk: Medium
Change in risk level:
Relevance: Company specific
Description
Disruption of a critical Group asset, whether a primary Group distribution
location, or a key system failure or outage, could significantly interrupt
operations. More generally, if the Group is 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
The Group operates a small number of distribution centres with significant
stockholdings with an increasing volume of deliveries that are 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 the Group is dependent on a wide range of IT
systems and supporting infrastructure. The Group’s 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. Execution of our technology
roadmap will lead in time to the replacement of a number of legacy systems.
Mitigation
Business continuity management
The Group takes 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.
The Group’s size and scale helps to mitigate stock issues in the event of
disruption. The Group carries a level of buffer stock in the network that
would be sufficient to cover a short-term disruptive event. The Group has
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 tested the Group’s crisis response capability as
tiered crisis response teams were mobilised to coordinate activity and
provide ongoing monitoring, decision support and communications. The
crisis management capabilities were refreshed this year, overseen by a new
Group-level steering group. This enhances the existing approach with the
lessons learned from the pandemic to deliver an updated control framework
and improved oversight.
IT Disaster Recovery
The Group’s IT disaster recovery plans are regularly tested and the results
assessed to drive further improvements. The Group successfully ran a test
during 2022. The 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, designed to
minimise the operational and customer impact.
Impact: Adverse effect on performance: financial, operational, customer service; diversion of management attention
Travis Perkins plc Annual Report and Accounts 2022
81
Financial statementsOther informationGovernanceStrategic report Non-financial information statement
The information below is intended to help users of these accounts understand the Group’s 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 Principal risks
Policy embedding, outcomes and key performance indicators
Link
Colleagues
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
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
Directors’ report – Modern slavery
Business model
Charities and volunteering
Responsible sourcing
Page 14-15
Page 27
Page 47
Page 44-45
Page 42
Page 46
Page 48
Page 48
Page 98-116
Page 118
Page 14-15
Page 27
Page 50-61
Page 30-49
Page 36-37
Page 40-41
Page 36-37
Page 42
Page 42
Page 118
Page 14-15
Page 49
Page 38-39
A description of the Group’s business model and how it creates sustainable value can be found on pages 14 to 15.
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 & 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 2 to 82 was approved by the Board of Directors and signed on its behalf by:
Nick Roberts
Chief Executive
27 February 2023
Alan Williams
Chief Financial Officer
27 February 2023
82
Travis Perkins plc Annual Report and Accounts 2022
Governance
Governance
84 Board of Directors
86 Corporate governance report
91 Nominations Committee report
93 Audit Committee report
98 Directors’ Remuneration report
117 Directors’ report
120 Directors’ Statement of responsibilities
Travis Perkins plc Annual Report and Accounts 2022 83
Financial statementsOther informationGovernanceStrategic report Board of Directors
Jasmine Whitbread
Chair
Nationality
British/Swiss
Appointment date
31 March 2021
Nick Roberts
Chief Executive Officer
Nationality
British
Appointment date
1 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
Jasmine has extensive boardroom experience with
a number of large public companies. These include
BT Group plc, where she chaired the Digital Impact
and Sustainability Committee. Jasmine currently
serves as Non-executive Director with Compagnie
Financière Richemont SA, WPP plc and Standard
Chartered plc. She will stand down from the Board
of Standard Chartered in May 2023.
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
84
Travis Perkins plc Annual Report and Accounts 2022
Skills and experience
Since joining the Group in 2019, Nick has reshaped
the business to be the leading partner to the
construction industry by focusing on trade
customers and offering value-added services
through an improved branch network. He was
previously President of engineering consultancy
Atkins and has spent nearly 30 years in the
construction industry. He is an Honorary Fellow of
the Institution of Civil Engineers and is the Deputy
Chair and Trustee 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.
Marianne Culver
Non-executive Director
Nationality
British
Appointment date
1 November 2019
Committee membership:
R
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 the RS Group 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
(listed on Euronext Paris), The British Quality
Foundation and EDS Corporation Inc.
Pete Redfern
Senior Independent
Non-executive Director
Nationality
British
Appointment date
1 November 2014
Committee membership:
A
N
R
S
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. From 2007 to 2022, Pete held
the position of CEO at Taylor Wimpey plc.
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.
Coline McConville
Non-executive Director
Nationality
Australian
Appointment date
1 February 2015
Louise Hardy
Non-executive Director
Nationality
British
Appointment date
1 January 2023
Committee membership:
A
R
Committee membership:
R
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. Coline is also on the Board of
Kings Cross Central GP (owned by Australian Super).
Coline holds an MBA from Harvard Business School
where she was a Baker Scholar.
Skills and experience
Louise has over thirty years of business and leadership
experience across the construction and infrastructure
industries. A civil engineer by background, Louise has
held a range of senior roles at London Underground,
Bechtel and Laing O’Rourke, where she was the
Infrastructure Director for the London 2012 Olympic
Park. Her most recent executive appointment was
European Project Excellence Director for AECOM.
Louise is currently a Non-executive Director of Crest
Nicholson Holdings plc, Severfield plc and Balfour
Beatty plc and the independent chair of Oriel.
Louise was formerly a Non-executive Director
of Renew Holdings plc, Sirius Minerals plc and
Genuit Group plc.
Louise remains a keen volunteer within the construction
industry as a STEM ambassador and diversity champion.
Heath Drewett
Non-executive Director
Nationality
British
Appointment date
11 May 2021
Jora Gill
Non-executive Director
Nationality
British
Appointment date
4 August 2021
Committee membership:
A
Committee membership:
N
S
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.
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. In addition,
he serves as a Non-executive Director of the Care
Quality Commission, a role he has held since 2016.
Travis Perkins plc Annual Report and Accounts 2022 85
Financial statementsOther informationGovernanceStrategic report
Corporate governance report
Jasmine Whitbread
Chair
27 February 2023
I am pleased, on behalf of the Board, to
present the corporate governance report
for the year ended 31 December 2022
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 Group’s strategy and business model are set out on pages 14
to 16. The principal risks of the business are set out in more detail
on pages 75 to 81. The Board discusses strategic matters at every
meeting and in June 2022 held an off-site strategy day to consider
progress made against the Group’s stated strategic direction and
to review the opportunities and risks faced by the Group.
The Board has a schedule of matters reserved to it which was last
reviewed and approved in December 2022. The latest approved
schedule of matters reserved can be found on the Group’s website.
In line with the UK Corporate Governance Code 2018 issued by
the Financial Reporting Council (the “Code”), which is available at
www.frc.org.uk, the Board has a number of Committees to which it
delegates certain responsibilities: 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 role it plays in assessing and monitoring
the Group’s culture to ensure that policy, practices and behaviour
throughout the Group are aligned with Group 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 Non-executive Director workforce engagement, the Group-wide
colleague engagement survey and a number of listening groups and
colleague communities. The Chair, Chief Executive Officer (“CEO”)
and other members of the Board also visit branches around the
country and in doing so gain insight into the Group culture.
During the year work was undertaken to embed understanding of the
Group’s purpose and strategy and the new Company values, which the
Board approved at its meeting in December 2021. The alignment of our
culture with the Group’s purpose, values and strategy is demonstrated in
the Colleague voice and engagement section found on pages 48 to 49.
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.
Engagement with stakeholder groups such as shareholders,
customers, suppliers and colleagues occurs 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 62 to 64. This includes reporting on engagement
with major shareholders and the outcomes of that engagement.
Pete Redfern is the Colleague Voice Representative on the Board.
His activities in this capacity, intended to help bring the employee
voice into the boardroom. During 2022 Pete held a number of
meetings with colleagues with a particular focus on drivers and
new starters. Key feedback themes included safety, belonging,
equal opportunity, customer focus and corporte citenzenship.
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Travis Perkins plc Annual Report and Accounts 2022
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 register of 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 2022 we continued to emphasise the principle of “calling it out”
across the Group and the importance of the Code of Conduct and the
Speak Up line. The Speak Up line 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. The
Audit Committee, on behalf of the Board, received quarterly reports on
issues raised through the Speak Up line and subsequent action taken.
The Board reviewed the effectiveness of the Speak Up line at its
meeting in December.
Board composition and evaluation
Board composition
As at 31 December 2022 the Board comprised six Non-executive
Directors and two Executive Directors. Louise Hardy was appointed
to the Board as a Non-executive Director on 1 January 2023.
The biographies of the Board, as of the date of this report,
are listed on pages 84 and 85.
Appointments of new Directors are made by the Board on the
recommendation of the Nominations Committee. The Nominations
Committee’s responsibilities and a description of its work, including in
connection with succession and Board effectiveness review, can be
found in the Nominations Committee report on pages 91 and 92.
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 2023 AGM.
Board effectiveness review
Consistent with the requirements of the Code a rigorous evaluation
of the performance of the Board and its Committees is carried out in
order to identify efficiencies, maximise strengths and highlight areas
for further development. As described in the Nominations Committee
report on pages 91 and 92, although 2021 would have been the due
date for that review in typical circumstances, the externally-facilitated
review of Board effectiveness was deferred to 2022.
Division of responsibilities and meetings
Chair and CEO
The Chair leads the Board and ensures its effectiveness.
Jasmine Whitbread was independent on appointment as Chair.
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. There were no relevant cross-directorships or
other links in 2022.
The roles of the Chair and CEO are split and the Board has approved
a written statement of the division of key responsibilities between the
Chair and CEO which was reviewed in 2022 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 reviews any relationships or
circumstances which are likely to affect their independence.
There were no changes to the Board during 2022. 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.
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.
Travis Perkins plc Annual Report and Accounts 2022
87
Financial statementsOther informationGovernanceStrategic report Corporate governance report continued
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
The Board held eight scheduled meetings in 2022, all of which were
in person and included a meeting at Staircraft together with a tour of
operations. Regular items on the agenda included: detailed updates
on financial results and performance against related KPIs; health and
safety; progress against strategic objectives; and strategic reviews of
the Group’s businesses. Other areas of consideration included investor
feedback, sustainability, risk and governance. During 2022 the Board
focused especially on: bringing to fruition the strategy of “elevating
relationships” by adding services and new areas of added value and
of “deepening relationships” to earn a greater share of spend; the
Group’s key commitments under its ESG Framework of “Building
for Better” (more detail of which are set out in the Strategic Report
on pages 30 to 49); the Group’s purpose, values and culture; diversity
and inclusion; and the Group’s response to the trading conditions
prevailing in 2022 due to macroeconomic circumstances.
The General Counsel & Company Secretary manages the process of
setting the agenda for each Board meeting which is agreed between the
Chair, the CEO and the Chief Financial Officer (“CFO”). 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 (“GLT”) 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.
Number of meetings
Attendance:
M. Culver
H. Drewett
J. Gill*
C. McConville
P. Redfern
N. Roberts
J. Whitbread
A. Williams
PLC
8
8/8
8/8
7/8
8/8
8/8
8/8
8/8
8/8
Audit
Committee
Stay Safe
Committee
Nominations
Committee
Remuneration
Committee
Overall
attendance (%)
4
n/a
4/4
n/a
4/4
4/4
n/a
n/a
n/a
3
n/a
n/a
3/3
n/a
3/3
3/3
3/3
n/a
5
n/a
n/a
5/5
n/a
5/5
n/a
5/5
n/a
3
3/3
n/a
n/a
3/3
3/3
n/a
3/3
n/a
100
100
93
100
100
100
100
100
* Jora Gill missed one Board meeting due to the cancellation of a flight, caused by Covid-19 related disruption. Jora ensured that his comments on the meeting papers were
circulated to the Chair who represented his thoughts in the meeting.
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 GLT
which comprises key business and functional leaders.
Other colleagues are invited to attend GLT meetings from time to time
in relation to specific matters. The main purpose of the GLT 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.
Annual General Meeting
In 2022 we were pleased to open our Annual General Meeting (“AGM”)
to shareholders, their proxies and corporate representatives to attend
in person at the Company’s premises at Ryehill House in Northampton.
This followed two years where we found that the Covid-19 pandemic
impeded our ability to hold our AGM with shareholders physically
present. As we prepared for the 2022 AGM we allowed for the
possibility that the Government could once again introduce guidance
or restrictions which would prevent the attendance of shareholders
(and others) at the AGM physically. This influenced our choice of
venue and decision to broadcast the 2022 AGM to preserve the
ability to attend and participate remotely.
Happily it transpired that we were able to admit shareholders to
the 2022 AGM in person while also broadcasting the meeting. No
shareholders chose to attend remotely and view the broadcast and no
questions were submitted during the meeting by participants attending
remotely. The possibility of disruption linked to the Covid-19 pandemic
has now receded. In order to husband shareholders funds appropriately,
avoiding uneccessary expenditure, we have decided to not broadcast
this year’s AGM, given that there appears to be no demand for it.
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Travis Perkins plc Annual Report and Accounts 2022
Shareholders, their proxies and corporate representatives will be able
to attend the 2023 AGM in person. We will keep shareholder demand
for remote participation under review in respect of our future AGMs.
Shareholders receive at least 20 working days’ notice of the 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. 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.
All Directors were present and available for questions at our 2022 AGM.
At our 2022 AGM we received strong support from shareholders for the
resolutions put to the meeting with an average of 96% of votes in favour
of each resolution.
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 2 to 83. 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 120.
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
• The impact on trading performance of severe but plausible downside
scenarios. Key assumptions include significant reductions in revenue
removal of property profits and limited reductions in fixed overheads,
as well as mitigating actions such as delayed capital expenditure and
dividend suspension
• The committed debt facilities available to the Group and the
covenants thereon
• The Group’s debt maturity profile, including the upcoming bond
maturity in 2023
• The Group’s robust policy on liquidity and cash flow management
• The Group’s ability to successfully manage the principal risk and
uncertainties outlined on pages 75 to 81 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 CEO and the CFO, 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 120.
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 Directors’ Remuneration report on pages 98 to 116.
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 93 to 97.
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 GLT 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 GLT 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 GLT 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
74, the Board considered the principal risks and uncertainties and
mitigating factors set out on pages 75 to 81.
Travis Perkins plc Annual Report and Accounts 2022 89
Financial statementsOther informationGovernanceStrategic report Corporate governance report continued
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.
UK Corporate Governance Code
Throughout the year ended 31 December 2022, 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, but for one exception.
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.” Accordingly the
reduction of 10% salary was made with effect from 1 January 2023
and as a result this non-compliance ended on 1 January 2023.
The Corporate governance report has been approved by the
Board of Directors and is signed on its behalf by:
Jasmine Whitbread
Chair
27 February 2023
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Travis Perkins plc Annual Report and Accounts 2022
Nominations Committee report
Jasmine Whitbread
Chair, Nominations Committee
27 February 2023
2022 focus areas
– Board succession planning
– Appointment of Louise Hardy
– Board and Committee
effectiveness review
– Board and senior management
pipeline diversity
Number of scheduled meetings
during 2022
5
Dear Shareholder,
I’m pleased to present the Nominations
Committee report for 2022.
The Committee had a busy year ensuring the succession pipeline for Board
and senior management positions is in the best of health. In doing so the
Committee kept focus on the diversity of skills and background among the
Board and senior management as well as the Group as a whole. We also
undertook an externally facilitated effectiveness review for the Board and
all of its Committees.
Board succession
The Board has seen a number of changes over recent years, including
my appointment in 2021, however since the end of 2021 we have had
no departures from the Board. In December 2021 the Board carefully
considered the size and make-up of the Board. We concluded that we would
benefit from a period of stability to allow the changes of recent years to bed
in and that we should take the time to plan succession for our two longest
serving Non-executive Directors, Pete Redfern and Coline McConville,
who will reach nine years service in November 2023 and February 2024,
respectively. Mindful that it can take time to find the right people, the
Committee began a search for two successors with the right profiles
to ensure that the Board continues to have the required skills and
experience once Pete and Coline leave.
We appointed Russell Reynolds to assist us with the search process.
This resulted in the appointment of Louise Hardy to the Board in January
this year. Louise has wide ranging experience across the construction
industry spanning large infrastructure projects to housebuilding.
Her deep understanding of the sector enables her to bring a valuable
customer’s-eye view as we pursue our strategy of deepening and
elevating our relationships with our customers to become the leading
partner to the construction industry. The Committee’s work to identify
a second Non-executive Director to join the Board in anticipation of Pete’s
departure continues. Key criteria in that search include substantial public
company board and City experience, strong commercial acumen,
governance experience and strategic capability.
Russell Reynolds has no relationship with the Company or Group other
than for the provision of search and evaluation services. No Director or
Senior Manager has any personal relationship with Russell Reynolds.
Senior Management Pipeline
During the year the Committee continued to sharpen its focus on the
pipeline for Senior Management roles, helping the Group to ensure it has
the right colleagues in the pipeline with the right skills and experience to
ensure smooth succession for Senior Management roles. Diversity, in all
respects, is an important factor in the pipeline build and although we
have a number of female as well as male colleagues in the pipeline, the
Committee is conscious that the diversity of ethnic background is not as
broad as it would like. The Committee is fully aware of and supportive of
the diversity and inclusion programme being driven by Management across
the Group and is confident that over time that programme will help to
address the issue of ethnic diversity in the Senior Management pipeline.
The Committee recognises that it will take time to build a more diverse
pipeline but is determined to do so.
Travis Perkins plc Annual Report and Accounts 2022
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Financial statementsOther informationGovernanceStrategic report Nominations Committee report continued
Board diversity
The Board currently comprises nine Directors of whom four are
female (44%). Seven Directors are of white British heritage, one
is of Indian British heritage and one is of Australian heritage. The
Chair of the Board is female. Accordingly, the current composition
of the Board meets the recommendations of both the Parker
Review on ethnic diversity on boards and the FTSE Women
Leaders Review, as well as the requirements of the Investment
Association and IVIS. The Nominations Committee, which is
comprised of three members, is diverse with male and female
members and a member whose heritage is British Indian. The
Committee requires of the search firms with which it works that
long lists demonstrate diversity of gender, ethnic background,
skills and experience.
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 page 46. 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 page 46 provide an explanation of the Company’s diversity
policy for the purposes of the Disclosure and Transparency Rules.
Jasmine Whitbread
Chair
27 February 2023
Board effectiveness review
Although 2021 was the third anniversary of the Board’s previous
externally facilitated effectiveness review, the Board decided to
postpone this by one year in order to give the new Non-executive
Directors and Chair time to settle into their roles. The Board did
undertake its own effectiveness review in 2021 which was facilitated by
the Company Secretary. In 2022, as planned, the Board undertook an
effectiveness review of its own activities and those of its Committees.
That review was conducted by Chris Saul who until 2016 was Senior
Partner at Slaughter and May. Since then, Chris has acted as an
independent, trusted adviser to senior executives and key
stakeholders within publicly quoted and privately owned
businesses and professional service firms.
In conducting the review, Chris interviewed all Directors, members of
the Group Leadership Team, the Director of Risk and Internal Audit, the
external auditor’s Client Engagement Partner and the remuneration
advisor’s Lead Partner. The review concluded that the Board and its
Committees operate effectively, are collegiate and well-led, operate
to high standards of professionalism and benefit from quality support.
Reflecting on the review, the Board agreed that focus areas for 2023
should include:
• Board agendas and meeting frequency, including addressing what
should come to the Board and why the Board needs to be involved
• A focus on constructive challenge and on operational issues
(but not operational detail) in addition to strategy
• Succession planning for Non-executive Directors and the GLT
• Competitive landscape and associated learnings
Committee focus for 2023
Our search for the best possible talent with the skills and experience
to succeed Pete Redfern with the scope to be the next Senior
Independent Director will remain a key focus for the Committee
this year, as will our work to ensure strong executive succession.
The Committee will maintain its focus on diversity of gender,
ethnicity, background and skills as it conducts its work.
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.
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.
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Travis Perkins plc Annual Report and Accounts 2022
Audit Committee report
Heath Drewett
Chair, Audit Committee
27 February 2023
2022 focus areas
– Monitoring the integrity of
financial statements and
formal announcements relating
to financial performance
– Assessment of effectiveness
and maturity of risk management
and internal control
– Assurance in connection
with the Group’s finance
modernisation programme
Number of scheduled meetings
during 2022
4
Dear Shareholder,
I am pleased to present the Audit Committee’s
report for the year ended 31 December 2022.
The report sets out the Audit Committee’s work
in relation to financial reporting, internal audit,
risk management and oversight of the external
audit process.
I will be available at the Annual General Meeting to answer any questions
about the work of the Committee.
Audit Committee membership and attendance
The members of the Audit Committee for the year ended 31 December
2022 have been Heath Drewett, Coline McConville and Pete Redfern. 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 84 to 85).
The Audit Committee held four formal meetings in 2022. Attendance by
members at the Audit Committee’s meetings during the year can be found
in the Corporate governance report on page 88.
The following were also invited to attend each of the Audit Committee’s
meetings in 2023:
• Chair of the Board
• Chief Executive Officer
• Chief Financial Officer
• General Counsel & Company Secretary
• Director of Group Finance
• Director of Internal Audit & Risk
• Director of Financial Accounting & Control
• the Group’s external auditor
From time to time Directors who are not members of the Audit Committee
may be invited to attend meetings of the Audit Committee where this will
facilitate a richer discussion and avoid potential inefficiencies in repeating a
review of matters at a Board meeting. In 2022 other Directors were invited
to attend the meetings in February and July for the review of principal and
emerging risks. The Group Head of Corporate and Commercial Legal
Services is the Secretary to the Audit Committee, as nominee of the
Company Secretary.
The Audit Committee held separate meetings with the Director of Internal
Audit & Risk and external auditor without the presence of management and
held separate meetings with management without the external auditor.
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Financial statementsOther informationGovernanceStrategic report Audit Committee report continued
Role of the Audit Committee
The Audit Committee assists the Board in fulfilling its oversight
responsibilities. The main roles and responsibilities of the
Audit Committee include:
• Monitoring 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
• Reviewing the effectiveness of the Company’s internal financial
controls and internal control and risk management systems
• Monitoring and reviewing the effectiveness of the Company’s
internal audit function
• Maintaining an appropriate relationship with the Company’s external
auditor and reviewing and monitoring its independence, objectivity
and effectiveness in carrying out the audit process, taking into
account relevant professional and regulatory requirements and
ethical guidance
Work of the Audit Committee
In carrying out the activities set out below, the Audit Committee places
reliance on regular reports from management, the Company’s internal
audit team and the external auditor. The Audit Committee is satisfied
that it received sufficient, timely and reliable information to enable
it to fulfil its responsibilities during the year.
In 2022 the Board undertook a review of Board and Committee
effectiveness. The review was conducted by an independent advisory
firm and culminated in a report and a discussion of feedback on the
performance of the Committee. It concluded that the Committee
was operating effectively, with some topics and recommendations
suggested, upon which the Audit Committee has reflected.
The Audit Committee functions around an annual agenda of business
covering financial reporting, internal controls, risk management, internal
audit activity and external audit. This agenda is reviewed regularly by
the Committee to ensure that it reflects the priorities of the Company
and continues to include all matters for which consideration must be
given in order to meet the Audit Committee’s corporate governance
responsibilities. Details of the main matters covered at each of its
meetings in 2022 are as follows:
February 2022
May 2022
July 2022
November 2022
• Year-end accounting
for 2021*
• External auditor’s report
• Review of internal controls
• Review of principal
and emerging risks
• The content of the Annual
Report and Accounts,
the results announcement
prepared by management
and the associated press
release
• ‘Deep dive’ into how the work
of the Operational Compliance
Support teams is conducted to
support control of risks within
the Group’s businesses
• The Group’s systems of controls,
the effectiveness of controls and
management’s continuing
controls improvement initiatives
• Progress reports on information
security initiatives and other
security matters
• The Group’s finance
modernisation programme
• External audit plan including
the half-year strategy
• Review of performance
and effectiveness of the
external auditors
• Half year accounting
• Committee effectiveness
for 2022*
review
• External auditor’s report,
• External auditor’s report
including items on auditor
quality control and
independence
• Review of principal
and emerging risks
• Review of the Group’s
including progress against
the plan for the 2022 audit
• Updates regarding the outcome
of impairment testing and other
significant accounting matters
relevant to year-end accounting
approach to risk, key risks
and the effectiveness of the
risk management framework
• Assurance relating to
the Group’s finance
modernisation programme
• External Quality Assessment
of internal audit
• Internal audit independence
assessment and approval of
an Internal Audit Charter
• Approval of the Internal
Audit plan for 2023
In addition to the above specific matters, the Audit Committee considered, at each of its meetings in 2022, the following standing agenda items:
• Review of non-audit fees
• Review of internal audit reports, including progress on implementing recommendations arising from internal audit work
• Review of reports on activity within the relevant period of the Operational Compliance Support teams
• Review of reports regarding matters disclosed to the Group’s Speak Up! Hotline (save that this formed part of the business
of the meeting of the Board in December 2022, rather than the Audit Committee’s November 2022 meeting)
* In considering accounting for both the year end and the half year, in discharging its financial reporting responsibilities, the Audit Committee
has special regard for 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 annual and interim accounts.
The Board is updated on key matters and recommendations following each Audit Committee meeting.
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Travis Perkins plc Annual Report and Accounts 2022
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 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 Audit Committee believes are the most significant.
In reaching its conclusions, set out in more detail in the table, the Audit
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 Audit Committee also received a report from the
external auditor on the work undertaken to arrive at the conclusions set
out in the auditor’s report on pages 122 to 128, discussing all relevant
matters in depth.
Issue and nature of judgement
Factors considered and conclusions reached
Inventory valuation
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 2022 the Group’s inventory was valued
at £728m.
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.
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).
Defined benefit
pension schemes
At 31 December 2022 the Group’s balance sheet
included a net asset position of £136m in respect
of its defined benefit pension schemes, which
reflects a gross pension asset of £1,097m and
pension liability of £961m.
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.
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.
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).
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Audit Committee report continued
Risk management and internal controls
Risk management
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. Regular horizon
scanning and risk benchmarking is undertaken to test the Group’s risk
set and identify emerging risks, which are reviewed by the Board.
Significant time was spent by the Board in 2022 considering the impact
of disruptive forces on the Group’s strategy and business models and
potential disruption opportunities, as well as the ongoing risk impacts
of macroeconomic factors, geopolitical tensions and market trends.
The Group adopts a continuous improvement approach to risk
management. Refinement of the risk management framework continued
in 2022 with a particular focus on delivering an in-depth assessment of
disruptive forces and developing the consideration of risk within major
programmes, which were reviewed at Group Leadership Team level in
conjunction with the Director of Internal Audit & Risk, and delivery of
risk management awareness and training sessions.
An independent review of the maturity of the Group’s risk management
framework was conducted in 2022. Further development plans drawing
upon the outcome of the review will be considered by the Board in the
first quarter of 2023. The principal risks and uncertainties are set out
on pages 75 to 81, together with information on how those risks are
mitigated and how emerging risks are assessed.
Internal controls
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
mitigation and assurance” on page 75). The Audit Committee has
received regular updates on the status of these activities.
The Audit Committee conducted a review of the effectiveness of the
Company’s risk management and internal controls, concluding that
notwithstanding the limitations of IT systems 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 the programme
to deliver a new finance system, as well as enhancing and improving
the Group’s control framework to lead to greater consistency and
automation of controls. The programme has an assurance plan
which has been reviewed by the Audit Committee and is reported
on to both the dedicated steering committee and the Audit Committee,
both of which will monitor the progress of this programme through
2023. Reviewing such major system transformation programmes
will remain an area of focus for internal audit. It is also the case
that all major internal assurance processes, including operational
compliance, health and safety and internal audit, track control
improvement actions to completion, which is a core part of the
continuous improvement of controls.
Internal audit
The delivery of the Internal Audit Plan, which is the annual plan of
internal audit activity structured to align with the Group’s strategic
priorities, major change programmes and principal risks, is a key source
of internal assurance for the Group. The in-house internal audit team
develops the Internal Audit 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 Internal Audit Plan and
reviews results and progress at each Audit Committee meeting.
The Internal Audit Plan is reviewed periodically throughout the year
and is updated as business priorities and risks change, to ensure that
it remains relevant. The Audit Committee oversees and approves all
changes to the Internal Audit Plan throughout the year.
The audits delivered during 2022 covered a broad range of operational,
financial, legal, regulatory, IT and transformation activities. Core financial
control areas are audited regularly. In 2022 this included reviews of
rebates, the certification process for key financial controls, the process
supporting the Senior Accounting Officer tax declaration and newly
implemented processes and controls in relation to Plastic Packaging
Tax. In addition, the audit team has commenced a process to map
risks and assurances for key financial areas.
The 2023 Internal Audit Plan was approved by the Audit Committee
at its meeting in November 2022. The 2023 Internal Audit Plan is
underpinned by a rolling risk assessment to ensure that internal audit
activities remain targeted at the areas presenting the most risk to the
Group, which can change over time. The 2023 Internal Audit Plan is
targeted at assurance in relation to key programmes such as finance
modernisation, areas of change and complexity and seeks to deliver
ongoing assurance coverage of the Group’s principal risks.
All audit findings and agreed management actions are communicated
to the Audit Committee and tracked through to completion. The Audit
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 outstanding audit findings, thereby
reducing the ongoing risks to the business.
The in-house internal audit team has a continuous improvement
strategy, with initiatives set annually and progress reported regularly
to the Audit Committee. Initiatives undertaken during 2022 included
further streamlining and standardising the audit process, with a
particular focus on the use of data and analytics to increase the
depth of assurance and insight provided by each audit. The team
has assessed its data capabilities and has set a roadmap to bring
all members to a core capability level, with a number of the team
undertaking Data Literacy apprenticeships that will enable them
to champion the use of data in the function.
In accordance with best practice, an external assessment of the
effectiveness of the in-house internal audit team was undertaken in
2022. Based on its review of the assessment, the Audit Committee was
satisfied with the overall effectiveness of the function throughout 2022.
Opportunities identified by the external effectiveness assessment have
been integrated into the continuous improvement process for 2023.
External auditor
The Audit Committee confirms that the Company has complied with
the provisions of the Statutory Audit Services for Large Companies
Market Investigation (Mandatory Use of Competitive Tender Processes
and Audit Committee Responsibilities) Order 2014.
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Travis Perkins plc Annual Report and Accounts 2022
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 James
Tracey, appointed in August 2022. 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 Audit Committee’s
assessment of the effectiveness of the audit, the Audit Committee
considers a tender for the 2025 audit to be in the best interests of
the Company’s shareholders.
Audit scope and effectiveness
The external audit plan and strategy for the external audit of the 2022
Annual Report and Accounts was presented by the external auditor to
the Audit Committee in November 2022 to enable the Audit
Committee to discuss and challenge the key elements.
The Audit 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
Audit 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 2022 the Audit Committee monitored the Group’s engagement
with external stakeholders relevant to the Audit Committee’s areas
of oversight, including the Financial Reporting Council (“FRC”).
Engagement included a limited scope review of the Company’s
2021 Annual Report and Accounts. This review was conducted by
the FRC in accordance with Part 2 of the FRC Corporate Reporting
Review Operating Procedures as part of the FRC’s thematic review
of companies’ disclosures relating to business combinations. The
FRC’s role in this review was to consider compliance with reporting
requirements based on its understanding of the relevant legal and
accounting frameworks and on the annual report and accounts.
The FRC was pleased to inform the Company in December 2022
that no queries arose based on the review. The review was not based
on detailed knowledge of business conducted by the Group business
or an understanding of the underlying transactions entered into and
does not verify the information provided or seek to assure that the
annual report and accounts are correct in all material respects.
In the preparing the Group’s Annual Report & Accounts, the Group
responds to the recommendations of the FRC made through its
published reviews of corporate reporting and its thematic reviews
of specific areas of corporate reporting.
Independence and objectivity
One of the Audit 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.
The process for approving all non-audit work provided by the external
auditor is overseen by the Audit Committee to safeguard the objectivity
and independence of the auditor. The Audit 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 Wickes business, in addition to conducting a review of the Group’s
interim financial statements. In 2022 KPMG was engaged to provide
non-audit services only in relation to the June 2022 review of the
Group’s interim financial statements. KPMG was considered the most
appropriate firm to carry out the work in respect of the interim review
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 Audit 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 Audit 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 £1,891,000 (2021: £1,820,000) for audit-related work and
£85,000 (2021: £770,000) for non-audit work. Non-audit work
related to the review of the Group’s interim financial statements.
Fees for non-audit work were 4% (2021: 42%) of fees for audit-related
work. The total fees paid by the Group to KPMG LLP in 2022
represents 0.1% of KPMG’s UK fee income. In addition, £1.3m
(2021: £1.9m) 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 Audit Committee was satisfied with the independence,
objectivity and effectiveness of the external auditor and recommended
to the Board that KPMG LLP be reappointed by shareholders at the
Annual General Meeting on 4 May 2023.
This report has been approved by the Board of Directors and signed on
its behalf by:
Heath Drewett
Audit Committee Chair
27 February 2023
Travis Perkins plc Annual Report and Accounts 2022
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Financial statementsOther informationGovernanceStrategic report Directors’ Remuneration report
Dear Shareholders,
As Chair of the Remuneration Committee,
I am pleased to introduce the
2022 Directors’ Remuneration Report.
Supporting our colleagues in challenging times
The ongoing cost of living crisis – with price increases for everyday
costs at times far exceeding the headline rate of inflation – has affected
all colleagues across the Group, and particularly front-line workers.
Whilst needing to continue to manage costs carefully in an uncertain
external environment, a comprehensive package of support has been
provided to colleagues throughout the year, increasing the focus
on financial wellbeing, education and practical tools to help people
manage their money. In June 2022, Wagestream was launched across
the Group, building on the successful implementation in Toolstation
the year before. This tool has enabled easy-to-access financial
management support for all colleagues. In addition, other benefits have
been offered including short-term loans, extensive retailer discounts
and offers on essential spend such as groceries and utilities, an
employee assistance programme and a wide range of wellbeing and
financial education resources. More recently, at a total cost of £7.7m,
a one-off cost of living payment of £400 was made to over 17,000
colleagues, around 95% of the total workforce in the UK. The take-up
and use of benefits has been monitored closely to assess the impact
of cost of living pressures and resources have been invested in further
communications and engagement, directly with colleagues as well as
through line managers, to ensure that everyone is aware of the support
that is available. The benefits offering is regularly reviewed, with virtual
GP advice, health checks, mental health and nutritional support recently
added to the portfolio of benefits that all colleagues can access.
All colleagues in the UK also have the opportunity to participate in
the discounted Sharesave programme, which has seen consistently
high take-up over time. The Restricted Share Plan (RSP) is used in a
targeted way to recognise critical roles and key talent across the Group.
All colleagues have the opportunity to earn a bonus when performance
targets are met. However, many colleagues will not receive a bonus for
2022 due to the impact of challenging trading conditions on the
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Travis Perkins plc Annual Report and Accounts 2022
Group’s profit performance. In light of this, whilst considerable progress
has been made against strategic targets during the year
(see page 107, the Committee has decided that no bonus payout
will be made for the Group element of the annual bonus plan for
Executive Directors and the Group Leadership Team for 2022.
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, a new Directors’
remuneration policy was approved by 89% of shareholders at the
2021 Annual General Meeting. This policy simplified and refocused
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 the two long-term incentive plans (Performance
Share and Co-Investment Plans) with a Restricted Share Plan (RSP).
The Committee believes the Directors’ remuneration policy is operating
effectively and remains the right approach to ensure delivery of the
Company’s strategic objectives and sustainable long-term value for
shareholders. No changes are therefore proposed to policy or the
approach to the implementation of remuneration (including quantum
and metrics) this year. The policy will be reviewed next year and put
to a shareholder vote at the 2024 Annual General Meeting.
Each part of the remuneration package plays an important role in
driving performance to deliver the Company’s long-term strategy
and improve shareholder returns, as outlined in the remuneration
policy and summarised on pages 101 to 103. The link between the
Company’s strategic ambition and incentive measures is detailed
under the ‘Quick view of remuneration’ on page 100.
2023 salary review
This year’s annual salary review presented a complex set of
considerations. The volatile external climate, very high levels
of inflation and the need to manage costs in a sustainable way
necessitated a delicate balance in supporting lower earners as well as
protecting against retention risk throughout the business. The Group
has taken a fair and equitable approach, investing higher increases in
colleagues who are facing the biggest cost of living challenges, as well
as providing a meaningful uplift to everybody else. 99% of colleagues
eligible for a salary increase will receive an increase of at least 6%,
with a substantial proportion of colleagues benefiting from a salary
uplift closer to the level of inflation. The Remuneration Committee
subsequently reviewed Executive Director salaries and, taking into
account current market conditions, determined that their salaries
would be increased by 4% from 1 April 2023. This is lower than
the increases awarded to other colleagues across the business.
This follows a similarly restrained approach to setting salaries for
Executives in the past. Both the Chief Executive and Chief Financial
Officer received a 3% salary increase in April 2022, which was also
lower than the increases offered to the wider workforce, in order
to prioritise investment in raising wages at lower levels across the
organisation. Executive Directors did not receive any salary increase
during 2021, and also took a voluntary salary reduction of 20%
for a three-month period during 2020.
Non-executive Directors’ fees were increased by 3% in April 2022,
consistent with the annual salary review for Executive Directors last
year. Non-executive Director fees will next be reviewed in April 2023.
2023 bonus plan
The Committee reviewed the structure of the 2023 annual bonus
plan and in light of the challenging economic environment, decided to
increase the focus on financial measures, with the weighting on profit
increasing from 50% to 55%, the weighting on cash increasing from
20% to 25%, and the weighting on strategic measures reducing from
30% to 20% of maximum. The Committee also refined the cash
measure from operating cash flow to operating cash conversion,
to drive deeper Group-wide accountability on efficient management
of stock and debtors together with disciplined capital expenditure
management. This also aligns with the key performance metric
around cash performance, which was set at the Capital Markets
strategy update in September 2021.
Incentive outcomes in 2022
Following an outstanding set of financial results last year, 2022 has
proved to be more challenging, with significant economic headwinds
including the highest level of inflation for 40 years. Despite the
softening of trading volumes in the second half of the year, the
Group delivered total year-on-year sales growth of 8.9%, and both the
merchanting businesses and Toolstation outperformed against peers.
Performance against key financial objectives in 2022 was as follows:
• Group adjusted operating profit of £295m vs bonus
target of £362m
• Group adjusted operating cash flow of £180m vs bonus
target of £228m
2022 bonus payout: 0% of maximum
The annual bonus plan for Executive Directors in 2022 was based on
adjusted operating profit (weighted at 50% of maximum), adjusted
operating cash flow (20% of maximum) and strategic performance
(30% of maximum).
Both operating profit and operating cash flow performance for 2022
were below the threshold level of performance under the annual bonus
plan, resulting in no payout against either of these financial measures.
Delivery against the Company’s strategic objectives during 2022 was
strong, despite ongoing volatility and uncertainty in the external
environment. The Group Leadership Team navigated these conditions
carefully, tightly managing costs and driving efficiencies, whilst taking
the right decisions to steward the business responsibly and sustainably,
in service of long-term shareholder value.
Market share gains were delivered across the business during
2022, cost efficiencies were achieved throughout the year and the
implementation of the Group’s finance modernisation programme and
BSS Enterprise Resource Planning system progressed in line with plan.
There was also considerable progress in raising standards on health
and safety across the Group, reflected both in positive feedback
from colleagues as well as there being a lower Lost Time Injury (LTI)
frequency rate compared to the target for 2022. Having successfully
met the Group’s carbon reduction target during the previous year, in
2022 the Scope 3 emissions target was met through partnering with
key suppliers to actively help them reduce their carbon emissions.
There was significant focus on people development, diversity
and inclusion and culture through the year. The Group continues to
champion internally and externally the value of apprenticeships and
has set an ambitious long-term target for growth in apprenticeship
hires, though the targeted number of hires in 2022 was not achieved.
The Committee determined that delivery against the strategic
measures would have resulted in a payment of 66% of this element
of the bonus plan. In light of financial performance and lower bonus
payments across the wider workforce than in previous years, the
Committee used its discretion and did not award a bonus payment
against the strategic measures for 2022 for Executive Directors and
the Group Leadership Team.
Long-term incentives vesting in March 2023
Long-term incentive awards granted to Executive Directors in 2020
were made in the form of Performance Share Plan (PSP) and
Co-Investment Plan (CIP) awards, in accordance with the previous
Directors’ remuneration policy, prior to the introduction of the RSP
in 2021. Based on performance against the financial targets for the
three-year period 1 January 2020 to 31 December 2022, 2020 PSP
awards will vest at 65% of maximum and 2020 CIP awards will vest in
full in March 2023. While performance in 2022 has been challenging,
the vesting levels reflect the significant progress delivered over the past
three years, particularly on cash performance.
2020 PSP awards vesting at 65% of maximum
The vesting of 2020 PSP awards is subject to performance against the
targets for adjusted Earnings Per Share (EPS) growth (40%), aggregate
cash flow (40%) and relative Total Shareholder Return (TSR) (20%).
The compound annual growth rate (CAGR) for adjusted EPS over
2020-2022 was 6.4%, meaning that this element will vest at 62.5%
of maximum. Aggregate cash flow over the three-year period was
£840m, so this element will vest in full. Finally, relative TSR
performance was ranked below median, resulting in nil vesting for this
element. The 2020 PSP award will therefore vest at 65% of maximum
in March 2023.
2020 CIP awards vesting at 100% of maximum
The vesting of 2020 CIP awards is based on Cash Return on Capital
Employed (CROCE) performance. Performance over the three year
period was 9.0%, meaning that this award will vest in full. This outcome
reflects strong cash generation underpinned by a focus on liquidity
and working capital management through a fundamental review and
streamlining of stock management, purchasing and rebate processes.
Given the corporate changes to the Group during the vesting period,
to assess performance on a comparable basis with the targets,
aggregate cash flow and CROCE targets were adjusted by the
Committee to exclude the divested businesses (Wickes and Plumbing
& Heating) from 1 January 2021 onwards, consistent with the approach
taken last year to determine the vesting of 2019 long-term incentive
awards. EPS performance has similarly excluded the divested
businesses to ensure a fair assessment of performance.
The Committee evaluated underlying business performance across the
three-year period, and concluded that the level of vesting of 2020 PSP
and 2020 CIP awards was appropriate. Whilst 2022 has been more
challenging, management has delivered strong cash performance
throughout the period as well as executing the strategy, delivering
operational performance and simplifying and strengthening the
business for the future. The current share price is lower than the share
price on grant for PSP and CIP awards, so there have been no windfall
gains. No discretion was consequently exercised by the Committee.
The Committee will submit its Remuneration report to the 2023 Annual
General Meeting, 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
27 February 2023
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Quick view – remuneration in 2022
Pay for performance
The following table shows how performance is measured under the annual bonus and long-term incentive plans.
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
Governance
Strategic and operational objectives that continue to lay the
foundations to deliver future success
ESG measures and strong governance framework
50%
20%
–
20%
10%
Delivering value to shareholders Alignment to shareholder experience through share price movement –
Bonus Weighting
RSP Weighting
–
–
Underpin
–
Underpin
100% (since awards
are made in shares)
2022 remuneration outcomes
Element
Base salary
(annualised from 1 April)
Annual bonus
(% of maximum)
Long-term incentives:
PSP (% of maximum
CIP (% of maximum)
Share ownership (% of salary)
(as at 31 December)
Nick Roberts, CEO
Alan Williams, CFO
2022
£655,389
+3%
0%
65%
100%
236%
2021
£636,300
97%
94%
100%
169%
2022
£533,180
+3%
0%
65%
100%
605%
2021
£517,650
97%
94%
100%
798%
Annual bonus outcome for 2022: 0% of maximum
The maximum bonus opportunity for Executive Directors is 180% of
salary. Half of the bonus earned is deferred into shares for three years.
Long-term incentive plan outcome for 2020-2022:
65% and 100% of maximum
Under the previous remuneration policy, the maximum PSP award for
Executive Directors was 150% of base salary. The maximum award
under the Co-Investment Plan was 100% of base salary, subject to an
Executive investing 50% of their net salary.
0
Operating profit (50%)
0
Operating cash flow (20%)
Adjusted EPS growth (40%)
62.5
PSP
Aggregate cash flow (40%)
0
Relative TSR (20%)
Strategic performance (30%)
66
CIP
CROCE (100%)
100
100
0
25
50
75
100
0
25
50
75
100
% of maximum achieved
% of maximum achieved
Despite strong strategic progress, in light of financial performance and lower bonus payments across the wider workforce than in previous years,
the Committee used its discretion and did not award a 2022 bonus payout to Executive Directors and the Group Leadership Team for the Group
performance element of the annual bonus plan. All bonus and LTIP outcomes are subject to malus and clawback. Performance weighting and
measures are unchanged from the previous year.
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Travis Perkins plc Annual Report and Accounts 2022
Proportionality and management of risk
The remuneration structure ensures that executives have a vested interest in delivering performance over the short and long term. There is a
three-year deferral of half of the annual bonus payout into shares, a two-year retention period on any vested awards under the long-term incentive
plan and a shareholding requirement that applies for two years after leaving the Company. The performance, retention and clawback periods for
each element of remuneration are shown below.
2022
2023
2024
2025
2026
2027
Salary, allowances and benefits
Annual bonus
-paid in cash
-deferred into shares
Long-term incentives -RSP
Shareholding requirement
Holding or clawback periods are shown in lighter shade.
Remuneration Policy report
The Directors’ remuneration policy (the ‘Policy’) was approved by 89% of shareholders at the Annual General Meeting held on 27 April 2021.
The Policy can be found on pages 99 to 106 of the Annual Report & Accounts 2020 and is available on the Travis Perkins plc website.
A summary of the Policy is also provided below under the ‘Statement of Implementation of Remuneration Policy in 2023’ section.
Annual Remuneration report
The following sets out the Annual Remuneration report for 2022, which includes details of how the Policy was implemented in 2022 and how
the Policy is intended to be implemented in 2023. This report is subject to an advisory shareholder vote at the 2023 Annual General Meeting.
Implementation of the Remuneration Policy in 2023
Executive Directors:
The following provides a summary of the Group’s remuneration policy and how the Group intends to implement the policy during 2023.
Plan
Purpose and link to strategy
Individual maximum
opportunity in 2023
Performance measures
and weighting
Operation
Base salary
(increase of 4% with
effect from 1 April
2023)
Core element of total
package, essential to
support recruitment and
retention of high calibre
executives.
CEO: £681,605
(2022: £655,389)
n/a
CFO: £554,507
(2022: £533,180)
Benefits
(no change)
n/a
Maintains a competitive
package with a range of
benefits for the executive
and their family.
n/a
Pension
(CFO pension
aligned with the
workforce rate from 1
January 2023)
Helps executives provide
for retirement and aids
retention.
n/a
10% of salary in line
with the rate
available across the
wider workforce.
The Remuneration Committee
reviewed executive salaries and,
taking into account current market
conditions, determined that salaries
will increase by 4% from 1 April
2023, compared to a minimum of
6% for the majority of the rest of the
workforce.
Directors continue to be entitled to
benefits in line with the Policy,
including private medical insurance,
income protection, annual leave,
company car (or cash alternative),
life insurance of up to five times
salary and participation in
all-employee share plans such as
Sharesave (SAYE) and BAYE.
Directors participate in a defined
contribution arrangement or receive
a cash allowance.
Travis Perkins plc Annual Report and Accounts 2022
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Directors’ Remuneration report continued
Plan
Purpose and link to strategy
Individual maximum
opportunity in 2023
Performance measures
and weighting
Operation
Maximum annual
bonus opportunity
of 180% of salary.
The 2023 annual bonus will be
based on the following
measures:
Targets are determined in relation to
the Group’s budget.
There is no bonus payment below
the threshold level of performance,
and maximum payment is made
only for performance in excess of
the Group’s budget.
50% of bonus earned is deferred as
shares that are held for three years.
Malus and clawback provisions
apply, up to three years from
the date of award.
For 2023, the weighting on financial
measures has been increased, with a
corresponding reduction from 30%
to 20% of maximum for the strategic
element, to reflect the level of focus
that is required on top and bottom
line performance during an expected
economic downturn.
The cash measure has also been
refined from operating cash flow
to operating cash conversion, to
facilitate the cascade of the measure
deeper in the business, driving
accountability on the efficient
conversion of profit into cash through
effective management of stock and
debtors throughout the year, together
with disciplined capital expenditure
management.
• 55% on adjusted operating
profit
• 25% on adjusted operating
cash conversion
• 20% on strategic performance
For 2023, strategic performance
will include:
• Future sources
of profit growth
• Operational efficiency
• Critical change programmes
• Sustainability
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 operating
cash conversion is a critical
measure for the business to
ensure that we have the
necessary resources to invest in
business transformation and
return value to shareholders.
Strategic measures ensure there
is also focus on key
opportunities that will deliver
long-term growth and
sustainable performance.
Annual bonus
(no material change)
Rewards achievement of
annual financial and key
business strategy
objectives.
Rewards personal
performance measured
against key objectives.
Deferred element
encourages longer
term shareholding
and aligns reward to
shareholder interests.
Malus and clawback
based forfeiture provisions
discourage excessive risk,
taking and short-term
outlook, ensuring that
executive and shareholder
interests are aligned.
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Travis Perkins plc Annual Report and Accounts 2022
Plan
Purpose and link to strategy
Individual maximum
opportunity in 2023
Performance measures
and weighting
Operation
Restricted Share
Plan
(no change)
Maximum annual
award of 125% of
base salary.
Aligns participants with
the shareholder
experience, whereby
participants build up a
shareholding in the
Company and are
incentivised to deliver
sustainable financial
performance and
enhance shareholder
value over the
longer term.
Helps retain high
performing executives.
For RSP awards
granted in 2023, the
performance underpins remain
as follows:
• ROCE above 9%. ROCE is one
of the business’ key KPIs
assessing how successful the
Group’s investments have
been in returning value to
shareholders. Return measures
have been a feature of the
incentive plans for a number
of years.
• Satisfactory governance
performance including no ESG
issues that result in significant
reputational damage to the
Company.
Share ownership
requirement.
Aligns the interests of
executives and
shareholders.
Executive Directors
are required to hold
shares valued at 2x
annual salary within
five years of
appointment.
75% of the award vests on the
third anniversary of the grant date,
subject to a holding period of a
further two years. The final 25%
of the award vests on the fifth
anniversary of the grant date.
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 up to six years from the
date of award.
The Committee is mindful of
shareholder guidance regarding
windfall gains. Based on the current
share price, the Committee does
not consider that it is necessary to
scale back awards, but this is
reviewed prior to grant.
Executive Directors are also expected
to maintain this level of shareholding
(or their actual shareholding if lower)
for a period of two years after
stepping down from the Board.
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.
Non-executive Directors:
Fees and Benefits
• The Non-executive Director fees policy is to pay:
– A basic fee for membership of the Board.
– An additional fee to the Chair of a Committee and to the Senior Independent Director, taking 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 the Company pension scheme.
• The review date for Non-executive Directors’ fees is 1 April. Fees were last increased by 3% with effect from
1 April 2022, in line with the approach for the wider workforce. The Chair fee has not increased since her
appointment on 31 March 2021.
• The current fees are as follows:
– Chair fee
– Non-executive Director basic fee
– Audit/Remuneration Committee Chair fee
– Senior Independent Director fee
– Stay Safe Committee Chair fee
£320,000
£61,800
£17,510
£12,875
£12,360
Travis Perkins plc Annual Report and Accounts 2022
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Considering stakeholders’ views
Shareholders
The Committee believes that it is important to maintain open dialogue with shareholders on remuneration matters. The Committee regularly
consults with significant shareholders and advisory bodies regarding the Group’s 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 during 2019 and 2020 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. There have been no material changes to Policy over the past year
and shareholders were not therefore consulted in 2022.
Colleagues
The Company undertakes regular engagement surveys for all employees to understand their views on working for the Group. Employee
feedback on all matters of reward is provided as part of this survey, and through supplementary surveys and focus groups on specific areas
such as employee health and financial wellbeing. Pete Redfern, the designated Non-executive Director for workforce engagement, is the
Colleague Voice representative on the Board. He hosts a number of listening groups throughout the year to gather colleagues’ perspective
on any topic relating to their experience of working for the Group, and the insights are fed back to the Board on a regular basis during the year.
The colleague voice is considered as part of the wider workforce context when making executive remuneration decisions. 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
The approach to setting reward for the wider workforce is guided by the same principles that apply to executives, with a focus on attracting and
retaining the best talent, competing within the industry sector and against the local market, and ensuring that pay outcomes are fair and equitable.
The salary review process and incentive plan design are broadly consistent throughout the Group. A higher proportion of total remuneration for
Executives and the Group Leadership Team is variable and linked to business performance, compared to the wider workforce.
All of the merchant businesses moved salaries to meet the Real Living Wage at the beginning of 2021, and the aim is to continue to work towards
meeting the Real Living Wage across the Group over time. For the 2023 salary review, the focus has been on delivering fair and equitable
outcomes, recognising the difficult and uncertain external conditions, investing higher increases in colleagues who are facing the biggest
cost of living challenges, as well as providing a meaningful uplift to everybody else.
The Group’s extensive wellbeing and benefit programmes are well established and provide comprehensive support to colleagues and their families,
which has been of particular importance during the pandemic and more recently as basic living costs have increased sharply. An extensive retailer
discount programme provides savings on average of between 6-7% of spend to help colleagues manage their essential household expenditure.
An employee assistance programme and a range of health, wellbeing, financial and lifestyle benefits are also provided to colleagues. More recently,
at a total cost of £7.7m, a one-off cost of living payment of £400 was made to over 17,000 colleagues, around 95% of the total workforce in the
UK. The take-up and use of benefits are closely monitored to assess the impact of cost of living pressures and resources have been invested in
further communications and engagement, direct with colleagues as well as through line managers, to ensure that everyone is aware of the support
that is available. The benefits offering is regularly reviewed, with virtual GP advice, health checks, mental health and nutritional support recently
added to the portfolio of benefits that all colleagues can access.
During 2022, the focus on financial wellbeing has been increased, with a series of communications and webinars around financial wellbeing topics,
in particular providing advice and support on retirement savings, budgeting, cost of living and mortgages. The financial wellbeing tool, Wagestream,
was also launched to all colleagues in June 2022, which allows them to track their earnings, manage their budget and short-term borrowing needs
more effectively, as well as encouraging long-term savings and providing financial coaching and other resources. 80% of the workforce now use
the platform for their regular budgeting needs, a third use the short-term borrowing service and another third are working towards achieving their
savings goals, with over half a million pounds saved collectively since the benefit was launched. Take-up of this benefit has increased steadily
over time and will continue to provide colleagues with valuable support through challenging times.
All colleagues based in the UK and the Netherlands also have the opportunity to participate in the Company’s Sharesave plan, which allows them
to save towards acquiring shares in Travis Perkins plc at a discounted option price. Leaders and key talent across the Group also receive long-term
incentive awards under the Restricted Share Plan.
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Travis Perkins plc Annual Report and Accounts 2022
Audited information
Single total figure of remuneration
£000
Executive Directors
Nick Roberts
Alan Williams
Non-executive Directors
Jasmine Whitbread3
Coline McConville
Pete Redfern
Marianne Culver
Heath Drewett4
Jora Gill5
Total
Salary
Benefits
Pension
Total fixed
Bonus
LTI1
Total variable
Total
2022
651
529
320
79
74
61
79
71
29
19
–
–
–
–
–
–
65
104
–
–
–
–
–
–
745
652
320
79
74
61
79
71
1,864
48
169
2,081
2021
–
–
–
–
–
–
–
–
–
1,081
882
1,081
882
–
–
–
–
–
–
–
–
–
–
–
–
1,826
1,534
320
79
74
61
79
71
1,963
1,963
4,044
£000
Salary
Benefits
Pension
Total fixed
Bonus
LTI2
Buy-out
636
518
241
77
72
60
46
25
20
67
56
80
29
19
64
104
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
729
641
241
77
72
60
46
25
20
67
56
80
1,111
904
1,199
1,207
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
391
–
–
–
–
–
–
–
–
–
–
–
Total
variable
Total
2,701
2,111
3,430
2,752
–
–
–
–
–
–
–
–
–
–
241
77
72
60
46
25
20
67
56
80
Executive Directors
Nick Roberts
Alan Williams
Non-executive Directors
Jasmine Whitbread3
Coline McConville
Pete Redfern
Marianne Culver
Heath Drewett4
Jora Gill5
Chris Rogers6
Blair Illingworth7
John Rogers8
Stuart Chambers9
Total
Notes:
1,898
48
168
2,114
2,015
2,406
391
4,812
6,926
1. Long-Term Incentives (LTI) reported for 2022 include PSP and CIP awards granted in 2020 and vesting in March 2023, based on performance over the three-year
period 1 January 2020-31 December 2022. The value of these awards has been calculated based on the average share price for the last quarter of 2022 of £8.83.
For 2020 CIP awards, the share price on the date of grant on 22 September 2020 was £10.42. For 2020 PSP awards, the share price on the date of grant on
14 September 2020 was £11.435. As the share price used to value LTI for the single figure table is £8.83, no value in the value reported is attributable to share
price appreciation for either Executive Director.
2. The LTI figure for 2021 reported last year (£1,894 for Nick Roberts and £1,430 for Alan Williams) was calculated on an estimated basis using the average share price
of the final quarter of 2021 of £15.33. These figures have been restated to reflect the actual share prices on vesting (£9.40 for Nick Roberts for both PSP and CIP
awards, and £13.21 for Alan Williams’ PSP award and £12.56 for his CIP award).
3. Jasmine Whitbread was appointed to the Board on 31 March 2021.
4. Heath Drewett was appointed to the Board on 11 May 2021. Heath Drewett was appointed Chair of the Audit Committee on 4 August 2021.
5. Jora Gill was appointed to the Board on 4 August 2021. Jora Gill was appointed Chair of the Stay Safe Committee on 25 February 2022.
6. Chris Rogers stepped down from the Board on 27 April 2021.
7. Blair Illingworth stepped down from the Board on 29 November 2021.
8. John Rogers stepped down from the Board on 6 October 2021.
9. Stuart Chambers stepped down from the Board on 31 March 2021.
Travis Perkins plc Annual Report and Accounts 2022 105
Financial statementsOther informationGovernanceStrategic report Directors’ Remuneration report continued
Explanatory notes for the single total figure of remuneration table
Salary
Annual salaries for the Executive Directors increased by 3% on 1 April 2022. Non-executive Director fees also increased by 3% on 1 April 2022.
The Chair’s fee has not been increased since her appointment on 31 March 2021.
Benefits
Benefits for 2022 for Nick Roberts and Alan Williams include private medical insurance and the provision of a company car and fuel
(or allowance alternative).
Directors’ pension entitlements
Nick Roberts receives 10% of salary, paid as a mix of pension contributions to the Company’s defined contribution pension scheme
and a cash allowance.
A gross cash allowance in lieu of pension of £103,530 was paid to Alan Williams during 2022. As previously disclosed, 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 was frozen at
this fixed level over the following two years. From 1 January 2023, Alan’s pension has been reduced to the wider workforce rate of 10% of salary.
The value of Directors’ pension entitlements for the year ended 31 December 2022 are outlined in the table below.
£000
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
Alan Williams
£3,996
£61,066
£65,062
n/a
£103,530
£103,530
Annual bonus for 2022
Annual bonuses for 2022 were subject to adjusted operating profit (50%), operating cash flow (20%) and performance against our strategic
measures (30%).
The following table summarises the bonus targets and achievement for 2022:
Performance measure
Weighting
Targets
Actual
performance
Payout
(% of maximum)
Threshold
(0%)
Plan
(50% bonus)
Maximum
(100% bonus)
Adjusted operating profit
Adjusted operating cash flow
Strategic performance
50%
20%
£344m
£205m
£362m
£228m
£380m
£274m
£295m
£180m
30% The Committee assessed performance against a number of
0%
0%
0%
strategic measures which were set at the start of the year.
A summary of performance is provided below. The Committee
determined that delivery against the strategic measures would have
resulted in a payout of 66% of maximum for this element of the
bonus plan. In light of financial performance and lower bonus
payments across the wider workforce than in previous years, the
Committee used its discretion and did not award a bonus payout
against the strategic measures for 2022.
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Travis Perkins plc Annual Report and Accounts 2022
Strategic
performance
Strategic
milestone
Measure
Summary of performance
Market share
Significant progress on building capability to deliver more value-added services,
drive retention and growth within our customer base, and develop areas of strategic
focus such as Intelligent Solutions and Whole House, as well as leveraging new
areas of business development with Staircraft and TF Solutions. Market share
gains were achieved during the year across the Merchanting division.
Committee’s
assessment
Delivered
Operational
efficiency
Operational cost efficiency has been a key focus during the year, and Travis Perkins
general merchanting and Toolstation in particular have driven core costs down in
their organisation structures throughout the year. Action was also taken in Q4 to
prepare the organisation for more challenging trading conditions in 2023.
Mostly
delivered
Supply chain and distribution centre capabilities have been reviewed across the
Group to drive improved customer propositions and more efficient operations.
Work is also underway to scope out continuous improvement strategies.
Critical
foundational
programmes
The finance modernisation programme progressed in line with the agreed plan
during 2022 and is on track to go live towards the end of 2023. This will deliver
improved stock accounting, simpler margin reporting and more streamlined and
efficient finance processes.
Delivered
ESG measures
Safety
Sustainability
People
development
and diversity
The first phase of the Enterprise Resource Planning implementation project within
the BSS business division went live in November 2022, a significant milestone with
further implementations planned for later in 2023.
Successful amplification of the health and safety culture across the business,
with various initiatives landing well with colleagues. There was a positive shift
in Colleague Safety Voice feedback, with engagement survey results four points
ahead of the external global benchmark. For 2022, the LTI frequency rate was
five LTIs per million hours, which is a 16% improvement on the prior year.
Exceeded
Support has been provided to suppliers who have calculated their Scope 1 and 2
emissions and who are actively working to reduce their carbon emissions. 53.9% of
Group spend was with centrally managed suppliers who meet the Group’s Scope 3
criteria, which exceeded the target set at the beginning of the year. More detail on
the Group’s progress against its sustainability ambition is detailed on page 30.
Delivered at
target
Partly
delivered
4.7% of all new hires in 2022 were appointed through the apprenticeship
programme, compared to 9.5% last year and behind the target of 15%. There has
been continued development of the centralised resourcing team, which is expected
to drive further progress in apprenticeship hires as well as a significant shift in the
recruitment of colleagues from minority backgrounds in the future. The launch
of a digital onboarding space, the learning management platform (‘Thrive’), and
further embedding of ‘At My Best’ performance enablement and the Group’s
values and purpose (‘Our Story’) are all contributing to a renewed focus on
people development. The recent ‘Your Voice, Our Future’ colleague survey was
answered by 76% of colleagues across the Group and produced a positive overall
engagement score of 71. Equal opportunity and authenticity were in the top three
engagement scores across the Group, both higher than the external benchmarks,
and 68% of colleagues felt a sense of belonging at the Company. During 2022, the
proportion of female colleagues increased slightly compared to the prior year.
Travis Perkins plc Annual Report and Accounts 2022
107
Financial statementsOther informationGovernanceStrategic report Directors’ Remuneration report continued
Long-term incentives (LTI)
Long-term incentives in the single total figure of remuneration for 2022 comprise the following awards, based on the average share price for the
three months 1 October 2022 to 31 December 2022, which was £8.83.
Performance Share Plan
Co-Investment Plan
Nick Roberts
£512,399
£568,699
Total LTIP
£1,081,098
83,467 shares granted
60,214 shares granted
54,253 shares due to vest at
65% of maximum
60,214 shares due to vest
at 100% of maximum
3,758 shares in respect of dividend
equivalents added in the vesting period
4,171 shares in respect of dividend
equivalents added in the vesting period
58,011 shares in total
64,385 shares in total
Alan Williams
£416,846
£465,250
£882,096
67,903 shares granted
49,261 shares granted
44,136 shares due to vest at 65% of
maximum
49,261 shares due to vest
at 100% of maximum
3,057 shares in respect of dividend
equivalents added in the vesting period
3,412 shares in respect of dividend
equivalents added in the vesting period
47,193 shares in total
52,673 shares in total
Impact of Wickes and Plumbing & Heating disposals
During 2021, the Group completed two material corporate transactions. In April 2021, the Wickes business was demerged and in September 2021,
the Plumbing & Heating division was sold. Taking into account the significance of the transactions and the impact on long-term incentive
performance metrics, the Committee reviewed the targets for in-flight awards granted in 2019 and 2020 to ensure that performance was
being assessed on a comparable basis with the targets for outstanding awards. Following careful consideration the Committee determined
that it was appropriate to exclude Wickes and Plumbing & Heating performance from 1 January 2021, both from the target set and from
reported performance. This holds management 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. The adjusted targets for 2020 awards are set out in the tables below and the
Committee is satisfied that the level of stretch is not materially different compared to the original targets.
2020 Performance Share Plan (PSP) awards
The following table sets out the performance targets, achievements and vesting levels for the PSP award granted in 2020 and vesting in 2023
in respect of the performance period 1 January 2020 to 31 December 2022:
Measure
Adjusted EPS growth1
Relative TSR2
Aggregate cash flow3
Total vesting
Weighting
40%
20%
40%
Threshold
3% p.a.
Maximum
10% p.a.
6.4% p.a.
Actual
Vesting (% Total)
Median Upper quartile
Below median
£720m
£800m
£840m
25%
0%
40%
65%
1. Adjusted EPS growth has been calculated on a consistent basis, adjusting for the impact of the Wickes demerger, the sale of the Plumbing & Heating business and
the acquisition of Toolstation Europe. Toolstation Europe was acquired on 30 September 2019 and was previously accounted for as an associated undertaking.
Where relevant, accounting policies have been kept consistent for the calculation of adjusted EPS growth, in particular the treatment of restructuring provisions.
2. Relative total shareholder return performance was measured against companies ranked 50-150 in the FTSE index on the date of award.
3. Wickes and P&H have been included in the aggregate cash flow targets up to the end of 2020 but targets have been adjusted to exclude both divisions
for 2021 and 2022. Actual performance has been assessed on the same basis to ensure consistency between the actual trading results and the targets.
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Travis Perkins plc Annual Report and Accounts 2022
2020 Co-Investment Plan (CIP) awards
Co-Investment Plan awards are subject to three-year average Cash Return on Capital Employed (CROCE) targets. As with aggregate cash flow, the
targets have been adjusted on the same basis to exclude the impact of both Wickes and Plumbing & Heating divisions in respect of 2021 and 2022
to ensure a like-for-like comparison with performance.
The following table sets out the performance targets, achievements and vesting levels for the matching awards granted in 2020 and vesting in
2023 in respect of the performance period 1 January 2020 to 31 December 2022:
Measure
CROCE (three-year average)
Total vesting
Weighting
Threshold
Maximum
100%
7.6%
8.6%
Actual
9.0%
Vesting
100%
100%
Consideration of underlying performance for long-term incentive outcomes
When considering the long-term incentive vesting outcome, the Committee also considered the underlying performance of the Group over the
three-year 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. While 2022 has been more challenging, given the progress that
management has made on delivering strong cash performance thought-out the three-year period as well as the execution of the strategy,
delivery of operational performance and the simplifying and strengthening of the business for the future, the Committee concluded that
the level of vesting of the long-term incentive awards was appropriate.
The Committee also noted that there were no windfall gains, since the share price is currently lower than on the date of grant. No discretion
was consequently exercised by the Committee.
Overall, the Committee considers that the Remuneration Policy has operated as it intended during 2022.
Payments to past Directors and payments for loss of office
No payments were made to past Directors and no payments were made to any Director for loss of office in the year.
Share interests awarded during the financial year
The Restricted Share Plan was approved by shareholders at the Annual General Meeting held on 27 April 2021, replacing the PSP and CIP.
Before granting awards under the RSP in 2022, 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 felt 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.
Travis Perkins plc Annual Report and Accounts 2022 109
Financial statementsOther informationGovernanceStrategic report Directors’ Remuneration report continued
2022 Restricted Share Plan (RSP) awards
Date of award
Type of award
Basis
% vesting at lower target Face value*
Underpin period
Nick Roberts
Alan Williams
1 April 2022
Restricted shares
125% of salary
n/a
£807,261
(64,298 shares at
£12.555 per share)
£656,739
(52,309 shares at
£12.555 per share)
1 January 2022
to 31 December
2024 (for the
purposes of
assessing
underpins only)
Shares that vest
after three years
are subject to an
additional two 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 the end of the holding period.
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.
2022 Deferred Share Bonus Plan (DSBP)
Half of the bonus earned in respect of 2021 performance was awarded as deferred shares as follows:
2022 DSBP awards
Nick Roberts
Alan Williams
Date of award
Face value
1 April 2022
£555,483
1 April 2022
£451,908
Number of
shares**
36,185
29,438
Share price*
£15.35
£15.35
* The share price used to calculate the number of shares awarded was the last 30 days of the 2021 financial year.
** Shares vest three years from the date of award. Awards are increased at each dividend payment date to reflect the dividends that would have been paid on vested shares
between grant and vesting.
As no bonus was earned in 2022, there will be no share awards under the deferred bonus plan in 2023.
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 annual salary within five years of appointment.
As at 31 December 2022, Nick Roberts’ total shareholding was 175,033 (which includes DSBP and RSP shares calculated at a net of tax basis)
and represents 2.36 times salary. Alan Williams’ total shareholding was 364,906 shares (which includes DSBP and RSP shares calculated
at a net of tax basis) and represents 6.05 times salary, based on the average share price for the last quarter of 2022 which was £8.83.
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Travis Perkins plc Annual Report and Accounts 2022
Directors’ shareholdings and share interests as at 31 December 2022 are outlined in the table below:
Executive Director
Beneficially
owned
shares
Conditional
shares under
PSP and CIP1
Conditional
shares under
RSP
Unconditional
shares under
DSBP and
Sharesave2
Unvested
options
subject to
performance3
Vested but
unexercised
options
Total
interests
Total shareholding
(beneficially
owned and DSBP)4
Total shareholding
(beneficially owned,
DSBP and RSP)5
Nick Roberts
83,010
Alan Williams
285,221
153,635
125,280
119,076
96,870
56,557
55,485
2,339
2,623
79,666 494,283
0 565,479
111,923
313,565
175,033
364,906
1.
Includes outstanding unapproved Performance Share Plan (PSP) awards and Co-Investment Plan (CIP) awards, which are subject to performance conditions.
2.
Includes outstanding awards made under the Deferred Share Bonus Plan (DSBP) and Sharesave, which are 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 the shareholding requirement comprise ordinary shares beneficially held at 31 December 2022 by the Executive and their spouse/partner,
vested but unexercised SAYE options and the post tax value (53%) of DSBP and RSP awards and any other share options or awards which have vested but have not
been exercised.
During 2022 the following awards were exercised:
Nick Roberts
Buyout award
2019 Co-Investment Plan award
Alan Williams
Deferred Share Bonus Plan
2019 Co-investment Plan award
2019 Performance Share Plan
Exercise
date
17 August 2022
17 August 2022
Exercise
date
16 March 2022
1 April 2022
16 March 2022
Number
of shares
41,596
47,877
Number
of shares
12,937
39,369
53,955
Price
per share
£9.1504
£9.1504
Price
per share
£13.1783
£12.8428
£13.1783
Director’s shareholding and share interests – Non-executive Directors
Non-executive
Director
Jasmine Whitbread
Coline McConville
Pete Redfern
Marianne Culver
Heath Drewett
Jora Gill
Louise Hardy
Beneficial shareholding
(as at 28 February 2023)
Beneficial shareholding
(as at 31 December 2022)
Beneficial shareholding
(as at 31 December 2021)
4,528
4,003
10,012
728
–
–
–
4,528
4,003
10,012
728
–
–
–
2,405
4,003
10,012
728
–
–
–
There were no material changes in Directors’ share ownership between 31 December 2022 and 28 February 2023. Nick Roberts acquired an
additional 30 shares through the all employee Buy as you Earn (BAYE) scheme.
Travis Perkins plc Annual Report and Accounts 2022
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Financial statementsOther informationGovernanceStrategic report Directors’ Remuneration report continued
Unaudited information
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 six 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 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 or other significant appointment,
provided that these appointments 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, and does not receive a fee for this appointment. Alan Williams held no external appointments during 2022.
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. As at 31 December 2022, the Trust held 2,596,684 shares.
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Travis Perkins plc Annual Report and Accounts 2022
Total shareholder return performance graph
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.
300
250
200
150
100
50
0
Travis Perkins plc
FTSE 350
Jan 13
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Dec 22
TSR is rebased to 100 from 1 January 2013.
Historical 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)
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
£2,044
£2,634
£2,360
£2,575
£2,532
£2,258
£2,622
£696
£4,446
£1,826
63%
89%
32%
24%
72%
35%
89%
–
97%
–
37%
45%
97%
54%
40%
40%
46%
40%
94%
65%
–
–
44%
97%
100%
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.
Travis Perkins plc Annual Report and Accounts 2022
113
Financial statementsOther informationGovernanceStrategic report Directors’ Remuneration report continued
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, 50th and 75th percentile employees.
Year
2022
2021
2020
2019
Method
Option A
Option A
Option A
Option A
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
79
206
37
133
69
168
30
109
56
134
23
81
The employees used for the purposes of the table above were identified on a full-time equivalent basis as at 31 December 2022. 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.
The following table provides salary and total remuneration information in respect of the employees at each quartile:
Year
2022
Element of pay
Salary
Total remuneration
25th percentile
employee Median employee
£21,120
£23,169
£24,000
£26,506
75th percentile
employee
£29,416
£32,830
The Board has confirmed that the ratio is consistent with the Company’s wider policies on employee pay, reward and progression.
There is a decrease in the CEO pay ratio for 2022. This reflects the fact that there was no bonus payout for 2022 whereas during 2021 the CEO
received a bonus and long-term incentives close to maximum, reflecting strong business performance in 2021. Also included in the CEO’s total
remuneration in 2021 is a significant element of his buyout awards.
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
The following table sets out the year-on-year percentage change in remuneration for the Executive and Non-executive Directors relative
to the wider workforce.
Percentage change in
salary/fee earned
Percentage change in bonus earned
Percentage change in taxable
benefits received
2022
2021
2020
2022
2021
2020
2022
2021
2020
5.2%
1.5%
1.7%
(74.8%)
69.0%
(38.0%)
13%
(8.5%)2
8.4%
Comparative
Employee Group1
Executive Directors
CEO – Nick Roberts3
CFO – Alan Williams3
2.4%
2.1%
Non-executive Directors
Jasmine Whitbread4
32.8%
Coline McConville
Pete Redfern
Marianne Culver
Heath Drewett4
Jora Gill4
2.6%
2.8%
1.7%
71.7%
184.0%
5.3%
5.3%
n/a
5.4%
(3.6%)
0%
n/a
n/a
(4.0%)
(3.5%)
(100.0%)
(100.0%)
97.0%
97.0%
(89.0%)
(89.0%)
n/a
(2.0%)
11.4%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
1.1%
–
n/a
n/a
n/a
n/a
n/a
n/a
1.4%
(6.9%)
0.0%
(5.0%)
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
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. During 2021, 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.
3. During 2020 Nick Roberts and Alan Williams took a pay cut of 20% for a period of three months. The increase in 2021 reflects the reinstatement of this temporary reduction
in salary. They received no underlying salary increase in 2021.
4. Jasmine Whitbread, Heath Drewett and Jora Gill were appointed during 2021 and therefore the increases to fees received in 2022 reflect the comparison of a full-year to a part-year.
114
Travis Perkins plc Annual Report and Accounts 2022
Relative importance of spend on pay
£1,000m
£750m
£500m
612
667
£250m
176
168
148
254
Distribution to
Shareholders
Capital
Investment
53
58
Corporation
Tax
Employee
Remuneration
2022
2021
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.
Governance
During the year the Committee comprised Coline McConville (Chair), Pete Redfern and Marianne Culver, all of whom are independent
Non-executive Directors, and Jasmine Whitbread, Chair of the Board, who was independent on appointment.
Deloitte was appointed by the Committee in December 2015, following an interview process, to provide independent advice on
executive remuneration. Deloitte are founding members 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 or
its Directors 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. Fees are charged on a time and materials basis. During the year
Deloitte was paid £16,500 for advice provided to the Committee.
In addition Nick Roberts (Chief Executive), Alan Williams (Chief Financial Officer), Robin Miller (General Counsel & Company Secretary), Emma
Rose (Chief Human Resources Officer), Jon Erb (Director of Group Finance), Paul Nelson (Group Reward Director until 31 March 2022) and Leonie
Clarke (Group Reward Director from 6 June 2022) have assisted the Committee in its work and attended Committee meetings where appropriate.
No individual is involved in the setting of their own remuneration.
Travis Perkins plc Annual Report and Accounts 2022
115
Financial statementsOther informationGovernanceStrategic report Directors’ Remuneration report continued
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 Company, Executive Directors and Group Leadership Team
members and other senior executives. 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 on request from the Company Secretary.
Key items discussed in 2022 meetings
The Remuneration Committee met formally three times during the year, with additional conference calls or meetings as required. The Committee
discussed amongst others the following matters:
Date
Key issues considered
4 February
• Annual salary review for Executive Directors and the Group Leadership Team
• Annual bonus targets for 2022
• Performance update on the 2021 annual bonus scheme
• Performance update on 2019 long-term incentive awards
21 February
• Review of 2021 performance against targets and determining outcomes for the 2021 annual bonus and 2019 long-term
incentive awards
• Annual bonus targets for 2022
• Deferral of 2021 bonus into shares granted in 2022
• Approach to granting awards under the RSP beyond the leadership team
• 2021 Directors’ Remuneration Report
9 December
• Context and considerations for the 2023 annual salary review for the wider workforce
• Performance update on the 2022 annual bonus scheme
• Performance update on 2020 long-term incentive awards and impact of Corporate Restructuring on targets
• Governance process for interim long-term incentive awards under the RSP
• Committee terms of reference
Shareholder voting
The following resolutions in relation to remuneration were put to the Company’s AGM (2021 Directors’ Remuneration Report and 2020 Policy):
Resolution
Votes for
For (%)
Votes against
Against (%)
Votes withheld
To receive and approve the Directors’ Remuneration Report
(2022 AGM)
To receive and approach the Directors’ Remuneration Policy
(2021 AGM)
154,790,824
94.71%
8,653,670
5.29%
7,325
178,947,921
89.38%
21,267,740
10.62%
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
27 February 2023
116
Travis Perkins plc Annual Report and Accounts 2022
Directors’ report
For the year ended 31 December 2022
The Directors present their Annual Report and audited accounts of
Travis Perkins plc and its subsidiaries (the “Group”) for the year ended
31 December 2022. The report sets out information required to be
included by the Companies Act 2006 (the “Act”), and the applicable
Financial Conduct Authority (“FCA”) Listing Rules (LR 9.8.4R(4), (12),
(13)) and Disclosure Guidance and Transparency Rules (the “DTRs”).
Certain information is incorporated into this report by reference and
can be located in the sections outlined below.
Disclosure
Page Reference
Corporate Governance Report
Directors’ details
Directors’ interests
Future business developments
Greenhouse gas emissions
Climate change risk management and governance
Principal risks and uncertainties
Financial risk management
Post-balance sheet events
Employee engagement
Employee share plans
Long-term incentive schemes
Dividend waivers
Number of employees and related costs
86
84
98
14
27
79
75
73-74
118
48
104
101-116
156
168
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 66 to 70. 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 158 branches in Belgium, France and Holland.
Articles of Association
The Company’s Articles of Association (the “Articles”) may
only be amended by special resolution at a general meeting
of the Shareholders. The Articles can be viewed on the Group’s
website at: www.travisperkinsplc.co.uk/about-us/governance/
Board of Directors
The names, biographies and committee memberships of all Directors are
provided on pages 84 to 85 and details of the Directors that held office
during the 2022 financial year are set out on page 88. The powers and
responsibilities of the Directors are set out in the Corporate Governance
report on pages 86 to 90. The appointment and removal of Directors is
regulated by the Articles, the Act, the UK Corporate Governance Code
(the “Code”) and related legislation. Under Article 83 of the Articles all
Directors are required to retire and seek re-election annually and
accordingly all will do so at the Annual General Meeting (AGM),
except for Louise Hardy who is standing for election having been
appointed since the last AGM.
All Directors are recommended for re-election on the basis of their
skills, experience and the value of their contributions to the Board
and the Company’s long-term sustainable success.
Details of the service agreements for Executive Directors and
letters of appointment for Non-executive Directors are set out
in the Directors’ Remuneration report on pages 98 to 116 and are
available for inspection at the Company’s registered office. Executive
Directors have rolling 12-month notice periods in their contracts.
Directors’ conflicts of interest
Directors have a statutory duty to avoid a situation where they have or
may have a direct or indirect interest that conflicts or may conflict with
the Company’s interests. The Company’s Articles permit Directors to
authorise a potential conflict of interest to the extent permitted by law.
During the year, no Director had any material interest in any contract
of significance of the Group’s business.
The disclosable interests of Directors at 31 December 2022, including
holdings, if any, of spouses and of children under the age of 18 are
provided in the Directors’ Remuneration report on pages 98 to 116.
Directors’ indemnities
Article 143 of the Company’s Articles permits the Company to
indemnify any person who is or was a Director, or a Director of any
associated company against any loss or liability in relation to the
Company or associated company, to the extent permitted by law.
The Company has granted such indemnities to its Directors and
Directors of associated companies and these remain in force in
the year ending 31 December 2022.
The Company maintains Directors’ and Officers’ liability insurance
cover in respect of potential legal action brought against its Directors.
Travis Perkins plc Annual Report and Accounts 2022
117
Financial statementsOther informationGovernanceStrategic report Directors’ report continued
For the year ended 31 December 2022
Major shareholdings
Information received by the Company pursuant to the FCA’s DTR 5.3.1(1) is published on a Regulatory Information Service and the Company’s
website. As of 31 December 2022, the Company has received notification of the following holdings of voting rights in its shares. The information
provided below was correct at the date of notification, however that date of notification 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 further notification is not required until the next
notifiable threshold is crossed.
Disclosure
BlackRock, Inc.
Sprucegrove Investment Management Limited
Artemis Investment Management LLP
Schroders Plc
Ninety One UK Limited
Investec Asset Management
Harris Associates L.P.
OppenheimerFunds, Inc
Sanderson Asset Management LLP
Pzena Investment Management, Inc
Results and dividend
The Group’s results for the year ending 31 December 2022 are set out
in the income statement on page 129 and dividends for the year ending
31 December 2022 are set out in note 21. The Directors recommend a
final dividend of 39.0 pence per share for approval at the Company’s
Annual General Meeting. If approved by shareholders, the final dividend
will be paid on 18 May 2023 to those shareholders on the register at the
close of business on 11 April 2023.
Balance sheet and post-balance sheet events
The balance sheet on page 130 shows the Group’s financial position.
No important events have occurred since the balance sheet date.
Employees
The Group is committed to its purpose of enriching lives and building
communities, and recognises the importance of colleague engagement
and inclusion in this. A full statement on employee matters can be
found in the Sustainability report on pages 30 to 49 and an overview of
the Company’s approach to diversity can be found in the Sustainability
report and the Nominations Committee report on pages 91 to 92.
The Encouraging Equal Treatment policy aims to ensure recruitment,
employment and promotion decisions are based solely on an
individual’s ability and potential, regardless of their gender, race, colour,
ethnic origin, sexual orientation, religious belief, age, disability, marital
status (including civil partnership), pregnancy, maternity or gender
identity. 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, including making any reasonable adjustments to their
role, 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.
Direct/Indirect Number of Shares
Voting Rights
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
10,860,539
10,569,923
10,751,952
11,136,777
12,480,008
12,741,837
12,398,948
12,381,080
12,321,382
15,587,458
5.13%
5.03%
5.059%
5.24%
4.95%
5.05%
4.92%
4.91%
4.89%
6.93%
The Group’s practices are designed to keep employees informed on
matters relevant to them, including the Group’s financial performance
and strategy, through regular meetings and communications. The Group
makes use of various channels including employee representatives;
listening groups; colleague forums; workshops; conferences; internal
newsletters and newspapers; and online communities.
In September 2022 the Group conducted its latest colleague
engagement survey ‘Your Voice Our Future’, which enables colleagues
to give feedback on issues affecting them and provides valuable insight
into their priorities and concerns. Areas for improvement are identified
and action plans to improve are developed with colleagues and
implemented accordingly. The results of the survey are used to
inform the Group’s approach to policies, the working environment,
working practices and diversity and inclusion, amongst other matters.
The Company has a designated workforce engagement Non-executive
Director to bring the colleague voice into the boardroom.
All colleagues with more than three months consecutive service are
eligible to join the Group’s Sharesave and Buy-As-You-Earn schemes,
enabling them to benefit from the Group’s growth and success. Full
details of employee share plans are available in the Remuneration
report on pages 101 to 116.
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 at:
www.travisperkinsplc.co.uk/modern-slavery-statement.
118
Travis Perkins plc Annual Report and Accounts 2022
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.
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 s418 of the Act.
Share capital and change of control
As at 31 December 2022 the Company had an allotted and fully
paid share capital of 212,509,334 ordinary shares of 11.205105
pence each with voting rights and an aggregate nominal value of
23,811,894.01, 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. The Company does
not hold any Ordinary Shares in Treasury.
There are no restrictions on voting rights attached 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.
During the year, the Company continued its non-discretionary
share buyback programme. The authority granted to the Board at the
2021 Annual General Meeting remained in place until the conclusion of
the 2022 Annual General Meeting. Further authority to purchase own
shares was approved at the 2022 Annual General Meeting, provided
that the maximum aggregate number of Ordinary Shares authorised
to be purchased is 21,359,702 (representing approximately 10% of the
issued Ordinary Share capital of the Company as at 11 March 2022).
This authority remains in place as of 31 December 2022 and will
expire at the conclusion of the next Annual General Meeting.
During the period 1 January 2022 to 28 April 2022, 11,437,559
Ordinary 11.205105 pence Shares were acquired by the Company
through buyback. They had an aggregate nominal value of
1,281,590.50, represented 5.08% of the Company’s issued share
capital as at 11 March 2021 and a consideration of £ 158,225,820.59
was paid for them. During the period of 29 April 2022 to 31 December
2022, 945,614 Ordinary 11.205105 pence Shares were acquired by the
Company through buyback. They had a nominal value of 105,957.04
represented 0.44% of the Company’s issued share capital as at 11
March 2022 and a consideration of £11,406,349.41 was paid for them.
As at 31 December 2022, there were no Ordinary Shares of the
Company held in Treasury.
The rights and obligations attaching to its shares are set out in the
Articles. 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 the notes to the financial statements on page 176.
As at 31 December 2022 the Travis Perkins Employee Share
Ownership Trust owned 2,596,684 shares in the Company (1.22%
of 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 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 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.
Robin Miller
General Counsel & Company Secretary
27 February 2023
Travis Perkins plc Annual Report and Accounts 2022
119
Financial statementsOther informationGovernanceStrategic report Directors’ Statement of responsibilities
For the year ended 31 December 2022
The Directors are responsible for preparing the Annual Report and the
Group and Parent Company financial statements in accordance with
applicable law and regulations.
Responsibility statement of the Directors in respect of the
annual financial report
We confirm that to the best of our knowledge:
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:
• 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 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.
• Select suitable accounting policies and then apply them consistently;
• Make judgements and estimates that are reasonable, relevant,
The Statement of Directors’ Responsibilities has been approved by the
Board and is signed on its behalf by:
Nick Roberts
Chief Executive Officer
27 February 2023
Alan Williams
Chief Financial Officer
27 February 2023
reliable and prudent;
• 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.
In accordance with Disclosure Guidance and Transparency Rule 4.1.14R,
the financial statements will form part of the Annual financial report
prepared using the single electronic reporting format under the TD
ESEF Regulation. The auditor’s report on these financial statements
provides no assurance over the ESEF format.
120
Travis Perkins plc Annual Report and Accounts 2022
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section
Financial statements
Financial statements
122
Independent Auditor’s report
129 Consolidated income statement
129 Consolidated statement of comprehensive income
130 Consolidated balance sheet
131 Consolidated statement of changes in equity
132 Consolidated cash flow statement
133 Notes to the consolidated financial statements
171 Company balance sheet
172 Company statement of changes in equity
173 Notes to the Company’s financial statements
182 Five year summary
Travis Perkins plc Annual Report and Accounts 2022
121
Financial statementsOther informationGovernanceStrategic 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 2022 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 2022 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 eight
financial years ended 31 December 2022. 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
£11.5m (2021: £13.0m)
4.7% (2021: 4.4%) of Group profit
before tax*
89% (2021: 94%) of Group profit
before tax
Key audit matters vs 2021
Recurring risks
Accounting for inventory
Gross defined benefit
obligations
Parent Company’s key audit
matter: Recoverability of
parent Company’s
investment in subsidiaries
*
In 2021 our materiality was based on Group profit before tax from continuing
operations, excluding adjusting items.
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 (unchanged from
2021), 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.
122
Travis Perkins plc Annual Report and Accounts 2022
The Risk
Our response
Accounting
for inventory
(£728 million;
2021: £724
million)
Refer to page 95
(Audit
Committee
Report) and
page 147
(accounting
policy and
financial
disclosures).
Gross defined
benefit
obligations
(£962 million;
2021: £1,466
million)
Refer to page 95
(Audit
Committee
Report), page
152 (accounting
policy) and
pages 152 to 154
(financial
disclosures).
Recoverability
of Parent
Company’s
investment in
subsidiaries
(£1,869
million; 2021:
£2,009
million)
Refer to page
175 (accounting
policy and
financial
disclosures).
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.
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.
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.
The determination of cost is made more
difficult by the ageing accounting systems.
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.
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 74% (2021: 58%) of the Parent
Company’s total assets.
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 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.
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 or
just after the year-end date, we obtained evidence for any significant movements
in inventory quantities to the year-end date.
We evaluated the results of our count procedures using statistical routines.
• Independent reperformance: We recalculated the net purchase prices attributed
to a sample of individual inventory lines and rebates deferred into inventory using
a combination of data and analytics and substantive tests of detail.
• 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 (2021: 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:
• 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
(2021: 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 (2021: acceptable).
Travis Perkins plc Annual Report and Accounts 2022
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to the members of Travis Perkins plc
Group profit before tax*
£245m (2021: £299m)
Group materiality
£11.5m (2021: £13.0m)
£11.5m
Whole financial
statements materiality
(2021: £13.0m)
£10.3m
Range of materiality at 7
components (£3.3m to £10.3m)
(2021: £3.0m to £11.0m)
£7.5m
Whole financial
statements performance
materiality (2021: £8.5m)
£0.5m
Misstatements reported to the
audit committee (2021: £0.5m)
Profit before tax
Group materiality
Group revenue
Total profits and losses that made
up Group profit before tax
89%
2021: 94%
94%
89%
95%
2021: 97%
97%
95%
Group total assets
93%
2021: 91%
91%
93%
Full scope for group audit purposes 2022
Full scope for group audit purposes 2021
Residual components
*In 2021 our materiality was based on Group profit before tax
from continuing operations, excluding adjusting items.
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
£11.5m (2021: £13.0m), determined with reference to a benchmark of
Group profit before tax*. It represents 4.7% (2021: 4.4%) of the stated
benchmark, which amounts to £245m in 2022 (2021: £299m).
Materiality for the Parent Company financial statements as a whole
was set at £8.0m (2021: £8.0m), determined with reference to a
benchmark of the Parent Company total assets, of which it
represents 0.3% (2021: 0.2%).
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% (2021: 65%) of materiality
for the financial statements as a whole, which equates to £7.5m
(2021: £8.5m) for the Group and £5.2m (2021: £5.2m) for the
Parent Company. We applied this percentage in our determination
of performance materiality based on the level of identified
misstatements in prior periods and our knowledge of the
Group’s legacy IT environment.
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £0.5m (2021: £0.5m),
in addition to other identified misstatements that warranted reporting
on qualitative grounds.
Of the Group’s 29 (2021: 33) reporting components, we subjected 7
(2021: 7) to full scope audits for group purposes. The components
within the scope of our work accounted for the percentages illustrated
opposite. The remaining 5% (2021: 3%) of total Group revenue, 11%
(2021: 6%) of the total profits and losses that made up the Group profit
before tax and 7% (2021: 9%) of total Group assets is represented
by 22 (2021: 26) reporting components, none of which individually
represented more than 3% (2021: 3%) of any of total Group revenue,
the total profits and losses that made up the Group profit before tax
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 £3.3m to £10.3m
(2021: £3.0m to £11.0m), having regard to the mix of size and risk
profile of the Group across the components. The work on 2 of the
7 components (2021: 2 of the 7 components) was performed
by component auditors and the rest, including the audit of
the Parent Company, was performed by the Group team.
The scope of the audit work performed was predominantly substantive
as we placed limited reliance upon the Group’s internal control over
financial reporting.
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Travis Perkins plc Annual Report and Accounts 2022
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 and
evaluating the models the Group uses in its assessment.
• Critically assessing the assumptions in the base case and downside
scenarios relevant to liquidity and covenant metrics, in particular in
relation the Group’s financing post the expiry of the £180m bond in
September 2023 and the impacts of historical trends in severe
economic situations and overlaying knowledge of the entity’s 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 133 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 133 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 89
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.
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 79, 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.
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 those subject to impairment
tests and those being depreciated or amortised over an estimated
useful life of assets. The Group considered the impact of climate
change and the Group’s targets in the preparation of the financial
statements, as described on page 143 in relation to the estimated
useful economic life of property, plant and equipment and 166 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 estimated
useful economic life of property, plant and equipment, there are no
significant risks of material misstatement in relation to climate change.
Therefore, 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 50 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 uncertain
economic environment to identify the inherent risks to the Group’s
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.
Travis Perkins plc Annual Report and Accounts 2022
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to the members of Travis Perkins plc
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, responsible
sourcing 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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Travis Perkins plc Annual Report and Accounts 2022
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 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.
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 74
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
74 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.
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.
Travis Perkins plc Annual Report and Accounts 2022
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to the members of Travis Perkins plc
9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 119, 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.
James Tracey (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
One Snowhill
Snow Hill Queensway
Birmingham
B4 6GH
28 February 2023
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Travis Perkins plc Annual Report and Accounts 2022
Consolidated income statement
For the year ended 31 December 2022
£m
Revenue
Adjusted operating profit
Adjusting items
Amortisation of acquired intangible assets
Operating profit
Interest on lease liabilities
Other finance costs
Finance income
Profit before tax
Tax
Profit from continuing operations
Profit from discontinued operations
Profit for the year
Total profit for the year is all attributable to the owners of the Company.
Earnings per ordinary share:
Adjusted basic earnings per share
Basic
– from continuing operations
– total
Diluted
– from continuing operations
– total
The accompanying notes form an integral part of these financial statements.
Consolidated statement of comprehensive income
For the year ended 31 December 2022
£m
Profit for the year
Items that will not be reclassified subsequently to profit and loss:
Actuarial (loss) / 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
Fair value gains on cash flow hedges
Deferred tax on cash flow hedge
Total other comprehensive (loss) / 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.
Notes
1
2(a)
3
2(a)
6(a)
6(a)
6(a)
7(a)
8
2022
4,994.8
295.3
–
(10.5)
284.8
(21.5)
(27.5)
9.2
245.0
(52.8)
192.2
–
192.2
2021
4,586.7
352.8
6.8
(11.1)
348.5
(21.1)
(25.7)
3.9
305.6
(64.8)
240.8
38.1
278.9
20(b)
94.6p
107.3p
20(a)
20(a)
20(a)
20(a)
90.8p
90.8p
89.2p
89.2p
103.9p
120.3p
102.6p
118.8p
Notes
18(b)
7(b)
27(a)
7(b)
2022
192.2
(145.3)
36.3
5.5
4.3
(1.1)
(100.3)
91.9
91.9
–
91.9
2021
278.9
94.9
(34.3)
2.9
–
–
63.5
342.4
304.3
38.1
342.4
Travis Perkins plc Annual Report and Accounts 2022
129
Financial statementsOther informationGovernanceStrategic report Consolidated balance sheet
As at 31 December 2022
£m
Assets
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use assets
Other receivables
Deferred tax asset
Derivative financial instruments
Retirement benefit asset
Total non-current assets
Current assets
Inventories
Derivative financial instruments
Trade and other receivables
Tax debtor
Cash and cash equivalents, excluding bank overdrafts
Total current assets
Total assets
Equity and liabilities
Capital and reserves
Issued share capital
Share premium account
Cash flow hedge reserve
Merger reserve
Revaluation reserve
Own shares
Foreign exchange reserve
Other reserves
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
Interest-bearing loans and borrowings
Lease liabilities
Derivative financial instruments
Trade and other payables
Tax liabilities
Short-term provisions
Total current liabilities
Total liabilities
Total equity and liabilities
Notes
2022
2021
9(a)
9(b)
10
11(a)
14
16
28
18(b)
12
28
14
23(b)
19
19
27
19
19
19
19
19
19
22
11(a)
16
15
22
11(a)
27
17
15
859.0
115.9
847.3
451.7
17.2
15.0
4.3
135.9
2,446.3
727.8
–
725.9
0.7
235.7
1,690.1
4,136.4
23.8
545.6
4.3
326.5
12.1
(34.3)
9.6
1.4
1,213.2
2,102.2
349.1
438.3
96.0
4.9
888.3
192.5
74.3
0.2
852.4
–
26.5
1,145.9
2,034.2
4,136.4
853.0
125.7
800.1
439.8
0.7
13.9
–
275.8
2,509.0
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
The financial statements of Travis Perkins plc, registered number 824821, were approved by the Board of Directors on 27 February 2023 and
signed on its behalf by:
Nick Roberts
Director
Alan Williams
Director
130
Travis Perkins plc Annual Report and Accounts 2022
Consolidated statement of changes in equity
For the year ended 31 December 2022
Own
shares –
treasury
Own
shares –
ESOT
Foreign
exchange
reserve
Merger
reserve
Revaluation
reserve
326.5
–
14.3
–
£m
At 1 January 2021
Profit for the year
Other comprehensive income
for the year net of tax
Total comprehensive
income for the year
Demerger dividend
Dividends paid
Adjustments in respect of
revalued fixed assets
Shares purchased in share
buyback and held as treasury
shares (note 19)
Share 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
At 1 January 2022
Profit for the year
Other comprehensive income
for the year net of tax
Total comprehensive income
for the year
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
Cancelled shares
Equity-settled share-based
payments, net of tax
Tax on equity-settled
share-based payments
Tax on revalued assets
At 31 December 2022
Share
capital
Share
premium
25.2
–
545.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
25.2
–
–
–
545.6
–
–
–
–
–
–
–
–
–
(1.4)
–
–
–
–
–
–
–
–
–
–
–
Cash flow
hedge
reserve
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4.3
4.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
326.5
–
–
–
–
–
–
–
–
–
–
–
–
–
23.8
–
–
545.6
–
–
4.3
–
–
326.5
–
–
–
–
–
–
–
(53.8)
–
–
–
–
–
–
(53.8)
–
–
–
–
–
–
–
–
–
(1.1)
–
–
–
–
–
–
(2.7)
10.5
–
–
–
–
(1.1)
–
(125.5)
–
–
–
–
–
–
2.7
12.1
–
–
–
179.3
–
–
–
–
(39.5)
–
–
–
–
–
–
–
(16.7)
17.4
31.2
–
–
–
(7.6)
–
–
–
–
–
–
(46.6)
3.8
16.1
–
–
–
–
(34.3)
1.2
–
2.9
2.9
–
–
–
–
–
–
–
–
–
–
4.1
–
5.5
5.5
–
–
–
–
–
–
–
–
–
–
9.6
Retained
earnings
Other
– 1,840.5
278.9
–
Total
equity
2,713.8
278.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
60.6
63.5
339.5
(679.7)
(105.4)
342.4
(679.7)
(105.4)
1.1
–
–
(53.8)
–
–
(31.2)
(16.7)
17.4
-
23.2
23.2
(0.7)
–
1,387.3
192.2
(0.7)
(2.7)
2,237.8
192.2
(110.1)
(100.3)
82.1
(81.7)
91.9
(81.7)
1.1
–
–
(125.5)
–
–
–
1.4
–
–
–
1.4
–
–
(16.1)
(179.3)
(46.6)
3.8
–
–
17.0
17.0
(2.3)
5.1
1,213.2
(2.3)
7.8
2,102.2
Travis Perkins plc Annual Report and Accounts 2022
131
Financial statementsOther informationGovernanceStrategic report Consolidated cash flow statement
For the year ended 31 December 2022
£m
Cash flows from operating activities
Operating profit
Adjustments for:
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of other 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 in inventories
Increase in receivables
(Decrease) / increase in payables
Payments in respect of adjusting items in excess of the income statement charge
Cash generated from operations
Interest paid and debt arrangement fees
Interest on lease liabilities
Income taxes paid
Net cash from continuing operating activities
Net cash 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
Cash flows from other investments
Net cash (outflow) / inflow from continuing investing activities
Net cash outflow from discontinued investing activities
Net cash (outflow) / inflow 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
Proceeds from borrowings
Repayment of bonds
Repayment of borrowings
Net cash used in continuing financing activities
Net cash used in discontinued financing activities
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December (note 23)
132
Travis Perkins plc Annual Report and Accounts 2022
2022
2021
284.8
348.5
73.6
79.0
6.5
10.5
17.0
-
(25.3)
(8.9)
(3.4)
(19.2)
(53.9)
(7.2)
353.5
(18.3)
(21.5)
(57.6)
256.1
-
256.1
1.4
22.5
(7.0)
(38.0)
(94.1)
-
-
-
(115.2)
-
(115.2)
-
(172.1)
3.8
(78.8)
(3.7)
(81.7)
-
75.0
(120.0)
-
(377.5)
-
(377.5)
(236.6)
459.8
223.2
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
2.6
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
Notes to the consolidated financial statements
For the year ended 31 December 2022
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 186. The nature of the Group’s operations and its principal activities are set out in the Strategic Report on pages 2 to 82.
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 171 to 181.
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
• Is exposed or has rights to a variable return from the involvement with the investee
• Has the ability to use its power to affect its returns
As such, the results of subsidiaries acquired 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
• The impact on trading performance of severe but plausible downside scenarios. Key assumptions include significant reductions in revenue,
removal of property profits and limited reductions in fixed overheads, as well as mitigating actions such as delayed capital expenditure and
dividend suspension
• The committed debt facilities available to the Group and the covenants thereon
• The Group’s debt maturity profile, including the upcoming bond maturity in 2023
• 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 75 to 81 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 going concern assessment is not sensitive to estimates on inflation.
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.
Travis Perkins plc Annual Report and Accounts 2022
133
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
General information continued
Some financial information in the Merchanting businesses 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 increases the risk of material misstatement in the information calculated by the systems. There
are processes and controls in place to mitigate these risks.
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
152
Note
18
Description
Pension assumptions
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 the number of people employed by the Group and associated costs.
Other: Provides information on items which require disclosure, but are not considered critical in understanding the financial performance or position
of the Group.
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 comprises 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
b. Revenue reconciliation and like-for-like sales
£m
2021 revenue
Network change
Trading days
2021 like-for-like revenue
Like-for-like change
2022 revenue
Network change
2022 like-for-like revenue
Like-for-like revenue %
Total revenue growth %
134
Travis Perkins plc Annual Report and Accounts 2022
2022
4,836.0
158.8
4,994.8
Merchanting
Toolstation
3,826.1
(9.2)
(32.0)
3,784.9
434.9
4,219.8
(107.0)
4,112.8
8.7%
10.3%
760.6
(11.9)
(2.0)
746.7
28.3
775.0
(55.7)
719.3
(3.7)%
1.9%
2021
4,443.2
143.5
4,586.7
Total
4,586.7
(21.1)
(34.0)
4,531.6
463.2
4,994.8
(162.7)
4,832.1
6.6%
8.9%
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
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 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
2022
4994.8
(3,610.1)
1,384.7
(816.4)
(324.5)
25.3
15.7
284.8
–
10.5
295.3
(25.3)
270.0
2022
245.0
–
10.5
255.5
(52.8)
–
–
(2.6)
200.1
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
Adjusted profit excludes adjusting items and amortisation of acquired intangible assets.
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 clear understanding of the Group’s underlying 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.
2021 adjusting items
In 2021, the Group was able to exit the leases of a number of branches closed in 2020 for less than the contractual lease liability, which generated
a net credit of £6.8m.
The 2021 tax charge includes an adjusting charge of £14.3m arising from the increase in the rate of UK corporation tax from 19% to 25% effective
on 1 April 2023 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).
Travis Perkins plc Annual Report and Accounts 2022
135
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Income and expenses continued
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
Pension costs in administration expenses
Pension costs in selling and distribution costs
Impairment losses / (reversal of impairment) for trade receivables (note 14)
Gain on disposal of property, plant and equipment
Costs of £14.8m were incurred in 2022 in respect of restructuring activity (2021: credit of £6.8m).
b. Other operating income
£m
Rental income
Transitional Service Agreement income
2022
(3.3)
3,437.2
7.4
13.9
11.0
(25.3)
2022
5.3
10.4
15.7
2021
(0.6)
3,119.5
6.5
12.2
(5.7)
(48.9)
2021
6.6
5.1
11.7
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. This income and the related costs will significantly decrease in 2023 as
the service agreements expire.
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
2022
2021
270
1,561
60
85
–
1,976
220
1,447
153
75
695
2,590
A description of the work of the Audit Committee is set out in the Audit Committee report on pages 93 to 97 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.
Segmental operating profit represents the result of each segment without allocation of certain central costs, finance costs and tax.
Segmental adjusted operating profit 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 predominantly in the
United Kingdom.
The Wickes business was demerged on 27 April 2021 and the Plumbing & Heating business was sold on 30 September 2021 and are excluded
from the 2021 comparatives.
136
Travis Perkins plc Annual Report and Accounts 2022
a. Segment information
£m
Revenue
Operating profit
Amortisation of acquired intangible assets
Adjusting items
Adjusted operating profit
Less property profits
Adjusted operating profit excluding property profits
Adjusted operating margin
Adjusted operating 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
Operating profit
Amortisation of acquired intangible assets
Adjusting items
Adjusted operating profit
Less property profits
Adjusted operating profit excluding property profits
Adjusted operating margin
Adjusted operating 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
2022
4,219.8
331.3
7.6
–
338.9
(25.3)
313.6
8.0%
7.4%
775.0
(11.8)
2.9
–
(8.9)
–
(8.9)
(1.1%)
(1.1%)
-
(34.7)
–
–
(34.7)
-
(34.7)
–
–
4,994.8
284.8
10.5
–
295.3
(25.3)
270.0
5.9%
5.4%
2,181.3
572.9
(83.4)
2,670.8
2,959.1
(1,083.3)
1,875.8
91.6
7.6
65.6
743.8
(309.4)
434.4
49.9
2.9
14.6
2021
433.6
(641.6)
(208.0)
4,136.5
(2,034.3)
2,102.2
_
_
_
141.5
10.5
80.2
Merchanting
Toolstation
Unallocated
Consolidated
3,826.1
369.8
6.1
(6.8)
369.1
(48.9)
320.2
9.6%
8.4%
760.6
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
Travis Perkins plc Annual Report and Accounts 2022
137
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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
Cash and cash equivalents
Retirement benefit surplus
Unallocated corporate assets
Tax asset
Deferred tax asset
Liabilities
Tax liabilities
Deferred tax liabilities
Interest-bearing loans, borrowings and loan notes
Unallocated corporate liabilities
Non-current assets owned by the Toolstation Europe businesses are located in foreign countries.
6. Net finance costs
a. Finance costs and finance income
£m
Interest on bank loans and overdrafts
Interest on bonds
Interest on loan and interest rate swap
Amortisation of issue costs of bank loans
Unwinding of discounts – property provisions
Pension scheme SPV interest
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
2022
2021
4.3
25.5
235.7
135.9
16.5
0.7
15.0
433.6
–
(96.0)
(541.6)
(4.0)
(641.6)
2022
(0.8)
(21.5)
(1.3)
(1.5)
(0.4)
(1.7)
–
(0.3)
(27.5)
(21.5)
(49.0)
2.1
–
5.3
1.8
9.2
(39.8)
4.9
17.6
459.8
275.8
0.7
–
13.9
772.7
(0.4)
(140.4)
(575.2)
(17.7)
(733.7)
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)
The charge caused by the unwinding of discounts relates to the property provisions (note 15) and the pension scheme SPV loan (note 18).
138
Travis Perkins plc Annual Report and Accounts 2022
b. Interest for non-statutory measures
£m
Interest on bank loans and overdrafts
Interest on bonds
Loan and interest rate swap
Amortisation of issue costs of bank loans
Pension scheme SPV interest
Interest for non-statutory measures
2022
0.8
21.5
1.3
1.5
1.7
26.8
2021
0.6
20.0
–
1.2
2.0
23.8
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 with in equity.
a. Tax charge in the income statement
£m
Current tax:
Current year
Prior year
Total current tax
Deferred tax:
Current year
Prior year
Total deferred tax
Total tax charge
2022
56.2
1.4
57.6
(2.5)
(2.3)
(4.8)
52.8
2021
62.1
0.6
62.7
1.9
0.2
2.1
64.8
The total tax charge in 2021 included £4.7m classified as adjusting (see note 3), and a charge of £1.6m relating to costs recognised as adjusting items.
Travis Perkins plc Annual Report and Accounts 2022
139
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Net finance costs continued
7. Tax continued
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:
£m
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
Current period deferred tax rate differential
Prior period adjustment
Tax expense and effective tax rate for the year
2022
2021
£m
245.0
46.6
(0.1)
2.9
1.3
(0.2)
3.3
1.2
(1.3)
(0.9)
52.8
%
19.0
21.6
£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
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 be reclassified:
Deferred tax charge on cash flow hedge
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
Deferred tax: Cash flow hedge
2022
2021
(1.1)
36.3
35.2
2022
0.1
7.8
(2.4)
5.5
–
(34.3)
(34.3)
2021
0.7
(2.7)
(1.4)
(3.4)
8. Discontinued operations
During the year ended 31 December 2021, the Group completed the demerger of the Wickes business and the disposal of the Plumbing & Heating
business. The Wickes business was demerged on 27 April 2021 and the Group recognised the distribution at a fair value of £679.7m. The difference
between the fair value of the Wickes business and the carrying amount of the assets distributed has been recognised as an expense of £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 of £28.7m in 2021 from the
Plumbing & Heating business before the completion of the sale.
a) Results of discontinued operations
£m
Revenue
Operating profit
Net finance costs – interest on lease liabilities
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
2021
1,469.2
56.0
(18.4)
37.6
(11.1)
26.5
11.6
38.1
140
Travis Perkins plc Annual Report and Accounts 2022
Net cash flows used in discontinued investing activities represent the purchase of tangible fixed assets. 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.
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.
Assets and liabilities
9. Goodwill and other intangible assets
Accounting policy
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
At 1 January 2021
Eliminated on disposal / distribution
Recognised on acquisition (see note 31)
Effect on movement in exchange rates
At 1 January 2022
Measurement period adjustments
Effect on movement in exchange rates
At 31 December 2022
Merchanting
Toolstation
661.0
–
21.5
–
682.5
2.3
–
684.8
174.8
–
–
(4.3)
170.5
–
3.7
174.2
Retail
455.2
(455.2)
–
–
–
–
–
–
Plumbing &
Heating
67.5
(67.5)
–
–
–
–
–
–
Total
1,358.5
(522.7)
21.5
(4.3)
853.0
2.3
3.7
859.0
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 five 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.
Travis Perkins plc Annual Report and Accounts 2022
141
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Assets and liabilities continued
9. Goodwill and other intangible assets continued
£m
Cost or valuation
At 1 January 2021
Additions
Additions from acquired business
Transfers between categories
Derecognition
At 1 January 2022
Additions
Transfers between categories
At 31 December 2022
Amortisation
At 1 January 2021
Charged on acquired intangibles
Charged on internally generated intangibles
Disposals
At 1 January 2022
Charged on acquired intangibles
Charged on internally generated intangibles
Disposals
At 31 December 2022
Net book value
At 31 December 2021
At 31 December 2022
Brand
318.7
–
–
–
(168.3)
150.4
–
–
150.4
72.9
3.6
–
(5.1)
71.4
2.3
–
–
73.7
79.0
76.7
Computer
software
Customer
relationships
Assets under
construction
132.8
2.2
0.5
0.2
(34.2)
101.5
6.8
2.4
110.7
99.7
1.7
12.3
(22.1)
91.6
–
6.5
–
98.1
9.9
12.6
145.2
–
9.4
–
(3.0)
151.6
–
–
151.6
114.7
5.8
–
(3.0)
117.5
8.2
–
–
125.7
34.1
25.9
2.6
0.3
–
(0.2)
–
2.7
0.4
(2.4)
0.7
–
–
–
–
–
–
–
–
–
2.7
0.7
Total
599.3
2.5
9.9
–
(205.5)
406.2
7.2
–
413.4
287.3
11.1
12.3
(30.2)
280.5
10.5
6.5
–
297.5
125.7
115.9
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 ten 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 29.
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
Toolstation
Toolstation UK
Toolstation Benelux
Toolstation France
2022
2021
Intangibles
Goodwill
Total
Intangibles
Goodwill
Total
–
–
49.3
–
–
–
–
–
–
49.3
43.6
100.2
26.8
7.8
482.6
23.8
103.4
61.1
9.7
859.0
43.6
100.2
76.1
7.8
482.6
23.8
103.4
61.1
9.7
908.3
–
–
49.3
–
–
–
–
–
–
49.3
43.6
100.2
26.8
7.8
482.6
21.5
103.4
57.9
9.2
853.0
43.6
100.2
76.1
7.8
482.6
21.5
103.4
57.9
9.2
902.3
142
Travis Perkins plc Annual Report and Accounts 2022
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 – four to 10 years
• Freehold land is not depreciated
The estimated useful lives are estimated taking into consideration the potential impact of climate change.
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.
Freehold
Long
leasehold
Leasehold
improvements
Plant and
equipment
£m
At 1 January 2021
Additions related to continued operations
Additions related to discontinued operations
Acquired through business combinations
Disposals
Derecognition on demerger and disposal of subsidiaries
Reclassifications
Effect of movements in exchange rates
At 1 January 2022
Additions
Disposals
Reclassifications
Effect of movements in exchange rates
At 31 December 2022
Accumulated depreciation
At 1 January 2021
Charged in the year on continued operations
Charged in the year on discontinued operations
Disposals
Derecognition on demerger and disposal of subsidiaries
Reclassifications
Effect of movements in exchange rates
At 1 January 2022
Charged in the year
Disposals
Reclassifications
Effect of movements in exchange rates
At 31 December 2022
Net book value
At 31 December 2021
At 31 December 2022
422.3
66.9
0.2
19.8
(32.0)
(2.6)
9.3
-
483.9
38.6
(15.3)
7.6
-
514.8
59.1
7.1
-
(16.6)
(0.8)
-
-
48.8
2.0
(3.2)
(3.1)
-
44.5
435.1
470.3
34.1
-
-
-
(0.9)
(1.2)
-
-
32.0
-
-
-
-
32.0
15.3
0.7
-
(0.9)
(0.9)
-
-
14.2
0.8
-
-
-
15.0
17.8
17.0
264.1
52.6
3.8
-
(10.5)
(145.7)
(9.1)
(0.4)
154.8
31.9
(13.4)
(21.1)
-
152.2
85.5
10.2
2.4
(1.3)
(90.3)
-
(0.1)
6.4
11.2
(1.3)
3.1
-
19.4
820.7
53.5
5.4
7.8
(27.9)
(353.8)
3.0
(0.3)
508.4
71.0
(8.4)
13.5
1.6
586.1
550.9
51.2
9.9
(27.9)
(274.2)
(0.3)
-
309.6
59.6
(10.8)
-
0.5
358.9
Total
1,541.2
173.0
9.4
27.6
(71.3)
(503.3)
3.2
(0.7)
1,179.1
141.5
(37.1)
-
1.6
1,285.1
710.8
69.2
12.3
(46.7)
(366.2)
(0.3)
(0.1)
379.0
73.6
(15.3)
-
0.5
437.8
148.4
132.8
198.8
227.2
800.1
847.3
Travis Perkins plc Annual Report and Accounts 2022
143
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Assets and liabilities continued
10. Property, plant and equipment continued
The cost element of the tangible fixed assets carrying value is analysed as follows:
At deemed cost
At cost
Freehold
20.2
494.6
514.8
Long
leasehold
Leasehold
improvements
Plant and
equipment
3.6
28.4
32.0
–
152.2
152.2
–
584.4
584.4
Total
23.8
1,259.6
1,283.4
Included within freehold property is land with a value of £230.7m (2021: £194.5m) 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. Included within leasehold improvements is £28.0m in respect
of assets under construction which are not depreciated.
In assessing the useful economic lives of the Group’s tangible fixed assets, management has considered the possible 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 TCFD Disclosure
on pages 50 to 61.
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) leases with a lease term of 12 months or less and containing no purchase options – this election is made by class of underlying asset
ii) 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.
144
Travis Perkins plc Annual Report and Accounts 2022
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.
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 included in the statement of financial position at 31 December:
£m
Land and buildings
Plant and equipment
At 31 December
2022
435.3
16.4
451.7
2021
425.3
14.5
439.8
Additions to the right-of-use assets during the 2021 financial year end were £92.4m in respect of continuing operations and £2.0m in respect
of discontinued operations.
Lease liabilities included in the statement of financial position at 31 December:
£m
Current
Non-current
2022
74.3
438.3
512.6
2021
74.5
414.7
489.2
Travis Perkins plc Annual Report and Accounts 2022
145
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Assets and liabilities continued
11. Leases continued
Maturity analysis – contractual undiscounted cash flows:
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities at 31 December (note 28(f))
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
Impairment / (reversal of impairment) of right-of-use assets
Gains on lease terminations
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
2022
88.5
282.3
262.1
632.9
2022
79.0
21.5
4.7
3.0
3.3
(3.1)
2022
70.3
8.7
79.0
2021
93.5
270.9
247.0
611.4
2021
80.0
21.1
4.5
1.8
(4.3)
-
2021
66.7
13.3
80.0
The total cash outflow for leases in 2022 was £100.3m (2021: £96.7m).
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.
146
Travis Perkins plc Annual Report and Accounts 2022
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.
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.
a. Amounts recognised in the balance sheet
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 £5.3m (2021: £6.6m).
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
2022
4.0
7.1
8.2
4.0
2.1
7.4
32.8
2021
6.2
5.1
4.6
4.0
3.5
18.7
42.1
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
2022
727.8
2021
724.4
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,
ie 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, ie when all conditions for it to be earned have been met.
Travis Perkins plc Annual Report and Accounts 2022
147
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Assets and liabilities continued
13. Supplier income continued
Supplier income balances included within the Group balance sheet are as follows:
£m
Other receivables
Trade payables
Inventories
Net balance sheet position
2022
84.0
66.1
(45.4)
104.7
2021
84.9
70.6
(42.0)
113.5
14. Trade and other receivables
Accounting policy
Trade and other receivables
The Group’s trade and other receivables at the balance sheet date comprise 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
Non current:
Other receivables
Prepayments and accrued income
Trade and other receivables
2022
2021
581.4
(17.7)
563.7
124.0
_
38.2
725.9
17.2
_
17.2
558.8
(13.7)
545.1
122.3
4.7
34.6
706.7
_
0.7
0.7
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 56 days (2021: 57 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.
The increase in the non-current prepayments balance reflects supplier licence fees and implementation costs incurred in respect of the Group’s IT
modernisation programmes, as well as deferred consideration from a property sold in Cambridge.
Movement in the allowance for doubtful debts
£m
At 1 January
Amounts written off during the year
Charge / (release) in the year
Derecognised on demerger/disposal of the business
At 31 December
2022
13.7
(7.0)
11.0
_
17.7
2021
30.6
(7.0)
(5.7)
(4.2)
13.7
148
Travis Perkins plc Annual Report and Accounts 2022
Expected credit loss assessment
Loss rates are based on actual credit loss experience over the past five years and existing market conditions, as well as forward-looking
estimated at the end of each reporting period.
The following table provides information about the exposure to credit risk and expected credit losses for trade receivables as at 31 December 2022.
£m
Current (not past due)
Days overdue:
1–30
31–60
61–90
91–120
More than 120
Gross carrying
amount
534.2
Weighted average
loss rate
0.7%
Net loss
allowance
(3.0)
Credit
impaired
No
18.9
5.4
1.9
(0.2)
21.2
581.4
6.0%
13.2%
22.3%
43.7%
72.8%
(0.9)
(0.6)
(0.3)
_
(12.9)
(17.7)
No
No
No
No
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
516.4
17.8
6.8
3.1
0.8
13.9
558.8
Weighted average
loss rate
0.4%
Net loss
allowance
(1.5)
Credit
impaired
No
13.3%
22.1%
45.5%
82.0%
82.9%
(0.9)
(0.8)
(0.6)
(0.3)
(9.6)
(13.7)
No
No
No
No
Yes
Loss rates are based on actual credit loss experience over the past five years.
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 25 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. Whilst the Group does not have a contractual right to defer payment, 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.
Travis Perkins plc Annual Report and Accounts 2022
149
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Assets and liabilities continued
15. Provisions continued
£m
At 1 January 2021
(Release) / charge to income statement
Derecognised following demerger or disposal
Utilisation of provision
At 31 December 2021
Charge to income statement
Utilisation of provision
At 31 December 2022
Included in current liabilities
Included in non-current liabilities
Property
Insurance
Restructuring
41.8
(3.3)
(9.0)
(13.6)
15.9
3.3
(6.8)
12.4
7.5
4.9
12.4
31.3
4.1
(9.7)
(5.6)
20.1
4.5
(5.6)
19.0
19.0
–
19.0
6.8
(0.8)
(3.1)
(2.9)
–
–
–
–
–
–
–
Total
79.9
–
(21.8)
(22.1)
36.0
7.8
(12.4)
31.4
26.5
4.9
31.4
The restructuring provision related to the 2020 branch closures and restructuring activities treated as adjusting items in that year. It excluded
property-related provisions and inventory and trade creditor amounts which were separately classified.
The following table details the Group’s liquidity analysis of its provisions, based on the undiscounted net cash outflows. The impact of discounting
is not material for the Group’s provisions.
2022:
Property
Insurance
2021:
Property
Insurance
0–1 year
1–2 years
2–5 years
5+ years
7.5
19.0
26.5
9.1
20.1
29.2
1.7
–
1.7
0.3
–
0.3
1.6
–
1.6
4.4
–
4.4
1.6
–
1.6
2.1
–
2.1
Total
12.4
19.0
31.4
15.9
20.1
36.0
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
Revaluation of property
Share-based payments
Provisions
Property assets acquired in business combinations
Brand
Pension scheme asset (note 18)
Deferred gains on property disposals
Leases
Cash flow hedge
Deferred tax liability
Net deferred tax
At 1 Jan 2022
Recognised in
income
Recognised
in equity
Recognised
in other
comprehensive
income
At 31 Dec
2022
(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
(1.1)
(1.1)
5.7
-
-
(1.0)
(1.1)
(2.2)
1.4
(1.7)
(4.9)
-
(3.8)
(4.9)
-
-
-
(7.8)
2.4
-
-
-
-
-
-
-
(5.4)
(5.4)
-
-
-
-
-
-
-
-
(36.3)
-
-
1.1
(35.2)
(35.2)
(15.0)
(15.0)
8.5
3.4
(3.5)
4.8
9.3
25.0
33.9
31.1
(17.6)
1.1
96.0
81.0
150
Travis Perkins plc Annual Report and Accounts 2022
£m
Trading losses
Deferred tax asset
Capital allowances
Trading losses
Revaluation of property
Share-based payments
Provisions
Property assets acquired in business
combinations
Brand
Pension scheme asset
Deferred gains on property disposals
Leases
Deferred tax liability
Net deferred tax
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
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 was met. This was disclosed as an adjusting item (note 2). No deferred tax asset has
been recognised on losses of £53.3m 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. The deferred tax asset with respect to the Netherlands trading losses has been
presented as a separate asset on the balance sheet as deferred tax assets and liabilities can only be offset if they arise in the same jurisdiction.
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 (2021: 25%).
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
2022
600.6
63.7
80.3
107.8
852.4
2021
642.0
65.0
88.0
126.1
921.1
Included in trade payables at 31 December 2022 are amounts of £87.2m (2021: £107.0m) 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 2022 was £13.8m (2021: £9.9m). 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.
Travis Perkins plc Annual Report and Accounts 2022
151
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Assets and liabilities continued
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.
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)
Amounts recognised in income:
Current service costs and administration 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 arising from changes
in demographic assumptions
Actuarial gain arising from changes
in financial assumptions
Actuarial (loss) / gain arising from experience adjustments
Gross pension asset / (liability) at 31 December
2022
Gross
assets
Gross
obligations
1,742.2
(1,466.4)
(1.5)
33.4
1.5
0.8
(50.4)
(0.2)
(28.1)
_
(0.5)
50.4
2021
Gross
assets
Gross
obligations
1,770.8
(1,592.4)
(1.6)
24.4
1.9
(0.5)
(50.6)
(0.3)
(21.9)
-
0.5
50.6
Net
275.8
(1.7)
5.3
1.5
0.3
_
Net
178.4
(1.9)
2.5
1.9
-
-
(628.6)
_
(628.6)
(2.2)
-
(2.2)
_
7.5
7.5
-
(15.5)
(15.5)
_
_
1,097.4
550.6
(74.8)
(961.5)
550.6
(74.8)
135.9
-
-
1,742.2
93.5
19.1
(1,466.4)
93.5
19.1
275.8
The assets valuation of £1,097.4m (2021: £1,742.2m) at 31 December 2022 consists of the TP DB Scheme £839.2m (2021: £1,334.5m) and the
BSS DB Scheme £258.2m (2021: £407.7m). The obligation valuation of £961.5m (2021: £1,466.4m) consists of the TP DB Scheme £729.2m
(2021: £1,115.8m) and the BSS DB Scheme £232.3m (2021: £350.6m). The significant reduction in the valuation of the assets and the obligation
is principally the result of the increase in bond yields in 2022.
The actual return on scheme assets of £595.2m (2021: £22.2m) is represented by the interest income and ‘return on plan assets (excluding
amounts included in net interest)’ figures above.
The deferred tax liability of £33.9m (2021: £68.8m) 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 2022 is £102.0m (2021: £207.0m). 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.
152
Travis Perkins plc Annual Report and Accounts 2022
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.
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
£m
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
2022
2.10%
3.00%
4.80%
3.10%
2.60%
At 31 December
2021
2.05%
3.00%
1.95%
3.10%
2.50%
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 2022
was 21.2 years for men and 23.2 years for women (2021: 21.5 years for men and 23.6 years for women). The mortality assumptions have not
been adjusted to reflect the potential effects of Covid-19, as a result of the uncertainty of its impact on long-term mortality rates.
The mortality assumptions have been adjusted to reflect the effects of Covid-19 as it has been determined that the impact of the pandemic on
long-term mortality outcomes has moved from a ‘neutral’ to ‘negative’ outlook. In particular, this takes into account: the possible mortality impact
of Covid-19 becoming endemic; data on waning vaccine effectiveness (noting that waning may be mitigated, at least in part, by future booster
programmes); the potential impact of new variants; and knock-on impacts of Covid-19 on the healthcare system.
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 2022 is given below. The sensitivities below are presented as 25 basis point changes rather than
the 10 basis points included in the prior year to reflect the heightened market volatility.
£m
Assumption
Discount rate
Inflation
Longevity
Increase of 0.25%
Decrease of 0.25%
Increase of 0.25%
Decrease of 0.25%
Increase of 1 year
Decrease of 1 year
TP & BSS
Schemes
Consolidated
(25.7)
27.2
16.1
(15.2)
64.9
(64.7)
Travis Perkins plc Annual Report and Accounts 2022
153
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Assets and liabilities continued
18. Pension arrangements continued
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. In accordance with the schemes’ derisked investment strategy, a high proportion of the largest two
pension schemes’ assets are invested in gilts and corporate bonds (“liability-driven investments”).
All fair values are provided by the fund managers. Where available, the fair values are quoted prices (e.g. listed equity, sovereign debt and corporate
bonds). Unlisted investments 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.
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
Secured finance income fund
At 31 December
2022
At 31 December
2021 (restated*)
9.1
4.3
3.1
149.9
476.4
0.9
926.4
(569.8)
0.2
25.1
76.1
1,097.4
4.1
156.0*
534.1
1.0
1,965.9
(1,037.3)
0.4
34.1
79.6*
1,742.2
*One of the funds within the secured finance category has been reassessed and is considered to fall within the definition of Level 3 within the fair
value hierarchy. The comparative has therefore been restated to re-classify the fund with a fair value of £79.6m at 31 December 2021 to Level 3,
having previously been classified as Level 2.
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 £19.8m (2021: £16.8m).
f. Pension scheme contributions for the year
The total charge to the income statement disclosed in note 4 of £21.3m (2021: £18.7m) comprises defined benefit scheme current service
costs of £1.5m (2021: £1.9m) and £19.8m (2021: £16.8m) 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.
154
Travis Perkins plc Annual Report and Accounts 2022
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 2021
Share consolidation
At 1 January 2022
Cancellation of share capital
Authorised, issued and fully paid
No.
252,143,923
(27,117,997)
225,025,926
(12,516,592)
212,509,334
£m
25.2
-
25.2
(1.4)
23.8
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 buyback
The Group concluded its buyback programme in May 2022 as announced in 2021 following the disposal of the Plumbing and Heating business.
A total of 12.3m shares were purchased in 2022 (2021: 4.6m), of which none were held as treasury shares (2021: 3.5m) and 3.3m were transferred
to the Employee Share Ownership Trust (2021: 1.1m). The shares were acquired at an average price of £13.70 per share (2021: £15.19 per share),
with prices ranging from £11.72 to £16.20 (2021: £14.58 to £15.76). The total cost of £172.1m, including £2.2m of after-tax transaction costs
(2021: £70.5m including £0.3m of after-tax transaction costs), was deducted from shareholder’s equity.
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
2022
Treasury
shares
3,533,419
-
ESOT
shares
Total
507,371 4,040,790
-
-
-
-
-
Treasury
shares
2021
ESOT
shares
Total
-
-
-
2,879,021
(309,495)
2,879,021
(309,495)
1,100,000
1,100,000
(3,533,419) 3,533,419
(1,444,106)
-
-
(1,444,106)
- 2,596,684 2,596,684
3,533,419
-
3,533,419
(3,162,155)
3,533,419
(3,162,155)
507,371 4,040,790
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.
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 cash flow hedge reserve represents the cumulative gain or loss on the fair value of effective hedging instruments used in cash flow hedges
which have not yet been reclassified to profit or loss
• 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
• Other reserves relates to a capital redemption reserve arising as a result of the share buybacks and the subsequent cancellation of shares
• Retained earnings represents cumulative results for the Group
Travis Perkins plc Annual Report and Accounts 2022
155
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Capital continued
20. Earnings per share
a. Basic and diluted earnings per share
£m
Profit 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 per share
-from continuing operations
-from discontinued operations
-total
Diluted earnings per share
-from continuing operations
-from discontinued operations
–total
2022
2021
192.2
-
211,630,413
3,789,212
215,419,625
240.8
38.1
231,766,613
2,967,694
234,734,307
90.8p
-
90.8p
89.2p
-
89.2p
103.9p
16.4
120.3p
102.6p
16.2p
118.8p
528,262 share options (2021: 6,545 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.
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
2022
192.2
-
10.5
-
-
(2.6)
200.1
94.6p
92.9p
2021
240.8
(6.8)
11.1
1.6
4.7
(2.7)
248.7
107.3p
105.9p
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 2021 of 26.0 pence (2020: nil pence) per ordinary share
Interim dividend for the year ended 31 December 2022 of 12.5 pence (2021: 12.0 pence) per ordinary share
Special dividend of nil pence (2021: 35.0 pence) per ordinary share
Total dividend recognised during the year
2022
55.5
26.2
-
81.7
2021
–
26.9
78.5
105.4
The Directors are recommending a final dividend of 26.5p in respect of the year ended 31 December 2022. The anticipated cash payment in
respect of the proposed final dividend is £56.3m (2021: £58.5m).
156
Travis Perkins plc Annual Report and Accounts 2022
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 page 78. At 31 December 2022, all borrowings were denominated in sterling (2021: sterling).
a. Summary
£m
Liability to pension scheme
Sterling bonds
Finance charges netted off borrowings
Loan note
Overdraft
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 2022, the following facilities were available:
£m
Drawn facilities:
£250m sterling bond
£180m sterling bond (2021: £300m sterling bond)
Term loan
Un-drawn facilities:
Five year committed revolving credit facility
Bank overdrafts
2022
26.7
430.0
(2.6)
75.0
12.5
541.6
192.5
349.1
541.6
2021
28.5
550.0
(3.3)
–
–
575.2
–
575.2
575.2
2022
2021
192.5
325.0
26.7
544.2
(2.6)
541.6
–
550.0
28.5
578.5
(3.3)
575.2
2022
2021
250.0
180.0
75.0
505.0
400.0
15.0
415.0
250.0
300.0
–
550.0
400.0
15.0
415.0
In April 2022, the Group completed a tender offer on the 2023 guaranteed notes, repurchasing £120m principal amount of notes which were
subsequently cancelled. In August 2022 the Group obtained a five year term loan of £75m repayable in August 2027, and entered into an interest
rate swap to hedge the risk relating to the variable element of the interest rate on the loan. Further details of the swap transaction are disclosed
in note 27.
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.
Travis Perkins plc Annual Report and Accounts 2022
157
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Capital continued
22. Borrowings continued
d. Interest
The weighted average interest rates received on assets and paid on liabilities were as follows:
£m
Assets:
Short-term deposits
Liabilities:
£250m sterling bond
£180m sterling bond (2021: £300m)
£75m term loan
Bank loans and overdrafts
2022
2021
1.0
3.8
4.5
4.6
2.1
0.1
3.8
4.5
n/a
1.9
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)
£180m sterling bond (2021: £300m) (2023)
Term loan
2022
Effective
interest rate
2021
£m
Effective
interest rate
£m
3.3%
194.0
0.2%
435.0
3.8%
4.5%
4.6%
250.0
180.0
75.0
505.0
3.8%
4.5%
–
250.0
300.0
–
550.0
e. Fair values
The book values of financial assets and liabilities have been determined based on amortised cost. For the majority of these, the fair values are not
materially different from their carrying amounts. Significant differences were identified for the Group’s £430m of bonds as at 31 December 2022,
where the assessed fair value based on quoted mid-market prices was £399.6m. Details of the fair values of derivatives are given in notes 27 and 28.
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
• £180m sterling bond (2021: £300m)
• £75m term loan
• £400m revolving credit facility
• Interest rate swap¹
• Currency derivatives (note 28)²
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 (2021: £32m).
Other guarantors
¹ Interest rate swap is guaranteed by Travis Perkins Trading Company Limited, Travis Perkins (Properties) Limited, CCF Limited and Keyline Civils
Specialist Limited.
² Currently derivatives are guaranteed by CCF Limited in addition to the above listed guarantors.
158
Travis Perkins plc Annual Report and Accounts 2022
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.
Leases
1,327.1
92.4
(13.6)
-
(96.7)
(841.1)
-
-
21.1
489.2
114.7
(12.5)
(100.3)
-
-
-
21.5
512.6
a. Movement in net debt
£m
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
At 1 January 2022
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
Cash and cash
equivalents,
including
overdraft
(505.6)
-
-
-
45.8
-
-
-
-
(459.8)
-
-
236.6
-
-
-
-
31 December 2022
(223.2)
b. Covenant net debt
£m
Cash and cash equivalents, including bank overdraft
Current interest-bearing loans and borrowings
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
Sterling
bonds
547.6
Liability
to pension
scheme
30.1
Term loan,
revolving credit
facility and loan
notes
(2.0)
-
-
12.0
(12.5)
-
1.0
-
-
-
-
-
-
-
0.6
-
-
(1.5)
548.2
-
-
75.0
(0.1)
-
-
-
-
-
(120.0)
0.7
0.1
-
-
73.4
429.0
Total
1,397.2
92.4
(13.6)
12.0
(67.0)
(841.1)
1.6
2.0
21.1
604.6
114.7
(12.5)
87.6
0.6
0.1
1.9
21.5
818.5
2021
459.8
-
(575.2)
(414.7)
(74.5)
(604.6)
28.5
489.2
(86.9)
-
-
-
(3.6)
-
-
2.0
-
28.5
-
-
(3.7)
-
-
1.9
-
26.7
2022
223.2
(180.0)
(349.1)
(438.3)
(74.3)
(818.5)
26.7
512.6
(279.2)
Cash and cash equivalents comprises short-term deposits of £194.0m (2021: £435.0m) and cash of £29.2m (2021: £24.8m).
Travis Perkins plc Annual Report and Accounts 2022
159
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Capital continued
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 purchases
Disposal of plant and equipment
Free cash flow
25. Net debt to adjusted EBITDA
£m
Operating profit
Depreciation and amortisation
EBITDA
Adjusting operating items (note 2)
Adjusted EBITDA
Net debt (note 23a)
Net debt to adjusted EBITDA
Covenant net debt (note 32b)
Covenant net debt adjusted EBITDA
Memo: covenant net debt to pre-IFRS 16 adjusted EBITDA
All figures relate to continuing operations.
2022
295.3
(25.3)
270.0
17.0
(16.9)
(21.5)
(57.6)
(76.5)
73.6
6.5
(110.0)
10.1
94.7
2022
284.8
169.6
454.4
–
454.4
818.5
1.8x
279.2
0.6x
0.8x
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
2021
348.5
170.0
518.5
(6.8)
511.7
604.6
1.2x
86.9
0.2x
0.2x
160
Travis Perkins plc Annual Report and Accounts 2022
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
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
Risk
2022
284.8
10.5
–
295.3
2,237.8
(207.0)
604.6
–
–
2,635.4
2,102.2
(102.0)
818.5
2,818.7
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
2,727.1
2,506.1
2022
295.3
2,727.1
10.8%
2021
352.8
2,506.1
14.1%
27. 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’s risk management policy is further
discussed on pages 73-74.
a. Derivatives
During 2022 the Group obtained a five year term loan facility for £75m (note 22) and at the same time entered into an equal interest rate swap
arrangement to hedge the interest rate. For 2022 through to 2025, the Board of Directors has decided to maintain a ratio of fixed and floating rate
net debt at 1:1. The risk management objective is to hedge against the fair value of the variable interest rate element of the loan facility. The interest
rate swap is a derivative measured at fair value and is designated in the hedging relationship in its entirety, therefore the hedging instrument is
eligible for hedge accounting.
The Group’s accounting policy for its cash flow hedges is set out in note 28.
The Group has the following derivative financial instruments in the following line items in the balance sheet:
£m
Non-current assets
Interest rate swap – cash flow hedge
Total non-current derivative financial instrument assets
2022
2021
4.3
4.3
-
-
-
Travis Perkins plc Annual Report and Accounts 2022
161
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Risk continued
27. Financial risk management continued
The Group’s hedging reserve relates to the following hedge instrument:
£m
At 1 January 2021 and 1 January 2022
Change in fair value of hedging instrument recognised in OCI
Deferred tax
At 31 December 2022
The following amounts were recognised in the Group’s profit and loss:
£m
Net loss on foreign currency forwards not qualifying as hedges included in other gains/(losses)
Interest rate
swaps
Total cash flow
hedge reserve
-
4.3
(1.1)
3.2
2022
(0.3)
-
4.3
(1.1)
3.2
2021
(0.5)
Hedge effectiveness was determined at the inception of the swap arrangement and through prospective effectiveness assessments, to ensure that
an economic relationship exists between the loan facility and the interest rate swap. As both the loan and interest rate swap have the same critical
terms, with the value, term and payment timings aligned, there is no portion of the hedge which is considered to be ineffective.
Swaps currently in place cover approximately 100% of the variable term loan principal outstanding. The fixed interest rate of the swap is 2.673%.
The interest rate of the term loan consists of a variable element based on the Sterling Overnight Index Average (“SONIA”) and a margin between
1.8% – 2.4%. The swap contracts require settlement of the net interest receivable or payable every six months and coincides with the dates on
which payment is due on the underlying term loan.
The effects of the interest rate swaps of the Group’s financial position and performance are as follows:
£m
Carrying amount (non-current assets)
Notional amount
Maturity date
Hedge ratio
Change in fair value of hedging instruments for the year
Weighted average hedged rate for the year
28. Financial instruments
Accounting policy
Investments and other financial assets classification
The Group classifies its financial assets in the following measurement categories:
2022
4.3
75.0
15 August 2027
1:1
4.3
2.43%
2021
-
-
-
-
-
-
• 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
162
Travis Perkins plc Annual Report and Accounts 2022
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. Where derivatives do not qualify for hedge accounting, any gains or losses on
re-measurement are immediately recognised in the Statement of Comprehensive Income. Where derivatives qualify for hedge accounting,
recognition of any resultant gain or loss depends on the nature of the hedge relationship and the items being hedged.
In order to qualify for hedge accounting, the Company is required to document, from inception, the relationship between the item being hedged and
the hedging instrument. The Company is also required to document and demonstrate an assessment of the relationship between the hedged item
and the hedging instrument, which shows that the hedge will be highly effective on an on-going basis. This effectiveness testing is performed at
each reporting date to ensure that the hedge remains highly effective.
Derivative financial instruments are classified as cash flow hedges when they hedge the Company’s exposure to variability in cash flows that are
either attributable to a particular risk associated with a recognised asset or liability, or a highly probable forecasted transaction. The effective
element of any gain or loss from re-measuring the derivative instrument is recognised directly in equity.
The associated cumulative gain or loss is removed from equity and recognised in the Statement of Comprehensive Income in the same period
during which the hedged transaction affects the Statement of Comprehensive Income.
The classification of the effective portion when recognised in the Statement of Comprehensive Income is the same as the classification of the
hedged transaction. Any element of the re-measurement criteria of the derivative instrument which does not meet the criteria for an effective
hedge is recognised immediately in the Statement of Comprehensive Income.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge
accounting or is de-designated. At that point in time, any cumulative gain or loss on the hedging instrument recognised in equity is retained
in equity until the forecasted transaction occurs or the original hedged item affects the Statement of Comprehensive Income. If a forecasted
hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the Statement of
Comprehensive Income
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.
Travis Perkins plc Annual Report and Accounts 2022
163
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Risk continued
28. Financial instruments continued
a. The carrying value of categories of financial instruments
£m
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 (including overdrafts) at amortised cost (note 17)
2022
2021
–
923.4
4.3
927.7
0.2
541.6
681.0
0.2
1,131.9
–
1,132.1
–
575.2
730.0
1,222.8
1,305.2
Loans and receivables exclude prepayments of £38.2m (2021: £34.6m). Trade and other payables exclude taxation and social security and
accruals and deferred income totalling £171.5m (2021: £191.1m). 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
Interest rate swap
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
2022
2021
4.3
–
4.3
(0.2)
(0.2)
–
0.2
0.2
–
–
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 2022, the Group had entered into an interest rate swap arrangement to hedge the variable interest
rate risk on a £75m five-year loan facility. The risk management objective is to hedge against the fair value of the variable interest rate element
of the loan facility. The interest rate swap is a derivative measured at fair value and is designated in the hedging relationship in its entirety.
(2021: no interest rate risks were hedged).
164
Travis Perkins plc Annual Report and Accounts 2022
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 EUR10.0m and US$30.0m (2021: EUR11.0m and US$20.5m). The fair value of these derivatives was
£0.2m liability (2021: £0.2m asset). 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.
At 31 December 2022 the Group had no floating rate liabilities. There was £194.0m on short-term deposit at 31 December 2022 (2021: £435m). 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 2022 would have increased/decreased by £1.9m (2021: increased/decreased by £4.4m)
due to the short-term deposits
• Net equity would have increased/decreased by £1.6m (2021: increased/decreased by £3.5m)
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.
£m
0–1 year
1–2 years
2–5 years
5+ years
2022
Total gross settled: foreign exchange forward contracts
Total net settled: Interest rate swap – cash flow hedge
Total derivative financial instruments
Net settled:
Borrowings
Trade and other payables at amortised cost (note 28a)
Leases (note 11a)
Total financial instruments
(33.9)
0.5
(33.4)
(192.5)
(681.0)
(88.5)
(962.0)
–
1.5
1.5
–
–
(81.5
(81.5)
–
2.8
2.8
(349.1)
–
(200.8)
(549.9)
2021
–
–
–
–
–
(262.1)
(262.1)
£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 28a)
Leases (note 11a)
Total financial instruments
(25.2)
(25.2)
–
(730.0)
(93.5)
(848.7)
–
–
–
–
(151.5)
(151.5)
–
–
–
–
(550.0)
–
(119.4)
(669.4)
(28.5)
–
(247.0)
(275.5)
Total
(33.9)
4.8
(29.1)
(541.6)
(681.0)
(632.9)
(1,855.5)
Total
(25.2)
(25.2)
(578.5)
(730.0)
(611.4)
(1,945.1)
Travis Perkins plc Annual Report and Accounts 2022 165
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
Risk continued
29. 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, except for the Toolstation Benelux and Toolstation France CGUs where fair value less cost of
disposal (“FVLCOD”) calculations have been used to better reflect the long-term nature of these investments and their early stage of maturity.
The valuation is considered to be level 3 in the fair value due to unobserveable inputs used in the valuation.
The key assumptions for the value-in-use and the FVLCOD 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 possible 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 TCFD Disclosure on pages 50 to 61. This has included
consideration of the impact of climate risks on the Group’s required capital expenditure, on energy costs directly in the business and the supply
chain and the impact of the changes on the Group’s markets and customers.
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
2022
2021
11.2%-14.7%
8.9%–10.2%
1.7%
1.7%
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.
166
Travis Perkins plc Annual Report and Accounts 2022
• Operating margin percentage is forecast in the context of the sales market volume growth 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 (2026 and beyond for the UK CGUs) have been determined using the long-term growth rate.
Impairment charge
The recoverable amount of goodwill and intangible assets with indefinite useful lives was in excess of their book value in all CGUs and therefore no
impairments have been recognised (2021: no impairments recognised). There are no reasonably possible changes in the key assumptions used in
the impairment reviews that would cause the recoverable amounts to be materially lower than the carrying amounts.
30. Capital commitments
£m
Contracted for but not provided in the accounts
Group structure
2022
8.3
2021
51.9
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. Goodwill of £21.5m was recognised as a result of this acquisition.
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.
Travis Perkins plc Annual Report and Accounts 2022
167
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
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
2022
18,453
1,503
19,956
2021
17,415
1,418
18,833
The average monthly number of persons employed (including Executive Directors) in 2021 including the discontinued operations was 24,136.
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)
2022
594.7
54.2
21.3
17.0
687.2
2021
544.5
48.6
18.7
19.1
630.9
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 105.
The total amounts received or receivable by Directors under long term incentive schemes in respect of qualifying service in the year is £127,000
(2021: £278,000). The aggregate of gains made by the Directors in the year on the exercise of share options equated to £nil (2021: £nil).
Details with respect to share options exercised in the year are set out on page 111.
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
(“SAYE”). 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 (%)
2022
2021
SAYE
889.4
710.0
44.5%
3.3
4.4%
2.5%
Nil-price
options
1245.0
-
44.0%
2.9
1.4%
1.8%
SAYE
1,518.5
1,411.0
44.3%
3.1
0.5%
1.3%
Nil-price
options
1,610.6
-
45.7%
2.1
0.1%
1.3%
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.
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).
168
Travis Perkins plc Annual Report and Accounts 2022
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 page 99. The estimated fair values of the
shares under option granted under the Group’s share schemes in 2022 are as follows:
Share scheme
Restricted Share Plan (nil-price options)
Restricted Recruitment Award (nil-price options)
Restricted Retention Award (nil-price options)
Save As You Earn
Grant date
1 April 2022
9 Sep 2022
9 Sep 2022
11 October 2022
Fair value
for the Group
£m
7.3
-
-
10.6
The Group charged £17.0m (2021: £23.2m, of which £19.1m related to continuing operations) to the income statement in respect of equity-settled
share-based payment transactions.
c. Share options for the Group
The number and weighted average exercise price of share options is as follows:
2022
2021
The Group
Weighted average
exercise price
(pence)
Number of
options
Number of nil
price options
Weighted average
exercise price
(pence)
Number of
options
Number of nil
price options
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
1,054
1,107
909
710
823
1,314
4,185
(1,863)
(544)
3,498
5,276
38
2,997
(225)
(902)
698
2,568
152
947
969
955
1,411
1,054
1,579
6,233
(1,303)
(1,808)
1,064
4,185
326
Details of the options outstanding at 31 December 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
2022
SAYE
1,061-1,958
710-1,411
1,200
120
0.2
7.7
814
5,156
2.6
3.1
The Group
Nil price
options
Executive
options
2021
SAYE
-
-
2,568
1.2
8.1
743-1,958
898-1,616
1,183
221
0.8
8.3
1,042
3,953
2.6
2.7
4,265
(541)
(1,255)
529
2,997
51
Nil price
options
-
-
3,127
1.0
8.4
Travis Perkins plc Annual Report and Accounts 2022
169
Financial statementsOther informationGovernanceStrategic report Notes to the consolidated financial statements continued
For the year ended 31 December 2022
People continued
33. Share-based payments
d. Impact of vesting and exercise
If all 2.0m outstanding executive options vest and then are exercised on the date of vesting, or in the case of SAYE all 5.1m shares are acquired on
the first possible day, 7.1m of shares will be issued for a consideration of £42.9m in the years below:
Options
SAYE
No. m
1.4
1.1
2023
£m
1.1
10.3
No. m
0.4
0.3
2024
£m
-
4.7
No. m
0.6
3.0
2025
£m
-
21.7
No. m
0.1
0.1
2026
£m
-
0.8
No. m
0.1
0.6
2027
£m
-
4.3
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
2022
10.9
0.4
7.8
19.1
2021
restated*
17.4*
0.4
11.5
29.3*
*The 2021 remuneration of key management personnel has been restated as short term employee benefits was previously understated.
This only impacts the disclosure note and there is no impact on the Income Statement for the year ended 31 December 2021.
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:
• Reference to the Conceptual Framework (amendments to IFRS 3)
• Property, plant and equipment – proceeds before intended use (amendments to IAS 16)
• Onerous contracts – cost of fulfilling a contract (amendments to IAS 37)
• Annual improvements to IFRS Standards 2018-2020
The above requirements did not have a material impact on the Group and have been adopted without restating comparatives.
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:
• IFRS 17 – Insurance contracts
• Classification of liabilities as current or non-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.
170
Travis Perkins plc Annual Report and Accounts 2022
Company balance sheet
As at 31 December 2022
£m
Assets
Non-current assets
Tangible assets
Investment in subsidiaries
Deferred tax asset
Derivative financial instruments
Total non-current assets
Current assets
Debtors
Derivative financial instruments
Cash and cash equivalents, excluding bank overdrafts
Total current assets
Total assets
Equity and liabilities
Capital and reserves
Issued capital
Share premium account
Cash flow hedge reserve
Merger reserve
Own shares
Other reserves
Accumulated profits
Total equity
Non-current liabilities
Interest-bearing loans and borrowings
Amounts due to subsidiaries
Total non-current liabilities
Current liabilities
Interest-bearing loans and borrowings
Derivative financial instruments
Amounts due to subsidiaries
Other creditors
Deferred tax liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Notes
2022
2021
2
3
9
4
9
5
6
7
6
9
7
10
3
0.2
1,868.6
-
4.3
0.2
2,008.9
3.1
-
1,873.1
2,012.2
472.2
-
195.7
667.9
981.5
0.2
440.4
1,422.1
2,541.0
3,434.3
23.8
545.6
4.3
326.5
(34.3)
1.4
1,107.8
1,975.1
322.5
32.9
355.4
192.5
0.2
0.8
16.9
0.1
210.5
565.9
2,541.0
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
The Company’s loss for the year was £2.8m (2021: loss of £24.0m), and total comprehensive income for the year was £0.4m (2021: loss of £24.0m).
The financial statements of Travis Perkins plc, registered number 824821, were approved by the Board of Directors on 27 February 2023 and
signed on its behalf by:
Nick Roberts
Director
Alan Williams
Director
Travis Perkins plc Annual Report and Accounts 2022
171
Financial statementsOther informationGovernanceStrategic report
Own
shares
Treasury
Own
shares
ESOT
–
(39.5)
-
-
-
(53.8)
-
-
-
-
-
-
-
-
-
(16.7)
17.4
31.2
-
-
(53.8)
(7.6)
-
-
(125.5)
-
-
-
-
-
-
(46.6)
3.8
16.1
Other
Retained
earnings
Total
equity
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,191.6
3,048.1
(24.0)
(679.7)
(105.4)
-
-
-
(31.2)
23.2
(1.3)
(24.0)
(679.7)
(105.4)
(53.8)
(16.7)
17.4
-
23.2
-
1,373.2
2,209.1
(3.9)
(81.7)
0.4
(81.7)
-
-
-
(16.1)
(179.3)
17.0
(1.4)
(125.5)
(46.6)
3.8
-
-
17.0
(1.4)
179.3
-
-
-
-
-
-
1.4
-
-
(34.3)
1.4
1,107.8
1,975.1
Company statement of changes in equity
For the year ended 31 December 2022
£m
At 1 January 2021
Profit and total comprehensive loss for the year
Demerger dividend
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
Profit and total comprehensive loss for the year
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
Cancelled shares
Equity-settled share-based payments
Tax on equity-settled share-based payments
Share
capital
Share
premium
Merger
reserve
Hedging
reserve
25.2
544.3
326.5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.3
-
-
-
-
-
-
-
-
-
25.2
545.6
326.5
-
-
-
-
-
-
(1.4)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.3
-
-
-
-
-
-
-
-
At 31 December 2022
23.8
545.6
326.5
4.3
172
Travis Perkins plc Annual Report and Accounts 2022
Notes to the Company’s financial statements
For the year ended 31 December 2022
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 2 to 82. 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 179.
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.
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.
Travis Perkins plc Annual Report and Accounts 2022
173
Financial statementsOther informationGovernanceStrategic report Notes to the Company’s financial statements continued
For the year ended 31 December 2022
General information continued
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 75 to 81 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.
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.
1. Income statements disclosures
The audit fee for the Company and the consolidated financial statements is disclosed in note 4(c) 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 87 to 92.
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 52 (2021: 56).
2022
6.6
0.9
0.2
7.5
15.2
2021
7.5
1.0
0.2
10.0
18.7
174
Travis Perkins plc Annual Report and Accounts 2022
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
2022
2021
2,930.1
73.5
-
-
3,003.6
(921.2)
(213.8)
-
(1,135.0)
1,868.6
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
The additions to investments in 2022 represent the capitalisation of a £53.2m (2021: £37.9m) 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. Furthermore, during the year there was a share purchase of the £10.1m investment by Travis Perkins Group Holdings Limited in Tool
& Fastener Solutions Limited from Travis Perkins Plc.
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.
The impairment charge relates to the Company’s investment in Travis Perkins Finance Company Limited, following the settlement of an interest-
bearing intercompany loan held with the Company via a distribution. This resulted in a reduction in the subsidiaries net assets below the carrying
amount of the investment held by the Company, and accordingly an impairment loss has been recognised.
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.
A full listing of all related undertakings is provided in note 13.
3. Deferred tax
£m
Liability / (asset):
Share-based payments
Cash flow hedge
Other timing differences
At 1 Jan
2021
Recognised
in income
At 1 Jan
2022
Recognised
in income
Recognised
in equity
(4.1)
-
(0.4)
(4.5)
1.2
-
0.2
1.4
(2.9)
-
(0.2)
(3.1)
0.8
-
(0.1)
0.7
1.4
-
-
1.4
Recognised
in other
comprehensive
income
-
1.1
-
1.1
At 31 Dec
2022
(0.7)
1.1
(0.3)
0.1
4. 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
2022
2021
376.3
4.0
91.9
472.2
881.5
4.7
95.3
981.5
Amounts owed by subsidiaries include loans and other balances. The loans are interest-free and repayable on demand.
Travis Perkins plc Annual Report and Accounts 2022
175
Financial statementsOther informationGovernanceStrategic report Notes to the Company’s financial statements continued
For the year ended 31 December 2022
General information continued
5. 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 2021
Share consolidation
At 1 January 2022
Share consolidation
At 31 December 2022
No.
252,143,923
(27,177,997)
225,025,926
(12,516,592)
212,509,334
£m
25.2
25.2
(1.4)
23.8
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
Transferred to ESOT
Reissued
At 31 December
Treasury
shares
2022
ESOT
shares
Total
Treasury
shares
3,533,419
507,371 4,040,790
-
-
-
-
-
-
(3,533,419) 3,533,419
-
-
-
-
-
(1,444,106)
(1,444,106)
-
-
-
3,533,419
-
-
2021
ESOT
shares
Total
2,879,021
2,879,021
(309,495)
(309,495)
1,100,000
1,100,000
-
-
3,533,419
-
(3,162,155)
(3,162,155)
- 2,596,684 2,596,684
3,533,419
507,371 4,040,790
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 2022 £nil (2021: 3.5m) of own shares were held as treasury shares with a value of £nil (2021: £53.8m), representing 0%
(2021: 2%) of issued share capital.
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 cash flow hedge reserve represents the cumulative gain or loss on the fair value of effective hedging instruments used in cash flow hedges
which have not yet been reclassified to profit or loss
• 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 broadly approximate its accumulated profits. When required the Company can receive
dividends from its subsidiaries to increase the available distributable reserves.
176
Travis Perkins plc Annual Report and Accounts 2022
6. Interest bearing loans and 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.
£m
Sterling bonds
Finance charges netted off borrowings
Term loan
Overdraft
Current liabilities
Non-current liabilities
£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
2022
430.0
(2.5)
75.0
12.5
515.0
192.5
322.5
515.0
2021
550.0
(3.3)
–
–
546.7
–
546.7
546.7
2022
2021
192.5
325.0
–
517.5
(2.5)
515.0
–
550.0
–
550.0
(3.3)
546.7
At 31 December 2022 all borrowings were denominated in sterling (2021: 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
£180m sterling bond (2021: £300m)
Term loan
Details of the sterling bonds are given in note 22 to the consolidated financial statements.
7. Amounts due to subsidiary undertakings
£m
Amounts due to subsidiary undertakings – non current
Amounts due to subsidiary undertakings – current
Amounts due to subsidiary undertakings relate to loans and other balances. These loans are interest-free.
2022
Effective
interest rate
2021
£m
Effective
interest rate
£m
3.3%
194.0
0.2%
435.0
3.8%
4.5%
4.6%
250.0
180.0
75.0
505.0
3.8%
4.5%
-
2022
32.9
0.8
33.7
250.0
300.0
-
550.0
2021
642.0
13.1
655.1
Travis Perkins plc Annual Report and Accounts 2022
177
Financial statementsOther informationGovernanceStrategic report Notes to the Company’s financial statements continued
For the year ended 31 December 2022
General information continued
8. Financial risk management
For more details of the Group’s hedging instruments see notes 27 and 28 of the Group financial statements.
£m
Non-current assets:
Interest rate swap – cash flow hedge
Total non-current derivative financial instrument assets
The Group’s hedging reserve relates to the following hedge instrument:
£m
At 1 January 2021 and 1 January 2022
Change in fair value of hedging instrument recognised in OCI
Deferred tax
At 31 December 2022
The following amounts were recognised in the Group’s profit and loss:
£m
Net loss on foreign currency forwards not qualifying as hedges included in other losses
£m
Carrying amount (non-current assets)
Notional amount
Maturity date
Hedge ratio
Change in fair value of hedging instruments for the year
Weighted average hedged rate for the year
2022
2021
4.3
4.3
-
-
Interest rate
swaps
Total cash flow
hedge reserve
-
4.3
(1.1)
3.2
2022
(0.3)
2022
4.3
75.0
15 August 2027
1:1
4.3
2.43%
-
4.3
(1.1)
3.2
2021
(0.5)
2021
-
-
-
-
-
-
9. Financial instruments
For the full details of the cash flow hedging instrument and the resulting accounting policy, see notes 27 and 28 of the Group accounts.
a. The carrying value of categories of financial instruments
£m
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 6)
Trade and other payables at amortised cost
2022
2021
–
583.0
4.3
587.3
0.2
515.0
44.7
559.9
0.2
1,421.9
–
1,422.1
–
546.7
677.6
1,224.3
178
Travis Perkins plc Annual Report and Accounts 2022
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
2–5 years
5+ years
2022
Total gross settled: foreign exchange forward contracts
Total net settled: Interest rate swap – cash flow hedge
Total derivative financial instruments
Net settled:
Borrowings
Trade and other payables at amortised cost
Total financial instruments
(33.9)
0.5
(33.4)
(192.5)
(44.7)
(237.2)
–
1.5
1.5
–
–
–
–
2.8
2.8
(322.5)
–
(322.5)
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
Total financial instruments
–
–
–
(22.5)
(22.5)
–
–
–
–
–
–
–
(546.7)
–
(546.7)
–
–
–
–
–
Total
(33.9)
4.8
(29.1)
(515.0)
(44.7)
(559.7)
Total
–
–
(546.7)
(22.5)
(569.2)
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.
£m
Other creditors
Accruals
2022
4.9
12.0
16.9
2021
22.5
0.9
23.4
Travis Perkins plc Annual Report and Accounts 2022
179
Financial statementsOther informationGovernanceStrategic report Notes to the Company’s financial statements continued
For the year ended 31 December 2022
General information continued
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
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 (Properties) Limited
Travis Perkins Finance Company Limited
Travis Perkins Group Holdings Limited
Travis Perkins Leasing Company Limited
Travis Perkins P&H Group Holdings Limited
Travis Perkins Trading Company Limited
Wickes Properties Limited
Dormant & non-trading subsidiary companies (100% ownership and UK registered)
B. & G. (Heating & Plumbing) Limited*
Rudridge Limited*
Benchmarx Kitchens and Joinery Limited
Staircraft Integrated Solutions Limited1
BMSS Limited
British Steam Specialties (International) Limited (The)
Bss (UK) Limited
BSS GPS Trustee Limited
Builders Mate Limited
Building Integrated Solutions Limited1
Built For Trade Limited
Burt Boulton (Timber) Limited*
Cobtree Nominees Limited
Curran Sawmills Limited – The17
Staircraft Limited1
Terant Supplies Limited
TFS Holdings Limited*
Tile It All (UK) Limited *
The BSS EBT Company Limited
Tile Giant Holdings Limited
TP Directors Ltd
TP General Partner (Scotland) Limited1
TP Newco 2 Limited *
TPG Management Services Limited
Downpatrick Timber Slate and Coal Company Limited17
Travis & Arnold Limited
E. East & Son Limited
Fry & Pollard Limited*
Harrison Trenery Limited*
HT (1995) Limited
Hunter Estates Limited*
IJM Enterprises Limited
IJM Holdings Limited*
Independent Construction Technologies Limited
J S Towell Limited*
MD-DOR3 Limited
MD-DOR4 Limited
Monteith Building Services Limited1*
P. H. Properties Limited1
P.T.S. Plumbing Trade Supplies Limited
Property Newco Two Limited
Travis Perkins Acquisitions Company Limited*
Travis Perkins Capital Partner Limited
Travis Perkins Financing Company No.2 Limited*
Travis Perkins Financing Company No.3 Limited
Travis Perkins Installation Services Limited*
Travis Perkins Merchant Holdings Limited
Travis Perkins P&H Partner Limited*
Travis Perkins Plumbing & Heating LLP*
Travis Perkins (PSL2015) Limited
Tricom Group Limited
Tricom Supplies Limited*
Trubuildingsystems Limited1
Wickes Developments Limited*
* companies in voluntary liquidation
180
Travis Perkins plc Annual Report and Accounts 2022
Other subsidiary companies
Company Name
BSS (Ireland) Limited9
City Investments Limited10
Gestion Toolstation inc.6
Toolexpert Benelux BV11
Toolstation BV11
Toolstation NV/SA12
Toolstation Europe BV11
Toolstation Europe Limited
Toolstation GmbH13
Toolstation Netherlands BV11
Toolstation SAS14
Travis Perkins Hong Kong Limited15
Travis Perkins Sourcing (Shanghai)Ltd16
Other subsidiary companies
Company Name
Hermitage Park Management Company Limited 18
Registered
% Ownership
Ireland
Jersey
Jersey
Netherlands
Netherlands
Belgium
Netherlands
United Kingdom
Germany
Netherlands
France
Hong Kong
China
100
100
100
97
97
97
97
97
97
97
97
100
100
Status
Active
Dormant
Dormant
Active
Active
Active
Active
Active
Dormant
Active
Active
Active
Active
Registered
% Ownership
United Kingdom
25
Status
Active
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
6 5303 boul. Saint-Laurent, Montréal Québec H2T1S5, Canada
9 White Heather Industrial Estate, South Circular Road, Dublin, 8, Ireland
10 Ogier House, The Esplanade, St Helier, JE4 9WG, Jersey
11 Brandpuntlaan Zuid 12, 2665NZ, Bleiswijk, 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 Clarendon Road, Belfast, BT1 3BG
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 page 99 and pages 108 to 110 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 98 to 106. 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 171
Travis Perkins plc Annual Report and Accounts 2022
181
Financial statementsOther informationGovernanceStrategic report Five-year summary
Consolidated income statement
Revenue
Operating profit before amortisation and adjusting items
Amortisation
Adjusting items – operating
Operating profit/(loss)
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
Basis earnings per share from discontinued operations
Adjusted earnings per share
Dividend declared per ordinary share
Number of branches at 31 December
(includes branches of associates)
Average number of colleagues
2022
£m
4,994.8
295.3
(10.5)
-
284.8
-
-
(39.8)
245.0
-
(52.8)
192.2
-
192.2
90.8p
-
94.6p
39.0p
1,484
19,956
* The comparative numbers for 2019 and 2018 were not re-presented for discontinued operations
Consolidated free cash flow statement
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
2022
£m
295.3
(25.3)
270.0
73.6
6.5
17.0
(76.5)
(16.9)
(21.5)
(57.6)
(110.0)
10.1
94.7
* The comparative numbers for 2019 and 2018 were not re-presented for discontinued operations
2021
£m
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
103.9p
16.4p
107.3p
73.0p
1,513
18,833
2021
£m
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)
£m
2019*
£m
2018*
£m
3,697.5
6,955.7
6,740.5
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)
£m
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
441.5
(9.0)
(200.4)
232.1
40.3
(4.3)
(87.3)
180.8
(27.1)
(30.9)
122.8
-
122.8
48.9p
-
112.7p
48.5p
2,154
30,059
2019*
£m
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
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*
£m
374.5
(26.8)
347.7
102.0
15.5
19.6
(107.1)
(25.5)
–
(55.1)
(143.1)
13.8
167.8
182
Travis Perkins plc Annual Report and Accounts 2022
Consolidated balance sheet
2022
£m
2021
£m
2020
£m
2019
£m
2018
£m
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
Derivative financial instruments
Deferred tax asset
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
847.3
974.9
451.7
-
17.2
135.9
-
4.3
15.0
727.8
725.9
0.7
-
235.7
-
4,136.4
23.8
545.6
326.5
(34.3)
27.4
1,213.2
2,102.2
-
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
-
830.4
1,670.5
1,145.5
–
–
178.4
9.2
-
-
840.7
892.7
6.5
–
505.6
–
882.0
1,691.7
1,276.8
1.9
–
57.5
6.7
-
-
937.8
1,239.7
–
–
207.9
138.0
6,079.5
6,440.0
25.2
545.6
326.5
(39.5)
15.5
1,840.5
2,713.8
–
2,102.2
2,237.8
2,713.8
349.1
438.3
-
-
4.9
96.0
192.5
74.3
0.2
852.4
-
26.5
575.2
414.7
–
–
6.8
140.4
–
74.5
–
921.1
0.4
29.2
575.7
1,168.3
–
–
21.9
77.2
–
158.8
1.6
1,304.2
–
58.0
2,034.2
2,162.3
3,365.7
-
–
–
4,136.4
4,400.1
6,079.5
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
Travis Perkins plc Annual Report and Accounts 2022
183
Financial statementsOther informationGovernanceStrategic report ESG data report (including SASB data)
Note that all data below represents only the ongoing businesses. Businesses that have been sold or demerged have been removed from current
and prior year numbers;
Unit of
Measure
SASB reference
2022
2021
2020
2019
2018
£m
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 ("PII")
Customers affected
Description of approach to identifying
and addressing data security risks
Labour practices
Average hourly wage
In-branch colleagues earning
minimum wage by region
Voluntary turnover rate for in-branch
colleagues
Involuntary turnover rate for in-branch
colleagues
Total amount of monetary losses as a
results of legal proceedings associated
with labour law violations
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
-
-
-
12.8
-
N/A (SECR
compliance)
kWh
Gigajoules CG-MR-1.30a.1
CG-MR-1.30a.1
%
CG-MR-1.30a.1
%
N/A
Litres
Tonnes
Tonnes
Tonnes
Tonnes
Tonnes
Tonnes
N/A
N/A
N/A
N/A
N/A
N/A
#
%
#
CG-MR-230a.2
CG-MR-230a.2
CG-MR-230a.2
300,026,522 364,826,976 339,716,233 415,844,450
1,497,040
27.4%
-
28,068,903
1,313,377
28.4%
5.8%
22,650,200
1,080,095
34.7%
23.5%
18,399,690
1,222,978
33.4%
-
21,430,651
27,238
297
1,622
8,656
16,960
27,535
-
-
-
28,175
229
1,492
10,084
16,829
28,404
18,946
236
1,353
9,614
8,216
19,182
27,561
457
1,773
11,535
14,710
28,018
1
1
100%
9
100%
4
521,115,345
1,876,015
24.1%
-
31,306,429
39,514
468
2,121
15,033
22,828
39,982
-
-
-
Text
CG-MR-230a.1 See text below the table
£
%
CG-MR-310a.1
13.5
CG-MR-310a.1
-
12.4
7.4%
12.2
4.4%
12.1
4.3%
Rate
CG-MR-310a.2
27.1%
42.7%
35.3%
40.2%
43.8%
Rate
CG-MR-310a.2
4.6%
3.8%
3.4%
4.7%
4.2%
£m
CG-MR-310a.3
0
0
0
0
0
Grade M1+
%
%
%
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
23.6%
76.4%
-
25.6%
74.4%
-
2.5%
0.7%
0.8%
80.1%
0.3%
15.7%
20.6%
79.4%
-
25.7%
74.3%
-
1.9%
0.5%
0.9%
82.5%
0.4%
13.7%
18.3%
81.7%
-
20.7%
79.3%
-
2.0%
0.3%
0.7%
85.9%
0.5%
10.7%
19.6%
80.4%
-
19.6%
80.4%
-
2.0%
0.3%
0.6%
74.3%
0.3%
22.5%
20.0%
80.0%
-
22.8%
77.3%
-
2.2%
0.3%
0.4%
77.2%
0.5%
19.4%
184
Travis Perkins plc Annual Report and Accounts 2022
£m
All other employees
Asian
Black or African American
Hispanic or Latino
White
Other
Not available or Not disclosed
Total amount of monetary losses as a
result of legal proceedings associated
with employee discrimination
Product Sourcing, Packaging and
Marketing
Revenue from products third-party
certified to environmental and/or social
sustainability standards
Description 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
2022
2021
2020
2019
2018
%
%
%
%
%
%
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
2.5%
1.2%
1.5%
65.1%
0.5%
29.3%
2.6%
1.0%
1.6%
64.3%
0.7%
29.8%
2.0%
0.7%
1.4%
67.8%
0.7%
27.4%
1.5%
0.6%
1.2%
60.3%
0.5%
36.0%
£m
CG-MR-330a.2
-
-
-
0.04
£m
CG-MR-410a.1
538
555
386
445
Text
CG-MR-410a.2 See text below the table
Text
CG-MR-410a.3 See text below the table
1.7%
0.6%
1.2%
67.5%
0.7%
28.3%
-
-
m3
N/A
258,321
316,852
281,050
260,845
264,601
CG-MR-230a.1: Description of approach to identifying and addressing data security risks
The Group approaches the identification of vulnerabilities in its information systems through a combination of people, process and technology, and uses the NIST
Cyber Security Framework to track its maturity. The NIST Cyber Security Framework is a widely-adopted voluntary framework consisting of standards, guidelines and
best practices to manage cybersecurity risk developed and promoted by the National Institute of Standards and Technology, a USA government department. The
activities of building, procuring, deploying, running 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 via an exceptions process. 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 training is a required part of every colleague’s learning plan and cyber awareness training is
available to the business. Furthermore, colleagues are targeted regularly with phishing campaign testing. Technology is deployed across the IT estate to both protect
and detect against cyber threats and attacks; technical controls such as firewalls, antivirus, web proxies and data loss prevention systems are deployed by the Group.
Security events are monitored 24/7/365 to ensure the detection of events is achieved in a timely manner. From a testing perspective, regular penetration tests and
vulnerability scans are performed on components of the IT infrastructure and systems to identify any exploitable vulnerabilities. Where vulnerabilities are found these
are assessed and tracked using the Group’s risk management standard. The Group also regularly tests its incident response capabilities via table top exercises to
ensure the effectiveness of its incident response plans and playbooks.
CG-MR-410a.2: Description 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). 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
systems, triggering processes at point of sale to ensure they’re not sold to underage customers (ie 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) 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 pages 40-41.
The Group held supplier webinars during 2022 requesting assistance with packaging reductions and reviewing packaging materials to begin to eliminate single use
plastic, increase the amount recycled content and improve recyclability. Throughout 2022, the Group worked with the direct sourcing team to optimise the amount of
material used, achieving packaging reductions and improvements. 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 team is 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.
Travis Perkins plc Annual Report and Accounts 2022
185
Financial statementsOther informationGovernanceStrategic report Other shareholder information
Financial diary
Ex-dividend date
Record date
Annual General Meeting
Trading statement
Payment of final dividend
6 April 2023
11 April 2023
4 May 2023
4 May 2023
18 May 2023
Annual General Meeting (“AGM”)
The AGM will be held on 4 May 2023 at 9am.
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: shareholderenquiries@linkgroup.co.uk
Telephone: +44 (0) 371 664 0300*
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 following address:
Travis Perkins plc
Ryehill House
Ryehill Close
Northampton
NN5 7UA
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:
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.
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.
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 Investors 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.
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: ww2.linkgroup.eu/share-deal/
Telephone dealing: +44 (0) 371 664 0445*
These services are only available to private shareholders resident in
the UK.
* 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.
186
Travis Perkins plc Annual Report and Accounts 2022
Notes
Travis Perkins plc Annual Report and Accounts 2022
187
Financial statementsOther informationGovernanceStrategic report Notes
188
Travis Perkins plc Annual Report and Accounts 2022
This report is printed on Revive Silk 100, a white triple coated
sheet, manufactured from FSC® Recycled certified fibre
derived from 100% pre and post-consumer waste.
Printer is ISO 14001 certified & Alcohol Free.
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Travis Perkins plc
Ryehill House, Rye Hill Close, Lodge Farm
Industrial Estate, Northampton. NN5 7UA
www.travisperkinsplc.co.uk