Leading partner to
the construction industry
Annual Report and Accounts
2023
What the Group does
Our purpose
Here to help build better communities
and enrich lives.
The Group enables customers to build, repair
and maintain the buildings and infrastructure
that touch all of us, every day.
Contents
Strategic report
Highlights
2
Overview
4
At a glance
6
8
Chair’s statement
10 Market overview
12
Investment case
14 Business model
16 Chief Executive’s statement
18 Strategy
28 Key performance indicators (KPIs)
30 Sustainability report
50 Climate-related financial disclosure
64 Business performance and priorities
70 Financial review
74 Statement of principal
risks and uncertainties
86 Non-financial and sustainability
information statement
Governance
88 Board of Directors
90 Corporate governance report
94 Section 172 statement
98 Nominations Committee report
101 Audit Committee report
106 Directors’ Remuneration report
134 Directors’ report
136 Directors’ statement of responsibilities
Travis Perkins plc Annual Report and Accounts 2023
Financial statements
Independent Auditor’s report
138
145 Consolidated income statement
Consolidated statement of
145
comprehensive income
146 Consolidated balance sheet
Consolidated statement of
147
changes in equity
148 Consolidated cash flow statement
149 Notes to the consolidated
financial statements
191 Company balance sheet
192 Company statement of
changes in equity
193 Notes to the Company’s
financial statements
204 Five-year summary
Other information
205 ESG data report (including SASB data)
208 Other shareholder information
For more and the latest information please visit the
Group’s website at: www.travisperkinsplc.co.uk
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Purpose
Travis Perkins plc is a purpose-
driven organisation with its values,
commitment to ‘Doing the Right
Thing’ and goal of helping to build
better communities and enrich
lives, underpinning everything
the Group does.
Strategy
Toolstation UK’s platform
for growth, TF Solutions’
category expansion and
Managed Services’ unique
offering to the repairs and
maintenance sector illustrate
the Group’s strategy.
p4
p18
Markets
The Group’s advantaged
businesses hold market-leading
positions in an attractive £73bn
market for construction materials
which has long-term structural
growth drivers.
p10
Sustainability
As sustainability continues to grow
in importance for stakeholders, the
Group is uniquely able to convene
the supply chain to collaborate and
co-create solutions, influencing
and supporting the sustainability
changes the construction
industry needs.
p30
Travis Perkins plc Annual Report and Accounts 2023
1
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Highlights
2023
A challenging year in weak market conditions,
with the Group driving actions to support profit
recovery and enhance cash generation.
Revenue
Adjusted operating profit
£4,862m
2022: £4,995m
£180m
2022: £295m
Dividend per share
18.0p
2022: 39.0p
Profit after tax
£38m
2022: £192m
Net debt/adjusted EBITDA
Return on capital employed
2.6x
2022: 1.8x
6.3%
2022: 10.8%
Graduated apprentices
Carbon emissions (kt of CO₂e)
414
2022: 370
8,004
2022: 8,294
2
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Protecting market position
in challenging conditions
Transforming the operating model
to build a stronger business
• Step change reduction in non-branch
cost base delivered with £35m
annualised savings
• Working on a plan for a potential exit
of Toolstation France; strategic review
of options for Toolstation Benelux
Enhancing cash generation
to support future
capital allocation
• Reduced capital expenditure
requirements in near term;
£80m guidance for 2024
• Review of working capital
opportunities underway
• Progressive downturn in new
build housing and private
domestic RMI markets leading
to Group revenue 2.7% lower
than prior year
• Combination of lower volumes,
overhead cost inflation and
rapid commodity price deflation
in H2 resulted in full year
adjusted operating profit of
£180m (2022: £295m)
• Invested to protect and
build market positions with
market share gains in both
Toolstation and Travis Perkins
General Merchant
• Optimising Benchmarx branch
• Refinancing completed,
supporting robust balance
sheet; no funding maturities
before 2026
• In line with policy, 2023
proposed full year dividend
of 18.0 pence per share
(2022: 39.0 pence per share)
network with focus on integrated
offer within destination
• Continued rationalisation of legacy
Toolstation UK supply chain, following
successful opening of the new
Pineham distribution centre
• Delivering profit enhancements
through simplification of group
structures, lowering supply chain
costs and harnessing benefits
from new technology
• Operating profit of £110m
(2022: £285m) reflects trading
performance and adjusting items of
£60m recognised in 2023, of which
around £16m is cash, related to
impairments in Toolstation France
and Benchmarx together with
restructuring actions
Travis Perkins plc Annual Report and Accounts 2023
3
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Overview
Purpose
To help build better communities
and enrich lives
Ambition
To be the leading partner to the
construction industry
Strategy
The Group’s strategy is to grow
the share of its market-leading
businesses by offering customers
attractive propositions which
mean they spend more with the
Group. The Group seeks to elevate
customer relationships through the
addition of value-added services,
solving customer pain points and
moving up the value chain. In
addition, the Group is deepening
its customer relationships by
winning a greater share of customer
spend through the addition of
digital channels, new ranges and
relevant offers.
ELEVATING
RELATIONSHIPS
Professional trades
and general builders
Smaller customers who value
local relationships and who
serve domestic and light
commercial markets for
mostly RMI work.
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
Sustainability priority
Decarbonising the industry
4
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Building for better
Changing the game
Doing the right thing
Modernising
construction
Sourcing
responsibly
Operating
sustainably
Developing the
next generation
– Safety and wellbeing
– Colleague voice
– Diversity, equity
and inclusion
– Reward
– Charity and community
– Legal compliance
– Modern slavery and
human rights
Values
The values reflect what matters
and how the Group does things.
We care
We give our best
to be the best
We’re better
together
Delivering shareholder value
Travis Perkins plc Annual Report and Accounts 2023
5
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section 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 grow their businesses in
new and established markets.
Large and varied customer base
Broad geographical spread in the UK
200k
Trade credit customers
£4.9bn
Revenue
Engaged colleagues in the UK and Europe
Evolving branch network
19k
Colleagues
1,509
Branches
The Group’s goal is to deliver exceptional customer service from advantaged
businesses operating from well-positioned networks in chosen geographies.
The Group offers a range of high-quality products and gives 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%
19%
3%
Heavyside
Lightside
Plumbing & Heating
Timber
48%
21%
19%
12%
6
Travis Perkins plc Annual Report and Accounts 2023
Channel
Collect
Deliver
38%
62%
Product mix
28%
Cash
Credit
72%
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Merchanting
Toolstation
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 622 national locations.
Contains a comprehensive tool
hire offer plus innovative Managed
Services solutions.
Market-leading supplier of
commercial and industrial heating
and cooling solutions, supplying
specialist contractors with a wide
variety of products from 69 branches
and two distribution centres. BSS
offers customers a tailored tool hire
service and contains TF Solutions, a
specialist provider of air-conditioning
products and heat pumps.
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 570 branches across
Great Britain and is growing quickly in
the Netherlands, Belgium and France.
Go to page 68 to see more
Distributes insulation and interior
building products from 36
branches to contractors throughout
Great Britain. CCF supports the
construction and renovation of both
domestic and commercial buildings
with service and specialist knowledge.
A civils specialist, Keyline supports
housebuilders, groundworkers and
infrastructure contractors to build and
redevelop facilities which are vital to
the nation. Delivering heavy products
from 42 branches in a safe and
accurate manner, Keyline works as
a partner to its specialist customers
and is developing new areas of
expertise in roads and highways.
Go to page 66 to see more
Travis Perkins plc Annual Report and Accounts 2023
7
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Chair’s statement
Distributions 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 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.
2023 was a challenging year for the Group as a combination
of macroeconomic uncertainty, progressively weakening end
market demand, sharp deflation on commodity products and
overhead inflation made business planning difficult, weighing
heavily on the Group’s earnings performance during the
year. Whilst some good progress has been made against our
strategic priorities, management’s primary focus is now to
drive efficiencies through the transformation of the Group’s
operating model and prioritise capital allocation to support
the recovery of profitability and reduction of leverage in the
medium term.
Taking into account all of these factors, I am confident that we
are taking the right decisions to drive profit recovery, enhance
cash generation and strengthen the business for the long term,
and for 2023 the Board recommended a final dividend of 5.5
pence per share (2022: 26.5 pence per share) to give a full year
dividend of 18.0 pence per share (2022: 39.0 pence per share),
in line with the Group’s previously communicated policy.
This reduction reflects the reduction in earnings and the
Board’s clear commitment to ensuring that the Group
swiftly returns leverage to the target range.
Go to page 12 to see more
8
Travis Perkins plc Annual Report and Accounts 2023
Dynamics impacting the Group’s
end markets resulted in 2023
being a difficult year with earnings
down notably, but I am confident that
we are taking the right decisions to
drive profit recovery, enhance cash
generation and strengthen the
business for the long term.
Jasmine Whitbread
Chair
I ended my statement in the 2022 review with a thought on how it would
be very hard to predict the shape of the UK economy in 2023 and what
level of recovery, if any, we would see in the construction sector. During
the last year we have seen a number of dynamics impacting the Group’s
end markets that have resulted in 2023 being a difficult period with
earnings down notably which is reflected in the Group’s share price.
At a macroeconomic level, persistently higher consumer inflation,
leading to elevated interest rates has resulted in a pronounced slowdown
in the new housebuilding market. In addition, deflationary pressures on
commodity products and a sustained slowdown in the domestic RMI
market have led to declining revenues throughout the year.
Throughout 2023 the Group’s businesses have adapted to address
near term trading conditions while continuing to build a stronger
business for the future and ensuring that we balance the needs of
our investors, customers, suppliers and colleagues. Stronger and
more urgent focus on using customer data to help retain and win
back customers helped protect and grow our market share, while
the modernisation of branches and processes in the Travis Perkins
General Merchant contributed to efficiencies.
In September, the Group held a Toolstation UK Capital Markets Update.
The update set out the pathway for the Toolstation UK business to
deliver £1bn of revenue at a high single digit operating margin by
2027. We shared the Group’s confidence in the underlying economic
model and the platform we have created for future profitable growth.
Toolstation UK is integral to the Group as a highly complementary offer
for UK tradespeople with an excellent opportunity to continue to grow
share in a large and fragmented market.
People and culture
Our colleagues adapted to changing market conditions, embracing
new technology and processes to deliver better customer service.
Recognising the importance of a skilled workforce in delivering great
customer service and expertise, the Group updated its knowledge,
learning, and development offering via a new learning management
system called Thrive, complementing its industry-leading
apprenticeship programme.
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section There was continued focus on colleague voice and engagement.
A Group-wide engagement survey was completed, yielding a score
of 73, two points higher than in 2022 and the external benchmark.
Louise Hardy assumed the role of the designated workforce engagement
Non-Executive Director. Externally, the Group a founding member of The
Construction Inclusion Coalition (CIC), focusing on raising standards for
equity, diversity, and inclusion, particularly regarding gender
representation in its first year.
Board and leadership
During the course of the year we have been able to inject new and relevant
public company and industry experience and perspectives to the Board
managing anticipated Executive and Board changes.
Jez Maiden was appointed to the Board in June as a Non-executive and
Senior Independent Director. Jez brings significant public company and
diverse industry experience.
After nearly nine years as Non-executive Directors, Pete Redfern
and Coline McConville stepped down from the Board in December.
Coline and Pete’s departure necessitated changes to the membership
of the Board’s Committees and other responsibilities which are set out
on pages 88 to 89.
Alan Williams retired as Chief Financial Officer and stepped down
from the Board in January 2024 after seven years in the role. In July
the Board announced the appointment of Duncan Cooper, to succeed
Alan and Duncan started with the Group on 9 January 2024. Duncan
has industry experience from his time as Chief Financial Officer at
Crest Nicholson plc and retail experience from roles at J Sainsbury plc.
In addition to a strong finance background he has experience in
corporate communication, strategy, design and implementation
of large scale technology change.
My thanks to Pete, Coline, and Alan for their significant contributions
and service to the Group and a warm welcome to Duncan and Jez.
After 20 years with the Group Chief Operating Officer, Frank Elkins
decided to leave the Group to pursue other leadership opportunities.
The Executive Leadership team under Nick Roberts was further
strengthened by the appointment of Dave Castle as the new managing
director of BSS. Dave was previously Regional Managing Director for
South West and Wales in the Travis Perkins General Merchant business.
Dave’s move to BSS, Angela Rushforth’s move to Toolstation in March
2023 and James Mackenzie’s move to Travis Perkins General Merchant
demonstrate the Group’s ability and intention to cross fertilise ideas and
to develop senior leadership talent.
Summary and looking forward
A recovery in the UK construction sector is unlikely to gather any
momentum before the UK general election is concluded with the
Group’s customers, large and small, inevitably waiting to see if there
is a post-election government stimulus package for the sector and
also seeking clarity on the future direction of interest rates.
Mindful of these challenges, management is planning for another year
of weak demand, with decisive actions taken with regards to overheads
and cash management actions. Lead indicators and customer feedback
will be closely monitored to inform further actions during the year. I am
confident that we are taking the right decisions for 2024 and beyond.
Travis Perkins plc Annual Report and Accounts 2023
9
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Market overview
The Group operates in a £73bn market
The market for construction materials is approximately £73bn
with £56bn coming through distribution channels. The Group
serves four major end markets, with half of revenues coming from
private domestic housing and the balance being split between the
commercial and industrial market and the public sector.
Private domestic and new build
Private domestic repair, maintenance
and improvement (‘RMI’)
Market mix
23%
Group revenue mix
17%
Growth drivers:
• Growth in the UK’s population
• A shortage of housing
• Sales incentives and support for first-time buyers
• Ongoing desirability of home ownership over renting
Market mix
16%
Group revenue mix
33%
Growth drivers:
• Disrepair of housing stock
• ECO+ Requirement for retrofit and cladding
remediation works
• Need for decarbonisation and improvement
for EPC ratings in the rented sector
• Reconfiguring homes for more space and
home-working
• Cost of moving and shortage of new homes has
given rise to a ‘Don’t move, improve!’ trend
The market mix and market size figures are based on 2022 data.
The Group mix figures are based on 2023 Group estimates.
10
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section
Commercial and industrial
Public sector
Market mix
25%
Market mix
36%
Group revenue mix
Group revenue mix
24%
Growth drivers:
• Growth in warehousing and logistics space
26%
Growth drivers:
• Hospital and school rebuilding programmes
• Refurbishment of office and retail space around
• Offshore wind growth
hybrid working and new patterns of retail
• Ongoing requirements for public sector
• Cladding remediation on commercial buildings
affordable housing
• Significant need to improve the condition and thermal
efficiency of existing public sector housing through
retrofit programmes
Travis Perkins plc Annual Report and Accounts 2023
11
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Contents Generation – Section
Contents_GEN_Page
Contents_GEN_PageL2
Investment case
The Group’s ambition is to
be the leading partner to
the construction industry
A compelling investment proposition
1
2
Well-invested businesses with
market leading positions
Long-term structural
growth drivers
3
Merchanting returns driven
by network investment and
value-added services
4
Substantial Toolstation
growth potential
5
Robust balance sheet
providing financial flexibility
6
Attractive and sustainable
returns for shareholders
12
Travis Perkins plc Annual Report and Accounts 2023
Contents Generation – Section
Contents_GEN_Page
Contents_GEN_PageL2
S
t
r
a
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e
g
c
i
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e
p
o
r
t
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n
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a
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e
n
t
s
O
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e
r
i
n
f
o
r
m
a
t
i
o
n
A strong and dynamic model
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
Well-set for future earnings growth
Ordinary dividend of 30–40% adjusted earnings
A clear focus on cash generation
Travis Perkins plc Annual Report and Accounts 2023
13
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
• Elevating customer relationships
by offering value added services
• Working with all customers from
professional trades to larger
contractors and developers
• Nationwide branch network
embedded in communities
• 19,000 engaged colleagues with
a unique and open culture
• Industry-leading supply chain
• Market-leading data platform to
enable informed decision making
• 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 customers across
the country
• Enabling suppliers to see live stock
information in order to maximise
product efficiencies
Requirements
• Collaborate, specify
and quote
• Negotiate, convert
and sell
• Range and source
• Assort and procure
• Fulfil collect and deliver
Products and services
Customers
Resources
Suppliers
Underpinned by
Responsible and sustainable approach
Go to page 30 to see more
14
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section What we do
Collaborative value chain
Outputs
Self-reinforcing model generating
growth and value to 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
Sound corporate governance
Robust risk management
Go to page 90 to see more
Go to page 74 to see more
Travis Perkins plc Annual Report and Accounts 2023
15
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Chief Executive’s statement
Whilst external markets will be
challenged throughout 2024, the actions
we are taking, alongside the previous
investments we have made to build
long-term competitive advantage, will
ensure that the Group is well positioned
to benefit when demand recovers.
Nick Roberts
Chief Executive Officer
A challenging year
Continued macroeconomic uncertainty and weak market
conditions significantly impacted the Group’s trading
performance during the year with notable volume weakness
across new build housing and domestic RMI as well as
challenging deflationary dynamics on commodity products.
We are taking tough but necessary decisions to navigate these
challenging market conditions including addressing our cost
base and finding solutions to reduce the impact of our loss-
making businesses. We are also transforming our operating
model to capitalise on our scale and create a simpler and
more efficient business. These actions will be underpinned
by a highly disciplined approach to overhead management
and capital expenditure that will enhance cash generation
and ensure that the Group continues to benefit from a
strong balance sheet.
Our teams are continuing to grow market share in both
Toolstation UK and the General Merchant, reflecting our
market leading positions and positive customer response
to our differentiated offer.
Whilst the timing of any recovery remains uncertain, the
structural drivers for the Group, including the acute shortage
of both public and private housing and the increasing need to
decarbonise the UK’s built environment, remain compelling.
The actions we are taking, alongside the previous investments
we have made to build long-term competitive advantage,
will ensure that the Group is well positioned to benefit
when demand recovers.
What are your thoughts on the
Group’s performance in 2023?
Q
A: It has been a difficult year for the Group with volatile market
conditions making business planning challenging. We had expected
a tough first quarter with September 2022’s “mini-budget” driving
up interest rate expectations and significantly reducing new build
housing volumes. However, we had also anticipated an improvement
into the second quarter which did not materialise as persistently high
consumer inflation raised interest rate expectations further.
In the second half we saw the market price of timber – the Group’s
largest product category – fall sharply, leading to overall price
deflation on our basket of goods, placing pressure on trading
margins. We focused on ensuring that we passed this through to
customers to win work and were rewarded by market share gains
in the second half, although the impact on overall profitability was
significant. We also experienced high levels of overhead inflation
through the year as we sought to protect our colleagues from the
cost-of-living impact with, firstly, a one-off payment in January
to all colleagues earning under £50,000 and then a minimum
6% pay award in April for all but senior management.
Towards the end of 2023 it became clear that market conditions
would remain subdued in 2024, so we accelerated plans to continue
the transformation of the business, starting with a reduction in
central and regional headcount alongside efficiencies realised within
the Group’s supply chain. These actions will deliver annualised
savings of around £35m and resulted in a one-off restructuring
charge of £17m in 2023.
Throughout the year we sought to balance short-term trading
actions with long term strategic priorities but the combined
impact of these factors on trading has led to the Group
delivering a financial performance notably below that
which we had envisaged at the start of the year.
16
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Q
Looking across the wider construction industry
have you seen any changes in behaviour attitudes
that you expect to endure?
A: I joined the Construction Leadership Council Board as Industry
Sponsor for People and Skills. This has enhanced my view that
there are still compelling and long-term positive drivers of growth
within the construction industry in our markets, the need for more
homes, to retrofit them and the need for enhanced economic and
social infrastructure.
I have heard an increased recognition among policy makers of the
need to get beyond the political and economic turmoil of the last
year and give more clarity and certainty about long term policy and
incentives. For People and Skills our challenge is one of absorption
and retention within the industry, how we attract more young
people or career changers and retain and up-skill those who have
already chosen construction in the right competence standards and
future skills. We as a Group, powered by our LEAP Apprenticeship
infrastructure which in 2023 was rated Good by Ofsted, will keep a
focus on developing the next generation workforce as we see this as
crucial to sharpening the quality of our customer service here and now,
as well as vital for our long term productivity and differentiation.
What are your views on market dynamics
in 2024 and the outlook for the Group?
Q
A: We believe that our end markets will remain challenging
throughout 2024. A UK general election is probable this year and
geopolitical instability will continue to bring uncertainty to markets
for a sustained period of time. Against this uncertainty we must
focus on what we can control and ensure that we execute our
decisions well and at pace.
We announced the first phase of a structural reorganisation
predominantly across our central and regional operations at the end
of 2023 which has resulted in a £35m overhead reduction. We will
be disciplined in our capital allocation with a reduction in investment
from previously guided levels, and we will focus on our working capital
to ensure that every pound invested provides a robust return.
From a customer perspective we will continue to provide a greater
focus on the ‘deepening’ element of our strategy as we use our internal
and external data to support our customers through the year ahead.
Making sure that we are there to provide great prices, great availability
and great project support to our existing and new customers.
Q
Although this has clearly been a very challenging
year in terms of trading, what progress has the
Group made towards long-term strategic goals?
A: We had to adapt our trading stance, maintain competitive
pricing and service levels and adjust our costs and operations to the
conditions. While near-term conditions necessarily occupied much
of our focus we did continue to make progress on modernising the
business with the introduction of digital branch processes in our
Merchant businesses and enhancing our future distribution capacity
and capability with our new Pineham distribution centre for Toolstation
UK. Internally we progressed updates to our core technology systems
to support more agile decision making by business managers.
Culturally our data literacy has improved, colleagues have embraced
the changes and it’s making service quicker and easier for our
customers. From a market share, modernisation, technology and
safety perspective I think we’re ahead of our competition and that
means we can emerge more strongly when the market recovers.
Have you seen different dynamics in
the end markets the Group serves?
Q
A: That has certainly been the case with marked differences across
our end markets. New house building activity has fallen sharply, driven
mainly by increasing interest rates. This has significantly impacted on
our CCF, Keyline and Staircraft businesses. Domestic RMI, the bedrock
of our Travis Perkins General Merchant business, has remained
subdued. Although Toolstation is also exposed to this market,
alongside DIY, the business has delivered good revenue growth during
the year, driven by the benefits of its maturing store network and the
compelling value and service proposition that we have developed.
Other end-markets – namely public sector, commercial and
industrial – have been more resilient which has been reflected in
a more robust performance in BSS and a good performance in our
Managed Services division which services social housing. We’ve also
seen an excellent performance from our Hire division, reflecting the
investment we’ve made in the business and the benefit this service
provides to our customers who enjoy the flexibility of this service
given the current pressures on their businesses.
How have you had to adapt?
Q
A: Every colleague in the business has had to be absolutely focused
on meeting our customers’ needs and using data and information to
predict and respond to customer behaviour and competitor activity.
We can still get better at this and it will be even more critical for 2024.
Our sharpened customer propositions will always be competitive
on price: not always the cheapest, but ahead of others on the depth,
breadth and quality of our service and solutions. For these reasons
we will continue to invest in areas such as digital processes, delivery
management, destination branches, in the skills of our people and
in reducing waste and carbon in our operations.
Travis Perkins plc Annual Report and Accounts 2023
17
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Strategy
A platform for growth and profitability
The Group strategy is to grow its businesses by elevating customer
relationships through value-added services and by deepening existing
and new relationships to win a greater share of customers’ spend.
Elevating relationships by adding services and new areas of added value
The Group is committed to finding ways of adding incremental value for customers by working
hard to grow the value-chain by identifying customers’ needs and pain points and by working
collaboratively to bring innovative solutions that serve them in the most effective way.
Professional trades and
general builders
Typically smaller customers who
value local relationships and who
serve domestic and light commercial
markets for mostly RMI work
Elevating
Relationships
Deepening
Relationships
Larger contractors
and developers
Large and more complex customers
who serve local and national markets,
often working in conjunction with
other contractors, suppliers and
specifiers to deliver new build and
RMI solutions across residential,
commercial and infrastructure
Deepening relationships to earn a greater share of spend
Recognising that customers face a choice between different suppliers
for their materials, the Group is committed to earning a greater share
of spend by deepening relationships and delivering solutions which
make the purchasing process as smooth and integrated as possible.
18
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Overview of strategic initiatives
• TF Solutions: growth and
• Tool Hire growth
• Managed Services expansion
• Retrofit
• Regional housebuilders
proposition development
• Optimisation of distribution
integration
• Keyline: Economic
infrastructure support
• CCF: Technical sales
capability in UK
• Enhanced trade proposition
• Continued improvements
to customer experience
• Staircraft integration
capability
• CCF: Carbon reporting
launch
Elevating
relationships
Deepening
relationships
• Data-driven customer
segmentation
• Network investment
• Own-brand investments
• Increased trade-focused range
• Ongoing digital investment
• Network rollout
Sustainably lower-cost organisation
The strategy is underpinned by a commitment to streamlining operations and modernising technology and
infrastructures, to ensure a solid foundation for future growth.
Travis Perkins plc Annual Report and Accounts 2023
19
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Strategy continued
A platform for growth and profitability
Toolstation is an integral part of the Group, particularly for the small and
general builder. There are 570 stores and 5,000 colleagues across Britain,
supplying customers with over 31,000 SKUs and with more store openings
planned in 2024. A 2023 Capital Markets Update clearly articulated the
pathway to a business generating £1bn sales at an 8% operating margin.
Significant value opportunity
Increasing the focus on trade customers is a key driver for future
growth. Currently 60% of sales are derived from our trade
customers who spend on average 5x more than DIY customers.
Toolstation’s goal is to increase the participation of trade
customers through the following initiatives:
• Dedicated Business Development Managers
• Utilising the breadth of the Travis Perkins Group
• Holding stock depth of key trade lines
• Loyalty benefits
• 10-minute click-and-collect offer
• Targeted digital experience
Digital is at the heart
Digital capability is core to the success of Toolstation: 80% of
journeys start online and almost 50% of sales are transacted
digitally. The app represents over 25% of ecommerce spend
and the website has nine million hits each month. The aim is
for the customer to have an enhanced digital experience and,
through the use of data and digital profiles for each customer,
an enhanced experience is ensured.
A core investment focus
Toolstation UK represents a significant source of growth for the
Group as careful investments continue to be made in the business.
The network plan is to add a further 80 branches by 2027, ensuring
that Toolstation provides an excellent service to trade customers
with 91% of customers being less than 20 minutes from a branch.
The recent investment in Pineham, the new distribution facility
for Toolstation, will future-proof the growth of the business
beyond the current target of £1bn of sales. The investment
in the automation of the facility enables a 33% reduction in
labour requirements, providing a market-leading, innovative
and cost-effective facility for the Group.
20
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Margin range
Average
sales growth
A platform for growth and profitability
Trial Period
Initial TP
investment
Steady
growth
Investing for
the future
Profit growth
and maturity
150%
nm
nm
68%
nm
22%
6-7%
18%
3-6%
8-10%
Rising to
c.8%
m
u
n
n
a
i
r
e
p
s
g
n
n
e
p
o
e
r
o
t
s
e
g
a
r
e
v
A
60
40
20
0
2002–2007
2008–2013
2014–2018
2019–2022
2023–2027
Stores
Sales
8
£21m
148
£164m
335
£355m
563
£672m
650
£1bn
Travis Perkins plc Annual Report and Accounts 2023
21
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section
Strategy continued
Category expansion
TF Solutions is a distributor of refrigeration, air conditioning and heat
pumps. The business was acquired by Travis Perkins in 2017 and has
grown from three branches to a 15 branch network covering the UK.
The business works closely with the Group, especially BSS and both
businesses have benefited from the acquisition. This is a great example
of the Group acquiring an adjacent business to expand existing product
ranges and provide additional solutions to existing and new customers,
especially in retrofit.
Optimal estate plan
With the investment and backing of the Group, the business
has accelerated from three to 15 branches, from Glasgow to
Exeter, attracting the best people and continuing to develop
its technical know-how. The Group’s support has enabled
the expansion of TF Solutions’ range into new air heating
and cooling sectors like refrigeration, commercial and
applied heat pumps, providing further growth opportunities.
Synergies within the Group
Collaborating with their strategic partners in BSS, TF
Solutions brings the technical expertise needed to solve
large-scale and complex heat pump projects for customers,
delivering against Travis Perkins’ sustainable ambitions.
One-third of the projects that BSS supports could benefit
from TF Solutions’ products and expertise, giving significant
opportunity for cross-selling and further profitable growth.
Retrofit
TF Solutions has invested in its technical capability in
heat pumps to enable it to address the challenge of retrofit,
positioning the business as a value-added partner to the
Group’s industrial and commercial customer base. The heat
pump market in the UK is expected to be in excess of £3bn
by 2027, with TF Solutions well-positioned to benefit from
this growth and establish itself as a market-leader.
22
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Sales growth
£80m
£60m
£40m
£20m
0
2017
2018
2019
2020
2021
2022
2023
Travis Perkins plc Annual Report and Accounts 2023
23
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Strategy continued
Managed Services
Travis Perkins Managed Services is a leading supply chain and service
solutions provider, supporting customers to build and maintain safe,
healthy, and sustainable homes. Established in 2004 to support the
renewal and retrofit of social housing, it has grown to be the UK’s largest
specialist team dedicated to the repairs and maintenance industry. With
the right resources and experience, the business has developed to meet
the needs of landlords across the UK and has built partnerships in social
housing, facilities management and defence.
Strength of the Group
Being part of the Travis Perkins Group gives TP Managed
Services a unique position in the UK market. With over 1,250
branches, access to more than 40,000 products and specialist
advice from other Group businesses, Managed Services is able
to provide unparalleled supply chain solutions. Curating service,
product and knowledge elements from across the Group,
Managed Services shares expertise with customers as
part of its value proposition.
Growth from the core
Growth within Managed Services has been driven by engaging
with customers to tackle critical problems like damp and mould,
fire safety, and decarbonisation. Understanding customers and
sharing new and innovative technologies for updating properties
has been integral to delivering on responsible retrofit improvement.
Understanding customers’ experiences, empathising with their
challenges, and leveraging the collective strength of the Group
to provide assistance and enhance value, as housebuilders work
towards the Future Homes Standard and social housing landlords
tackle the goal of reaching EPC C by 2030.
Decarbonisation
Analysing customers’ purchasing data and fostering strong
collaborations with suppliers has enabled the business to
champion innovative products that significantly enhance the
energy efficiency of homes. Providing digital ordering solutions
and optimising the product mix on customers vans, supports
a reduction in journeys needed to restock on materials and
contributes to a reduction in emissions.
24
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Our supply chain and procurement solutions enable
our partners to achieve more for less by increasing
the productivity of their repairs and maintenance
operations, whilst reducing the costs associated.
Importantly this is delivered alongside our commitment
to support the social, economic and environmental
well-being of the wider communities in which we work.
Case Study – Halton Housing
Halton Housing provide over 7,000 homes across Cheshire
and the Northwest of England. As well as utilising TPGO
Order, which enables the repairs team to place orders from
their mobile devices, Travis Perkins Managed Services supply
materials via the Group’s fulfilment hub in Widnes. The hub
satisfies materials orders, allowing for click-and-collect,
typically in under 30 minutes. The digital and fulfilment tools
have helped Halton Housing to drive efficiencies in repairs
and maintenance, which in turn benefits tenants.
Go to page 37 to see more
Travis Perkins plc Annual Report and Accounts 2023
25
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Strategy continued
A data-driven business
Technology and data is at the heart of the Group. It is driving
efficiencies, improving distribution and reducing the Group’s carbon
footprint. The impact of technology and data does not stop there,
with apprenticeships offered to colleagues to help them and the
Travis Perkins Group stay at the forefront of the industry.
Customers
In 2023 the deployment of a new delivery management
system started, providing a best-in-class experience for
customers. By loading the data provided by this solution into
the Group’s new data-lake, the Group unlocked operational
efficiencies in the use of its fleet and provided customers
with award-winning carbon reporting.
Better data analysis has enabled a step change in the
Group’s understanding of customer behaviour, with Sales
teams able to proactively segment, engage and improve
the customer experience across multiple brands.
Suppliers
The Group is utilising data to deepen its relationships with
suppliers. The I-Supply data portal available to them for a
subscription fee providing up-to-date information on sales,
stock, deliveries and invoices. This allows suppliers and the
Group’s Commercial and Operations teams to use a shared
dataset to work together to grow sales and manage costs, as
well as reducing manual reporting. This industry-leading portal
expanded in 2023 with Toolstation and BSS data added and
additional insight dashboards added to the platform.
Colleagues
In branches new mobile devices have digitised critical stock
management and yard sales activities, improving stock
accuracy and removing friction from the customer journey.
Progress has been made in modernising back-office technology
with the first phases of the implementation of new finance
systems into the merchanting businesses. Further efficiency
focused work has also been performed, with a number of pilots
of Robotic Process Automation demonstrating opportunities for
further operational efficiencies.
26
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section CCF Product Traceability
CCF has developed a process to provide a detailed
“end-to-end” report that tracks products from the
manufacturer, at manufacturing batch level, through
the distribution process to the goods-in location on
a site, giving customers greater visibility on the
journey products take from manufacture to site.
Traceability
report
Time and date
of manufacture
TP Group
Data Cloud
Time, location, product
and quantity
Take delivery
Load delivery
Scan pallet at point of delivery
Travis Perkins plc Annual Report and Accounts 2023
27
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Key performance
indicators (KPIs)
Operational
Adjusted operating profit
Sales growth
2023
2022
2021
2020
2019†
£180m
£295m
£353m
£128m
£442m
2023
2022
2021
2020
2019†
(2.7)%
(10.8)%
2018
8.9%
24.0%
3.2%
Definition (note 2b)
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 intangible assets
arising on the acquisition of a business, so
management can monitor the Group’s
underlying performance.
Definition (note 1b)
Total revenue growth.
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, rather than like-for-like growth,
ensures that actions such as the consolidation
of branches do not distort the KPI.
Financial
Leverage ratio
2023
2022
2021
2020
2019†
Free cash flow
2023
2022
2021
2020
2019†
2.6x
1.8x
1.2x
2.0x
2.5x
Return on capital employed
£44m
£95m
£65m
£241m
£195m
2023
2022
2021
2020
2019†
6.3%
10.8%
14.1%
5.3%
10.1%
Definition (note 24)
The ratio of net debt to earnings before tax,
interest, depreciation, amortisation and
adjusting items (“EBITDA”).
Reason
The leverage ratio is an indicator by
management and lenders of the Group’s
ability to support its debt. The Group has
a target of 1.5x–2.0x.
Definition (note 23)
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 25)
Adjusted operating profit divided by the
combined value of balance sheet debt
and equity excluding pension assets.
Reason
This ratio allows management to measure
how effectively capital is used in the business
to generate returns for shareholders.
28
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section
Non-financial
Accident frequency rate
Carbon emissions (Scope 1, 2 and 3)*
2023
2022
2021
2020
2019
2023
2022
2021
2020
3.9
4.7
5.6
5.4
5.6
8,004
8,294
9,111
8,546
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
(kilotonnes 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 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.
* Carbon emissions
have been restated
for prior years to
reflect improvements
in the quality of
available Scope 3
data.
† KPI figures for 2019
include the Retail and
Plumbing & Heating
segments that were
disposed of in 2021.
Travis Perkins plc Annual Report and Accounts 2023
29
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Sustainability report
Building for better
As sustainability continues to grow in importance for the Group’s stakeholders,
Environmental, Social and Governance leadership remains at the core of the Group’s
strategy. It is delivered through the “Building for Better” agenda and is a key driver in
achieving the Group’s Purpose and Ambition. The Group’s market-leading businesses
and position in the supply chain between thousands of customers and suppliers means
it is uniquely able to convene the supply chain to collaborate and co-create solutions,
influencing and supporting the sustainability changes the industry needs.
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 help
facilitate sector
improvements.
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 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Leading partner to the industry on ESG
In 2023 the Group made progress towards its targets and engaged with
customers, suppliers, the government, trade bodies and strategic partners
to move forward on shared sustainability challenges for the industry.
With decarbonisation and skills as primary areas of focus, the Group
is catalysing and contributing to the change needed in the sector. Nick
Roberts, CEO, became the Construction Leadership Council (“CLC”)
Industry Sponsor for People and Skills, to support delivery of the agreed
workstreams and energise colleagues, attract diverse talent, enhance
skills for the future and ensure policy development addresses the
sector’s business requirements.
The Group joined industry working groups on decarbonisation,
including the National Retrofit Hub, Future Homes Hub and Supply
Chain Sustainability School, and hosted forums for customers and
suppliers. Collaboration is key to decarbonisation and to finding ways to
remove complexity and duplication. The Group made progress towards
its ambitious carbon reduction targets, reducing Scope 1 and 2 carbon
by 7% and Scope 3 by 3% in 2023. Against the 2020 target baseline
this is a 33% improvement for Scope 1 & 2 and a 6% improvement
for Scope 3. The ratio of Scope 3 carbon emissions to revenue has
improved by 28% against the 2020 baseline.
A total of 414 colleagues and industry partners graduated in
apprenticeships facilitated by LEAP, the Group’s Early Careers and
Apprenticeship provider. This contributes towards the Group’s skills goal
of 10,000 graduated apprentices by 2030. Work in all other focus areas
has moved forward and progress is reported in the following pages.
Continually monitoring the material focus areas
In 2023 the Group engaged extensively with its stakeholders on ESG.
These interactions demonstrated that the material focus areas for the
Group remain unchanged from those that were determined in 2022
through an in-depth ESG double materiality assessment. Ongoing
engagement with all stakeholder groups ensures that the Group’s
strategic choices and reporting remain focused on the most important
issues. The assessment undertaken in 2022 was supported by a
third-party expert and involved the refinement of key ESG topics,
stakeholder engagement and strategic analysis.
The output of the assessment is shown in the Double Materiality Map
which illustrates key priorities for the Group based on double materiality.
The Group will continue to review the material focus areas so that the
most important topics for the Group and for its stakeholders are in scope.
The Double Materiality Map illustrates the Group’s key priorities based
on double materiality, taking into account impacts on the Group and
the Group’s impacts on the environment, society and the market.
The Group will continue to review the material focus areas to ensure
that the most important topics for the business and for its
stakeholders are in scope.
DECARBONISING THE INDUSTRY
MODERNISING
CONSTRUCTION
SOURCING
RESPONSIBLY
DEVELOPING THE
NEXT GENERATION
OPERATING
SUSTAINABLY
Access to sustainable
and resilience-
improving solutions
Biodiversity, nature
and forestry
Responsible sourcing
and relationships
with suppliers
Human rights and
modern slavery
Carbon emissions
Operational waste
management
Developing skills
and knowledge in
the community
Skills, apprenticeships
and training
Identified as a top ten priority for impact in. An issue
that can materially impact Travis Perkins plc.
Identified as a top ten priority for impact out. An issue
that Travis Perkins plc has a material impact on.
Water use
Product packaging
and circularity
Data use and
responsibility
Product safety
and quality
Air quality
DOING THE RIGHT THING
Employee safety
and wellbeing
Culture
and purpose
Responsible and
transparent business
Responsible
marketing
and selling
Pay and
reward
Employee
engagement
and relations
Diversity, equity
and inclusion
Community impacts
of our business
and operations
Travis Perkins plc Annual Report and Accounts 2023
31
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Sustainability report
continued
Building better communities and enriching
lives: 2023 social value impact
The Group delivers value to its communities in many ways. Below are some of the
highlights from 2023. The Group works closely with customers on its social value
commitments and will continue to improve its disclosures in 2024.
Operational impact
Transport carbon reduction
11%
Revenue from products with Environmental
Product Declarations
10.7%
Spend on goods-for-resale with SMEs
47%
Employed colleagues (FTE)
18,680
Investment in colleague total reward packages
£623.5m
Total tax contribution
£410.4m £137.1m taxes borne, £273.3m taxes collected
Skills development
Graduated apprentices
414 359 for Group colleagues, 55 for the industry
Enrolled apprentices
876 693 for Group colleagues, 183 for the industry
Female apprentices
29%
Apprentices under 25 years old
21%
Apprentices from ethnic minorities
7%
Hours of ESG training completed in-house or
through the Supply Chain Sustainability School
51,823
Community investment
Amount raised for charity
£1.3m
Volunteer-it-yourself (“VIY”) projects supported
5
32
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Engaging with stakeholders
The Group actively engages with stakeholders
to share progress, inform plans, listen to
feedback and seek views. The key stakeholder
groups, their ESG concerns and the Group’s
engagements with them in 2023 are detailed
in the Section 172 statement on pages 94-97.
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.
Climate-related financial risks and opportunities
The Group has submitted an annual climate disclosure to the Carbon
Disclosure Project (“CDP”) since 2010, including a financial assessment
of climate-related risks and opportunities. The Group has prepared its
third full disclosure against the Task Force for Climate-related Financial
Disclosure (“TCFD”) recommendations on pages 50 to 54. During
2023 the Group further enhanced its climate risk and opportunity
assessment and engaged Inspired ESG to support in developing
climate scenarios and conducting a deep dive assessment of the
Group’s timber supply chains.
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”). The most relevant six goals are detailed in the table
on pages 34 to 35. 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.
Several of the remaining SDGs have some relevance to the Group,
however on review of the specific targets underpinning these goals
they were determined to be less directly aligned to the Group and
therefore are not listed.
Travis Perkins plc Annual Report and Accounts 2023
33
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Sustainability report
continued
Sustainability priority Material focus areas
Commitment
2023 key actions
Progress 2024 key actions
Supporting the Group’s strategy
SDGs1
Decarbonising
the industry
1.5 degree-aligned,
SBTi-approved
carbon reduction
targets
Good progress
Some progress
Modernising construction
Sustainable products and services
to support Modern Methods of
Construction, 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 in the Group’s operations.
Scope 3 and product sustainability supplier
engagement programme, supporting suppliers
to calculate their carbon footprint.
Develop a definition of sustainable products based on robust
By providing sustainable products and
criteria and launch within at least one Group business.
value-add services to customers, the
Increase the percentage of sales backed by Environmental
Product Declarations from today’s 10.7%.
Group can earn a greater share of
spend and become a key partner.
63% reduction in
Scope 3 carbon
by 2035
Evolve the Group’s due diligence approach by bringing
into scope lower-spend product suppliers and
goods-not-for-resale suppliers.
Develop the Group’s due diligence approach, with a target
Customer relationships are underpinned
of the supplier assessment programme covering 90% of
by trust in the Group to source responsibly
Group spend on products-for-resale by the end of 2024.
and meet changing data transparency
requirements.
Net-zero for Scope
1 and 2 carbon by
2035, with at least
80% reduction
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.
Continue with carbon training to enable colleagues to drive
All of the Group’s stakeholders expect
energy and fuel reduction and better support customers by
credible action on operational carbon
sharing best practice.
and waste. Performance can influence
the outcome of customer tenders.
Developing the next generation
Upskilling colleagues and the wider
industry in green and future skills to
help facilitate sector improvements.
10,000 graduated
apprentices by
2030
Doing the Right Thing
Safety and wellbeing: Getting everyone home safe and
well, every single day.
Diversity, equity and inclusion: Creating an environment
where everyone can be themselves.
Colleague voice: Listening to colleagues to make better
decisions and increase engagement.
Deliver a development curriculum aligned to
talent management processes that offers career
development opportunities to all colleagues, enabling
the development of the next generation workforce and
helping to change construction.
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.
Build the skills, knowledge and behaviours of our
leaders to enable them to create the conditions
for a diverse and inclusive workplace.
Engage colleagues in the Group’s purpose, values
and strategy, using the Group story to build colleague
connection to their role in the Group’s success.
Charity and community: Taking pride in helping others
and making positive change happen.
Use the experience we gained in 2022 to deepen
and elevate existing partnerships.
Reward: Improving the financial health of colleagues.
Further the reach and impact of financial wellbeing
and employee benefits support to colleagues,
particularly those on the front-line.
Introduce a flexible apprenticeship which will include
To best support customers in a changing
placements with other businesses in the sector. Launch
market, green and future skills are critical.
a suite of micro-qualifications: short, focused learning
programmes for job-related skills and knowledge.
As a trusted and leading partner to the
construction industry, customers value
the Group’s expertise and advice.
Continue to embed the growing culture of “Calling it out”,
taking time to “Stop, Step Back, Think. Then Act” by
ensuring daily team briefings take place at all locations.
Target an engagement survey score for the statement
“I feel a sense of belonging at this Company”
above the provider’s global average by 2025.
Develop action plans to address the priorities and issues
that have the biggest impact on engagement and therefore
on overall business performance.
Grow colleague volunteer hours and build charity and
Doing the Right Thing deepens relationships
community partnerships that deliver on the Group’s impact
with customers as expectations around
goals and use these partnerships deliver social value.
responsible business increase.
Continue to explore ways to support colleague long-term
financial resilience and wider wellbeing.
Modern slavery and human rights: Eliminating modern
slavery from the Group and its supply chains.
Continue to roll out ID checks for third parties coming
to site, addressing higher risk organisation types first.
Extend in-person ID checks, currently conducted on higher-risk
labour agency workers, to other third parties.
Legal compliance: Complying with all relevant laws.
Further awareness raising and training to make sure
the Code of Conduct, policies and tools that have
been launched are fully understood and embedded.
Develop the internal Doing the Right Thing portal to increase
understanding of legal compliance policies and guidance.
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Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section
Sustainability priority Material focus areas
Commitment
2023 key actions
Progress 2024 key actions
Supporting the Group’s strategy
SDGs1
Decarbonising
the industry
1.5 degree-aligned,
SBTi-approved
carbon reduction
targets
Modernising construction
Sustainable products and services
to support Modern Methods of
Construction, 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
63% reduction in
Scope 3 carbon
by 2035
Scope 3 and product sustainability supplier
engagement programme, supporting suppliers
to calculate their carbon footprint.
Develop a definition of sustainable products based on robust
criteria and launch within at least one Group business.
Increase the percentage of sales backed by Environmental
Product Declarations from today’s 10.7%.
By providing sustainable products and
value-add services to customers, the
Group can earn a greater share of
spend and become a key partner.
Evolve the Group’s due diligence approach by bringing
into scope lower-spend product suppliers and
goods-not-for-resale suppliers.
Develop the Group’s due diligence approach, with a target
of the supplier assessment programme covering 90% of
Group spend on products-for-resale by the end of 2024.
Customer relationships are underpinned
by trust in the Group to source responsibly
and meet changing data transparency
requirements.
Net-zero carbon and reduced
operational waste. Leading by
Net-zero for Scope
Upskill key colleagues in the businesses and Group
1 and 2 carbon by
functions in order to influence colleague behaviour
example in the Group’s operations.
2035, with at least
and expand the network of expertise on sustainability
80% reduction
and carbon.
Continue with carbon training to enable colleagues to drive
energy and fuel reduction and better support customers by
sharing best practice.
All of the Group’s stakeholders expect
credible action on operational carbon
and waste. Performance can influence
the outcome of customer tenders.
Developing the next generation
Upskilling colleagues and the wider
10,000 graduated
Deliver a development curriculum aligned to
industry in green and future skills to
apprentices by
talent management processes that offers career
help facilitate sector improvements.
2030
development opportunities to all colleagues, enabling
the development of the next generation workforce and
helping to change construction.
Doing the Right Thing
well, every single day.
Safety and wellbeing: Getting everyone home safe and
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.
Diversity, equity and inclusion: Creating an environment
Build the skills, knowledge and behaviours of our
where everyone can be themselves.
leaders to enable them to create the conditions
for a diverse and inclusive workplace.
Colleague voice: Listening to colleagues to make better
Engage colleagues in the Group’s purpose, values
decisions and increase engagement.
and strategy, using the Group story to build colleague
connection to their role in the Group’s success.
Charity and community: Taking pride in helping others
Use the experience we gained in 2022 to deepen
and making positive change happen.
and elevate existing partnerships.
Reward: Improving the financial health of colleagues.
Further the reach and impact of financial wellbeing
and employee benefits support to colleagues,
particularly those on the front-line.
Introduce a flexible apprenticeship which will include
placements with other businesses in the sector. Launch
a suite of micro-qualifications: short, focused learning
programmes for job-related skills and knowledge.
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
the Group’s expertise and advice.
Continue to embed the growing culture of “Calling it out”,
taking time to “Stop, Step Back, Think. Then Act” by
ensuring daily team briefings take place at all locations.
Target an engagement survey score for the statement
“I feel a sense of belonging at this Company”
above the provider’s global average by 2025.
Develop action plans to address the priorities and issues
that have the biggest impact on engagement and therefore
on overall business performance.
Grow colleague volunteer hours and build charity and
community partnerships that deliver on the Group’s impact
goals and use these partnerships deliver social value.
Doing the Right Thing deepens relationships
with customers as expectations around
responsible business increase.
Continue to explore ways to support colleague long-term
financial resilience and wider wellbeing.
Modern slavery and human rights: Eliminating modern
Continue to roll out ID checks for third parties coming
slavery from the Group and its supply chains.
to site, addressing higher risk organisation types first.
Extend in-person ID checks, currently conducted on higher-risk
labour agency workers, to other third parties.
Legal compliance: Complying with all relevant laws.
Further awareness raising and training to make sure
the Code of Conduct, policies and tools that have
been launched are fully understood and embedded.
Develop the internal Doing the Right Thing portal to increase
understanding of legal compliance policies and guidance.
1. More information on the United Nations Sustainable
Development Goals (“SDGs”) is included on page 33.
Travis Perkins plc Annual Report and Accounts 2023
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Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section
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.
The Group’s purpose and sustainability priority
To help change construction and 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 2023
2023 saw further development of value-add solutions for customers,
and increased engagement with suppliers to drive carbon reporting
and reduction. Customer interest in and requirements on sustainability
continue to grow and the Group is mobilising to meet their needs.
Working with suppliers, customers and wider industry to
modernise construction and reduce carbon
99% of the Group’s emissions are in its supply chain and 40% of the
UK’s emissions are from the built environment. This is due primarily
to the embodied carbon from manufacturing the products sold and
the operational carbon of some of those products in use, such as gas
boilers. Reducing Scope 3 requires the Group to engage with suppliers,
customers and the wider industry to influence and drive change.
Suppliers
The Group works with manufacturers to encourage them to calculate
and reduce their own emissions, develop new materials and products
and provide product-level sustainability data, typically Environmental
Product Declarations (“EPDs”).
• 57% of the Group’s spend is now with suppliers who have calculated
their carbon and set reduction targets.
• 87 suppliers joined carbon workshops hosted by the Group.
• The Group was ranked in the top 8% of companies globally by CDP
for its engagement with suppliers on climate change.
• 11% of sales were backed by Environmental Product Declarations.
Customers
The Group works with customers to help them build and operate
more sustainably, providing the products, data and services they
need to decarbonise.
• CCF launched a delivery carbon reporting service, enabling
customers to better understand and reduce their Scope 3 emissions.
• WholeHouse® was launched, enabling regional builders to reduce
construction and operational carbon.
• New product ranges were listed and stocked to fulfil customers’
requirements for delivering retrofit.
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Travis Perkins plc Annual Report and Accounts 2023
Wider industry
The Group leads working groups and engages with government and
trade bodies to move forward decarbonisation across the industry.
• Nick Roberts, CEO, became the Construction Leadership Council
(“CLC”) Industry Sponsor for the skills challenge in the industry,
one of the main barriers to decarbonisation at scale.
• The Group became a partner of the National Retrofit Hub, with
representation on all of its working groups, helping to shape
retrofit planning for the UK.
• The Group is represented in sustainability working groups with the
Builders Merchant Federation, Future Homes Hub, West Midlands
Combined Authority Future Homes Taskforce and the Supply Chain
Sustainability School.
• The Group hosted ESG Forums for the top national house-builders,
and separately for regional house-builders, to discuss how best to
work together on decarbonisation and product-level carbon data.
Harnessing the power of the Group on retrofit solutions
The Group is focused on delivering growth and market-leading
solutions for customers through the collective power of the Group.
One such opportunity is retrofit: the process of upgrading homes and
commercial buildings to make them more energy efficient, reduce
carbon emissions and create buildings that are healthier and cheaper
to live in. According to market estimates, the demand to retrofit 30m
UK properties in the next 15 years will be worth over £300bn.
What’s next?
Develop an internal sustainable product definition
based on robust criteria and launch it within at least
one of the Group’s businesses.
Increase the percentage of Group sales backed by
Environmental Product Declarations (currently at 11%).
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Case study
Case study
A community approach to retrofit
Travis Perkins Managed Services has jointly invested in a site
in Penygroes alongside Adra, one of its social housing landlord
customers, to enable the development of a unique approach to
retrofit. Besides moving a local branch into the new site, Travis
Perkins Managed Services has worked closely with Adra, who
have developed a Decarbonisation Hub on site. Partners to the
hub include a local college and Bangor University and it is
intended to enable swift retrofit and local spending:
Local suppliers can showcase their products
Local installers can receive training on new products
•
•
• The college and university can deliver courses and research
• Tenants can see the new technologies going into their homes
• The Group can supply goods locally and showcases products
The first of its kind to bring the community together in this way,
it is a fantastic example of how delivering retrofit requirements
can also deliver strong local economic and social value.
Improving the efficiency of SME builders
Travis Perkins launched WholeHouse® in March 2023 to address
major challenges faced by regional house builders. It is a digital
platform which takes care of everything from creating the designs,
producing all the plans, elevations and sections, to material
schedules and costing information. It provides a new way of
working and helps house builders build quality homes faster,
more easily and without wasting time or materials.
Lack of design-visibility up front can cause challenges when it
comes to planning, financing, legislation and sustainability.
WholeHouse® addresses these issues by creating a design freeze
early within the project, allowing for bespoke designs and upfront
access to construction information and material costs. There are
now 275 companies registered on the WholeHouse® portal, with
the first two plots already being constructed and sold off plan.
WholeHouse® has already won two awards and been shortlisted
for seven others.
Tonnes of CO2e (Absolute) – Scope 3
2035 Target
1.4m
1.4m
1.4m
0.3m
2023
2022
2021
2020*
2.7m
3.5m
4.0m
3.8m
4.3m
3.6m
0.9m
1.1m
4.1m
0.9m
3.9m
0.8m
0
2.0m
4.0m
6.0m
8.0m
10.0m
* Baseline year for target.
Tonnes of CO2e
(Absolute) – Scope 3
Category 1
Category 11
All other categories
Carbon reduction (Absolute Scope 3, 2020 to 2023)
6%
indicates that the data point has been assured.
Please see page 41 for more information.
Travis Perkins plc Annual Report and Accounts 2023
37
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Sustainability report
continued
Sourcing responsibly
Ensuring safe and quality products from ethical, traceable and
sustainable supply chains. Supporting the Golden Thread of data.
The Group’s 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 2023
The primary objective for 2023 was to bring more goods-for-resale
(“GFR”) and goods-not-for-resale (“GNFR”) suppliers and service
providers into scope for assessment. The Group works with thousands
of suppliers and complex supply chains and it is critical for the Group
and its customers, investors and supply chain that this is managed well.
using either this system or the short GNFR assessment. The short
GNFR assessment was trialled on technology suppliers to better
understand risks across this supplier type.
New training launched for colleagues
A new training module on responsible sourcing was launched in
2023 and has been completed by 90% of nominated colleagues
from Commercial, Purchasing and Service Management teams,
providing an in-depth insight to the subject, the risks and their role.
Maintaining safe and sustainable timber supply chains
90.2% of timber purchased by the Group in 2023 was certified.
The business continues to operate a robust timber chain of custody
system in order to pass the “chain of custody” safely onto customers.
Certified timber purchased in 2023
Due diligence on product suppliers
The Group’s Online Risk Assessment (“ORA”) was updated in 2023,
with the questions and scoring criteria assessed and revised to reflect
changing supply chain risks. ORAs were submitted by 357 suppliers
in 2023 with 1,382 suppliers now engaged in the ORA programme.
90.2%
Own-brand product manufacturing sites are subject to in-person ethical
and technical audits, with all ethical audits completed by a third-party
auditor. In 2023, 220 factory audit gradings were completed. Where
issues were identified, time-bound corrective action plans were used
to support suppliers to resolve these. Suppliers resolved 7,806
non-conformances through engagement with this programme.
The Group’s supplier assessment programme accounts for in
excess of 85% of total Group spend on goods-for-resale.
A short version of the assessment has been developed for lower spend
suppliers and this will be applied to all new accounts created in the
Group’s new finance system in 2024.
Bespoke assessments for GNFR suppliers
A new questionnaire was launched in 2023 for GNFR suppliers, using
the same assessment system hosted by Verisio as is used for the
Group’s suppliers of goods-for-resale. The supplier list has been
risk-profiled to allow the business to prioritise assessments in 2024
indicates that the data point has been assured.
Please see page 41 for more information.
38
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Case study
Case study
Collaboration across the industry
There is significant duplication and complexity in the
way suppliers are assessed at present. Manufacturers
receive assessments from merchants, house-builders,
contractors, social housing landlords and more, none
of which are the same but all of which have
significant overlap.
The Group has led customer working groups and
consulted with trade federations to enable the
development of a shared approach that removes
duplication for suppliers and improves transparency
of the sustainability of organisations operating in the
supply chain. A shared question set is well-developed
and work will continue on this in 2024.
Upskilling the supply chain
Based on the results of supply chain assessments,
there is a knowledge gap on modern slavery and human
rights and how to manage these risks. When the Group
requires that suppliers address challenges in this area,
it also provides support so the suppliers can better
understand and manage key risks.
The Group ran a series of online supplier workshops
to raise the profile of these topics, share insights and
best practice and publicise links to external resources.
The sessions were well-attended and the Group will
continue to run workshops for suppliers in 2024.
What’s next?
Continued development of the Group’s due diligence
approach, with the supplier assessment programme
to cover 90% of Group spend on goods-for-resale by
the end of 2024.
Travis Perkins plc Annual Report and Accounts 2023
39
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continued
Operating sustainably
Leading by example within the Group’s own operations.
Delivering net-zero carbon and reducing operational waste.
Decarbonising the fleet
The Group continued to use Hydrotreated Vegetable Oil (“HVO”),
a low-carbon alternative to diesel, in 270 vehicles across the Group
during 2023. The use of HVO saved 1.4 million litres of diesel, saving
3,500 tonnes of carbon. The Group continues to work closely with
Logistics UK and the Department for Transport to drive change
and keenly awaits the publication of the Low Carbon Fuels Strategy.
In the absence of this and in a difficult economic climate, use of
HVO may slow in 2024. The Group remains committed to its
decarbonisation goals and the fleet roadmap can be found
on the Group’s website.
Decarbonising the estate
A pilot project was conducted in 2023 to understand the potential
impacts of fully decarbonising one branch in each business. The project
identified the types of renewable energy systems and low-carbon
technologies, including PV solar panels, heat pumps and LED lights,
needed to reduce carbon at each location. The findings will inform
the long-term decarbonisation strategy.
Expanding colleague knowledge
Carbon Awareness, Reduction & Management training was delivered
across the Group in 2023, outlining simple ways to improve energy
efficiency in branches and stores. This has been supported by a trial
of automated energy alerts which warn branch managers when energy
usage is above its normal level. This enables the Group to target
inefficiencies and take quick actions to deliver savings.
A “Carbon Change Makers” initiative has been developed and is
available to colleagues. It explains the terminology used in discussing
carbon and climate change in order to build confidence and encourage
informed discussions with customers.
Reducing packaging
In 2023 the Group reduced plastic packaging by removing air pillows
and packing peanuts, replacing foam door corners with cardboard and
changing shrinkwrap to a lighter grip film which requires less material.
The Group’s purpose and sustainability priority
The Group has committed to reducing Scope 1 and 2 carbon – relating
to the Group’s fleet and estate – by 80% by 2035 and offset any
remaining emissions. 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 address its own direct emissions.
The Group generates waste in its operations, primarily relating to added
packaging or obsolete products, and takes its role in preventing, reusing,
recycling and recovering waste seriously in order to protect the natural
environment and the communities within which it operates.
Progress in 2023
The Group’s main priority for 2023 was training colleagues and
increasing expertise on sustainability and carbon. Operating sustainably
means managing the Group’s estate and fleet well and transitioning
them to net-zero carbon. The Group has a science-based target to
reduce Scope 1 and 2 carbon by 80% by 2035 from a 2020 baseline
and so far has achieved a 33% reduction. For more detailed carbon data,
and for information on the Scope 3 target, please see pages 62-63.
Tonnes of CO2e (Absolute) – Scopes 1 and 2
10,796
5,022
2035 Target
2023
2022
2021
2020*
44,932
7,750
50,388
6,498
56,465
53,981
21,284
25,111
0
10,000
20,000 30,000 40,000 50,000
60,000
Tonnes of CO2e (Absolute) – Scopes 1 & 2
70,000
80,000
Transport
Buildings
* Baseline year for target.
Carbon reduction (Absolute Scopes 1 and 2, 2020 to 2023)
33%
indicates that the data point has been assured.
Please see page 41 for more information.
40
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section The Group’s new Toolstation distribution centre (“DC”) is at the forefront
of packaging optimisation. Machinery in the DC processes the cardboard
packaging based on the type and size of product which ensures safe,
efficient packaging and minimises waste. The Group continued to operate
its backhaul system, enabling branches to return 3,200 tonnes of paper
and cardboard, 400 tonnes of plastic and 2,400 tonnes of wood.
Case study
Environment Incidents
In 2023 the Group recorded 23 environmental incidents with six
classed as ‘reportable’ and 17 “non-reportable”. Of the six reportable
incidents, three were a result of third-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.
Total Waste (Tonnes)
2023
2022
2021
27,326
1,075
25,913
1,622
26,912
1,492
0
10,000
20,000
30,000
Recycled/Recovered Waste
Landfilled Waste
Percentage of waste diverted from landfill – 2023
96%
UK’s largest electrification forklift programme
The Group is switching up to 1,100 diesel forklift trucks with
electrics trucks by mid-2024. This multi-million pound investment
is one of the largest forklift truck change programmes of its kind.
Once the new forklift trucks have been rolled out across the
branch network, it is estimated that this programme will reduce
the Group’s Scope 1 carbon emissions by 6,600 tonnes per
annum, equivalent to the carbon emissions of 4,000 cars.
This is just one of the actions implemented by the Group to
achieve a 27% reduction in vehicle and plant fleet emissions by
2027. Other steps include trialling alternative fuels and providing
training for drivers to ensure they operate machinery and trucks in
the most energy efficient way.
Decarbonising the fleet is a core part of the Group’s detailed
plan on how to meet its ambitious 1.5°C aligned carbon reduction
targets, which were announced by the Group in 2021 and are
accredited by the Science Based Targets initiative (‘SBTi’).
What’s next?
Continue with carbon training for colleagues to drive energy
and fuel reduction and better support customers by sharing
best practice.
Travis Perkins plc Annual Report and Accounts 2023
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continued
Doing the Right Thing
Protecting against modern slavery and
complying with all relevant laws.
The Group’s 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.
Progress in 2023: Modern slavery and human rights
Construction remains one of the industries most exposed to modern
slavery and the Group works to ensure the fair treatment of all workers
in its own businesses and supply chains.
• The key objective for 2023 was to roll-out identity checks for third
parties coming to site. In-person identity checks have been
introduced during second-line construction reviews, to assess
right-to-work and worker access to identity documents and to report
any red flags of modern slavery. A branch app to register those
coming to site was trialled in 2023 and will inform future plans.
• A new human rights policy was published to ensure that internal
and external stakeholders understand the Group’s commitments.
• Two modern slavery training modules launched in December 2022
have been completed in 2023: an all-colleague “bite-sized” module
and a key-colleague training module for those in roles more likely to
observe or manage modern slavery risks.
• The Group sits on the Supply Chain Sustainability School’s Modern
Slavery Working Group, whose purpose is to help the sector identify,
prevent, mitigate and remediate modern slavery risks and labour
exploitation, and on the Slavery and Trafficking Risk Template
Development Committee, which develops tools and assists efforts to
comply with human trafficking and modern slavery legislation.
• A review of labour agency use has been conducted and is being used
to develop better controls over temporary labour usage, with modern
slavery controls forming part of the tender process assessment.
Progress in 2023: Legal compliance
The legal compliance modules listed below were launched in December
2022 and completed in 2023 to improve foundational understanding
on key legal topics, supplemented by more advanced courses such as
Anti-Bribery and Corruption and Competition Law.
• Code of Conduct and Whistleblowing Line
• Anti-Bribery and Corruption
• Anti-Money Laundering
• Competition Law
• Corporate Criminal Offences
• Market Abuse and Insider Trading
• Sales of Restricted Products
The Group’s completion rate for colleagues allocated these legal
compliance modules is 82%, providing comfort that an understanding
of legal compliance permeates through the Group.
What’s next?
Further develop 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.
What’s next?
Further development of the Doing the Right Thing internal
webpage to enhance access to and understanding of legal
compliance policies and accompanying guidance.
42
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section People
Travis Perkins is a skills and apprenticeships powerhouse and I’m delighted that, since
training its 1,000th apprentice, the Company is not resting on its laurels and is aiming
for an amazing 10,000 apprentices by 2030. This is exactly the kind of initiative which
will extend the ladder of opportunity to people from all backgrounds across the country
and help them to secure sustainable, fulfilling work. I hope other businesses follow this
blueprint for success as I continue to work with employers to incentivise people to learn
the skills which are crucial to keeping our economy and our country moving.
Robert Halfon MP
Minister for Skills, Apprenticeships and Higher Education
Travis Perkins plc Annual Report and Accounts 2023
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Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Sustainability report
continued
Developing the next generation
Upskilling colleagues and the wider industry in green and future skills
to help facilitate sector improvements.
The Group’s 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 sector.
Development is not only about construction sector skills but also life
skills including digital skills, maths and English. New colleagues are
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 taught about modern construction methods to help
customers to build better. In this way the Group is developing the
next generation for the construction supply sector.
Progress in 2023
The Group remains focused on enabling the development of the
next generation workforce and helping to change construction.
More apprenticeships, better apprenticeships
The 1,000th apprentice graduated through the apprenticeship
programme run by the Group in 2023, a major milestone on
the journey towards 10,000 graduated apprentices by 2030.
Case study
Transformation of Bradby Youth Club in Rugby
In June 2023 colleagues from across the Group joined forces
with social enterprise VIY and their 17 young volunteers from
disadvantaged backgrounds to transform a youth club in Rugby.
All of the VIY participants were awarded a City and Guilds
accreditation in painting and decorating by the end of the course,
which created an updated entrance area and refreshed interior,
making a more inviting and vibrant space for the local young
people who access it on a daily basis.
The new apprenticeship target was unveiled at an inaugural
apprenticeship graduation ceremony, held at Franklin’s Gardens
stadium, home of Northampton Saints Rugby Club, which
celebrated the success of this year’s 414 apprentice graduates.
In addition to the donation of materials and time, colleagues
from the Group apprenticeships and early careers team
delivered career and employability talks to provide insight
into work opportunities in construction.
Successful assessment by Ofsted
The Group was awarded a “Good” Ofsted rating across all aspects
of its Apprenticeship programme. The report found that:
• Apprentices enjoy their courses and are positive about
their experience, with many gaining promotion.
• Programme leaders have a good understanding of the construction
sector and ensure apprentices receive insights into key drivers in the
industry, such as sustainability and retrofitting current housing stock.
• Apprentices benefit from experienced and well-qualified staff who
guide them carefully through their learning and value the high-quality
of their learning materials, training and online sessions.
• There is a commitment to raising the profile of groups that are
underrepresented in the construction industry, resulting in an
apprentice population increasingly reflective of the UK’s diversity.
External recognition
The Group was ranked 38th at the Apprenticeships Top 100 Employers
2023 and 23rd in Rate My Apprenticeships Best 100 Employers in 2023.
2023 apprentice graduates
414
2030 graduated apprentices target
10,000
What’s next?
In 2024 the Group will introduce a ‘flexi-job’ apprenticeship
which includes placements with other businesses in the sector.
A suite of micro qualifications – short, focused learning
programmes that provide specific, job-related skills and
knowledge – will be launched.
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Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Diversity, equity and inclusion
Creating an environment where everyone can be themselves.
The Group’s 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 with the diversity of thought needed
to help the Group and the industry to innovate and change.
Progress in 2023
The Group is committed to building the skills, knowledge and behaviours
in its leaders that will enable them to create the conditions for a diverse
and inclusive workplace. Progress on this continued in 2023.
New industry coalition to tackle lack of diversity
Travis Perkins plc is a founding member of The Construction
Inclusion Coalition (“CIC”), which was established by CEOs at leading
organisations, including Aliaxis, Baxi, Bradfords, Highbourne Group,
Ibstock plc, Knauf, Wavin, Wolseley, the Builders Merchants Federation
and the National Merchant Buying Society, to raise standards on equity,
diversity and inclusion, with an immediate focus on gender representation.
A survey of 2,000 adults highlighted the opportunity for the construction
industry, with 46% saying they’d be more likely to seek employment in
the sector if it showed a stronger commitment to diversity and inclusion.
A foundation for strong governance and leadership
The diversity, equity and inclusion (“DE&I”) policy developed
in 2022 informed DE&I activities in 2023, which included the
development of colleague and leader knowledge to support the
roll-out of the policy. A supporting governance framework is in place to
allow the businesses and DE&I networks to track progress and prioritise
next steps. The improvement in the Group’s DE&I culture was shown in
an engagement survey score of 70 (2022: 68) for colleagues’ sense of
belonging at this company and a score for equal opportunity five points
above the global benchmark.
The future of our industry is at risk if
we can’t attract and retain talent from a
diverse pool of people because too many
think the construction sector is not for
them. This is an industry-wide challenge
that requires industry-wide solutions,
which is why the CIC has been set up to
improve equity, diversity and inclusion.
We are calling on businesses across the
sector to join the coalition and take action.
Angela Rushforth
Construction Inclusion Coalition Chair and
Toolstation Managing Director
What’s next?
The Group is targeting an engagement survey score for
the statement “I feel a sense of belonging at this company”
in excess of the provider’s global average by 2025.
Gender diversity 2023 – by role type
Director
Senior Manager
Colleague
Total
Gender diversity 2023 – by business segment
Group and shared service
Toolstation
Merchanting
Total
Female
4
70
4,652
4,726
Female
421
2,456
1,849
4,726
%
44
28
25
25
%
48
36
17
25
Male
5
182
13,767
13,954
Male
447
4,465
9,042
13,954
%
56
72
75
75
%
52
64
83
75
Total
9
252
18,419
18,680
Total
868
6,921
10,891
18,680
Travis Perkins plc Annual Report and Accounts 2023 45
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Sustainability report
continued
Safety and wellbeing
Getting everyone home safe and well, every single day.
The Group’s purpose and sustainability priority
Keeping people safe and well is the Group’s number one priority.
Helping colleagues look after their wellbeing has a positive impact
on their lives, at work and outside work, and on their communities.
Progress in 2023
The Group’s priority for 2023 was to continue to create a culture
where colleagues “call it out” and take time to “Stop, Step Back, Think.
Then Act.” by ensuring daily team briefings take place at all locations.
Case study
Virtual GP and other digital wellbeing services
In 2023, the Group introduced a new health and wellbeing benefit,
Aviva Digicare+, which can be accessed by all colleagues and their
families. This includes virtual GP advice, health checks, second
medical opinions and mental health and nutritional support. 25%
of colleagues have registered for the health and wellbeing benefit
and the services are rated 4.7 out of 5.
I have used the Digicare app a few times
now and every time has been a seamless
process. After applying to complete the
health check, the kit came in the post a
few days later and I completed the tests
and popped it in the post. After expecting
this to take a few weeks to process I was
shocked to see I had an email with my
results only a few days later. I had a quick
virtual follow up with a GP to go over the
results thoroughly. I was really impressed.
Colleague testimonial
Advancing a safety culture through colleague engagement
The “10B410” (10 minutes before 10am) team briefings established
in 2022 continue to gain traction across the Group. Branches are
engaging well with the process and this has led to an improvement
in colleague perceptions on safety culture in the colleague
engagement survey.
A data-led “safety beacon” drives targeted action
The Group is using the power of data to predict safety risk, allowing
intervention if it shows increasing risk levels. This data-centric
approach to safety is being developed through a test and learn
process in Travis Perkins, CCF and Keyline.
Leading partner to the industry on safety
The Group HSE and Fleet Director, Richard Byrne, is the Chair of
the Builders Merchant Federation Health and Safety Working Group.
This provides an opportunity for the Group to share best practice
and raise standards across the sector and beyond.
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Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Case study
of PsyDrive; a company that specialises in accredited training for
road safety professionals, research, assessment and interventions
for improved road safety.
The study involved a comprehensive literature review of existing
research and took into consideration studies in other industries, such
as aviation, emergency services, marine, military and the rail industry
to review their experiences and adapt them for use with the Group’s
fleet and drivers.
The results of this study were first presented by Karl Wilshaw,
the Group’s Technical Fleet Director, and Dr Lisa Dorn at the recent
Chartered Institute of Logistics and Transport (“CILT”) Annual Safety
Forum Conference, in the company of CILT patron, Her Royal
Highness The Princess Royal.
Industry leading research on driver behaviour to enhance fleet safety
The Group announced the findings of a groundbreaking study
which identified three areas to focus on to improve driver safety:
• Skill decay.
• Stress and performance.
• Attention lapses and distractions.
With one of the largest fleets in the UK and around 3,000 drivers,
drivers are at the forefront of the Group’s business. They deliver
building materials to customers across all segments of construction
and are often required to drive specialist vehicles including light
commercial vehicles and heavy goods vehicles.
As part of the Group’s commitment to continuous improvement,
the business commissioned research from Dr Lisa Dorn, Associate
Professor of Driver Behaviour at Cranfield University and Founder
Lost time incident frequency rate
3.9
4.7
2.0
4.0
LTIs per million hours worked
5.6
6.0
8.0
2023
2022
2021
2021
0.0
Severity rate
2023
2022
2021
0.000
0.05
0.07
0.10
0.025
0.050
0.100
Lost workdays per thousand hours worked
0.075
The figures reported do not include Toolstation Europe
0.125
What’s next?
The objective for 2024 is to continue to create 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 2023
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Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Sustainability report
continued
Colleague voice and reward
Listening to colleagues to make better decisions.
Improving the financial health of colleagues.
The Group’s purpose and sustainability priority
Listening to colleagues enables the Group to make better decisions,
leverage diversity of thought and be responsive to colleagues’ needs.
Progress in 2023
In 2023 the Group committed to use its strategy, purpose and values
– “Our Story” – to build colleagues’ connection to their role in the future
success of the Group.
Further embedding the Group’s purpose and values
The Group has continued to share stories through its communication
channels and newly implemented knowledge management system.
Many of the business conferences held in 2023 ran exercises to explore
how each team is demonstrating the Group’s values. New awards were
used to recognise colleagues who had embodied the Group’s values.
Learning from colleagues and benchmarking progress
The Group issued an engagement survey via Glint for the second
time in 2023. This provides the opportunity to compare scores against
2022 and against other industries, giving rich insight into strengths and
weaknesses. 79% of the Group’s colleagues responded to the survey, a
3% improvement on 2022 and 4% higher than the global benchmark.
38% of colleagues provided a comment, which is above the Glint global
average of 33%. The Group’s engagement score in 2023 was 73, which
is two points higher than 2022 and two points higher than the global
benchmark. Headlines from the survey included:
• Most improved scores were for work-life balance, values, equal
opportunities, contribution success and a belief that the Group cares.
• Scores for safety culture and equal opportunity are furthest above
the global benchmark.
Managers have access to their team’s results and a framework to
develop action plans.
Engagement survey
response rate
Survey engagement
score
79%
73
The Group’s purpose and sustainability priority
Improving the financial, physical and emotional health and wellbeing
of colleagues contributes towards stable communities and enriches
the lives of colleagues and those around them.
Progress in 2023
The core objective for 2023 was to develop the reach and impact
of the financial and wellbeing benefits offered to colleagues.
Supporting colleagues manage their finances
2023 saw the continued enrolment of colleagues into Wagestream, a
financial management and wellbeing app, which lets colleagues access
a portion of their salary each month before pay day or set up a savings
fund directly from their pay at a competitive interest rate. One-in-three
colleagues have enrolled with Wagestream and the short term savings
built up by colleagues across the Group exceeds £1m.
Colleague support in a tough economic climate
Recognising the difficult economic climate, the Group made an
£8m ‘cost of living’ payment in January 2023 to the majority of the
workforce and in April 2023 awarded an average pay rise of 6%, with
those on lower incomes receiving a larger award and a lower award for
senior executives.
The Group introduced a free mortgage advice service via Coreco, the
UK’s largest mortgage broker, rolled out an extensive communication
programme aligned with national campaigns, such as pension
awareness season and talk money week, and ran targeted webinars
including pre-retirement for colleagues aged over 50. A total of 500
colleagues participated in financial wellbeing webinars in 2023, with
recordings available for other colleagues to access “on demand”.
New total reward statements have been launched online for colleagues,
to help them understand and access the benefits available to them.
To ensure that non-office-based colleagues such as drivers receive
benefits news, videos have been created for driver hand-held devices.
What’s next?
The Group will develop action plans to underpin the strategic
priorities and local team issues that have the biggest impact on
engagement and therefore overall business performance.
What’s next?
The Group will continue to help colleagues build their financial
resilience and support their wellbeing needs.
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Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Charity and community
Taking pride in helping others and making positive changes happen.
The Group’s 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 “we care” value means that great
pride is taken in helping others and making positive changes happen.
Case study
Progress in 2023
In 2023 the core objective was to deepen and elevate existing
partnerships, scaling up cross-Group volunteering opportunities,
and to improve data capture and social impact reporting.
The business makes an important contribution to the local and national
economy, and supports the community in a range of different ways:
• Donations made in the form of funds, products or services
• Charitable social events
• Fundraising
• Strategic partnerships
• Corporate sponsorship
• Volunteering
• Disasters and humanitarian emergencies support
Colleagues across the Group continued to run and support a great range
of charitable events, many of them in collaboration with customers and
suppliers. These included charity golf days and walks for Mind and the
Teenage Cancer Trust Unit at Leicester Royal Infirmary, as well as coffee
mornings, auctions and Tough Mudder and Marathons for Macmillan
Cancer Support and much more.
Charity and social enterprise partners
2023 contributions (£000)
Macmillan Cancer Support
Mind
Prostate Cancer UK
Centrepoint
VIY
Cynthia Spencer Hospice
Variety
Leicester Hospitals Charity
Scottish Association for Mental Health
May Name’5 Doddie Foundation
Youthbuild
1,023
101
24
7
83
3
18
14
3
4
5
Framework to encourage colleague participation
The Group published a new Charity and Communities policy and
supporting framework. This sets out how all colleagues from across
the Group can get involved in initiatives, join networks, access resources
and support best practice learning.
Expansion of VIY partnership
In 2023 the Group expanded its partnership with social enterprise
Volunteer it Yourself (“VIY”) by supporting five flagship community
renovation projects across the country to provide young people at
risk of unemployment with vocational trade skills to boost their
employability. Support included a mixture of donations of
funds and materials, volunteering, mentoring and career
development sessions.
Netball tournament for Macmillan
Over 100 colleagues from Travis Perkins, Benchmarx, BSS and
Staircraft raised £8,000 in a mixed netball tournament at Kings
High School in Warwick for charity partner Macmillan Cancer
Support. The mixed tournament had been organised to reflect
the Group’s diversity, and Sharon Cottam, who is Partnership
Manager for Travis Perkins at Macmillan Cancer Support, said:
We cannot thank the team enough for organising
such a brilliant event. It has taken months of
planning, and we are delighted it was such a
success. Everyone absolutely threw themselves
into it, the team spirit on the day was fantastic.
It costs £33 to fund a Macmillan Nurse for
one hour, the incredible amount raised by this
tournament could fund 242 nursing hours,
helping to provide emotional, practical, and
financial support where it is needed most.
I cannot thank you enough, it was certainly
one of my highlights of 2023.
What’s next?
Increase colleague volunteer hours and build charity and
community partnerships that deliver on the Group’s impact
goals and use these partnerships to deliver on customer
social value commitments.
Travis Perkins plc Annual Report and Accounts 2023
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Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Contents Generation – Section
Contents_GEN_Page
Contents_GEN_PageL2
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 third 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 by material type 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 2024 Annual Report
and TCFD Report. During 2023 a deep-dive climate risk assessment of timber supply chains was completed in addition to a refresh of UK physical
risk and the Group’s transition risks.
TCFD disclosure requirement
Location in Annual Report
Page(s)
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
Describe the Board’s oversight of
climate-related risks and opportunities
TCFD report – Board Oversight and Engagement
Principal Risks report – Climate
Change and Carbon Reduction
Describe management’s role in assessing and
managing climate-related risks and opportunities
TCFD report – Board Oversight
and Engagement
52
81
52
Describe the climate-related risks and opportunities
the organisation has identified over the short,
medium and long term
TCFD report – Principal Risks and Opportunities
Principal Risks report – Climate Change and
Carbon Reduction
52 – 53
81
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 2C°
or lower scenario
TCFD report – Principal Risks and Opportunities
52 – 53
TCFD report – Scenario results
Describe the organisation’s processes for identifying
and assessing climate-related risks
TCFD report – Risk and Opportunity
Management
Describe the organisation’s processes for managing
climate-related risks
TCFD report – Risks and Opportunity
Management
Describe how processes for identifying, assessing
and managing climate-related risks are integrated
into the organisation’s overall risk management
TCFD report – Risk and Opportunity
Management
Principal Risks report – Climate Change
and Carbon Reduction
57
55
55
55
81
Disclose the metrics used by the organisation to
assess climate-related risks and opportunities in
line with its strategy and risk management process
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
TCFD report – Metrics and Targets
Sustainability report – Operating Sustainably
Sustainability report – Modernising Construction
Remuneration Report
TCFD report – Metrics and Targets
Sustainability report – Operating Sustainably
Sustainability report – Modernising Construction
TCFD report – Metrics and Targets
Sustainability report – Operating Sustainably
Modernising Construction
62 – 63
40 – 41
36
106 – 122
62 – 63
40 – 41
36
62 – 63
40 – 41
36
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Governance
Scope and sphere of influence.
The Group’s addressable market for construction materials is £73bn 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 2,388 HGVs and LCVs
Leadership role
Decarbonisation of our own business and our supply chain is the Group’s sustainability priority. For further information see page 40.
The Group has sector-leading commitments to reduce carbon in line with a 1.5°C 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 34.
Page 62-63 provides details of the metrics and
measures used by the Group to assess progress.
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
Deepening and elevating relationships with customers
Changing the game
Modernising
construction
Sourcing
responsibly
Operating
sustainably
Developing the
next generation
Underpinned by Doing the right thing
DRIVING STRONG TOTAL SHAREHOLDER RETURNS
The Group’s targets are SBTi approved as being in line with a 1.5°C pathway. By 2035 the Group will have reduced
Scope 1 and 2 GHG emissions by 80% and Scope 3 emissions by 63% from a 2020 baseline.
Travis Perkins plc Annual Report and Accounts 2023
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Climate-related
financial disclosure continued
Advocates for change
The Group is proactively engaging with the sector to drive forward
the decarbonisation agenda. 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.
During 2023 the Group Chief Executive joined the board of the
Construction Leadership Council as industry sponsor for People and
Skills, one of the big barriers to decarbonisation at scale. The Group
also became a partner of the National Retrofit Hub to help to shape
solutions and accelerate change. As 80% of the properties that will
exist in 2050 exist today, it’s critical to address the current housing and
commercial stock if the Group is to reduce its Scope 3 carbon relating
to carbon in-use (from gas boilers). Two ESG forums were hosted by
the Group for the top National House Builders to agree and act upon
key priorities. Online workshops were hosted for 87 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.
For more information on stakeholder engagement see page 31.
The scenario analysis conducted by the Group each year for the last
three years has 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 CCF Ltd is the Group Leadership Team sponsor
for modernising construction, including 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 five sessions with the Group Leadership
Team or plc Board during 2023. 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 81.
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 2023 the GLT and Board 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 270 HGVs.
Alignment of incentives to carbon commitments
The 2023 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 114). In addition, the
restricted stock scheme includes a climate-related performance
underpin (see page 114).
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 pages 74 to 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 purchased and sold, rather
than how it moves through the Group’s businesses. The table
below summarises the Group’s principal risks and opportunities.
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Top climate-related financial impacts
RISK – TECHNOLOGY: TRANSITIONING TO LOWER EMISSIONS TECHNOLOGY
L
M
H
Low
Medium
High
P
R
I
Proactive
Reactive
Inactive
Description:
Decarbonisation of the HGV fleet (c.1600 HGVs to
transition away from diesel)
Risk for
TP Group*
Scenario in
which this impacts:
Time period in
which this impacts
Parts of the value
chain most impacted:
H
P
R
In-house: Travis Perkins Group
RISK – PHYSICAL: RISING SEA LEVELS AND EXTREME WEATHER EVENTS
Description:
Risk for
TP Group*
Scenario in
which this impacts:
Time period in
which this impacts
Parts of the value
chain most impacted:
Decreased asset values (assumes some branches affected)
ML
P
R
I
In-house: Travis Perkins Group
RISK – REGULATION: MANDATES ON AND REGULATION OF EXISTING PRODUCTS AND SERVICES
Description:
Risk for
TP Group*
Scenario in
which this impacts:
Time period in
which this impacts
Parts of the value
chain most impacted:
Product carbon pricing (assumes a small portion of carbon-
related cost price increases are not passed through)
L
P
R
Downstream and Upstream:
Customers and Manufacturers
RISK – MARKET: CHANGING CUSTOMER BEHAVIOUR
Description:
Risk for
TP Group*
Scenario in
which this impacts:
Time period in
which this impacts
Parts of the value
chain most impacted:
Obsolescence of product (assumes some product lines are
no longer of interest to customers aligning with net zero)
L
P
R
Upstream: Manufacturers (particularly
manufacturers of gas boilers or
high-carbon building fabric materials)
OPPORTUNITY – PRODUCTS AND SERVICES: DEVELOPMENT AND OR EXPANSION OF LOW EMISSION GOODS AND SERVICES
Description:
Rising demand for new product mix and new technologies
(to meet changing building regulations and low-emission
targets)
Risk for
TP Group*
Scenario in
which this impacts:
Time period in
which this impacts
Parts of the value
chain most impacted:
H
P
R
In-house: Travis Perkins Group
OPPORTUNITY – RESOURCE EFFICIENCY: USE OF MORE EFFICIENT MODES OF TRANSPORT
Description:
Increased revenue opportunity (assumes large customers
move business towards merchants with decarbonised
transport options)
Risk for
TP Group*
Scenario in
which this impacts:
Time period in
which this impacts
Parts of the value
chain most impacted:
L
P
R
In-house: Travis Perkins Group
OPPORTUNITY – PRODUCTS AND SERVICES: DEVELOPMENT AND OR EXPANSION OF LOW EMISSION GOODS AND SERVICES
Description:
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 (i.e. extreme weather))
Risk for
TP Group*
Scenario in
which this impacts:
Time period in
which this impacts
Parts of the value
chain most impacted:
L
P
R
In-house: Travis Perkins Group
* Risk ratings are in line with those in the Principal Risks Section on pages 74 – 85.
A number of other less-material climate-related risks and opportunities are mapped and monitored internally.
Timeline considered
The timelines considered and why they were selected is detailed in the table below.
Time Horizon
Description
Why chosen
Short
1-5 Years (2022-2027)
This time horizon was chosen to ensure impacts being felt now and their
potential escalation are understood
Medium 5-15 Years (2028-2037)
This time horizon was chosen to reflect that scenarios show limited
divergence prior to this point
Long
15-30 Years (2038-2052)
The physical impacts from climate change will magnify over a longer time
period than usual business planning
Travis Perkins plc Annual Report and Accounts 2023 53
Climate-related
financial disclosure continued
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.
Our low carbon transition plan
The Group has shared the roadmaps to 2035 for Scopes 1, 2 and 3
on its corporate website 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 89% of this)
• Working with the whole value chain to phase out the majority of
fossil-fuel boilers from sales by 2035. This primarily relates to
commercial gas boilers sold by the BSS business.
• Reducing 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 materials or 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 and 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. 270 HGVs used HVO instead
of diesel in 2023.
• 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 nine 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.
Our climate adaptation plan
The Group reviews the physical impact risk across different warming
scenarios for both its own estate, UK infrastructure and its supply
chains. This information is used to inform:
• Commercial strategy for the medium to long term to ensure both
continuity of supply and a just transition.
• Group property decisions and planning for new site locations
and existing site adaptation.
• Group insurance planning to best manage future risks and
business continuity.
Physical climate risk impacts are rated as low to medium. Early
conversations are underway on this and plans will evolve more in
the coming year.
With 99% of the Group’s carbon emissions in the supply
chain, predominantly due to carbon from manufacturing
products or carbon from products in-use, it’s critical that
each of our businesses has a bespoke Scope 3 roadmap
which is owned and actioned by Commercial and Sales
teams. We will be further evolving these roadmaps in 2024.
Heinrich Richter
Head of Commercial – Sustainable Products and Services.
54
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section 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 74. 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 Group
Leadership Team 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 fourteen
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 Group
Leadership Team members) with confidence to make decisions
provided by a clear carbon strategy, target and roadmaps.
In 2023 the Group followed up the scenario analysis undertaken in
the previous two years with a deep-dive investigation of the possible
physical climate impacts on its timber supply chains, in partnership
with Inspired ESG. The UK estate and infrastructure physical climate
impacts were also revisited along with the Group’s transition risks.
Travis Perkins plc Annual Report and Accounts 2023 55
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Climate-related
financial disclosure continued
Scenarios and modelling process†
The scenarios modelled outline possible physical and transitional impacts out to 2050 and beyond. 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
Physical
Using RCP 2.6.
Using RCP 4.5.
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.
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.
>3 degrees mean
global warming
Using RCP 8.5.
Concentrations of CO2 in the
atmosphere accelerate and reach
950 ppm by 2100 and continue
increasing for another 100 years.
Scenario
assumptions
which apply to all
three scenarios
• 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 166 UK sites, in 166 different towns and cities, 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
Scenario
assumptions
which apply to
specific scenarios
Scenario risk lenses
The climate change impact under each of the three scenarios was
considered across a number of risks and opportunities for the Group,
including the following examples.
The transition risk and opportunity assessment considered:
Technology
• costs of lower emissions technology
• unsuccessful investment in new technologies
• substitution of existing products and services
with lower emission options
Policy and Legal risks
• carbon pricing
• enhanced emissions-reporting obligations
• mandates on and regulation of existing products and services
• exposure to litigation
Market risks
• increased cost of raw materials
• changing customer behaviour
Reputation risks
• stigmatisation of the sector
• shifts in consumer preferences
• increased stakeholder concern or negative stakeholder feedback
The physical risk and opportunity assessment considered:
• rising mean temperatures
• changing precipitation patterns
• sea level rise
• extreme weather
• wildfire
This was taken into account for the Group’s UK estate as well
as UK-wide infrastructure (roads, ports, railways, utility supply, IT
infrastructure), selected supply chain locations and comprehensive
timber supply chain locations. Impacts on the UK workforce due to
physical climate risk were also reviewed.
In future reporting periods the Group will conduct deep dive
assessments on other material types in its supply chains.
56
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Scenario results
Resilience over the 3 Scenarios
Scenario
Future costs
(resilience)
Proactive
LOWEST
Reactive
HIGHER
Inactive
HIGHEST
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.
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.
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.
Summary of Transitional Risks
There are two predominant transitional risk implications of climate
change for the Group – both of which are rated as high-risk. Firstly,
impacts on the ongoing relevance of the products and services that the
Group sells to the market. Secondly, impacts on the pace and methods
of upgrading the Group’s own fleet, in line with or ahead of UK policy.
With regard to products and services, 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.
Carbon pricing will introduce a cost to embodied emissions and
climate experts are calling for carbon pricing across more sectors
and on high-emission materials such as steel, plastic, cement and
bricks. In 2023, the EU implemented the Carbon Border Adjustment
Mechanism trial phase, placing a cost on the embedded emissions
in certain materials. The UK will likely follow and introduce a similar
mechanism. Whilst the Group has a policy to pass price increases
through to customers, thereby not directly taking on these costs,
the market will consider alternative materials, and the Group will
need to adapt to remain relevant.
Steel price
l
e
e
t
S
f
o
e
n
n
o
t
/
£
1,600
1,400
1,200
1,000
800
600
400
200
0
2020
2025
2030
2035
2040
2045
2050
Proactive
Reactive
Inactive
Figure 8: The price of steel after the introduction of a carbon border
mechanism across each climate scenario and timeframe.
PVC price
e
n
n
o
t
/
£
1,400
1,200
1,000
800
600
400
200
0
2020
2025
2030
2035
2040
2045
2050
Proactive
Reactive
Inactive
The price of PVC across each scenario and timeframe.
† Climate scenarios make projections on hypothetical futures and as such come with a degree of uncertainty. While
some of the information obtained from existing climate models have a high degree of accuracy, there is still a level
of uncertainty. As a result, scenario analysis should only be used as a guide for climate-related risks and opportunities.
Travis Perkins plc Annual Report and Accounts 2023
57
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section
Contents Generation – Section
Contents_GEN_Page
Contents_GEN_PageL2
Climate-related
financial disclosure continued
Cement price
t
M
/
£
350
300
250
200
150
100
50
0
2020
2025
2030
2035
2040
2045
2050
Proactive
Reactive
Inactive
The price of cement across each scenario.
In addition to the cost increase of high-embodied carbon products,
there will also be a move to heating technologies with a lower carbon
impact in-use, such as heat pumps instead of gas boilers.
Heat pump installation projections
)
n
o
i
l
l
i
m
(
s
n
o
i
t
a
l
l
a
t
s
n
I
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0
2020
2025
2030
2035
2040
2045
2050
Proactive
Reactive
Inactive
Government target
Heat pump installation projections.
Oil price
J
G
/
£
12.2
12.0
11.8
11.6
11.4
11.2
11.0
10.8
10.6
2020
2025
2030
2035
2040
2045
2050
Proactive
Reactive
Inactive
Pricing for Oil under each of the three scenarios.
58
Travis Perkins plc Annual Report and Accounts 2023
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. The Group appointed a new Head of Commercial
for Sustainable Products and Services and Sustainable Product
Data Analyst in 2023 to accelerate this work.
With regard to the Group’s heavy fleet, 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 2023, £39.5m
was invested in replacement or new delivery vehicles and an additional
£1.2m on plant assets across the network. £600k was invested into
HVO fuel purchase, based on average costs compared to diesel in 2023.
Transport-related carbon reduced by 11% in 2023 as compared to 2022.
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. Although this will be considered in future years as a
tool to support the business case for change, particularly in light of the
projected costs for oil under the three scenarios.
Summary of physical risks
The physical risk from climate change to the Group’s estate in the UK
and the UK transport, utility and IT infrastructure 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.
The assessment of physical climate risks
to the estate informs the decisions of the
Group Property team with regard to
adaptation of existing sites and the
location and design of future sites.
Nick Pinney
Group Property Director
S
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Contents Generation – Section
Contents_GEN_Page
Contents_GEN_PageL2
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 the 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.
• Direct flood impacts (damages to the Group’s property, stock and
machinery) will likely increase in the inactive scenario. 45 branches
are at direct risk from river flooding and 73 branches will be exposed
to indirect risks of flooding i.e. affected transport networks. Annually,
Wales, Scotland and the Northwest receive the most rainfall.
• Heatwaves are predicted to become more likely as the UK temperature
is predicted to rise between 0.67°C and 1.45°C by mid-century (from
a 1980-2010 baseline). Extreme temperatures can disrupt transport
networks, reduce employee productivity, increase the risk of wildfire
and decrease the efficiency of electrical products. Greater London,
the South East and South West will experience the most significant
temperature increases under all three scenarios.
• A forecast 0.5m rise in sea levels would not impact on all of the
Group’s 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. Twenty-one Group sites could be
impacted by 2050 under the Inactive scenario.
Timeframe for
0.5m sea level
rise to impact
Proactive
Reactive
Inactive
2110
(86 years)
2080
(56 years)
2070
(46 years)
• 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.
Higher increases
in precipitation
Higher sea level
rise impacts
Regions likely to experience the highest temperature increases under the
three scenarios.
Region
Greater London
South East
South West
Reference period
(1980–2011)
10.77
10.69
10.48
Average daily temperature projection by 2052 (°C)
Proactive
Reactive
Inactive
11.44 (6%)
11.76 (9%)
12.22 (13%)
11.36 (6%)
11.68 (9%)
12.14 (14%)
11.15 (6%)
11.47 (9%)
11.93 (14%)
Regions likely to experience the highest precipitation increases under the three
different scenarios.
Region
Wales
Scotland
North West
Reference Period
(1980-2011)
1032
1028
937
Annual Precipitation Projection by 2052 (mm/yr)
Proactive
Reactive
Inactive
1056 (2%)
1082 (5%)
1066 (3%).
1029 (0.1%)
1029 (0.1%)
1053 (2%)
962 (3%)
972 (4%)
970 (4%)
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.
The Group will use the insight provided by the scenario analysis to refine its property and
insurance strategies.
Higher increases
in temperature
Travis Perkins plc Annual Report and Accounts 2023 59
Climate-related
financial disclosure continued
A deep-dive on physical risk to UK infrastructure
In 2023, scenario analysis included a review of the physical climate
risks affecting the UK infrastructure. The headlines of this analysis
are as follows:
• Roads will be affected by increased precipitation due to landslide
risks and closed roads, in addition to increased surface water runoff.
Extreme heat can also cause roads to melt. Road disruption affects
both distribution of goods and the ability for employees and
customers to travel to sites.
• Ports will be affected by sea level rises, storm surges and damage
to port infrastructure. Shipping fees may increase as ports raise
handling fees for repairs after storm damage and port closures
will cause bottlenecks at other ports across the UK.
A deep-dive on physical risk to timber supply chains
In 2023, scenario analysis included a deep-dive review of the
physical climate risks to timber supply chains. Globally, climate
change is expected to increase the frequency of extreme weather
events, exposing the timber industry to varying degrees of risk.
Key takeaways from the analysis were as follows.
• Increased carbon in the atmosphere will benefit tree growth,
providing other factors also increase (water availability,
soil nutrients, etc.).
• There is a risk to timber quality as increased carbon can promote
faster tree growth, potentially making the timber unsuitable for
construction grade requirements.
• Increased heat waves can directly damage foliage on trees and bake
• Railways will be affected as heat waves can buckle tracks and
soils, affecting growth rates.
flooding prevents trains from accessing tracks. Secondary risks
include landslides and rock falls which can damage tracks and
other rail infrastructure.
• Electricity supply will be affected as increased temperatures cause
lower efficiency in electrical products, including solar panels. Storms
can damage transmission lines and cause wind turbines to cut out.
Storm damage to transmission lines left over 1 million people and
businesses without power for a week in 2022. Extended droughts
can impact water availability for hydroelectric power.
• IT infrastructure will be affected as increased flooding can corrode
buried electrical cables and high-flowing flood water can damage
telephone masts and other IT infrastructure. High temperatures
impact wi-fi speeds as routers struggle to send and receive data.
The analysis confirms that the overall risks are low to medium, and
the Group is well placed to balance the risk with the opportunity to
sell products which prevent or remediate climate impacts.
The Group will use the insight provided by the scenario analysis to
inform its approach to property locations, energy resilience, logistics
planning, commercial strategy and business continuity.
• Drought events limit water availability for tree growth and can cause
reduced yields or tree mortality.
• Wildfire events will be more frequent, damaging forests.
• Flooding, due to increased precipitation, can prevent access
to forests.
• Warmer climates favour invasive pest and disease species,
threatening trees and ecosystems.
• Storm damage will increase, damaging forests and also potentially
requiring timber to be treated before it can be used in construction.
The Group is protected in general by its spread of supply chain
partners, enabling continuity of supply when parts of the supply
chain are affected. The risks of supply chain disruption are rated as
low-medium over the three scenarios. The Group will use the insight
provided to inform its commercial strategy in order to ensure supply
chain resilience and to work with suppliers to enable them to act early
and ensure a just transition.
Timber is an important product category for the Group,
and one which is likely to increase as customers seek
to decarbonise construction and comply with the UK
government’s ‘Timber in construction roadmap’. We work
closely with our suppliers and use scenario analysis insights
to understand risk, inform our commercial plan and develop
key mitigation actions.
Rosie Wise
Category Director – Timber and Joinery
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Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section 2023 transport-related carbon reduction
11%
2023 investment in fleet decarbonisation
£41m
Travis Perkins plc Annual Report and Accounts 2023
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financial disclosure continued
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).
KPIs and metrics which more directly align to the material risks and
opportunities set out in this disclosure have been added to the table.
The 2023 Scope 3 engagement target for the GLT was almost
achieved. In total 57% 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 125 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 and 2 carbon
emissions that are equal to or less than the emissions the Group
removes from the environment.
2023 headline performance
2023 saw reductions across both
operational and supply chain carbon
and we increased the percentage of
our spend with suppliers who have
calculated their carbon and set reduction
targets. Decarbonisation of the industry
remains our sustainability priority.
James Vance,
Group Head of Environment
Scope 1 and 2 carbon reduction
7%
Scope 3 carbon reduction
3%
Spend with suppliers engaged
on carbon
57%
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2023
Non-UK
Energy GWh
Total
UK
Non-UK
Total
UK
Non-UK
Total
UK
Non-UK
Total
%
%
2022
2021
2020
Energy GWh
Performance in
2023 vs 2022
Performance in
Targets
2023 against
(with 2020
2020 target
baseline)
baseline year
GWh energy
Annual energy use relating to gas,
purchased electricity and transport
fuel (for SECR compliant kWh data
see the data table on page 206)
Scope 1
Direct emissions from burning gas and
solid fuel for heating and from road fuel
use for distribution1
306
6
312
314
8
322
358
6
364
334
5
339
(3)%
Carbon Dioxide Equivalent (CO2e) Tonnes
Carbon Dioxide Equivalent (CO2e) Tonnes
51,325
501
51,826
55,218
1,016
56,234 63,285
814
64,099
60,656
641
61,297
(8)%
Scope 2
Indirect emissions from our use of electricity
0
856
856
0
652
652
13,121
530
13,651
17,333
461
17,794
31%
Scope 1 and 2 Absolute
51,325
1,357
52,682
55,218
1,668
56,886
76,406
1,344
77,750
77,989
1,102
79,091
(7)%
Scope 1 and 2 Intensity
Emissions from Scope 1 and 2 sources per
£m of revenue
% of fleet (inc. MHE) that is low-carbon in
use (either electric, hybrid or alternate fuel)
Scope 3 Absolute2
Indirect emissions from the supply chain.
Including all Scope 3 categories
Scope 3 Intensity
Emissions from Scope 3 sources per £m
of revenue
% heat generators sold which are low
carbon (i.e. heat pumps, solar thermal or
electric boilers)
% of group product spend with suppliers
engaged on decarbonisation (carbon
calculated and targets set)
10.7
11.3
10.8
11.2
16.0
11.3
16.9
14.6
16.8
21.3
15.7
21.2
(4)%
26%
22%
18%
17%
4 ppt
7,657,832
292,988
7,950,820
8,132,970
103,868 8,236,838 8,904,544 128,958 9,033,502 8,466,700
424
8,467,124
(3)%
63% reduction
by 2035
(6)%
1,599
2,442
1,630
1,650
999
1,637
1,971
1,402
1,960
2,316
6
2,274
0%
(28)%
10.7%
57%
54%
14%
1%
3 ppt
New KPI
Scope 1, 2 and 3 Absolute
7,709,157
294,345
8,003,502
8,188,188 105,536 8,293,724 8,980,950 130,302 9,111,252 8,544,689 1,526 8,546,215
(3)%
(6)%
Net zero by
2035 (min.
80% reduction
(33)%
(49)%
62
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section
Carbon data table
The Group has reported on all of the emission sources required under
the Companies Act 2006 (Strategic report and Directors’ reports)
Regulations 2013. The numbers reported include data for companies
where Travis Perkins plc has operational control. Scope 1 and 2
emissions are calculated using the DEFRA Conversion Factors for
Company Reporting 2023 on an operational control basis. Scope 3
emissions are calculated using EcoInvent or DEFRA factors. Specific
data points in the carbon chart and the carbon data table, marked with
the logo “
procedures. For a link to the assurance report see page 41.
”, have been assured against Lloyd’s Register verification
1. Fugitive emissions from domestic refrigeration and building air conditioning are
included but they are not material to the Group’s overall emissions.
2. Scope 3 data quality improved in 2023, due to data corrections and the use of
Environmental Product Declaration carbon data where available within Category
1: Purchased Goods and Services, instead of estimated emissions factors. 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.
Total emissions Scope 1, 2 and 3 (tonnes CO2e)
Scope 3 % of total emissions
8,003,502
99.34%
2022
2021
2020
Performance in
2023 vs 2022
Targets
(with 2020
baseline)
Performance in
2023 against
2020 target
baseline year
UK
Total
UK
Non-UK
Total
UK
Non-UK
Total
UK
Non-UK
Total
%
%
Energy GWh
306
6
312
314
8
322
358
6
364
334
5
339
(3)%
Carbon Dioxide Equivalent (CO2e) Tonnes
Carbon Dioxide Equivalent (CO2e) Tonnes
51,325
501
51,826
55,218
1,016
56,234 63,285
814
64,099
60,656
641
61,297
(8)%
Indirect emissions from our use of electricity
0
856
856
0
652
652
13,121
530
13,651
17,333
461
17,794
31%
Scope 1 and 2 Absolute
51,325
1,357
52,682
55,218
1,668
56,886
76,406
1,344
77,750
77,989
1,102
79,091
(7)%
Emissions from Scope 1 and 2 sources per
10.7
11.3
11.2
16.0
11.3
16.9
14.6
16.8
21.3
15.7
21.2
(4)%
Net zero by
2035 (min.
80% reduction
(33)%
(49)%
7,657,832
292,988
7,950,820
8,132,970
103,868 8,236,838 8,904,544 128,958 9,033,502 8,466,700
424
8,467,124
(3)%
63% reduction
by 2035
(6)%
22%
18%
17%
4 ppt
Emissions from Scope 3 sources per £m
1,599
2,442
1,630
1,650
999
1,637
1,971
1,402
1,960
2,316
6
2,274
0%
(28)%
54%
14%
1%
3 ppt
New KPI
Scope 1, 2 and 3 Absolute
7,709,157
294,345
8,003,502
8,188,188 105,536 8,293,724 8,980,950 130,302 9,111,252 8,544,689 1,526 8,546,215
(3)%
(6)%
Travis Perkins plc Annual Report and Accounts 2023 63
2023
Non-UK
Energy GWh
10.8
26%
10.7%
57%
GWh energy
Annual energy use relating to gas,
purchased electricity and transport
fuel (for SECR compliant kWh data
see the data table on page 206)
Scope 1
Direct emissions from burning gas and
solid fuel for heating and from road fuel
use for distribution1
Scope 2
Scope 1 and 2 Intensity
£m of revenue
% of fleet (inc. MHE) that is low-carbon in
use (either electric, hybrid or alternate fuel)
Scope 3 Absolute2
Indirect emissions from the supply chain.
Including all Scope 3 categories
Scope 3 Intensity
of revenue
% heat generators sold which are low
carbon (i.e. heat pumps, solar thermal or
electric boilers)
% of group product spend with suppliers
engaged on decarbonisation (carbon
calculated and targets set)
n
o
b
r
a
c
l
a
n
o
i
t
a
r
e
p
O
n
o
b
r
a
c
n
i
a
h
c
y
l
p
p
u
S
l
a
t
o
T
n
o
b
r
a
c
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section
Business performance
and priorities
Protecting market position in challenging
conditions
• Progressive downturn in new build housing and
private domestic RMI markets leading to Group
revenue 2.7% lower than prior year
• Combination of lower volumes, overhead cost inflation
and rapid commodity price deflation in H2 resulted in
adjusted operating profit of £180m (2022: £295m)
• Invested to protect and build market positions with
market share gains in both Toolstation and Travis
Perkins General Merchant
Transforming the operating model to build
a stronger business
• Step change reduction in non-branch cost base
delivered with £35m annualised savings
• Working on a plan for a potential exit
of Toolstation France; strategic review
of options for Toolstation Benelux
• Optimising Benchmarx branch network with
focus on integrated offer within destination
• Continued rationalisation of legacy Toolstation UK
supply chain, following successful opening of the
new Pineham distribution centre
• Delivering profit enhancements through greater
synergies between Group businesses, lowering
supply chain costs and harnessing benefits from
new technology
• Operating profit of £110m (2022: £285m) reflects
trading performance and a restructuring charge of
£60m recognised in 2023, of which around £16m
is cash, related to Toolstation France and Benchmarx
impairments alongside restructuring actions
£m (unless otherwise stated)
Revenue
Adjusted operating profit
Adjusted earnings per share
Return on capital employed
Net debt / adjusted EBITDA
Ordinary dividend per share
Operating profit
Profit after tax
Basic earnings per share
Note
1
2a
19b
25
24
20
2a
19a
2023
4,862
180
45.7p
6.3%
2.6x
18.0
110
38
18.1p
2022
4,995
295
94.6p
10.8%
1.8x
39.0p
285
192
90.8p
Summary
2023 was a challenging year for the Group as a combination of
macroeconomic uncertainty, progressively weakening end market
demand, sharp deflation on commodity products in the second half
and overhead inflation made business planning difficult, weighing heavily
on the Group’s earnings performance during the year. Reflecting the
expectation of continued challenging market conditions, management’s
primary focus is now to drive efficiencies through the transformation of
the Group’s operating model and prioritise capital allocation to support
the recovery of profitability and reduction of leverage in the medium term.
2023 Performance
The Group delivered revenue of £4,862m, down 2.7% versus 2022.
The decline in revenue was driven by the Merchanting businesses with
rising interest rates leading to a significant reduction in new build housing
activity. A lack of secondary housing transactions, coupled with weak
consumer confidence and pressure on household finances, resulted in
the domestic RMI market also remaining subdued. Toolstation saw good
revenue growth in both the UK and Europe with maturity benefits being
realised and further market share gains.
Adjusted operating profit of £180m was £115m, or 39%, lower than in
2022 with the prior year reported adjusted operating profit also including
a £15m restructuring charge. Around £60m of the profit decline resulted
from lower sales volumes whilst approximately £25m was attributable
to lower gross margins, with deflation on timber products in the second
half a significant contributory factor.
Although the Group delivered overhead savings in 2023 of around
£35m, the remaining profit reduction was due to these savings being
more than offset by overhead increases. The majority of these
increases related to inflation, primarily on salaries, and included an £8m
cost-of-living payment in January 2023. The increase in overheads also
64
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section included £(20)m investment in Toolstation, primarily in the new
distribution centres at Pineham (UK) and Rotterdam (Netherlands
and Belgium) plus the ongoing expansion of the European network.
Transformation of the Group’s operating model
Given the significant impact of the macroeconomic environment on the
Group’s profitability, and with uncertainty remaining as to the timing and
speed of recovery in the Group’s key end markets, management has
commended further significant actions which will transform the
business for the future.
The first phase of this review, completed in the fourth quarter, will
deliver further cost savings of around £35m in 2024, primarily from
a reduction in central and regional headcount and the closure of the
Toolstation Bridgwater distribution centre.
The next phase commenced in February 2024 with 39 standalone
Benchmarx branches closed as part of a review of the strategy of
the business. The focus is now on optimising the profitability of the
remaining standalone branches and growing the network through
integrated solutions in new General Merchant branches which
provide a lower cost model with a convenient customer journey.
In March 2024 the Group announced the proposed closure of the
Toolstation Daventry distribution centre which represents the next
stage of supply chain consolidation within Toolstation UK.
Work to deliver further structural efficiencies will continue over
the medium term and be focused on the following areas:
• Supply chain consolidation – reviewing and optimising the Group’s
supply chain to take advantage of scale and consolidation opportunities.
• Technology enablement – driving benefits from new technology
starting with the implementation of a new Oracle finance system
to improve processes, data, and control.
• Simplifying our structures – streamlining the interactions between
businesses and with customers.
• Shared procurement capability – consolidating separate
procurement functions across business units and leveraging
the Group’s scale to optimise procurement processes.
Adjusting items
There were £60m of adjusting items in the year (2022: zero):
Restructuring charge
Benchmarx branch closures
Toolstation France impairment
Total
£m
17
10
33
60
metrics. The Group’s balance sheet remains robust with the refinancing
of the 2023 bond completed during the year and the renewal of the
revolving credit facility of £375m (see “Funding” section for more
details); providing adequate liquidity for its future plans.
However, with net debt/adjusted EBITDA rising to 2.6x at the year-end,
management has set out the following medium-term capital
allocation priorities:
• Maintaining an investment grade credit rating by returning lease-
adjusted leverage to the target range as soon as possible
• A disciplined approach to capex and property spend focused on
maintaining asset quality and sources of competitive advantage
• Improving working capital management and an ongoing review of
loss-making activities
• An attractive and sustainable dividend
Taking into account all of these factors, for 2023 the Board is recommending
a final dividend of 5.5 pence per share (2022: 26.5 pence per share) to
give a full year dividend to 18.0 pence per share (2022: 39.0 pence per
share), in line with the Group’s previously communicated policy.
The commitment to lowering leverage will result in a planned reduction
in capital expenditure to £80m in 2024 (compared to medium-term
guidance of £125m). Property activity will continue in order to enhance
the quality of the Group’s branch network but with the objective of
generating a cash surplus from property transactions in the year.
Property
The Group generated property profits of £15m in the year, with
£67m of cash proceeds. The main transaction in the year was
the sale-and-leaseback of seven sites in March 2023 for £23m.
The Group continued with its policy of reinvesting freehold sale
proceeds with the purchase of a 6.25 acre industrial site in Selsdon,
near Croydon for £22m the major purchase during the year.
Outlook
A recovery in the UK construction sector is unlikely to gather any
momentum before the UK general election is concluded with the
Group’s customers, large and small, inevitably waiting to see if there
is a post-election government stimulus package for the sector and
also seeking clarity on the future direction of interest rates.
Mindful of these challenges, management is planning another year
of weak demand, with overhead and cash management actions
supporting financial performance. Lead indicators and customer
feedback will be closely monitored to inform further actions during
the year. Pricing benefit is expected to be minimal in 2024 with lower
timber pricing rolling over into H1 and limited manufacturer increases.
The restructuring charge relates primarily to severance payments made
as a result of headcount reductions in Q4 2023, the majority of these
roles being in central functions or regional sales and support teams.
Also included in the charge are the costs related to the closure of the
Toolstation UK Bridgwater distribution centre and other supply chain
restructuring activity.
Whilst it is still early in the trading year, the Group has seen a
continuation of the weak trading environment experienced in the
second half of 2023. Accordingly, management’s best estimate at
this stage is that FY24 adjusted operating profit will be in the range
of £160m to £180m, inclusive of around £10m of property profits
and around £20m of losses in Toolstation France.
The charge associated with the Benchmarx branch closures related
to fixed asset impairments and property closure costs.
The Toolstation France impairment charge relates to the write-down
of goodwill, property and right-of-use assets under IAS36.
Capital structure and shareholder returns
The Group has previously 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 maintenance of investment grade credit
Technical guidance
The Group’s technical guidance for 2023 is as follows:
• Expected ETR of around 29% on UK generated profits
• Capital expenditure of around £80m
• Property profits of around £10m
Travis Perkins plc Annual Report and Accounts 2023 65
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Business performance
and priorities continued
Merchanting
Revenue
£4,036m
2022: £4,220m
Adjusted operating profit
£212m
2022: £314m
2024 priorities
– Drive benefits from technology investments to gain
market share and increase margins
– Grow higher margin and value-added services,
including Hire and Management Services
– Procurement functions consolidation to harness the
buying power of the Group’s combined scale
– Tight management of the cost base, including supply
chain efficiencies
66
Travis Perkins plc Annual Report and Accounts 2023
Revenue
Adjusted operating profit
Adjusted operating margin
ROCE
Branch network
2023
2022
Change
£4,036m £4,220m
£314m
7.4%
15%
767
£212m
5.3%
9%
769
(4.4)
(32.5)%
(210)bps
(6)ppt
2
Segmental adjusted operating profit excludes property profits
The Merchanting segment had a challenging year with revenue down
by 4.4% and adjusted operating profit reduced by 32.5% to £212m,
reflecting the high operational gearing of the Merchant businesses.
Revenue decline was consistent although the drivers moved
significantly through the year with pricing starting off at elevated
levels due to the rollover of 2022 increases before falling away rapidly.
Deflation on commodity products, notably timber, became a major
factor in the H2 with overall pricing turning negative, having been
+9% in Q1. By contrast, volumes started the year weakly, driven by
a reduction in new build housing activity, before levelling off in H2
as comparatives eased and actions on pricing delivered market
share gains in the General Merchant.
Throughout a difficult year, the Merchant businesses remained focused
on meeting customers’ needs, notably in the second half when pricing
was adjusted to reflect the weak demand environment and ensure that
existing customers were retained alongside winning new work. There
was continued progress on the development of digital capability and
increased penetration of higher margin, value-added services,
particularly Hire which delivered revenue growth of 6%
The private domestic RMI market, the Merchant segment’s largest
end market which is primarily serviced by the Group’s General
Merchant business, remained pressed throughout the year.
Pressures on household finances, the significant rise in the costs
of building materials and labour and the rise in the cost of borrowing
have all contributed to lower levels of activity in the renovation and
improvement market.
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section The private domestic new-build market, primarily serviced by Keyline,
CCF and Staircraft working with national and regional housebuilders,
was significantly impacted by the economic turmoil in autumn 2022
with activity down by around one-fifth in the year. This reduction in
activity has weighed heavily on the performance of all three businesses
with each deriving at least half of their revenue from this customer base
in normal market conditions.
The Merchant segment’s other end markets – commercial, industrial
and public sector – which represent around half of the segment’s
revenue, remained relatively stable, supported by long-term projects.
This stability was reflected in a more resilient performance in BSS,
which derives the majority of its revenue from these sectors, and in
the Group’s Managed Services business where revenue increased
by 5% as the business continues to benefit from its tailored
proposition to partner with social housing providers.
Adjusted operating margin reduced by (210)bps as a result of
lower gross margins and high levels of operational gearing in the
Merchant businesses. Overhead inflation, mainly driven by payroll
costs, remained elevated with underlying inflation of around 5%.
Cost actions and volume related savings of around £35m in 2023
mitigated the overall cost increase to around 1% for the year.
Travis Perkins plc Annual Report and Accounts 2023
67
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Business performance
and priorities continued
Toolstation
Revenue
£826m
2022: £775m
Branch network
739
2022: 721
2024 priorities
– Optimisation of the supply chain, taking advantage
of the Pineham DC and recovering fixed costs
– Selective network expansion towards long-term
target of 650 stores in the UK
– Continue to win share in a difficult market with
an enhanced trade customer proposition
– Strategic review of the Toolstation Benelux business
68
Travis Perkins plc Annual Report and Accounts 2023
Revenue
Like-for-like growth
Adjusted operating profit – UK
Adjusted operating profit – Europe
Adjusted operating profit – Total
Adjusted operating margin
ROCE
Store network (UK)
Store network (Benelux)
Store network (France)
2023
£826m
4.0%
£23m
£(37)m
£(14)m
(1.7)%
(2)%
570
119
51
2022
£775m
(3.7)%
£21m
Change
6.6%
7.7ppt
9.5%
£(30)m (23.3)%
£(9)m (55.6)%
(1.2)% (50)bps
–
7
6
6
(2)%
563
113
45
Segmental adjusted operating profit excludes property profits
Toolstation made good progress during the year with 6.6% sales growth
demonstrating the businesses’ ability to win share in difficult markets.
In the UK, where sales grew by 5.3%, network expansion was limited in the
year to a net seven new stores reflecting a combination of market outlook,
significant investment in the network in recent years and management
focus on the opening of the new distribution facility in Pineham,
Northamptonshire. Pineham opened in Q3 with 500,000 square feet of
capacity and semi-automation technology providing distribution capability
as the business grows over the next decade. As a result of Pineham
coming on-line, the Bridgwater distribution centre was closed in Q2 2023.
A further review of the retail distribution network proposed closing the
Daventry distribution centre which was announced in Q1.
UK adjusted operating profit grew by 9.5% to £23m which included
around £13m of higher operating costs related to start-up and dual
running costs at Pineham. Management expects to recover these costs
over the next three years as supply chain efficiencies come through.
In September the Toolstation UK management team set out their vision for
the future of the business at a Capital Markets Update with the ambition to
grow revenue to £1bn by 2027 with operating margin increasing to around
8% through scale efficiencies and margin enhancement opportunities. The
materials from the event can be accessed via the Travis Perkins plc website.
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Toolstation Europe
France
Toolstation France delivered sales growth of 29% in the year but
losses increased to £18m as six new stores were added alongside
further investment in infrastructure. Despite some positive progress
in the past year, the business in France faces long-term challenges
which significantly increase the time and investment needed to
achieve profitability. These challenges include:
• Building brand awareness
• Serving the trade in a less populated region
• Ongoing weak demand in the end market
Taking these factors into consideration, and with forecast losses
expected to increase to £20m in 2024, management has concluded
that the investment required to reach profitability is no longer sustainable
and, today confirms that it is working on a plan for a potential exit of the
business. Any decision will be subject to a prior consultation process
with the relevant employee representatives.
Benelux
Although sales grew by 10%, performance overall in Benelux in 2023
was significantly below management expectations with a loss of £19m
in the year (2022 : £15m). The increase in losses was a result of weak
gross margins, cost inflation and the additional costs of the second
distribution centres alongside six new branches.
Management forecast losses to narrow to around £12m in 2024 in
Benelux and now anticipates that the Netherlands business will reach
break-even point, on an annual basis, by 2025 with Belgium expected
to reach profitability by 2028. With end market conditions expected to
remain challenging in the near term and the delay to reaching profitability,
management have commenced a strategic review of both businesses.
Travis Perkins plc Annual Report and Accounts 2023 69
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Financial review
Revenue analysis
The Merchanting business saw consistently challenging trading conditions across the year, although the drivers of performance varied significantly.
At the start of the year price inflation remained high, largely driven by the rollover of 2022 increases. By contrast, volumes were very weak,
particularly in the new house building sector following the impact of the “mini-budget” in late 2022.
From May onward, a sharp decline in the price of commodity products, notably on timber, saw the overall basket of goods move into deflation
as price reductions were passed on to customers. Volumes stabilised in the second half as comparatives eased and more competitive pricing
delivered market share gains in the General Merchant.
Toolstation also gained market share across the year in both the UK and Europe with volume growth despite a declining market and robust pricing.
Maturity benefits from the investment in the store network and customer proposition continue to come through.
Merchanting
Toolstation
(1.3)%
(5.7)%
(4.4)%
(0.4)%
0.4%
(4.4)%
5.4%
(1.4)%
4.0%
2.3%
0.3%
6.6%
Group
1.9%
(5.0)%
(3.1)%
0.0%
0.4%
(2.7)%
Total revenue*
Like-for-like revenue
2023
(3.2)%
(5.6)%
(4.5)%
(3.4)%
(5.1)%
(4.2)%
(4.4)%
8.6%
9.7%
9.0%
7.3%
1.1%
4.1%
6.6%
(1.5)%
(3.3)%
(2.5)%
(1.8)%
(4.0)%
(2.9)%
(2.7)%
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%
2023
(4.2)%
(5.2)%
(4.8)%
(2.9)%
(5.2)%
(4.1)%
(4.4)%
4.6%
7.2%
5.9%
4.4%
0.0%
2.2%
4.0%
(2.9)%
(3.3)%
(3.2)%
(1.8)%
(4.3)%
(3.0)%
(3.1)%
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%
Price and mix
Like-for-like volume
Like-for-like revenue growth
Network changes, acquisitions and disposals
Trading days
Total 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
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Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Operating profit
£m
Merchanting
Toolstation
Property
Unallocated costs
Adjusted operating profit
Amortisation of acquired
intangible assets
Adjusting items
Operating profit
2023
212
(14)
15
(33)
180
(10)
(60)
110
2022
314
(9)
25
(35)
Change
(32.5)%
(55.6)%
(40.0)%
5.7%
295
(39.0)%
(10)
–
285
100%
Finance charge
Net finance charges were in line with prior year at £40m.
Taxation
The tax charge before adjusting items was £44m (2022: £55m) giving
an adjusted effective tax rate (adjusted ‘ETR’) of 31.5% (standard rate:
23.5%, 2022 actual: 21.7%). The adjusted ETR rate is substantially higher
than the standard rate due to the effect of expenses not deductible for
tax purposes, the largest item being unutilised overseas losses.
The statutory tax charge for 2023 was £32m (2022: £53m) giving an
effective tax rate of 45.6% (2022: 21.6%). This is higher than the
adjusted ETR as a result of the tax effect of the impairment of goodwill.
Earnings per share
The Group reported a total profit after tax of £38m (2022: £192m)
resulting in basic earnings per share of 18.1 pence (2022: 90.8 pence).
Diluted earnings per share were 17.8 pence (2022: 89.2 pence).
Adjusted profit after tax was £96m (2022: £200m) resulting in
adjusted earnings per share (note 19) of 45.7 pence (2022: 94.6 pence).
Diluted adjusted earnings per share were 45.0 pence (2022: 92.9 pence).
Cash flow and balance sheet
Free cash flow
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
165
270
(105)
100
(22)
(25)
(26)
(41)
151
97
(76)
(17)
(21)
(58)
195
(109)
(110)
2
44
10
95
3
76
(8)
(5)
17
(42)
1
(8)
(49)
The Group delivered free cash flow conversion of 81% in the year
(2022: 67%). Working capital increased year on year driven by a
reduction in other creditors. Trade debtors and payables reduced in line
with volumes and revenue across the Group whilst stock remained flat.
Capital investment
£m
Strategic
Maintenance
IT
Base capital expenditure
Freehold property
Gross capital expenditure
Disposals
Net capital expenditure
2023
2022
51
52
6
109
33
142
(68)
74
75
28
7
110
38
148
(23)
125
Base capital expenditure in cash terms was in line with prior year and
below the Group’s medium-term guidance (of £125m per annum),
reflecting the weaker demand outlook.
Strategic capex was £25m lower than prior year, reflecting a significant
slowdown in the Toolstation store rollout in both the UK and Europe,
with new 23 stores in 2023 compared to 70 in 2022, and the spend
on Toolstation distribution capacity in the prior year.
Maintenance capex increased by £25m, principally as a result of a
overdue fleet replacement.
Uses of free cash flow
£m
Free cash flow
Investments in freehold property
Disposal proceeds from freehold
transactions
Dividends paid
Net purchase/sale of own shares
Drawdown of borrowings
Repayment of borrowings
Other
2023
2022
Change
44
(33)
67
(82)
–
(11)
100
(180)
3
95
(38)
12
(82)
(172)
(7)
75
(49)
5
56
–
172
2
25
(120)
(60)
–
7
Change in cash/cash equivalents
(92)
(237)
Cash and cash equivalents reduced by £(92)m in the year primarily as
a result of financing activity. The remaining 2023 bond (£180m) was
repaid during the year, being largely replaced with £100m of US private
placement notes (details below).
In 2022, the Group repurchased £120m of bonds early via a tender
offer as part of the ongoing management of its debt maturity profile,
these bonds being partly replaced by a £75m term loan. The Group
also completed a £240m share buyback programme in 2022 to return
the proceeds of the sale of the Plumbing & Heating division in 2021.
Travis Perkins plc Annual Report and Accounts 2023
71
£m
2023
2022
Change
Cash payments on adjusting items
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Financial review continued
Net debt and funding
2023
2022
Change Covenant
Net debt
£922m £819m
Net debt / adjusted EBITDA
2.6x
1.8x
<4.0x
Net debt excluding leases
£314m £(35)m
£(35)m
Net debt excluding leases/
adjusted EBITDA
0.9x
0.8x
(0.1)x
Note – All covenant metrics measured post IFRS16
Overall net debt increased by £103m of which £68m related to
increased lease commitments. The higher lease commitments were
principally a result of the Group investing in a new Toolstation UK
distribution centre, a new manufacturing facility for Staircraft and the
sale-and-leaseback package of seven sites completed in March 2023.
Funding
As at 31 December 2023, the Group’s committed funding of
£800m comprised:
The Group settles its currency denominated purchases using a
combination of currency purchased at spot rates and currency
bought in advance on forward contracts. It purchases forward contracts
for approximately 90% of its committed requirements six months
forward based on the firm placement of forward stock purchases.
At 31 December 2023 the nominal value of currency forward
contracts was €6m (2022: €10m) and US$22m (2022: US$30m).
The Group is a substantial provider of credit to a large portfolio of small
and medium-size businesses throughout the UK together with some of
the country’s largest construction companies. It manages its exposure
to credit risk through a strong credit control function that works closely
with the business and its customers to ensure the Group offers credit
sufficient for the needs of those customers without exposing the Group
to excessive risk. The bad debt charge in 2023 was approximately 0.3%
(2022: 0.3%) 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
• £250m guaranteed notes due February 2026, listed on the London
• Seek to maintain a strong balance sheet
Stock Exchange
• Place a high priority on effective cash and working
• £75m bilateral bank loan due August 2027
capital management
• A revolving credit facility of £375m, refinanced in November 2023
• Maintain liquidity headroom of over £200m and build and
and maturing in November 2028
maintain good relationships with the Group’s banking syndicate
• £100m of US private placement notes, maturing in equal tranches in
• Manage counterparty risk by raising funds from a syndicate
August 2029, August 2030 and August 2031
As at 31 December 2023, the Group had undrawn committed facilities
of £375m (2022: £400m) and deposited cash of £102m (2022:
£194m), giving overall liquidity headroom of £492m (2022: £594m).
The Group’s credit rating from Fitch Ratings was affirmed at BBB-,
albeit on negative watch, following a review in October 2023.
Financial risk management
The overall aim of the Group’s financial risk management policies is to
minimise potential adverse effects on financial performance and net
assets. The Group manages the principal financial and treasury risks
within a framework of policies and operating parameters reviewed and
approved annually by the Board of Directors. The Group does not enter
into speculative transactions.
The Group negotiated a revolving credit facility with a syndicate of eight
banks in January 2019 with terms renegotiated in November 2023.
This facility was reduced to a total value of £375m (2022: £400m)
with a maturity date that was extended to 2029. Built into the
agreement is an option to extend the maturity date to 2031.
In August 2023 the Group issued £100m of senior unsecured notes
to a syndicate of investors. These notes are split into three equal
tranches maturing in 2029, 2030 and 2031. The Group has repaid the
outstanding £180m principal amount of the 2023 guaranteed notes
in September 2023. The original size of this issuance was £300m.
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).
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 2.6x (2022: 1.8x) 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
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Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section 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.
Total Tax Contribution
The table below provides a reconciliation of the income taxes paid by
the Group in the financial year compared to the tax charge shown in the
Group’s Financial Statements. Details of the total tax contribution made
by the Group in 2023 and tax collected on behalf of tax authorities is
also detailed below.
Reconciliation of tax paid to tax charge:
Total tax charge per accounts
Deferred tax*
True up of prior periods’ tax liability
Tax deductions in reserves
Current tax payable on 2023 profits
Tax paid in 2023 to be refunded in 2024
Tax refunds received in 2023 relating to years prior
to 2022
Total net current taxes paid in 2023
Other taxes paid in 2023:
Business rates
National insurance contributions
Other taxes and duties
Total tax contribution for 2023
Tax collected in 2023:
PAYE
Employee’s NI
VAT
Construction Industry Scheme
Total tax collected and paid for 2023
£m
31.9
(5.1)
6.2
–
33.0
8.6
(1.0)
40.6
37.7
42.3
16.5
137.1
64.9
27.7
180.6
0.1
410.4
* Certain profits and costs recognised in the Financial Statements do
not result in a cash tax effect until a future date. When this happens an
accounting entry, called deferred tax, is made to recognise the expected
future tax cost or benefit.
As part of its deliberations the Board undertook a robust review of the
Emerging and Principal Risks and Uncertainties facing the Group, how
they are managed and the actions that could be taken to mitigate their
effect or avoid them altogether. The resulting disclosures, which include
those risks that could threaten the Group’s business model, performance,
solvency and liquidity are shown on pages 18 to 39 of the Annual
Report. The Board believes the Group is well-placed to manage those
risks successfully.
The Board has decided that it is appropriate to assess the performance
of the Group over a three-year period from 29 February 2024, the
month-end date closest to the approval of the 2023 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 2008–09
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
2008–09 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.
Travis Perkins plc Annual Report and Accounts 2023
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Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Statement of principal risks and uncertainties
Maintaining a dynamic and effective risk management process is central to the successful
delivery of the Group’s strategic objectives and building resilience, as the Group manages
the impacts of a challenging external environment, an evolving risk landscape and
continued uncertainty.
Risk management framework
The Group takes a balanced approach to manage risks in a proactive, efficient and effective way, targeted at the most significant risks, particularly
where there is a low tolerance for risk or uncertainty. The risk management framework considers risk from both a “top down” and “bottom up”
perspective, to support a comprehensive and common understanding of the risks and opportunities and their potential impact on the achievement
of the Group’s strategic priorities, and to provide a multi-layered approach to the review and management of risk. The approach and key
responsibilities remain consistent with the prior year, as set out in the diagram below.
Key Activities
Risk appetite – An annual Board
exercise to consider the nature and
level of risk it is prepared to accept
to deliver the strategy
Risk identification – Key review and
decision making processes capture
risks, including reviews of strategy,
major programmes and performance
Risk assessment – Risks are prioritised
using a standard scoring mechanism
and compared to appetite
Risk response – Action is taken, if
possible, for risks outside appetite.
Risk acceptance is formalised
Reporting and monitoring – The Board,
Audit Committee and GLT receive
regular risk reports and challenge and
agree the Group’s principal risks and
mitigation strategies twice a year
Emerging risks and issues – areas of
change are monitored through regular
risk activities, assurance processes and
horizon scanning
Internal control and assurance
framework – a “three lines” model to
confirm effective risk management
Top Down
Board – Audit Committee
– GLT – Risk function
Activities focused on the
assessment and mitigation of
material risks to the Group’s
strategy, business models
and operations
Bottom Up
Risk Function – Business
and Functional Leadership
– Major Programmes
Activities across the Group that
capture and assess significant
risks at a business unit,
programme or functional level
The Board
• Overall responsibility for risk
management and internal control,
reviewing effectiveness annually
• Reviews and selects the Group
principal and emerging risks and
approves related disclosures
• Sets the risk appetite and
monitors adherence
The Audit Committee
• Regular assessment of the risk
management framework, and
development activities
• Monitors the results of key
assurance processes
• Provides assurance to the Board on
the effectiveness of risk management
and financial, compliance, and
operational controls
The Group Leadership Team
• Undertakes regular top-down
risk reviews
• Monitors key risks particularly in
relation to safety, programmes
and performance
Business & functional leadership
• Responsible for control, compliance with
minimum standards and the active
management of risk for their area
The Risk function
• Maintains the risk
management framework
• Co-ordinates ‘top down’ reporting,
horizon scanning and risk disclosures
• Reviews and challenges risk content
and the quality of mitigation plans
Further details on the Group’s risk management responsibilities and oversight are set out in the Corporate Governance Report on page 93 and in
the Audit Committee Report on page 104.
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Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section G
o
v
e
r
n
a
n
c
e
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. The Board undertakes an exercise, at least
annually, to consider the nature and level of risk it is prepared to accept to
deliver the strategy and to set its resulting risk appetite. In 2023 this risk
appetite was comprehensively reviewed, with participation from the
Group Leadership Team and other senior leaders. An updated suite of
appetite statements were approved by the Board, which are used to
define the appropriate risk-taking parameters for all significant activity
within the business.
The risk appetite has been set to balance opportunities for growth
and business development in areas that present a clear opportunity
for reward, against a low risk tolerance for activities that offer little
commercial advantage or that may present a significant safety,
legal, regulatory or reputational risk.
The Board also considered the principal risks in the context of its
updated risk appetite and assessed current and planned mitigating
activities to ensure that these key risks are being managed within
the stated appetite.
Development of the Risk Management Framework
in 2023
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.
At the end of 2022 the Group commissioned an external review of its
risk management framework. This confirmed the improvements made
in recent years to the way risk is identified, considered and reported
and supported plans to continue to evolve the framework, drive greater
consistency of approach and develop the risk culture across the Group.
Alongside the comprehensive risk appetite exercise in 2023, particular
focus has been placed this year on risk management within major
transformation programmes. In addition to the risk governance
provided by the programme steering committees, and oversight from
the Group Leadership Team’s Programme Board, the Audit Committee
has received updates at every meeting on the Oracle implementation
programme, which include the current risk profile and results of
assurance activities. Another key area of focus, in preparation for
UK corporate reforms, has been the Group’s fraud risk framework,
which is now supported by a fully refreshed policy and quarterly
engagement on the key fraud risks facing the businesses.
The continued development of climate change governance and the
assessment of related principal risks and opportunities as continued
in 2023. This assessment is aligned with the Group’s risk management
framework, utilising the same impact criteria assessed over short,
medium and long term horizons. More detail on the risk assessment
process and the principal climate risks and opportunities is set out
on page 52 under climate related financial disclosure’.
The Risk function has continued to deliver training and risk workshops
in 2023 with a particular focus on supply chain resilience and
sustainable products and services. Priorities for the coming year
include communicating and monitoring adherence with the updated
risk appetite, and refreshing the guidance and materials that underpin
the risk management framework.
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 many large
organisations, the Group is also influenced by a complex set of external
factors, including geopolitical and economic risks, which drove ongoing
change and uncertainty in 2023. 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 risk impact and the mitigating actions taken
is 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.
The Board and Group Leadership Team assess the Group’s principal
and emerging risks at least twice a year. During 2023 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.
No principal risks have been added or removed in the latest risk review
and, although all risks and associated mitigations have evolved over the
past year, the overarching trends and inherent risk levels are assessed
to be broadly consistent year-on-year. As set out in the half year results,
the Board no longer considers the risk trend in relation to supply chain
resilience to be increasing albeit the inherent risk remains high. The
Group has a good track record of navigating through supply challenges
and its well established programme of stock monitoring, supplier
engagement and independent testing helps to ensure a continuous
supply of quality materials. Sourcing options for key materials are
regularly evaluated and, where possible, the Group seeks to engage
with more than one supplier where materials are sourced from more
complex supply chains outside of the UK.
Travis Perkins plc Annual Report and Accounts 2023
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Financial statementsOther informationStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Statement of principal risks and uncertainties continued
Risk Category
Principal Risks
External
1. Long-term market trends
2. Macroeconomic volatility
3. Supply chain resilience
Strategic
4. Managing change
5. Climate change and carbon reduction
Technological
6. Cyber threat and data security
Operational
7. Health, safety and wellbeing
8. Legal compliance
9. Critical asset failure
N New
Increasing
Decreasing
Limited change year-on-year
Key disruptive risks that may impact the viability of a strategy or
business model are also identified and managed. 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.
Principal risks heat map:
After mitigating action or controls
6
2
9
1
3
4
7
8
5
t
c
a
p
m
I
Likelihood
Strategic
Objective
ABCD
AE
BC
ABCDE
D
D
D
D
BCD
Risk Trend
2023
2022
Inherent Risk
High
High
High
Medium
High
High
Medium
Medium
Medium
A Operating and leading in attractive markets
B Leading the evolution of the merchanting model
C Maximising the potential of Toolstation
D Leveraging the power of the Group
E Delivering attractive financial outcomes
Emerging risks
The risk environment in which the Group operates will continue
to evolve as a result of future events and uncertainties, therefore
awareness of emerging risks arising from these forms part of the
overall risk assessment process. The Group seeks to capture
emerging risks that do not currently present a significant risk but
which may have the potential to adversely impact its operations 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 new and emerging risks through a
process of horizon scanning that includes assessment of our risk
set against a diverse set of external 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 the war in Ukraine continues to
be monitored as an emerging risk. The Group continues to ensure
compliance with sanctions and that timber purchases are from certified
sources and exclude timber from Russia or Belarus. In the event that
hostilities escalate in Europe, sourcing and supply could be impacted,
so the situation is closely monitored. More generally, the Group
is exposed to geopolitical risks across its supply chain, including
the direct sourcing operation in China. The Board is watchful of
developments in the Middle East and how unrest in the region may
create further macroeconomic uncertainty and impact trade relations.
There are no other emerging risks considered significant enough to
report at this time.
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Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Long-term market trends
Inherent Risk:
High
Description
Relevance:
Industry-wide
Mitigation
Risk
Trend:
The construction sector is changing, driven by both macro and
sector-specific factors. A number of longer-term 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
competitors will impact its longer-term growth and strategic delivery.
• 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 sold by the Group
may look to sell directly to end customers. Disintermediation has the
potential to increase in a challenging economic environment where
customers are more price sensitive and proposition differentiation
becomes less important.
• ESG factors are becoming more fundamental to long-term success
but are challenging to address, requiring investment and broad
engagement across the sector.
• New UK legislation drives a need to manage changing building
standards and the future framework for heat in buildings through
the products and services offered by the Group.
Whilst current macroeconomic conditions are challenging, 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 and the need
to decarbonise an ageing housing stock is growing in urgency.
The Group is well positioned to partner with the construction industry to
address these challenges. 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 Group remains focused on deepening trade customer relationships to win
a greater share of wallet by delivering convenient service propositions, both
physical and digital. Deeper customer understanding in turn drives initiatives
to elevate customer relationships through the provision of solutions and value
added services that take time, cost and carbon out of customers’
construction processes.
The Group continues to make progress in digitising key customer journeys and
building tools that complement existing operations and offer customers options
to transact in ways that best suit their needs.
Toolstation’s investment in the part-automated Pineham distribution centre in
2023 allows the business to drive distribution efficiencies, improve productivity
and reduce the cost to serve.
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.
The Group maintains a comprehensive tracking system for lead indicators that
influence the market for the consumption of building materials in the UK.
Impact:
Adverse effect on financial results; loss of market share
Travis Perkins plc Annual Report and Accounts 2023
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Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Statement of principal risks and uncertainties continued
Macroeconomic volatility
Inherent Risk:
High
Description
Relevance:
Industry-wide
Mitigation
Risk
Trend:
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
Group to much wider macroeconomic and geopolitical uncertainty.
The UK continues to face a range of macroeconomic challenges
including, along with many of the countries from which we source
products, persistent high levels of inflation and interest rates. Inflation
has substantially impacted both the cost of goods sold and operating
costs, with elevated interest rates influencing the cost of debt.
The Group remains confident in its strategy and the long term resilience of its
diverse end markets but needs to navigate the current volatile macroeconomic
conditions carefully. The action taken in Q4 2023 to reduce above branch
headcount and realise efficiencies in the Group’s supply chain represents the
first steps in a programme of planned changes to the Group’s operating model.
Together, these changes will deliver further operational efficiencies, enhance
cash generation and strengthen financial resilience over the medium term.
The Group undertakes constant product price and availability monitoring across
the businesses. Pricing strategies across the Group are regularly reviewed.
Alongside general economic conditions, Group performance is affected
by a number of specific drivers of construction, repairs, maintenance
and improvement and DIY activity. In the last year, the Group’s lead
indicators, which include the volume of housing transactions, house
price inflation, and consumer confidence, have continued to be
weakened by the cost of living crisis and rising UK interest rates.
Continued turbulence in the external environment could negatively
impact the Group’s ability to grow market share and deliver an
improved trading performance.
Any changes in central UK government policy and investment plans
in relation to construction and/or infrastructure could impact the
Group’s businesses that serve these sectors.
Policy and legislative changes that may impact the Group 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 its exposure to currency
and energy price fluctuations.
The Group has committed debt facilities of £800m, including a £375m
revolving credit facility that was renewed in November on broadly comparable
terms to the previous facility. This has significantly increased the average tenor
of the Group’s debt.
The Group has balanced supporting colleagues at a difficult time with adjusting
the cost base to reflect market conditions. Around 95% of colleagues received
a “cost of living” support payment in January 2023 and in April 2023 the Group
awarded a pay rise of around 6% on average with those on lower incomes
receiving a larger award, balanced by a lower award for senior executives.
Impact:
Operational disruption; adverse effect on ranging and/or price, customer service and financial results
78
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Supply chain resilience
Inherent Risk:
High
Description
Relevance:
Industry-wide
Mitigation
Risk
Trend:
A resilient supply chain is a critical factor in serving customers and
achieving strategic objectives.
There is both breadth and depth in the supply chain. Sourcing is
undertaken across the globe and the Group 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, geopolitical and macroeconomic factors,
industrial action, transport network disruption and climate impacts.
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 our 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 is a means to assess supplier resilience but if suppliers do not
meet the Group’s standards it could further restrict supplier options.
The Group maintains strong relationships with its key suppliers and
continuously works with them to agree mutually beneficial contracts, conduct
due diligence in line with its commitment to responsible sourcing, and ensure
a continuous supply of quality materials.
Where possible the Group has multiple sourcing strategies for key products,
to reduce the effect of a supply failure. 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.
Potential impacts to the Group’s supply chain from UK and global geopolitical
developments are closely monitored.
The Group has invested over many years in its TP Asia office to support direct
sourcing. This allows the development of own brand products, reducing the
reliance on branded suppliers. Investment has been made in 2023 in the
Group’s distribution capabilities: the capacity added by the new Pineham
distribution centre supports Toolstation’s future growth plans, driving
efficiencies through automation.
The Group holds Authorised Economic Operator status as a preferred importer
in order to reduce potential customs delays.
Published Supplier Commitments clearly articulate the Group’s expectations.
Independent checks are undertaken at 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. Guidance is provided for suppliers and workshops are
held to help them to improve and protect their own operations and supply chains.
Impact:
Adverse impact on ranging and/or price, customer service and financial results
Travis Perkins plc Annual Report and Accounts 2023
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Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Statement of principal risks and uncertainties continued
Managing change
Inherent Risk:
Medium
Description
Relevance:
Company specific
Mitigation
Risk
Trend:
Embracing and effectively navigating change is fundamental to the
Group’s future success.
A Group-wide “Idea to Live” process is used to prioritise, approve and manage
change initiatives in a transparent and consistent way.
Strategic change
The Group seeks to build new services, digitise the business 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 capabilities needed to achieve this change
are different from the traditional merchanting skill set.
The ability to attract, retain and develop colleagues, or add capability
through targeted acquisitions or partnerships, is central to ensuring that
the Group has the right skills and experience to deliver its 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. Market 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
business change required is key to achieving these objectives.
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 and difficult trading
conditions, the pace of delivery may need to flex with available
resources, which could lead to missed opportunities or delays to
access operational benefits and/or deliver on strategic priorities.
Dedicated teams deliver major programmes with external expertise added
to support when necessary. Programmes consider the related capability
requirements and the options to buy or grow the skills needed for a
strategically significant opportunity.
Major programmes are managed by a dedicated PMO with a designated Group
Leadership Team (GLT) sponsor. Defined governance structures are in place,
including programme Steering Committees, oversight of programme assurance at
the Audit Committee, regular Board reporting and the monthly GLT Programme
Review to assess progress, milestones, risks, interdependencies and key decisions.
During 2023 BSS successfully transitioned finance processes to Kerridge, with
plans to launch the system to the branch network in 2024. The Group has also
made good progress in the implementation of Oracle financials which has
already delivered significant business process change as it moves into the
final stages of delivery.
The Group undertakes post-investment review exercises to assess the success of
change programmes, in both financial and non-financial terms. If projects do not
deliver against expectations, the “lessons learned” inform future programmes.
The Group has designated developing the next generation as a pillar of its
“Building for Better” agenda, aiming to equip the sector for change. This year
the Group celebrated the 1,000th apprentice graduate, received a “Good”
Ofsted rating for its apprenticeship programme and announced an ambitious
target to train 10,000 apprentices across the industry by 2030.
The Group listens to colleagues’ voices through regular engagement surveys.
Reward and recognition systems are actively managed and 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 and colleague engagement
80
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Climate change and carbon reduction
Inherent Risk:
High
Description
Relevance:
Industry-wide
Mitigation
Risk
Trend:
Climate change will significantly impact the construction sector during
the transition to a low carbon environment. The nature, extent and scale
of that change remains unclear although headline risks and opportunities
have been forecasted through climate scenario analysis. 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 not only promotes
a sustainable and value-generating business model, underpinning the
ambition to be the leading partner to the construction industry, but
more fundamentally aligns with the Group’s purpose, to build better
communities and enrich lives, fulfilling its responsibility to take action
now, and influence the wider industry, to mitigate the significant threats
posed by climate change.
The Group’s top climate-related risks relate to:
• The move to a low-carbon fleet, given the Group has one of the
•
largest UK vehicle fleets;
Increasing costs of goods due to producer country carbon
pricing mechanisms;
• The ability to transition to new lower-carbon product categories; and
• Product obsolescence for higher-carbon product categories.
Delivering the Group’s industry-leading carbon reduction targets,
approved by the Science Based Targets initiative, will be challenging.
It requires significant investment and engagement with the wider
construction products industry to reduce supply-chain and product
carbon. In a difficult economic environment, both the Group and the
wider industry must seek to deliver this change amid short-term capital
expenditure restrictions which could limit progress and shorten the
target period for investment.
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.
The Group regularly identifies its most material climate-related responsibilities
and challenges in order to target investment and drive effective mitigation.
Governance is led by the Board, which receives regular reports on the most
material climate risks and opportunities, the action taken and the
progress made.
The Group continues to make 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 number of fleet
initiatives will significantly reduce future carbon emissions: in July the Group
began to take delivery of its new electric fork lift trucks that replace diesel
alternatives and will save 6,600 tonnes of carbon a year. The Group has also
invested this year in a new fleet of 26-tonne trucks, which are engineered to
reduce emissions, reduce fuel consumption, and can also run on HVO.
The LED roll out continues across the branch network and EV chargers
have been installed this year for colleagues and visitors.
A key element of plans to address Scope 3 carbon emissions is engagement
throughout the whole supply chain. Earlier this year the Group was ranked in
the top 8% of companies globally by CDP for its engagement with suppliers on
climate change. The Group has upskilled colleagues in Sales and Commercial
to support ongoing engagement and a series of workshops were run this year
with over 200 key suppliers to work with them on the collation of carbon data.
Alongside targeted investments and ongoing engagement, developments to
support ongoing carbon reduction in 2023 include:
• Upskilling colleagues to help customers make more sustainable choices;
Improving delivery carbon data reporting for CCF customers; and
•
• Developing more sustainable products and services for customers.
Further information on progress made during the year can be found in the
Sustainability Report on page 30.
Impact:
Adverse effect on reputation, financial and/or operational performance; competitive disadvantage; less attractive as an investment stock
Travis Perkins plc Annual Report and Accounts 2023
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Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Statement of principal risks and uncertainties continued
Cyber threat and data security
Inherent Risk:
High
Description
Relevance:
Industry-wide
Mitigation
Risk
Trend:
Events in the last year continue to highlight the extent to which
geopolitical crises and technology change increase the risk of cyber
attacks. Sophisticated, targeted and increasingly frequent cyber-crimes
represent a real and present risk to all Group businesses, particularly
given the drive to accelerate application development to support the
expanding adoption of digital services by customers large and small.
Risks associated with a growing digital footprint are further exacerbated
by geopolitical tensions, cyber warfare and advancements in highly
disruptive new technologies, such as artificial intelligence.
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. Theft and misuse of confidential
data, damage to or manipulation of operationally critical data or
interruption to technology services would have serious consequential
impact on the Group’s reputation, ability to trade and the risk of fines
relating to non compliance with regulations including the Payment
Card Industry Data Security Standard and 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 encrypting data to demand ransom payments,
either directly or as the result of supply-chain attacks. The Group has
seen a year on year continued increase in the volume, frequency and
sophistication of attempted cyber-attacks, in line with wider trends.
As the Group continues to drive digital change to meet customers
expectations and obtain competitive advantage, the underlying data
that powers these services is of increasing value to cyber criminals.
In executing the technology, data and security strategy, the Group will
move away from legacy internally hosted systems and transition to new
cloud-based services, with enhanced native cloud security capabilities
that will improve the overall security maturity and posture for the Group.
The Group is proactive in ensuring it meets its responsibilities and legal
obligations in respect of information security and compliance, taking a
risk-based approach in relation to people, process and technology to
reduce the overall likelihood and impact of cyber incidents.
To ensure the Group stays ahead of evolving threats, it is essential to maintain
the security of its network edge perimeter, infrastructure and sensitive data,
while continuing to build cyber resilience into technology-driven digital
processes. Key elements of the framework to achieve these aims include:
• Utilisation of a 24/7 Security Operations Centre, providing managed
detection and response services in conjunction with modern XDR endpoint
protection and continuous threat hunting to rapidly identify potential
vulnerabilities and attack vectors.
• Regularly reviewing, updating and rehearsing incident response capabilities,
including lessons learnt from attempted attacks and threat intelligence
sharing. This year the Group has onboarded third party support services
with an approved NCSC partner with specialist capabilities including
forensic, containment and recovery.
• Education and awareness is promoted across all colleague levels: baseline
cyber awareness training is in place, which is further enhanced with regular
phishing simulations, awareness campaigns and the work of information
security champions.
The Group continually tests and measures its security posture and takes steps
to address any vulnerabilities. Changes to technology solutions require
Information Security review and approval.
Impact:
Operational disruption; adverse effect on reputation; potential legal action, fines and penalties
82
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Health, safety and wellbeing
Inherent Risk:
Medium
Description
Relevance:
Industry-wide
Mitigation
Risk
Trend:
Keeping people safe and well is clearly aligned to the Group’s purpose.
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 and
mechanical handling equipment 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 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 in relation to the
recent Covid-19 pandemic.
Health, safety and wellbeing are fundamental to the Group’s values. The Group
continues to challenge current ways of thinking to de-risk its operations and
improve safety performance. An open reporting culture is fostered with
colleagues encouraged to ‘Call It Out’ if they see anything that they consider
to be unsafe. Monthly communications to all colleagues highlight examples
of successfully “calling it out” or where there are lessons to be learned.
Safety governance is well established and designed to promote continual
focus and improvement. Safety performance is reviewed at every level of
the business, including at all Board Meetings and by the dedicated Safety
Committee, which is chaired by a Non-executive Director.
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.
Alongside regular review and update of practices to address changes to
operations or legislation, the Group has formed several research partnerships
in 2023 to address new and emerging safety risks. The Group worked with the
University of Salford Manchester’s specialist acoustic testing team on a study
into the development of electric forklift truck sound alerts; and with Cranfield
University on research to identify the human factors that can impact driver safety.
Staircraft has made good progress with integration into the Group’s Safety
Management System in 2023 and is supported by a dedicated Safety Manager.
The Group follows Government guidance in relation to the management of
Covid-19 and continues to be watchful of developments in public health matters.
This year the Mental Health First Aider (MHFA) community continued to
support colleagues and the Group further expanded resources in the online
“StayWell” hub.
Further information on progress made during the year can be found in the
Safety and Wellbeing report on page 46.
Impact:
Harm to colleagues, customers or the public; potential legal action, fines and penalties; adverse effect on reputation
Travis Perkins plc Annual Report and Accounts 2023 83
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Statement of principal risks and uncertainties continued
Legal compliance
Inherent Risk:
Medium
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 its 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.
The ongoing global development of ESG reporting regimes, continuing
the implementation of the Building Safety Act 2022 as well as the
evolving status of UK corporate governance reforms all require the
Group to assess current processes, controls and related assurance.
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.
Relevance:
Industry-wide
Mitigation
Risk
Trend:
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, all-colleague
mandatory training and a comprehensive framework of detailed policies,
sets out the requirements for all colleagues to do business in the right way
with adherence regularly monitored by the Group Leadership Team.
The Group encourages colleagues to speak up whenever they see or suspect
activity that contravenes the values, Code of Conduct or policies. All cases
reported through the independent hotline are investigated.
The Group shares a Supplier Manual and Supplier Commitments to articulate
its expectations of the supply base and higher risk suppliers are assessed
against these requirements through onsite audits or an Online Risk
Assessment. As construction is exposed to more modern slavery than many
other industries, the Group is a member of the Supply Chain Sustainability
School’s Modern Slavery Group and has run a series of supplier workshops
to raise awareness and offer support in relation to common supply chain
weaknesses identified through the supplier assessment programme.
Also this year the Slave Free Alliance delivered training to the businesses.
The Group has mapped out the ESG reporting changes ahead and is readying
the data and information required to meet these in the timescales indicated.
Progress continues 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.
The implementation of Oracle financials is advanced and will underpin
the Group’s journey to improve controls and reporting, in time supporting
compliance with UK corporate governance reforms, as these become clear.
Further information on the Group’s climate disclosures in line with TCFD
guidelines can be found on pages 50 to 54.
Impact:
Adverse effect on reputation, financial and/or operational performance; potential legal action, fines and penalties; diversion of management attention
84
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Critical Asset Failure
Inherent Risk:
Medium
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, 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 its 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 some 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, and there is a plan to
replace the legacy systems over time, the older systems present an
increasing risk of failures or outages and require more effort to maintain.
Relevance:
Company specific
Mitigation
Risk
Trend:
Crisis management and business continuity planning
The Group has developed crisis response capabilities, overseen by a
Group-level steering group. In the event of an incident, tiered crisis response
teams are mobilised that coordinate activity and provide ongoing monitoring,
decision support and communications.
A risk-based approach is taken to business continuity management with a
focus on critical infrastructure. This is currently being reviewed through the
preparation of updated strategic business impact assessments in each Group
business. The supporting business continuity plans prepared for key sites
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.
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 in
2023. 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. In 2023, to further mitigate the risk of disruption to
technology services, the Group invested in its Data Centres to update its
continuous supply logic and hardware, as well as replacement air conditioning.
Impact:
Adverse effect on performance: financial, operational, customer service; diversion of management attention
Travis Perkins plc Annual Report and Accounts 2023 85
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Non-financial and sustainability information statement
The information below is intended to help users of these accounts understand our position on key non-financial and sustainability 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
Business model
KPIs – Accident frequency rate
Safety and wellbeing
Managing change
Development
Modern slavery and human rights
Diversity and inclusion
Colleague voice and engagement
Reward
Directors’ remuneration report
Directors’ report – Employees
Environment
Climate change and carbon reduction
Business model
KPIs – Carbon emissions
Climate-related financial disclosure
Sustainability report
Carbon
Waste
Sustainable products and services
Human rights, anti-bribery
and anti-corruption
Legal compliance
Human rights and modern slavery
Supply chain resilience
Legal compliance
Chair’s introduction – Culture
Directors’ report – Modern slavery
Social and community
Managing change
Business model
Charities and community
Responsible sourcing
Page 14
Page 29
Page 46
Page 44
Page 42
Page 45
Page 48
Page 48
Page 106
Page 135
Page 14
Page 29
Page 50
Page 30
Page 37
Page 40
Page 36
Page 42
Page 42
Page 8
Page 135
Page 14
Page 49
Page 38
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 and uncertainties or are incorporated into the Strategic report by reference from the pages noted. The Group
has appropriate policies and diligence procedures regarding all the non-financial information presented in this Annual Report.
Section 172 statement
Working together with our stakeholders towards shared goals is part of how we deliver long-term sustainable success. Go to page 94 to see more.
Strategic Report approval
The Strategic Report on pages 2 to 86 was approved by the Board of Directors and signed on its behalf by:
Nick Roberts
Chief Executive
11 March 2024
Duncan Cooper
Chief Financial Officer
11 March 2024
86
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section
Governance
Governance
88 Board of Directors
90 Corporate governance report
94 Section 172 statement
98 Nominations Committee report
101 Audit Committee report
106 Directors’ Remuneration report
134 Directors’ report
136 Directors’ statement of responsibilities
Travis Perkins plc Annual Report and Accounts 2023
87
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section 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
Duncan Cooper
Chief Financial Officer
Nationality
British
Appointment date
9 January 2024
Committee membership:
N
R
S
Committee membership:
S
Committee membership: N/A
Skills and experience
Duncan is a Chartered Accountant and, in
addition to having a strong finance background,
has experience in corporate communications,
strategy design and implementation as well as
large-scale technology change. Duncan joined
the Group from Crest Nicholson plc, where he
was appointed Chief Financial Officer in 2019.
He formerly worked at J. Sainsbury plc where
he held multiple roles since 2010, culminating
in Director of Group Finance. Prior to that
Duncan held finance roles at BSkyB plc
and GlaxoSmithKline plc.
Skills and experience
Jasmine has extensive boardroom experience
from a number of large public companies.
These include Standard Chartered and
BT Group plc, where she chaired the Digital
Impact and Sustainability Committee. Jasmine
currently serves as Non-executive Director
with Compagnie Financière Richemont SA
and WPP plc.
A seasoned executive leader, whose career
spans over two decades, she was most recently
CEO for London First 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, where she also became
the first CEO of Save the Children International
to align 30 federation members in over 100
countries. Jasmine’s experience in the nonprofit
sector began in 1999 when she worked in
West Africa with Oxfam.
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.
Skills and experience
Nick joined the Board of Travis Perkins plc as
Group Chief Executive in July 2019. He has
spent over 30 years in the international
engineering design and construction industry,
serving 25 years at WS Atkins plc where he
was CEO of the UK & Europe business before
becoming Global President following the
acquisition of Atkins by SNC Lavalin of Montreal.
He has led businesses across multiple industry
sectors and geographies, living overseas for
several years.
At Travis Perkins he has led the portfolio
transformation and modernisation of the
Groups operations in the UK and continental
Europe, particularly in respect of the Group’s
approach to safety and wellbeing, inclusion,
apprenticeships and sustainability.
A Fellow of the Institution of Civil Engineers, he
leads the Construction Leadership Council’s work
on People and Skills, bringing together industry
and government to drive long-term change in
opportunities for young people. A former reservist
officer in the British Army, he has served on the
Board of the Forces in Mind Trust as Trustee and
Deputy Chair for over six years and will complete
his extended term in February 2024.
Committee membership key:
A Audit
N Nominations
R
S
Remuneration
Stay Safe
Chair
88
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Marianne Culver
Non-executive Director
Nationality
British
Appointment date
1 November 2019
Committee membership:
R
S
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 the RS Group
plc (formerly Electrocomponents plc). Her
non-executive career to-date has included
membership of the boards of Rexel SA
(listed on Euronext Paris), The British Quality
Foundation and EDS Corporation and she is
a current member of the Supervisory Board
of BME B.V.
Jez Maiden
Senior Independent
Non-executive Director
Nationality
British
Appointment date
1 June 2023
Committee membership:
A
N
Skills and experience
A qualified accountant (FCMA), Jez is a proven
Senior Independent Director with diverse sector
experience spanning household FMCG,
management consultancy, food manufacturing,
transport, life sciences and chemicals. He has
extensive finance, public company and capital
markets expertise and has held a number of
Executive Director CFO positions, latterly as
Group Finance Director for Croda International
plc. He has previously served as a Non-executive
Director at PZ Cussons plc and Synthomer plc.
He is currently a Non-executive Director and member
of the Audit Committee at Intertek Group plc, a
Non-executive Director, Chair of the Audit Committee
and member of the Remuneration Committees at
Smith & Nephew plc and a Non-executive Director
and Chair of the Audit Committee at the Centre for
Process Innovation Limited.
Louise Hardy
Non-executive Director
Nationality
British
Appointment date
1 January 2023
Committee membership:
R
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
R
Committee membership:
A
N
S
Skills and experience
Heath is an experienced CFO and currently
Chief Financial Officer at Aggreko; a global
power, temperature control and energy solutions
company and former constituent of the FTSE 250
prior to its takeover 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
company, Insights Driven. In addition, he serves
as a Non-executive Director of the Phoenix Life
Limited, a role he has held since June 2023.
Travis Perkins plc Annual Report and Accounts 2023 89
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Jasmine Whitbread
Chair
11 March 2024
I am pleased, on behalf of the Board, to
present the corporate governance report
for the year ended 31 December 2023.
UK Corporate Governance Code
Throughout the year ended 31 December 2023, the Company
was in compliance with the principles and provisions of the
UK Corporate Governance Code 2018 issued by the Financial
Reporting Council (‘the Code’), which is available at www.frc.org.uk.
Role of the Board
The Board is responsible for considering the opportunities and risks
relevant to the success of the overall Group strategy and for setting
the tone and approach to corporate governance. The Board does
this with the aim of promoting the long-term sustainable success
of the Company, such that it generates value for shareholders and
contributes to wider society.
The Board has a schedule of matters reserved to it, which was
last reviewed and approved in November 2023. The latest
approved schedule of matters reserved can be found on the
Company’s website. In line with the Code, the Board has a number
of Committees to which it delegates certain responsibilities: Audit,
Nominations, Remuneration and Stay Safe. Aligned with the Code
the Audit, Nominations, and Remuneration Committees all have
three independent Non-executive members. The Committees all
have defined terms of reference, which can be found on the
Company’s website.
Culture
The Board receives regular updates on cultural indicators to assist its
oversight of the Group’s culture. This assists the Board in monitoring
the alignment of policy, practices and behaviour with Group purpose,
strategy and values. These cultural indicators include feedback from the
Group-wide colleague engagement survey (“Your Voice, Our Future”) and
updates from a number of listening groups and colleague communities.
The Chair, CEO and other members of the Board also visit branches
around the country to gain further insight into the Group’s culture.
The extent of alignment of our culture with the Group’s purpose,
values and strategy is reported in the Colleague Voice section
of the Sustainability Report found on pages 30 to 49.
Engaging with stakeholders and the workforce
Engagement with stakeholder groups such as shareholders,
customers, suppliers and colleagues occurs when formulating the
strategic direction of the Group. The Board takes the views of its
stakeholders into account when strategic decisions are made.
A statement on the ways in which the Group meets its duties under
Section 172 of the Companies Act 2006 is described in the Section 172
statement on pages 94 to 97. This includes reporting on engagement
with major shareholders and the outcomes of that engagement.
The role of the designated workforce Non-executive Director is to help
bring the colleague voice into the boardroom. Responsibility for this role
transitioned to Louise Hardy from Pete Redfern in June 2023. Louise
has used the activity conducted as part of her familiarisation with the
Group in 2023 to meet colleagues and gauge engagement.
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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 2023.
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. 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. The Non-executive Directors provide constructive
challenge, strategic guidance and appraise Executive Directors’
performance against agreed performance targets, including through
the work of the Remuneration Committee. The Non-executive Directors
and Chair meet regularly without the Executive Directors present.
Pete Redfern was the Company’s SID until 1 June 2023. Jez Maiden
is the Company’s SID with effect from 1 June 2023. 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 Company’s 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.
Time commitment
When making new appointments, the Board considers the competing
demands on candidates’ time. Prior to appointment, candidates are
required to disclose any significant commitments along with the
estimated associated time commitment. Each Non-executive
Director’s letter of appointment sets out the time commitment
expected of them and these letters will be available for inspection
at the Annual General Meeting.
The Board considers, on an annual basis, the time commitments
of each Director and it is satisfied that all Directors continue to
have sufficient time available to fulfil their duties. Any new external
appointments during the year are given careful consideration,
taking into account the number and scale of each Director’s other
commitments before approval is given and recorded. Subject to
approval by the Board, Executive Directors are allowed to accept
one external non-executive directorship with a listed entity.
So far as is practicable, the Company liaises with the Non-executive
Directors to ensure the schedule of meetings does not clash with
external appointments. Directors are able to attend meetings by video
or telephone conferencing if there is an issue with location or travel.
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. 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 (“SID”). No such concerns
were raised during the year.
During 2023 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 regular
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 November 2023.
Board composition and nominations
Board composition
There were a number of changes to the Non-executive Directors
during 2023. Louise Hardy and Jez Maiden were appointed in January
and in June respectively. Pete Redfern stepped down from the Board
in September. As at 31 December 2023 the Board comprised seven
Non-executive Directors and two Executive Directors. Coline McConville
stepped down from the Board as a Non-executive Director on
31 December 2023 and as of the date of the Annual Report and
Accounts the Board comprised six Non-executive Directors and
two Executive Directors. The biographies of the Board are listed
on pages 88 to 89
Appointments of new Directors are made by the Board on the
recommendation of the Nominations Committee.
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 2024 Annual General Meeting.
Board effectiveness review
Consistent with the requirements of the Code, evaluation of the
performance of the Board and its Committees was carried out in 2023
as described in the Nominations Committee report on pages 98 to 100.
Division of responsibilities and meetings
Chair and CEO
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 November 2023 and is available
on the Group’s corporate website. The Chair leads the Board and
ensures its effectiveness. I was independent on appointment as
Chair and remain so.
Travis Perkins plc Annual Report and Accounts 2023
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Board and Committee meetings
The Board held twelve meetings in 2023, dealing with the annual cycle
of activity planned in advance of the year and other matters arising
during its course. The format for meetings of the Board in 2023 was
a mix of in person and virtual using video conferencing. Regular items
on the agenda for consideration included:
• Detailed updates on financial results and performance against
related KPIs
• Health and safety
• Progress in the execution of the Group’s strategy
• Strategic reviews of the Group’s businesses
• Governance matters, including review of the work of the Committees
to the Board and the conduct of matters reserved to the Board
Examples of other areas of particular focus in certain meetings include:
• Investor relations; review of feedback received from investors in the
course of the 2022 results roadshow and discussion of investor
relations priorities for 2023
• Technology and data enablement; review of the delivery of
technology enabled business change aligned to the objectives
of the Group
• Sustainability and corporate affairs; review of climate-related risks
and opportunities, the sustainability reporting landscape and the
roadmap for the Group’s external engagement
• Group talent agenda; review with particular focus on talent and
succession at the GLT level
• Colleague voice; review of key themes in the feedback from the
Your Voice our Future engagement survey
• The Group’s response to the trading conditions prevailing in 2023
The Chair meets regularly with Board members and with members of the 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
L. Hardy**
J. Maiden***
C. McConville
P. Redfern****
N. Roberts
J. Whitbread
A. Williams
PLC
Board
12
12/12
12/12
12/12
12/12
7/8
12/12
9/9
12/12
12/12
12/12
Audit
Committee
Stay Safe
Committee
Nominations
Committee
Remuneration
Committee
Overall
attendance (%)
4
n/a
4/4
n/a
n/a
1/1
4/4
3/3
n/a
n/a
n/a
4
1/1
n/a
4/4
n/a
n/a
n/a
2/2
4/4
4/4
n/a
8
n/a
1/1
8/8
n/a
1/1
n/a
6/6
n/a
8/8
n/a
7
7/7
n/a
n/a
6/7
n/a
7/7
6/6
n/a
7/7
n/a
100%
100%
100%
95%
90%
100%
100%
100%
100%
100%
*
Marianne Culver joined the Stay Safe Committee on 19 September 2023.
**
As a result of a potential conflict of interest, Louise Hardy was recused from one Remuneration Committee meeting during the year.
*** Jez Maiden joined the Board on 1 June 2023, but due to a pre-existing arrangement was unable to attend the Board meeting on 27 July 2023.
Jez provided his comments on the papers ahead of the meeting. He joined the Audit Committee and Nominations Committees on 20 September 2023.
**** Pete Redfern left the Board in September 2023 (last meeting was on 20 September 2023).
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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 2023 we were pleased to welcome shareholders, their proxies and
corporate representatives to attend our Annual General Meeting in
person at the London offices of Linklaters. All Directors were present
and available for questions at our 2023 Annual General Meeting.
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 and with no resolution receiving 20% or more of votes cast
against them, the threshold that is a general trigger for the Board to
consult with shareholders to understand the reasons behind their
voting (the Board may choose to consult with shareholders
regarding reasons for voting in any event).
We look forward to welcoming attendance by shareholders, their
proxies and corporate representatives at the 2024 Annual General
Meeting in person again. Having reviewed the apparent shareholder
appetite for broadcasts of the Annual General Meeting, we have
decided that there will be no broadcast of the Annual General Meeting
this year in order to use shareholders funds appropriately by avoiding
unnecessary expenditure. We will keep shareholder demand for
remote participation under review in respect of our future Annual
General Meetings.
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 86. 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 136.
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
• The Group’s robust policy on liquidity and cash flow management
• The Group’s ability to successfully manage the principal risks and
uncertainties outlined on pages 74 to 85 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
content 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 136.
Effectiveness of the system of internal control and
risk management
In conjunction with the Audit Committee and in a process that accords
with the Financial Reporting Council guidance on Risk Management,
Internal Control and Related Financial and Business Reporting, 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 the Annual Report and Accounts, and
concluded that these systems are effective. A further description of this
work is set out in the Audit Committee report on pages 101 to 105.
The Corporate governance report has been approved by the Board
of Directors and is signed on its behalf by:
Jasmine Whitbread
Chair
11 March 2024
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Engaging with stakeholders
Building positive relationships through strong engagement, collaboration and dialogue with stakeholders that share our values is important to us.
Working together towards shared goals assists us in delivering long-term sustainable success.
Our Group comprises a number of businesses and all engage with each other recognising our ‘we’re better together’ value. Each business also
has extensive engagement with its own unique stakeholders. The Group’s governance framework delegates authority for local decision-making
to businesses, up to defined levels of cost and impact, which allows the businesses to take account of the needs of their own stakeholders in their
decision-making.
The leadership teams of each business make decisions with a long-term view and with the highest standards of conduct in line with Group policies. In
order to fulfil their duties, the Directors of each business and of the Group itself take care to have regard to the likely consequences on all stakeholders
of the decisions and actions which they take. Where possible, decisions are carefully discussed with affected groups and are therefore fully understood
and supported when taken.
The Board is well informed about the views of stakeholders. Reports are regularly made to the Board by the businesses about strategy, performance
and key decisions taken, which provides the Board with assurance that proper consideration is given to stakeholder interests in decision-making. It uses
this information to assess the impact of decisions on each stakeholder group as part of its own decision-making process. Details of the Group’s key
stakeholders and how we engage with them are set out below.
Shareholders
We rely on the support of shareholders and their opinions are
important to us. We want to enable shareholders to have an
in-depth understanding of our strategy and operational and
financial performance, so they can accurately assess the
value of our shares.
We have an open dialogue with our shareholders through
one-to-one meetings, group meetings, and the Annual General
Meeting. Discussions with shareholders cover a wide range
of topics including financial performance, strategy, outlook,
governance and ethical practices. Shareholder feedback along
with details of movements in our shareholder base are reported
to and discussed by the Board and their views are considered
as part of decision-making.
The Group’s Chair and management team undertook 144 investor
interactions during 2023, including attendance at 10 investment
bank conferences. The management team recognises the benefits
of virtual meetings with regard to efficiency and reaching a wide
investor base but remains focused on in person meetings as it
is their belief that this facilitates better quality conversation and
helps to build long term relationships with shareholders. In 2023,
two-thirds of all investor interactions were in-person, this figure
rising to over 80% with UK based investors.
Key ESG interests: Carbon, Responsible Sourcing.
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 continues to invest 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 the straight supply of 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 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. Many of these examples are shared under
“Modernising construction” on pages 36 to 37.
Two ESG forums were hosted for national house builders and two
for regional house builders during 2023 and three working groups
have been formed to work together on shared ESG opportunities.
Customers increasingly invite the Group to participate in events or
present at conferences to advance sustainability agendas. The ESG
team engaged with over 250 customers in 2023.
Key ESG interests: Carbon (product, delivery, data, solutions for
Net Zero new build and Retrofit), Sustainable products, Responsible
sourcing, Social value, Packaging, Safety.
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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 2023
was sent to just under 18,000 colleagues with a completion
rate of 79%, representing the views of over 14,000 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.
The Group also continued to embed its storytelling process in
2023 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 are easily communicable and capable of being
embellished with personal stories from the tellers to make
narratives both resonate with the audience and be capable of
being passed on. The story has been kept alive and further
embedded in 2023 through the businesses’ conferences and
Group and business level communications. Further information
on how the Group engages with colleagues can be found under
“Colleague voice” on page 48.
ESG training sessions were delivered across a number of teams at
Group and within the businesses by the Group Sustainability team
and the ESG module, which is now included in all apprenticeships,
was revised in 2023 to keep the content current.
Key ESG interests: Safety and Wellbeing, Skills, Diversity, Equity
and Inclusion, Carbon, Responsible Sourcing.
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 2023. Online workshops
were held for suppliers in July, September and October, focusing
on decarbonisation, packaging and waste, and modern slavery.
Between the workshops and individual supplier engagements,
over 350 suppliers were supported by the Group sustainability
team during 2023. 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.
Key ESG interests: Carbon, Responsible sourcing (including QA),
Sustainable products, Packaging, Safety, Modern slavery.
Working together towards shared goals assists us
in delivering long-term sustainable success.
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Section 172 statement continued
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. In 2023, we continued to work towards the
long-term target for people development that we announced in
2022 for 10,000 people to successfully complete 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 2023 progress
was made towards the Group’s targets for buildings and fleet (Scope
1 and 2) and for the supply chain (Scope 3). Further information is
available in the Sustainability report on pages 30 to 49.
Key ESG interests: Carbon, Sustainable products, Safety, Quality,
Skills, Responsible sourcing.
Government and regulations
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. In 2023, Nick Roberts, Chief Executive, joined the
Construction Leadership Council (CLC) board as industry sponsor
for People and Skills. Key areas of focus during 2023 were around
the skills gap, a national retrofit strategy, decarbonisation of
specialist fleets and health and safety. The Group became a
partner to the National Retrofit Hub in 2023 and is represented
on each of its working groups. The Board is updated on legal and
regulatory developments and takes these into account when
considering future actions.
Key ESG interests: Carbon, Retrofit, Skills, Governance.
Trade and professional bodies
The Group has committed to be the leading partner to the industry.
This involves close collaboration with trade and professional
bodies to raise awareness, to share best practices and to move
forward together as an industry on shared opportunities, issues
and challenges. For example, the Group sits on the Builders
Merchant Federation Board and each of its industry working groups,
in some cases chairing those groups. The Group was also a member
of the Institute of Environmental Management & Assessment
(“IEMA”) in 2023, benefiting from and contributing to cross sector
knowledge sharing. The Group is a CO2nstructZero Business
Champion, the Construction Leadership Council’s framework
for net zero in the construction industry. As a partner to the
Supply Chain Sustainability School, experts from across the
Group participate in key industry forums to co-develop plans
and solutions for key sustainability issues.
The Group also participates in working groups with the
Future Homes Hub and the West Midlands Combined Authority
Future Homes Taskforce. The Group is a founding member of
The Construction Inclusion Coalition (“CIC”), which has been
established by CEOs at leading organisations including Aliaxis, Baxi,
Bradfords, Highbourne Group, Ibstock PLC, Knauf, Travis Perkins
PLC, Wavin, Wolseley, the Builders Merchants Federation and the
National Merchant Buying Society to raise sector standards on
equity, diversity and inclusion, with an immediate focus on gender
representation in its first year.
Key ESG interests: Carbon, Retrofit, Skills, Safety, Packaging,
Diversity, Equity and Inclusion.
96
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Contents Generation – Section
Contents_GEN_Page
Contents_GEN_PageL2
Decision-making in practice
One of the major decisions made by the Group this year was to strengthen the Group’s involvement and investment in Retrofit. This was to meet
increasing social housing customer requirements and upcoming consumer requirements relating to the retrofitting of their buildings to improve
energy and thermal efficiency, reduce carbon, reduce utility costs and improve health and comfort. Recognising our role as leading partner to the
industry, the Group has further developed its retrofit plans and retrofit basket of goods, as well as joining the National Retrofit Hub, investing in
bespoke retrofit projects with customers and recruiting new dedicated team members to drive this agenda forward. In making this decision the
Board considered the interests of and the impact on all stakeholders. To provide insight into the approach taken by the Board, a summary of
stakeholder views and conclusions is set out below.
Stakeholder
Stakeholder views
Conclusions
Shareholders 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.
Colleagues
Customers
Suppliers
Our colleagues want the Group to do the right thing and to
help build better communities. They are also interested in
improving their own homes and costs. For both current and
future colleagues, the Group’s alignment to key national
sustainability and economic issues is expected.
Our customers want industry partners who can meet their
needs relating to products, data and value-add services.
These needs are evolving and becoming more complex as
the industry addresses the challenges of carbon reduction
and modernisation, and one of the emerging and significant
opportunities is around retrofit.
Our customers are facing their own challenges in addressing
retrofit requirements and look to partners such as our Group
for solutions, advice and support.
Our suppliers want us to enable the success of their own
businesses by opening up market opportunities. If the Group
establishes itself as a key retrofit partner within the industry,
our suppliers will have the opportunity to sell more products.
Construction
Supply sector
The Construction supply sector needs to work together,
and with government, to effectively establish the supply
chain solutions needed for high volume retrofits.
Communities
Government
and regulators
Communities are challenged to keep their community
buildings and housing stock in good repair and with high levels
of energy and thermal efficiency. With energy price increases
and a cost of living crisis, this is particularly relevant.
The government and regulators are very aware of the need
to retrofit as 80% of the homes that will exist in 2050 exist
today – UK Net Zero cannot be achieved simply by focusing
on new build. A retrofit revolution is needed to address the
existing built environment.
The regulators are also focused on building health (due to
damp and mould) and safety (following the Building Safety
Act), and the energy cost crisis.
Investors see companies with a strong focus on material
sustainability issues outperforming. With a cost of living crisis,
poor quality and leaky housing and a challenging national
decarbonisation target, the UK must address the existing
built environment. The retrofit revolution ahead will offer
significant opportunities for increased sales.
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 evolve its product and service offering to customers
keeps the business relevant and attractive to colleagues.
Colleagues can relate to the need to better manage energy,
particularly in light of recent energy price increases.
The Group maintains regular communication with its
customers, consulting regularly with them on their changing
needs. Both social housing landlords and Tier 1 contractors
have increasing needs to support the successful delivery
of their retrofit plans. Other customer segments are also
involved as many trade types are needed to fulfil whole
house retrofits. It is critical for the Group to support its
customers to participate in and benefit from new
opportunities in the market.
The business has worked with suppliers to introduce new
product ranges which are needed to complete whole
house retrofits.
The Group has also offered Suppliers the opportunity to
showcase their products in a new decarbonisation hub
developed by one of its social housing landlords.
The Group has partnered with the newly launched
National Retrofit Hub and sits on all of the working groups
in order to shape the plans around retrofit, making sure that
manufacturers and merchants can effectively play their part.
As a Group our purpose is to Build Better Communities
and Enrich Lives. Retrofitting the UK’s old and leaky built
environment is a key pillar in delivering our purpose.
The Group is the largest supplier of materials into the UK
construction sector, serving all customer types and selling
the vast majority of product categories. Retrofit represents
a clear opportunity to demonstrate the value of the Group
as the combined “basket of goods” across all businesses is
essential to fulfil retrofit product needs. The Group can play
a leading role in delivering against the government’s
retrofit agenda.
Travis Perkins plc Annual Report and Accounts 2023
97
Nominations Committee report
Jasmine Whitbread
Chair
11 March 2024
2023 focus areas
– Board succession planning
– Appointment of Duncan Cooper
– Board and Committee
effectiveness review
– Board and senior management
pipeline diversity
Number of scheduled meetings
during 2023
6
98
Travis Perkins plc Annual Report and Accounts 2023
Dear Shareholder,
As Chair of the Nominations Committee I am
pleased to present to you the Committee’s
report on its activities in 2023.
The last year saw further changes to the Company’s board of Directors
(“Board”). In 2023, Pete Redfern reached the milestone of nine years’
service on the Board and at the end of the year, Coline McConville also
stood down having served for nearly nine years. Pete and Coline’s
departures necessitated searches for their successors. The Committee
had already conducted searches in 2022 and by 1 January 2023 Louise
Hardy had joined the Board as Coline’s successor, enabling her to spend
some time working on the Remuneration Committee alongside Coline
before assuming the role of Chair of that Committee on 1 December
2023. The search for Pete’s successor continued into 2023 culminating
in Jez Maiden joining the Board on 1 June last year. Alan Williams’s early
indication of his desire to retire enabled the Nominations Committee to
lead an appropriately measured search for a new Chief Financial Officer
on behalf of the Board which I’m delighted to say resulted in Duncan
Cooper joining the Board on 9 January this year.
We have in place a talented Board with deep sectoral and excellent
general business and commercial, as well as strong public
company experience.
Board diversity policy and diversity
For financial years commencing on or after 1 April 2022, Disclosure
Guidance and Transparency Rule (“DTR”) 7.2.8AR, which deals with
corporate governance, requires disclosure of the diversity policy applied
to a Board and its Remuneration, Audit and Nomination Committees.
It has always been our approach to seek diversity in all senses, including
age, gender, ethnic and social backgrounds, sexual orientation and
disability and to foster a culture of inclusion. That remains our approach
in all the activities of the Board and its Committees. In light of DTR
7.2.8AR the Board has approved and adopted a formal diversity policy
which can be found in the Governance section on the Company’s
website www.travisperkinsplc.co.uk.
The Board supports the principles and aims of the FTSE Women
Leaders Review (FWLR) and its recommendations that Boards should
comprise 40% female directors with a female in at least one of the
roles of Chair, SID, CEO or CFO; and that by the end of 2025 40%
of the leadership team (executive committee (or its equivalent) and its
direct reports) should be female. At the end of the year, four Directors
out of nine were female (44.44%) with a female Chair. Accordingly, we
met the currently applicable recommendations of the Review. With the
departure of Coline McConville from the Board at the end of 2023, at
the date of this report, three out of eight Directors are female (37.5%).
We would like to further strengthen the Board’s diversity and enhance
our sectoral/distribution industry experience. We are scanning the
market for suitable potential future candidates to recruit when the
time is right.
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Our executive committee, which we call our Group Leadership Team
(GLT), currently comprises ten colleagues, of whom 30% are female.
Full details of our gender diversity as a Group are set out at page 45 in
the Sustainability report. The gender split amongst the direct reports to
the GLT are 64% male and 36% female. If we are to meet the FWLR’s
recommendation for the leadership team to comprise 40% female by
the end of 2025, we have our work cut out. We have calculated that if
headcount remains stable for the leadership team and if we assume
that female attrition remains in line with overall attrition in that cohort
at 7%, to reach the review’s target of 40% female colleagues in the
leadership team, we shall have to recruit females to fill 77% of
anticipated vacancies. Although we are committed to achieving the
FWLR’s aims, in light of historic and current female representation in
our industry as a whole, and the impact the legacy of years of female
under representation has on the available talent pool, we are unsure
how realistic the target of filling 77% of vacancies with females really is.
We will actively endeavour to do so, but it may take longer than the end
of 2025 to meet the FWLR’s recommendation. That will not stop us
trying though.
The Parker Review (on ethnic diversity) has recommended that by
2024, FTSE 250 companies should have at least one director who
identifies as minority ethnic. At the end of the year and at the date of
this report, the Board has met that recommendation. In its latest report,
the Parker review recommended that listed companies should set
targets to be met by 2027 for ethnic diversity in leadership teams
(executive committees and their direct reports) and that from
December 2024 onwards, listed companies should report on their
progress towards those targets. Our current ethnic diversity amongst
our leadership team is poor with 96% from white ethnic backgrounds
and 4% from Asian ethnic backgrounds. We are not yet ready to
disclose targets as we have further work to do before we can set them.
It is our aim to complete that work during 2024 so that we can report
targets for ethnic diversity amongst our leadership team in our next
annual report and thereafter, we can report progress against them.
At 31 December 2023, the Company met the targets on board diversity
set out in Listing Rule 9.8.6R (9). As Coline McConville has stepped
down from the Board, at the date of this report the Company no
longer meets the target in LR9.8.6R(9)(a)(i) as 37.5% of the Board
are women. The following table is included in compliance with Listing
Rule 9.8.6R(10) in the format prescribed by that rule and set out in
Listing Rule 9 Annex 2:
Gender identity or sex
At 31 December 2023
Men
Women
Not specified/prefer not to say
No. of Board
members
% of
the Board
No. of senior positions
on the Board
No. in executive
management
% of executive
management
5
4
–
55.56
44.44
–
3
1
–
5
3
–
62.5
37.5
–
Ethnic Background (at 31 December 2023)
At 31 December 2023
White British or other White (including minority-white groups)
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/Black British
Other ethnic group, including Arab
Not specified/prefer not to say
No. of Board
members
% of
the Board
No. of senior positions
on the Board
No. in executive
management
% of executive
management
8
–
1
–
–
–
88.88
–
11.12
–
–
–
4
–
–
–
–
–
8
–
–
–
–
–
100%
–
–
–
–
–
Board effectiveness review
As the Board undertook an externally-facilitated effectiveness review last year, this year the Board effectiveness review was conducted in-house
with the process facilitated by the General Counsel & Company Secretary. Using a combination of questionnaires and discussion, the effectiveness
of the Board, its Committees and the Chair was assessed. The Board, its Committees and the Chair were found to be operating effectively with
good constructive challenge and better focus on operational issues, albeit, in light of current economic pressures, the Board has had to be
conscious not to allow its focus to become too short-term and to maintain its longer-term strategic perspective.
Travis Perkins plc Annual Report and Accounts 2023 99
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2023 focus areas identified by the effectiveness review and progress:
Focus area
Progress
Board agendas and meeting
frequency, including
addressing what should come
to the Board and why the
Board needs to be involved
Good progress has been made with the introduction of an approach whereby the Board’s annual work plan,
including meeting frequency, for the subsequent year is agreed with the Board at the end of each year with
detailed agendas mapped out. As agendas naturally evolve in response to changing circumstances and
demands, the agenda for the subsequent meeting is reviewed and discussed at each Board meeting.
In that discussion the rationale for bringing each item to the Board is considered, including an
examination of why the Board needs to be involved in anticipated agenda items.
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
In response to the increasingly challenging economic environment in which the Group is operating, the Board has
increased its focus on key operational matters but actively sought to ensure that it has not done so to the detriment
of its core focus on strategic planning and execution. It has consciously recalibrated the balance of the Group’s
focus on elevating and deepening relationships with customers with a greater balance on deepening activities in the
short term which are intended to win a greater share of customer spend through making the purchasing process as
smooth and integrated as possible. Operational excellence is a key facet of deepening customer relationships.
The successful navigation of the succession of Non-executive Directors over the last two years, including the critical
roles of Remuneration Committee Chair and SID, is testament to the progress achieved with Non-executive Director
succession. Focus remains on robust future succession planning with regular review of the skills and experience of
the existing Non-executive Director cohort against the evolving business environment and anticipated demands of
the Group. Horizon scanning work using the services of external search organisations is embedded and ongoing to
ensure that the Board is aware of the availability of suitable talent so that it has the opportunity to move pre-emptively
in anticipation of future Board changes. The Nominations Committee leads oversight of GLT succession planning and
pipeline build on behalf of the Board which regularly reviews the current and future GLT constituency examining the
pipeline of talent into the GLT and the pipeline from the GLT to potentially fill future Executive Director roles. In doing
so, regard is had to the Board’s Diversity Policy and the recommendations of the FWLR and the Parker Review.
Each of the business units attends a Board meeting at least annually for an in-depth review of business unit
performance, key issues and strategic execution. Standing items have been introduced for those reviews
including, amongst other matters, market share performance, competitor performance and initiatives
to address relative performance and how to beat competitors. In addition to providing better insight to
the Board, that approach achieves consistency across the business units and enables comparison of
performance, which also helps insight and learnings to be shared across the business units of the Group.
2024 Focus areas:
The Board has agreed the following focus areas for 2024:
• In light of changes in the Non-executive and Executive Director constituencies, focus should continue on the balance of constructive challenge
and support as relationships between Directors become better established.
• Improving the feedback loop with the Board regarding actioning within the business of issues raised by the Board, for example the introduction
of clear milestones against which to judge the success of implementation of initiatives.
• Continuing to improve risk management processes, in particular, the articulation of the Board’s risk appetite to the business with attention to the
language used to bridge between the articulation of risk appetite and how it is embedded in the business.
• Achieving an appropriate balance between the Board’s focus on short-term performance improvement against the backdrop of current
economic challenges and long-term strategic success.
Process for Board 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 meets 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 with key personnel and visits to key areas
of the businesses within the Group.
During the year the Committee used the services of Russell Reynolds. Other than the use of their services in search assignments and advising on
succession planning, the Directors have no connection with Russell Reynolds.
Jasmine Whitbread
Chair
11 March 2024
100
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Audit Committee report
Heath Drewett
Chair, Audit Committee
11 March 2024
2023 focus areas
– Monitoring 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 (“Apex”)
Number of meetings during 2023
4
Dear Shareholder,
I am pleased to present the Audit
Committee’s report for the year ended
31 December 2023. 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 Audit Committee.
Audit Committee membership and attendance
The members of the Audit Committee for the year
ended 31 December 2023 have been:
• Heath Drewett
• Jez Maiden (from the close of the Board’s meeting
on 19 September 2023)
• Coline McConville
• Pete Redfern (up to the close of the Board’s meeting
on 19 September 2023)
(Coline McConville stepped down from the Committee on
31 December 2023 and Jora Gill joined the Audit Committee
from 1 January 2024)
All members are independent Non-executive Directors. At any time at
least 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 88 to 89.
The Audit Committee held four formal meetings in 2023. Attendance
of members at the Audit Committee’s meetings during the year can
be found in the Corporate Governance report on page 92.
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
Travis Perkins plc Annual Report and Accounts 2023
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Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Audit Committee report continued
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 both an
Audit Committee and Board meeting. Directors who are not members
of the Audit Committee but who have a pending appointment may also
be invited to attend meetings. In 2023 other Directors were invited to
attend the meetings in February, July and November on these bases
for, among other reasons, the review of principal and emerging risks.
• 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.
The Group’s Director of Legal Services & Deputy Company Secretary
is the Secretary to the Audit Committee, as nominee of the General
Counsel & 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.
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.
Work of the Audit Committee
In carrying out the activities referred to above, the Audit Committee
places reliance on regular reports from management, the Company’s
Internal Audit function 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.
The Audit Committee’s performance evaluation has been conducted as
part of the Board Effectiveness Review set out on page 99, which found
the Audit Committee to be operating effectively.
The Audit Committee conducts 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 in the business
of the Audit Committee at each of its meetings in 2023 are as follows:
Q1 (February 2023)
Q2 (May 2023)
Q3 (July 2023)
Q4 (November 2023)
• Year-end accounting for 2022*
• External audit report for 2022
• Review of internal controls
• Review of principal and
emerging risks
• The content of the Annual
Report and Accounts, the
results announcements
prepared by management and
the associated press release
issued at year-end
• Developments regarding UK
corporate reform and in that
context the Group’s systems
of internal financial controls
• Progress reports on information
security initiatives
• External audit plan including
half year strategy
• Review of performance
and effectiveness of
external auditors
• Half year accounting for 2023*
• External audit report including
auditor quality control
and independence
• Review of principal and
emerging risks
• Audit Committee
effectiveness review
• External auditors report
including progress against plan
for 2023 audit and findings
• Updates regarding the outcome
of impairment testing and other
significant accounting matters
relevant to year-end accounting
• Internal Audit – Independence
and effectiveness assessment;
re-approval of charter
• Internal Audit – approval of
Internal Audit plan for 2024
• Progress report on
security matters
In addition to the above specific matters, the Audit Committee considered at each of its meetings in 2023 the following standing agenda items:
• Review of non-audit fees
• Review of progress reports concerning the Internal Audit Plan for 2023, including approving additions and deferrals proposed
• 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 updates regarding assurance activity concerning the Group’s Apex programme (delivery of new finance system)
• Review of reports regarding matters disclosed to the Group’s SpeakUp Hotline (save that this formed part of the business of the meeting
of the Board in November 2023, rather than the Audit Committee’s November 2023 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.
102
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Significant issues related to the financial statements
The Audit Committee has assessed whether suitable accounting policies have been adopted by the Group and whether management has made
appropriate judgements and estimates.
The table below sets out the key judgement areas associated with the Group’s financial statements for the year ended 31 December 2023 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 below, 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 audit report on pages 138 to 144, discussing all relevant matters in depth.
Area
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.
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.
Defined benefit
pension schemes
Inventory should be included in the balance
sheet at the lower of cost or net realisable
value. At 31 December 2023 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.
At 31 December 2023 the Group’s balance
sheet included a net asset position of £101m in
respect of its defined benefit pension schemes,
which reflects a gross pension asset of
£1,097m and pension liability of £996m.
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.
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 11 – Inventories and note 12 – Supplier Income).
Management presented the Committee with papers setting out the
results of the work done, the assumptions made and the conclusions
reached with respect to the Group’s defined benefit pension schemes.
Management explained to the Committee how the discount rate,
inflation and life expectancy estimates were prepared and how
sensitive the valuation was to changes in these key assumptions.
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 17 – Pension arrangements).
Travis Perkins plc Annual Report and Accounts 2023 103
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Risk management and internal controls
Risk management
Risks are logged and managed on an ongoing basis at a Group
level and within the businesses and assessed in key strategic and
performance review processes throughout the year. Key risks are
regularly collated and reviewed by the GLT 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.
The Group adopts a continuous improvement approach to risk
management. Refinement of the risk management framework
continued in 2023 in response to the independently conducted
maturity assessment in 2022 of the Group’s risk management
framework. Risk appetite has been an area of particular focus this
year. An exercise was undertaken in Q3 to consult with a selection
of senior managers and the GLT to assess existing appetite levels
and ways of working, with the outputs considered by the Board in
resetting its risk appetite in November 2023.
The principal risks and uncertainties are set out on pages 74 to 85,
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 “Statement of principal risks and uncertainties” on page 74).
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
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.
In 2023, particular Audit Committee focus has been on continuing
management initiatives to improve the internal financial control
environment. There are a number of system replacements in progress,
including Apex, which will 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. An independent
assurance provision has been procured from PwC to underpin the plan
for assuring Apex. The assurance plan has been reviewed by the Audit
Committee. Regular reports on results were presented to both the Apex
steering committee and the Audit Committee throughout 2023 and
progress will continue to be monitored in this way in 2024. Reviewing
such major system transformation programmes will also remain an
area of focus for the Internal Audit function. 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.
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Travis Perkins plc Annual Report and Accounts 2023
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 Internal Audit function
develops the Internal Audit Plan, with consideration of relative risk,
historic coverage and management requests, 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 2023 covered a broad range of operational,
financial, legal, regulatory, IT and transformation activities. Core
financial control areas are audited regularly. In 2023 this included
reviews of the new treasury system, supplier payments in Toolstation
UK, the certification process for key financial controls and the process
supporting the Senior Accounting Officer tax declaration. In addition,
Internal Audit has supported the Apex programme and, alongside the
external programme assurance provider, has undertaken reviews of
related architecture, system integration testing and access controls,
as well as a number of changes to operational ways of working.
Internal Audit continues to conduct risk assurance mapping for
key areas including safety, credit services and cyber security in
the Toolstation businesses.
The 2024 Internal Audit Plan was approved by the Audit Committee
at its meeting in November 2023. As with every year, a rolling risk
assessment will continue throughout 2024 to ensure that internal audit
activities remain targeted at the areas presenting the most risk to the
Group, which can change over time. Any changes to the proposed 2024
Internal Audit Plan will be approved by the Audit Committee. The 2024
Internal Audit Plan is targeted at assurance in relation to, follow-ups in
key areas that have previously been the subject of the most significant
audit findings, key technology programmes including those related to
Group finance systems, control effectiveness (in response to expected
changes to the UK Corporate Governance Code in 2024) and areas or
processes that align to any of the Group’s principal risks. The annual
Internal Audit Plan includes standing requirements to review internal
financial controls self-assessments, the basis for the Group’s Senior
Accounting Officer declaration regarding tax controls and rolling
assurance coverage to support the Group’s ISO14001 certification.
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 Internal Audit function has a continuous improvement strategy,
with initiatives set annually and progress reported regularly to the
Audit Committee. Opportunities identified by the external effectiveness
assessment of internal audit activity undertaken in 2022 were integrated
into the continuous improvement process for 2023. This informed the
decision to focus on activities such as improving within the wider Group
the understanding of governance, risk and controls and increasing
audit coverage and depth through a greater use of data within audits.
A range of development actions have been undertaken and completed
in 2023 with the development of the data analytics capability of the
Internal Audit function and the monitoring of team skills and knowledge
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section 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 external 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 2023 KPMG LLP was engaged to provide non-audit services only
in relation to the June 2023 review of the Group’s interim financial
statements. KPMG LLP 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 annually confirms compliance with the policy.
Reporting
The CFO 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 £2,093,000 (2022:
£1,891,000) for audit-related work and £90,000 (2022: £85,000) 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% (2022:
4%) of fees for audit-related work. The total fees paid by the Group to
KPMG LLP in 2023 represent 0.1% of KPMG LLP’s UK fee income.
In addition, £2.7m (2022: £1.3m) 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 external 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 it recommend that KPMG LLP
be reappointed by shareholders at the Annual General Meeting on
22 April 2024.
This report has been approved by the Board of Directors and signed
on its behalf by:
Heath Drewett
Audit Committee Chair
11 March 2024
to continue as priorities into 2024. The Internal Audit function also
reported to the Audit Committee that good progress continues against
all three of its strategic pillars: Alignment to Business Needs; Leverage
Data & Technology; Continuous Improvement.
Based on its review of the updates on activity undertaken and progress
made, the Audit Committee was satisfied with the overall effectiveness
of the Internal Audit function throughout 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.
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 retender
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
2023 Annual Report and Accounts was presented by the external
auditor to the Audit Committee in November 2023 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 external 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 its
handling of key accounting and audit judgements
• The interaction between management and the external auditor
• The provision of non-audit services
Financial Reporting Council
During 2023 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”).
The Audit Committee began the process of familiarising itself with the
FRC’s Audit Committees and the External Audit: Minimum Standard
(“FRC Minimum Standard”) following its publication in May 2023
and will identify any areas of Audit Committee practice that may
be enhanced in line with the FRC Minimum Standard for so long
as it applies on a voluntary basis. It is the current intention of the
Audit Committee that the tender for the 2025 audit referred to
above will be conducted in line with the FRC Minimum Standard.
In preparing the Group’s Annual Report and Accounts, the Group
responds to the recommendations of the FRC made through its
reviews of corporate reporting and its “thematic reviews” of
specific areas of corporate reporting.
Travis Perkins plc Annual Report and Accounts 2023 105
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Directors’ remuneration report
Louise Hardy
Chair, Remuneration Committee
11 March 2024
2023 focus areas
– Remuneration policy review
– Shareholder, proxy and adviser
consultation
– Appointment of Duncan Cooper, Chief
Financial Officer
– Transition to new Remuneration
Committee Chair
Number of meetings during 2023
7
106
Travis Perkins plc Annual Report and Accounts 2023
Dear Shareholder,
As Chair of the Remuneration Committee,
I am pleased to introduce the 2023 Directors’
remuneration report.
Challenging trading conditions and impact
on executive pay
The Group has made good progress against its strategic priorities
during the year, growing margin-accretive value-add services,
delivering a substantial proportion of planned technology and
modernisation programmes to improve operational effectiveness,
as well as continuing to drive positive actions in support of the Group’s
longer-term sustainability plan. However, challenging market conditions
continued for longer than expected during 2023, which significantly
impacted on sales volumes. In light of lower than anticipated profit
delivery by the end of the year, the Group will not pay any bonuses
to Executive Directors or members of the Group Leadership Team
in respect of 2023 performance. Actual total remuneration for the
Chief Executive for 2023 was 43% lower than the year before.
Across the Group, there is a renewed focus on significantly reshaping
the organisation to capitalise on its scale, expertise and partnerships
with suppliers and customers, and to operate in a more agile and
customer-focused way, enabling the business to more consistently
outperform its markets over the long term.
Remuneration policy review – minor changes to policy
and no change to quantum
The current 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 sustainable,
long-term business performance, to align management and shareholders
and to foster a culture of collaboration and ownership across the Group.
The primary change to the policy was the replacement of two long-term
incentive plans (Performance Share and Co-Investment Plans) with a
Restricted Share Plan (“RSP”).
In accordance with the requirement to put a remuneration policy to
a shareholder vote every three years, the Committee has undertaken
a comprehensive review of each element of the policy to ensure it
supports the Group’s strategic ambition, purpose and values. The
Committee believes the Directors’ remuneration policy is operating
effectively and remains the right approach to support the delivery of
the Group’s strategic objectives and long-term value for shareholders.
No material changes have therefore been proposed to either the policy
or the approach to the implementation of remuneration (including
quantum and metrics) this year.
The Group has consulted with major shareholders as well as proxy and
advisor bodies over the past few months, listening carefully to a range
of views and taking on board the feedback in considering what is in
the best interests of the Group.
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section The Committee believes that the RSP continues to be an appropriate
and effective long-term incentive for executives and senior leaders
across the Group. The RSP was implemented in 2021 in the knowledge
that there would be an extended period of strategic change, and that
the RSP would better support long-term growth and shareholder
value by providing more flexibility around long-term decision making,
particularly in times of significant external volatility. The intention was
also that the RSP would enable a focus on vital aspects of the business
strategy, such as customer relationships, modernisation, sustainability
and decarbonisation.
The benefits of operating an RSP in support of long-term business
strategy remain applicable to the Group, as summarised below:
Purpose of RSP:
• Reward long-term sustainable performance
Delivery of the strategy requires longer-term decision making
in order to drive value creation for shareholders. As the Group
elevates and deepens its relationships with customers as well
as taking actions to modernise the business and decarbonise t
he industry, these decisions may not always maximise short-term
performance but will enable the delivery of a strong and
sustainable business over the long term. The RSP supports
long-term growth and shareholder value by providing more
flexibility around long-term decision making, particularly in
times of significant external volatility.
• Align management and shareholders
The RSP aligns management with the experience of shareholders
through the direct link between reward outcomes and the
share price.
• Aligned to our culture
The RSP has been cascaded throughout the organisation to other
senior leaders and key talent and in doing so supports the culture
of collaboration and alignment to the Group’s purpose, values and
strategy. Working in tandem with the all-employee share
purchase plan (which has had a take-up of around 20%
over recent years), the RSP also enhances a sense of share
ownership and collective accountability throughout the Group.
• Simple and transparent
The RSP provides a single, simple mechanism for long-term
incentivisation. It encourages positive behaviours and improved
strategy execution without the distraction of shorter-term targets
and avoids potential boom and bust cycles inherent with plans
containing performance outcomes.
• Effective retention tool
The RSP is a clear and easily understood incentive structure and
therefore acts as an effective retention tool.
The first awards granted under the RSP in 2021 are due to vest in 2024.
The Committee believes the RSP has operated effectively in that time,
enabling management to react to evolving market conditions.
Under the new remuneration policy, the RSP is proposed to continue
in its existing form for awards granted in 2024, with one change to
simplify the vesting structure under the plan. For Executive Directors,
currently 75% of RSP awards vest after three years and 25% after five
years, with a two-year holding period on the three-year tranche, taking
the timeframe for the entire award to five years. For RSP awards made
in 2024 and beyond, it is proposed that 100% vests after three
years, subject to a further two-year holding period, meaning that
no shares will be delivered to executives until five years after grant.
This approach is simpler and more transparent for participants and
shareholders, is aligned with recent market practice, and the use of a
three-year vesting period is consistent with the approach that is already
applied for RSP participants below the Board.
Each part of the remuneration package plays an important role in
driving performance to deliver the Group’s long-term strategy and
improve shareholder returns, as outlined in the remuneration policy
on pages 112 to 119. The link between the Group’s strategic ambition
and incentive measures is detailed under the “Remuneration in 2023
– at a glance” section on page 110.
2024 salary review
The approach to this year’s annual salary review was again a difficult
balancing act. In light of business performance and ongoing challenges
in the external market, affordability was a key concern in ensuring that
fixed costs are managed carefully and sustainably. However, it has also
been very important to recognise that inflation remains high and that
cost of living pressures continue to impact colleagues across the Group.
The other priority has been to maintain fair internal relativities between
different levels in the organisation, given the impact of the near
double-digit uplift to the National Living Wage rate, acknowledging that
a substantial proportion of colleagues are paid at various steps just
above the Group’s entry level rate of pay. As a result, a majority of
colleagues will receive a salary increase above the rate of inflation,
whilst higher earners will receive a salary increase of 1.5%.
The Remuneration Committee subsequently reviewed the salaries of
Executive Directors and members of the Group Leadership Team and,
taking into account current market conditions, cost challenges and
financial performance in 2023, determined that there would be a salary
increase of 1.5% from 1 April 2024, in line with the approach taken for
other management levels across the Group. This follows a similarly
restrained approach to setting salaries for executives in the past. Both
the Chief Executive and Chief Financial Officer received a 4% salary
increase in April 2023 and a 3% increase in April 2022, which were
lower than the increases offered to the wider workforce in both years
in order to prioritise investment in raising wages at lower levels across
the organisation.
Non-executive Directors’ fees were increased by 4% in April 2023,
consistent with the annual salary review for Executive Directors last year.
The Chair’s fee was not increased in 2023 as it is already in line with the
FTSE 250 benchmark data. The fees for the Chair and Non-executive
Directors will next be reviewed in April 2024.
Travis Perkins plc Annual Report and Accounts 2023
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Directors’ remuneration report continued
2024 bonus plan
The Committee reviewed the 2024 annual bonus plan and in light
of the challenging economic environment, decided to retain the
primary focus on financial performance measures for a further
financial year, with 55% of the bonus based on operating profit,
25% on operating cash conversion and the remaining 20% on
strategic measures. These financial measures ensure the business
is focused on delivering top and bottom line growth, while continuing
to drive accountability on efficient management of stock and debtors
together with disciplined capital expenditure. For 2024, the Committee
also decided to adjust the structure of the bonus plan, so that there
would be no payout for profit or cash delivery below target, and a
payout of 25% of maximum for achieving target. This change has
been implemented at all levels across the organisation, and is intended
to drive accountability across the business in ensuring the budget is
delivered as a minimum commitment for 2024, to restore confidence
in the Group’s ability to achieve volume and margin in line with market
guidance. It is the current intention that this payout structure will be
reviewed after one year for 2025.
Incentive outcomes in 2023
External volatility and weak trading demand continued for longer than
expected during 2023, and the uncertain economic outlook continues
to impact across the industry. As a result of these challenging
conditions the Group issued two profit warnings during the second-half
of the year when it became clear that the initial guidance on profit would
not be achievable. The Group saw a total year-on-year sales decline of
2.7%, however the general merchanting businesses, Toolstation and
several of the value-added service lines held or grew market share.
Performance against key financial objectives in 2023 was as follows:
• Group adjusted operating profit of £180m vs bonus target of
£280m; and
• Group adjusted operating cash conversion of 81% vs bonus
target of 75%.
2023 bonus payout – downward discretion exercised to
award 0% of maximum
The annual bonus plan for Executive Directors in 2023 was based on
adjusted operating profit (weighted at 55% of maximum), operating
cash conversion (25% of maximum) and strategic performance
(20% of maximum).
Operating profit performance for 2023 was below the threshold level
of performance under the annual bonus plan, resulting in no payout
against this financial measure. Operating cash conversion was delivered
above target, equating to 20% of the maximum bonus opportunity.
The Group Leadership Team also made progress against the Group’s
strategic objectives on value-added services, operational efficiencies,
critical change programmes and sustainability during 2023 (more
details on page 125), despite ongoing volatility and uncertainty in the
external environment. The Committee assessed the achievement
of strategic measures at 50% of maximum (10% of total bonus
opportunity). This level of strategic performance, combined with
operating cash conversion performance, meant that a total of 30%
of the maximum bonus opportunity was achieved during 2023.
However, in light of profit performance for 2023 significantly below the
initial guidance to market earlier in the year, and given that the majority
of the wider workforce will not be receiving bonus payouts for
performance over the same period, aligned with management’s
recommendation, the Committee used its discretion and did not award
any bonus payout for Executive Directors and the Group Leadership
team for 2023.
2021 RSP award – full vesting in 2024 and 2026
Long-term incentive awards granted to Executive Directors in 2021 were
made in the form of Restricted Share Plan (‘’RSP’’) awards, the first of
such awards made under the new plan that was introduced as part of
the previous Directors’ remuneration policy approved at the 2021 AGM.
In accordance with the previous remuneration policy, for Executive
Directors, 75% of the 2021 RSP award vests after three years (March
2024) and 25% of the award vests after five years (March 2026),
subject to being employed on the vesting dates. For other participants,
RSP awards vest three years after grant. Whilst there are no
performance targets attached to the vesting of RSP awards, the
Committee may consider adjusting the extent to which awards
will vest in the event the Group fails to meet the applicable
performance underpins over the vesting periods.
The performance underpins for 2021 RSP awards were:
• Average Return on Capital Employed (“ROCE”) above 9%; and
• Satisfactory governance performance including no ESG issues
occurring or being identified by the Board which, in the Board’s
opinion, have resulted in, or could result in, material reputational
damage to the Company.
Average ROCE performance over the three financial years ended
31 December 2023 at 10.5% was above the underpin threshold and
there were no governance including ESG issues which in the Board’s
opinion had resulted or could result in material reputational damage
to the Company. The Committee therefore concluded that it was
appropriate that RSP awards vest in full. For Executive Directors,
25% of the 2021 RSP award remains subject to the performance
underpins over the five financial years ending 31 December 2025.
The share price is currently below the share price at grant, so it is
clear that there have been no windfall gains. The Committee carefully
considered the circumstances and concluded that the vesting of 2021
RSP awards was appropriate and therefore did not apply any discretion.
Continuing to support colleagues in challenging times
Whilst needing to manage costs carefully in an uncertain external
environment, a comprehensive package of benefits has been offered
to colleagues throughout the year to support their financial, health
and wellbeing needs. A key part of this has been the provision of
the Wagestream tool, which was launched across the Group in 2022,
building on the successful implementation in Toolstation the year before.
This enables easy-to-access financial management support for all
colleagues, the ability to access a portion of their salary each month
before pay day to help manage short-term cash flow needs and the
opportunity to set up a savings fund directly from their pay to earn a
competitive interest rate, all of which helps to build colleague’s longer-
term financial resilience. One-in-three colleagues have now enrolled
with Wagestream and the short term savings built up by colleagues
across the Group to date have exceeded £1m. Other benefits have
been provided on an ongoing basis for several years, including
short-term loans, extensive retailer discounts on essential spend
such as groceries and utilities, an employee assistance programme
and a range of wellbeing and financial education resources.
108
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Recognising the difficult economic climate, the Group made a cost of
living cash payment in January 2023 at a cost of £8m to over 17,000
colleagues (around 95% of the workforce) and in April 2023 awarded
a pay rise of 6% to the majority of colleagues, with those on lower
salaries receiving a larger award. In 2023, the Group also introduced
a free mortgage advice service and a new health and wellbeing benefit,
accessible by all colleagues and their families, which includes virtual
GP advice, health checks, mental health and nutritional support.
These additional benefits have been received well by colleagues.
All colleagues in the UK and the Netherlands have the opportunity to
participate in the discounted Sharesave programme, which has seen
consistently high take-up over time. The RSP is also used in a targeted
way to recognise critical roles and key talent across the Group.
2024 Annual General Meeting
The Committee will submit its remuneration policy and annual
remuneration report to the 2024 AGM, where the policy will be
subject to a binding shareholder vote and the remuneration report
will be subject to an advisory shareholder vote. I look forward to
receiving your support, and will be available to answer any questions.
Louise Hardy
Remuneration Committee Chair
11 March 2024
Travis Perkins plc Annual Report and Accounts 2023 109
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Directors’ remuneration report continued
Remuneration in 2023 – at a glance
2023 remuneration outcomes
Element
Base salary
(annualised from 1 April)
Annual bonus (% of maximum)
Long-term incentives:
RSP (% of maximum)
PSP (% of maximum)
CIP (% of maximum)
Share ownership (% of salary) (as at 31 December)
Nick Roberts, CEO
Alan Williams, CFO
2023
2022
2023
2022
£681,605
£655,389
£554,507
£533,180
+4%
0%
100%
n/a
n/a
392%
0%
N/A
65%
100%
236%
+4%
0%
100%
n/a
n/a
648%
0%
n/a
65%
100%
605%
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 vested awards under the long-term incentive plan
and a shareholding requirement that applies for two years after leaving the Group. Malus and clawback provisions apply for up to six years from the
date of long-term incentive awards and for three years from the date of payment of the annual bonus. The performance, retention and clawback
periods for each element of remuneration are shown below.
2023
2024
2025
2026
2027
2028
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.
Pay for performance in 2023 – at a glance
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 conversion
Delivery against investments
Average Return on Capital Employed (ROCE)
Strategic delivery
Strategic and operational objectives that continue to lay the
foundations to deliver future success
Governance
ESG measures and strong governance framework
Delivering value to shareholders Alignment to shareholder experience through share price movement
Bonus weighting
RSP weighting
55%
25%
–
20%
–
–
–
–
Underpin
–
Underpin
100% (since awards
are made in shares)
110
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Annual bonus outcome for 2023: 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. Despite strong cash conversion and good progress
against strategic measures, 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 2023 bonus
payout to Executive Directors and the Group Leadership Team.
Long-term incentive plan outcome for 2021–2023:
underpins met
The maximum RSP award for Executive Directors was 125% of base
salary, representing a 50% reduction on the combined maximum
award under the previous performance-based plans (PSP and CIP).
Annual bonus performance for 2023
RSP underpin performance for 2021 – 2023
Operating profit (0%)
Return on capital employed (ROCE)
Operating cash conversion (80%)
Governance
Strategic performance (50%)
underpins achieved
0
25
50
% maximum achieved
75
100
The following charts illustrate how incentive outcomes for the Executive Directors have reflected performance over the past five years.
Historical bonus outcomes for the last 5 years vs
Group operating profit
Historical LTIP vesting outcomes for the last 5 years
)
x
a
m
f
o
%
(
t
n
e
m
y
a
p
s
u
n
o
B
100
80
60
40
20
0
88.7%
£442m*
97%
£353m
£295m
£227m
£180m
0%
0%
0%
500
400
300
200
100
0
G
r
o
u
p
o
p
e
r
a
t
i
n
g
p
r
o
f
i
t
£
m
2023
2022
2021
2020
2019
2019
2020
2021
2022
2023
0
20
RSP underpin met
65%
100%
94%
100%
100%
100%
40%
46%
40
% maximum achieved
60
80
100
% of max
Group adjusted operating profit
*
Includes Wickes and Plumbing & Heating
RSP
PSP
CIP
All annual bonus and long-term incentive outcomes are subject to malus and clawback. Performance weighting and measures are unchanged
from the previous year.
Travis Perkins plc Annual Report and Accounts 2023
111
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Directors’ remuneration report continued
Remuneration policy report
The following sets out the Group’s Directors’ remuneration policy (the “Policy”). The Policy is subject to a binding shareholder vote at the
Annual General Meeting on 22 April 2024 and, if approved by shareholders, will apply to payments made on and from this date. This Policy
will replace in full the Directors’ remuneration policy set out in the 2020 Annual Report, which was approved at the Annual General Meeting
held on 27 April 2021.
Remuneration philosophy
The principles of the Group’s remuneration policy, which were developed taking into account provision 40 of the UK Corporate Governance
Code, are:
• Alignment to our culture, purpose and values
Remuneration arrangements are determined taking into account the culture, purpose and values of the Group, wider workforce
remuneration and emerging best practice as well as ensuring there is robust governance and compliance with the 2018 Corporate
Governance Code.
• Delivery of business strategy
Remuneration should support the execution of the strategy and long-term decision making, contributing to the delivery of short and long
term financial returns for shareholders. Reward mechanisms should ensure that a significant proportion of variable pay is delivered in
deferred shares, ensuring that executives retain a meaningful personal stake in the Group’s long-term success.
• Rewarding sustainable and consistent performance
A significant proportion of executive remuneration is delivered in variable pay that is linked to business performance. Bonus payments
are linked to performance against a limited number of measures which are clearly linked to our strategy, balancing collective ownership of
strategic deliverables and collaboration across the Group with clear line of sight for individual accountabilities, and subject to stretching but
fair targets. Reward structures should also reinforce the company’s sustainability strategy and ESG agenda where relevant and appropriate.
• Attraction, development and retention of talent
Total remuneration should be competitive, fair and equitable, taking into account the size and scope of the role, external market practice as
well as internal relativities and the wider workforce context. The principles that guide the approach to remuneration should be consistent for
all colleagues across the Group. Reward structures should be clear, simple and transparent so that colleagues understand the value of their
total remuneration and know how to contribute to performance.
• Fair and balanced remuneration outcomes
Remuneration outcomes are reviewed in the context of the shareholder experience, external climate and wider workforce. The Committee
has the discretion to adjust reward outcomes to ensure that pay appropriately reflects underlying business performance and the wider
context in a consistent and responsible way. All colleagues should be able to share in the success of the Group through participation in
both annual bonus schemes and longer-term share plans.
• Management of risk
Malus, clawback and discretion provisions, RSP holding periods and shareholding guidelines, including post-employment guidelines, should
be in place to create alignment with shareholders and to mitigate reputational and other risk.
These principles apply across the Group. In addition to a competitive base salary and bonus, colleagues also have access to an extensive range
of benefits and support under the ‘MyPerks’ programme, which includes flexible and voluntary benefits, retirement benefits, our all-colleague
Sharesave scheme and recognition awards.
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Link to strategy
Operation
Maximum potential value Performance metrics
Remuneration Committee discretion
The Committee retains discretion to
award salary increases in excess of
the general population where this
is considered appropriate to reflect
performance or significant changes
in market practice or the size or
complexity of the Group, to recognise
changes in roles and responsibilities,
where a new Executive Director has
been appointed to the Board at a
lower than typical market salary
to allow for growth in the role or in
other exceptional circumstances.
The Committee may remove
benefits that Executive Directors
receive or introduce other benefits if
it is considered appropriate to do so
taking into account the circumstances.
Base salary
Core element of total
package, essential to
support recruitment
and retention of high
calibre executives.
Benefits
Maintains a competitive
package with a range of
benefits for the executive
and their family.
The Committee sets base salary
levels taking into account:
• Role, experience and
individual performance
• Pay awards elsewhere in
the Group
• Salary levels at other
companies of a similar size
Any salary increases are normally
effective from 1 April.
None
Whilst there is no
maximum salary level
or maximum salary
increase, the increase for
Executive Directors will
normally be no greater
than the general
employee increase.
None
Benefit levels reflect
those typically available
to senior managers
within the Group and
may be subject to
change. The maximum
potential value being
the cost of providing
those benefits.
Executive Directors are currently
entitled to benefits including:
Income protection
• Private medical insurance
•
• Annual leave
• Car allowance or alternative
car provision
• Life insurance of up to 5
times salary
• All employee share plans
such as Sharesave and
Buy As You Earn
The Committee may introduce
other benefits if it is considered
appropriate to do so. Executive
Directors shall be reimbursed for
all reasonable expenses and the
Group may settle any tax incurred
in relation to these
where appropriate.
Pension
Helps executives
provide for retirement
and aids retention.
Pension provided either as a
cash allowance in lieu or as a
contribution to a personal pension
plan (or a combination of both).
The maximum
contribution or allowance
is aligned with the
maximum rate available
across the wider
workforce (currently
10% of salary).
None
None
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Link to strategy
Operation
Maximum potential value Performance metrics
Remuneration Committee discretion
Maximum bonus
opportunity under
the plan is 180%
of annual salary.
Annual bonus and Deferred Share Bonus Plan
Rewards achievement
of annual performance
objectives.
Total bonus level is determined
after the year end, based on
achievement of targets.
Deferred element
encourages longer-term
shareholding and aligns
reward to shareholder
interests.
Normally up to 50% of the total
bonus is paid in cash. The
remainder of the bonus is
normally deferred as shares
for three years.
Malus and clawback
based forfeiture
provisions discourage
excessive risk taking and
short term outlook
ensuring that executive
and shareholder interests
are aligned.
Targets are normally set annually
in line with the performance
metrics.
Dividend equivalents on shares
that are released may be paid.
Malus and clawback provisions
apply as explained further in the
notes to this table.
Bonus measures may include:
• Financial targets
•
Individual or Group targets
pertaining to delivery of the
business strategy including
ESG measures. Financial
targets will account for at
least 50% of the bonus.
Performance below threshold
normally results in zero bonus.
Bonus earned rises from 0%
to 100% of maximum bonus
opportunity for levels of
performance between threshold
and maximum targets. The
Committee retains discretion
to use an alternative payout
structure if appropriate.
Performance measures and
weightings are set out in the
statement of Implementation
of the Remuneration Policy
on page 120.
The Committee retains the discretion to
review the measures, the weighting of
measures and to set the performance
targets and ranges for each measure.
The Committee will determine
financial targets and the amount
of bonus which can be earned for
achievement of the Group’s plan. This
determination will be based upon an
assessment of the degree of difficulty
in achieving the targets taking into
account market conditions,
improvement on prior year
performance required, and
other relevant factors.
The Committee may, in its discretion,
adjust annual bonus payments, if it
considers that such level would not
reflect the underlying performance
of the Executive or the Group or the
experience of shareholders or other
stakeholders or if such level would not
be appropriate in the circumstances.
Restricted Share Plan
Aligns participants with
the shareholder
experience, whereby
participants build up a
shareholding in Travis
Perkins plc and are
incentivised to deliver
sustainable financial
performance and
enhance shareholder
value over the
longer term.
Helps retain executives.
Awards are normally granted
annually in the form of
restricted shares.
For Executive Directors, awards
will normally vest on the third
anniversary of the award,
subject to a further two-year
holding period, with a total
time horizon of five years
until shares are released.
Dividend equivalents on shares
that are released may be paid.
Malus and clawback provisions
apply as explained further in the
notes to this table.
Shareholding requirement
The maximum annual
award for all Executive
Directors is 125%
of salary.
Awards will be subject to
performance underpins
measured over the
vesting period.
If the Group 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 would retain
discretion to determine
what level of scale back
was appropriate.
The Committee retains discretion to
review the performance underpins,
and to set the triggers for
each underpin.
The Committee may in its discretion,
adjust the vesting level of an award,
if it considers that the vesting level
would not reflect the underlying
performance of the executive or
the Group or the experience of
shareholders or other stakeholders
or if such level would not be
appropriate in the circumstances.
Executive Directors are
expected to hold shares valued
at 200% of salary within five
years of appointment to
the Board.
The Committee retains discretion to
increase shareholding requirements.
Aligns the interests
of executives and
shareholders.
None
Formal requirements (not
voluntary guidelines) apply to
Directors and senior executives.
Participation in long-term
incentives may be scaled back
or withheld if the requirements
are not met or maintained.
For the purposes of assessing
compliance with the shareholding
requirement vested but
unexercised awards will
be considered as well as
unvested awards with
no further performance
conditions attached to them.
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Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Changes to Policy
The key changes to this Policy compared to the previous policy are as follows:
• Simplification of the RSP vesting schedule, which provides for the full award to vest after three years and subsequently be released after a
further two-year holding period, replacing the current policy of 75% of the award vesting after three years (held for a further two years) and
the remaining 25% vesting after five years; and
• Other minor amendments to the wording of the Policy to reflect current practice, increase clarity and aid policy implementation in the future.
Summary of decision making process
In determining the revisions to the Policy, the Committee followed a robust process, which included discussions on the content of the Policy at
Remuneration Committee meetings during the year. The Committee considered the input from management and independent advisors, as well
as consulting with major shareholders and proxy and advisory services.
Performance metrics
In considering appropriate performance metrics for the annual bonus, the Committee seeks to incentivise and reinforce delivery of the Group’s
strategic objectives achieving a balance between delivering annual return to shareholders and ensuring sustainable long-term profitability and
growth. Measures will therefore reflect a balance of direct shareholder value, as well as measures focused on meeting specific strategic objectives
aligned to long-term growth.
The Committee calibrates these targets by due reference to market practice, the Group’s strategic plan, general and bespoke market intelligence,
lead indicators and other indicators of the economic environment such that targets may represent relative as well as absolute achievement.
Awards under the RSP are subject to performance underpins that act as safeguards to ensure that awards do not pay out if vesting is not justified.
For 2024 awards, the underpins will be linked to average ROCE performance and satisfactory governance performance over the vesting period.
These underpins have been selected as they are considered to reflect a good overall balance and safeguard the financial stability of the business
whilst ensuring a continued focus on governance.
Malus and clawback
Malus and clawback provisions are included in all incentives: the annual bonus (up to three years from the date of payment), and the Restricted
Share Plan (up to six years from the date of the award).
The circumstances in which malus and clawback could apply include:
• A material misstatement resulting in an adjustment to the Group’s audited consolidated accounts;
• The determination of the bonus or the number of shares subject to an award or the assessment of any performance condition was in error
or based on inaccurate or misleading information;
• The Board determining in its reasonable opinion that any action or conduct of the participant amounts to serious misconduct,
fraud or gross misconduct;
• The Board determining that there has been a material failure of risk management (for 2020 bonus and incentive awards onwards);
• The Board determining that there has been serious reputational damage (for 2020 bonus and incentive awards onwards);
• The Board determining that there has been a material corporate failure (for 2020 bonus and incentive awards onwards); or
• Any other circumstances which the Board in its discretion considers to be appropriate.
Discretion
Areas where the Committee has discretion have been outlined in the Policy. The Committee may also exercise operational and administrative
discretions under relevant plan rules approved by shareholders as set out in those rules. A number of Committee discretions apply to awards
granted under each of the Group’s share plans, including that:
• Awards may be granted as conditional share awards or nil-cost options or in such other form that the Committee determines has the same
economic effect.
• Awards may be settled in cash at the Committee’s discretion (for Executive Directors this provision will only be used in exceptional circumstances
where for regulatory reasons it is not possible to settle awards in shares).
• Awards may be adjusted in the event of any variation of the Group’s share capital or any demerger, delisting, special dividend or other event that
may affect the Group’s share price.
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In addition, the Committee has the discretion to amend the Policy with regard to minor or administrative matters where it would be, in the opinion
of the Committee, inappropriate to seek or await shareholder approval.
The Committee retains discretion to amend or substitute performance measures, targets and underpins and the weightings attached to
performance measures part-way through a performance year if one or more significant corporate events occur which causes the Committee
to believe that amended or substituted performance measures, weightings or targets would be more appropriate and not materially less difficult
to satisfy. Discretion may also be exercised in cases where the Committee believes that the outcome is not considered to be reflective of the
underlying financial or non-financial performance of the business or the performance of the individual. Any exercise of this discretion will
typically be discussed with shareholders in advance and explained in full.
The Committee reserves the right to make any remuneration payments and/or payments for loss of office (including exercising any discretions
available to it in connection with such payments) notwithstanding that they are not in line with the Policy set out above where the terms of the
payment were agreed (i) before the policy set out above came into effect, provided that the terms of the payment were consistent with any
applicable shareholder-approved Directors’ Remuneration Policy in force at the time they were agreed or where otherwise approved by
shareholders; or (ii) at a time when the relevant individual was not a Director of the Group (or other persons to whom the Policy set out
above applies) and, in the opinion of the Committee, the payment was not in consideration for the individual becoming a Director of the
Company or such other person. For these purposes “payments” include the Committee satisfying awards of variable remuneration and,
in relation to an award over shares, the terms of the payment are “agreed” no later than the time of the award.
Illustration of the application of the remuneration policy
Chief Executive Officer
Chief Financial Officer
)
m
£
(
n
o
i
t
a
r
e
n
u
m
e
R
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
£0.79m
100%
Minimum
£2.89m
30%
£3.32m
13%
26%
43%
37%
27%
24%
£1.96m
44%
16%
40%
In line with
expectations
Maximum
Maximum +
share price
growth
3.0
2.5
2.0
1.5
1.0
)
m
£
(
n
o
i
t
a
r
e
n
u
m
e
R
0.5
0.0
£0.59m
100%
Minimum
£2.20m
30%
£2.52m
13%
26%
43%
37%
27%
24%
£1.49m
44%
16%
40%
In line with
expectations
Maximum
Maximum +
share price
growth
Fixed remuneration
Annual bonus
Long-term incentives
Share price growth
Fixed remuneration includes basic salary (from 1 April 2024), pension provision (from 1 April 2024) and other benefits (based on the value disclosed in the single figure for 2023).
• The “Minimum” scenario includes fixed remuneration only.
• The “In line with expectations” scenario includes fixed remuneration plus target annual bonus (25% of maximum for 2024) plus 100% vesting of RSP
(125% of salary).
• The “Maximum” scenario includes fixed remuneration plus maximum bonus (180% of salary) plus 100% vesting of RSP (125% of salary).
• The “Maximum + share price growth” scenario is as per the “Maximum” scenario and assumes share price growth of 50%.
Non-executive Directors’ Fees
Fees for the Non-executive Chair and Non-executive Directors are set at an appropriate level to recruit and retain Directors of a sufficient calibre to
guide and influence Board level decision making without paying more than is necessary to do so. Fees are set taking into account relevant factors,
which may include the following:
• The time commitment required to fulfil the role.
• Typical practice at other companies of a similar size and complexity to Travis Perkins.
Non-executive fees will typically be reviewed annually with increases normally being effective from 1 April each year. Non-executive Director fees
policy is to pay:
• A basic fee for membership of the Board.
• An additional fee for the Chair of a Committee and the Senior Independent Director to take into account the additional responsibilities and time
commitment of the role.
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Additional fees may be paid to reflect additional Board or Committee or other responsibilities or additional time commitments as appropriate.
The Non-executive Chair receives an all-inclusive fee for the role.
Current fees are detailed within the statement of Implementation of the Directors’ remuneration policy on page 120.
Non-executive Directors do not normally receive any benefits (other than a staff discount card for purchasing products) and are not eligible to join
a Company pension scheme. Benefits may be provided if considered appropriate. No compensation is payable on termination of office, which may
be without notice from the Group. They cannot participate in any of the Group’s share plans. The Group will pay reasonable expenses incurred by
the Chair and Non-executive Directors (including any tax incurred in relation to these where appropriate).
Recruitment remuneration
It is the Group’s policy to recruit the best candidate possible for any executive Board position. It seeks to avoid paying more than is considered
necessary to secure the candidate and will have regard to guidelines and shareholder sentiment when formulating the remuneration package.
Generally the Group will set salary, incentives and benefits for candidates in line with the above remuneration policy and accordingly participation
in short- and long-term incentives will typically be on the same basis as existing Directors. In all cases the Group commits to providing
shareholders with timely disclosure of the terms of any new executive hires including the approach taken to determine a fair level of compensation.
The maximum level of variable remuneration which may be awarded (excluding any buyout awards referred to below) in respect of recruitment is
305% of salary, which is in line with the current maximum limit under the annual bonus plan and the Restricted Share Plan.
The table below outlines the Group’s normal recruitment policy:
Base salary and benefits
The pay of any new recruit would be determined following the principles set out in the remuneration policy table.
Pension
Annual bonus
Restricted Share Plan
Share buy-outs and
replacement awards
The appointee will be able to receive either a contribution to a personal pension scheme or cash allowance or
combination in lieu of pension benefits, in line with the Group’s policy as set out in the remuneration policy table.
The appointee will be eligible to participate in the annual bonus and Deferred Share Bonus Plan as set out in the
remuneration policy table. Awards may be granted up to the maximum opportunity allowable in the remuneration
policy table at the Remuneration Committee’s discretion.
The appointee will be eligible to participate in the Group’s Restricted Share Plan as set out in the remuneration
policy table. Awards may be granted up to the maximum opportunity allowable under the Plan Rules at the
Remuneration Committee’s discretion.
Where an individual forfeits outstanding variable pay opportunities or contractual rights at a previous employer
as a result of appointment, the Committee may offer compensatory payments or awards if after careful
consideration it is determined that it is appropriate to offer a buyout. Any buyout may be in such form as the
Committee considers appropriate, taking into account all relevant factors including the form of awards, expected
value and vesting timeframe of forfeited opportunities. When determining any such buyout, the guiding principle
would be that awards would generally be on a like-for-like basis unless this is considered by the Committee not to
be practical or appropriate.
The incentive plan rules allow for awards to be made outside of the plan limit to facilitate the recruitment of an
Executive Director.
To the extent that it was not possible or practical to provide the buy-out within the terms of the Group’s existing
incentive plans, a bespoke arrangement may be used (including granting an award under the Listing Rule 9.4.2
which allows for the granting of awards, to facilitate, in unusual circumstances, the recruitment of an executive
Director). Any buyout award made under the Group’s Deferred Share Bonus Plan or long-term incentive plans
will not count towards the individual’s maximum opportunity under those plans.
Relocation
Where the Group requires a candidate to relocate in order to take up an executive position it will normally
reimburse the reasonable costs of the relocation. This may include one-off or ongoing expenses such as
schooling or housing for a reasonable period of time.
Where an internal candidate is promoted to an executive position, the Group will honour any contractual commitments made through their
employment prior to the promotion including any accrued defined benefit pension provision. Future pension provision will be aligned with the
policy set out above.
Recruitment remuneration for Non-executive Directors would be assessed following the principles set out in the policy for Non-executive
Director fees.
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Policy on payment for Directors leaving employment
Executive Directors’ contracts do not have a fixed expiry date but can be terminated by serving notice. Contractual notice periods for Directors
are normally set at six months’ notice from the Director and 12 months’ notice from the Group and the Group would normally honour contractual
commitments in the event of the termination of a Director. Notwithstanding this approach, it is Group policy to seek to minimise liability in the event
of any early termination of a Director.
The Group classifies terminations of employment arising from death, ill health, disability, injury, retirement with company agreement, redundancy
or the transfer from the Group of the employing entity as ‘good leaver’ reasons. In addition the Committee retains discretion under incentive
plan rules to determine good leaver status in other circumstances. In the event such discretion is exercised a full explanation will be provided
to shareholders.
Leaver reason may impact the treatment of the various remuneration elements as follows:
Remuneration element
Good leaver reason
Other leaver reason
Salary
Ceases on cessation of employment (salary may be paid in
lieu of notice) unless a pre-existing contractual term applies.
Annual bonus including
Deferred Share Bonus*
Unpaid bonus from a completed performance period prior to
cessation will be paid in full. For the performance period in which
cessation occurs a pro rata bonus may be paid, subject to normal
performance conditions. Any unvested deferred bonus share awards
will normally continue until the normal vesting date and vest in full.
The Committee may determine that awards should vest on cessation
of employment.
Benefits
Provision or accrual of benefits will cease on cessation of employment
or, if later, at the end of the relevant subscription period.
Restricted Share Plan*
Unvested awards will normally vest at the normal vesting date and
remain subject to the performance underpins. Where a participant
ceases employment before vesting, awards will be time pro-rated
unless the Committee decides otherwise. Awards will normally
remain subject to any applicable holding period.
The Committee may determine that awards should vest and be
released at cessation of employment taking into account the extent
to which underpins have been met and, unless the Committee
decides otherwise, the period of time elapsed since award.
Where a participant ceases employment during any holding period
(other than for reason of gross misconduct) they will continue to
retain their award in full and it will be released at the end of the
holding period unless the Committee determines that the award
should be released at the time of cessation.
For awards in the form of options participants will have six months from
vesting or the end of any applicable holding to exercise their award.
Ceases on cessation of employment
(salary may be paid in lieu of notice)
unless a pre-existing contractual
term applies.
All unpaid annual bonus payments lapse.
Any unvested deferred bonus shares also
lapse on leaving.
Provision or accrual of benefits will
cease on cessation of employment
or, if later, at the end of the relevant
subscription period.
Unvested awards lapse at cessation
of employment. Where a participant
ceases employment during any holding
period (other than for reason of gross
misconduct), they will continue to retain
their award in full and it will be released
at the end of the holding period, unless
the Committee determines that the
award should be released at the
time of cessation.
For awards in the form of options,
participants will have six months
to exercise any vested awards.
* Leaver vesting provisions are fully defined in the appropriate plan documents.
The Committee reserves the right to make additional payments where such payments are made in good faith in discharge of an existing legal
obligation (or by way of damages for breach of such an obligation); or by way of settlement or compromise of any claim arising in connection with
the termination of a Director’s office or employment. In addition, the Group may pay any fees for outplacement assistance and/or the Director’s
legal or professional advice fees in connection with their cessation of office or employment. Where a Director was required to relocate to take up
their role then reasonable repatriation expenses may be included.
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Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Post-employment shareholding
In the event of stepping down from the Board, Executive Directors will normally be expected to maintain a minimum shareholding of 200% of base
salary (or actual shareholding if lower) for a period of two years after leaving the Board. This policy ensures appropriate alignment with shareholder
interests. The Committee retains discretion to waive this guideline if it is not considered to be appropriate in the specific circumstance or to
determine that this guideline should not apply to certain shares (for example, purchased shares).
Non-executive Directors
The Chairman and Non-executive Directors’ appointment letters provide for no compensation or other benefits on their ceasing to be a Director.
Change of control
In the event of a takeover or winding up of the Group, share awards may vest early. The Committee will determine the extent to which awards
shall vest taking into account the extent to which any of the performance conditions/underpins have been satisfied and unless the Committee
determines otherwise, the proportion of the performance period that has elapsed. Deferred share bonus awards will normally vest in full. In the
case of a winding-up, demerger, delisting, special dividend or similar circumstances, awards may, at the Committee’s discretion, vest early on the
same basis as for a takeover.
Considering colleagues’ views
The Committee reviews information regarding the typical remuneration structure and reward levels for other UK-based employees to provide
context when determining executive remuneration policy. The Company undertakes regular engagement surveys for all Group employees to
understand their views on working for Travis Perkins and how this can be improved. Employee feedback on all matters of reward is provided
as part of this survey, and through supplementary surveys focusing on specific areas such as employee health and financial wellbeing.
The Company established a Colleague Voice Panel in 2019, which includes within its terms of reference the aim of listening to colleagues’
views when developing the Directors’ Remuneration Policy. Louise Hardy replaced Pete Redfern as the designated workforce engagement
Non-executive Director on 1 December 2023, and pursuant to the UK Corporate Governance Code 2018, is the Colleague Voice representative
on the Board. Louise has engaged with a number of colleagues on branch visits throughout the year and all relevant views are incorporated into
remuneration reviews. A significant portion of colleagues are shareholders, meaning that they are also able to express their views in the same
way as other shareholders.
Considering shareholders’ views
The Committee believes that it is very important to maintain open dialogue with shareholders on remuneration matters. The Committee regularly
consults with significant shareholders regarding its 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. The Committee intends to
continue to consult with shareholders regarding any material changes to remuneration arrangements.
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Annual remuneration report
The following sets out the annual remuneration report for 2023, which includes details of how the Policy was implemented in 2023 and how the
Policy is intended to be implemented in 2024. This report is subject to an advisory shareholder vote at the 2024 AGM.
Implementation of the Directors’ remuneration policy in 2024
Executive Directors:
The following provides a summary of how the Group intends to implement the Policy during 2024.
Purpose and
link to strategy
Individual maximum
opportunity in 2024
Performance measures and weighting in 2024
Operation in 2024
Base salary (increase of 1.5% for the CEO from 1 April 2024)
Core element of total
package, essential to
support recruitment
and retention of
high-calibre executives.
CEO: £691,829
(2023: £681,605)
n/a
CFO: £525,000
(2023: n/a)
Benefits (no change)
Maintains a competitive
package with a range
of benefits for the
executive and
their family.
n/a
n/a
Pension (no change)
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 the Chief Executive’s
base salary would increase by 1.5%
from 1 April 2024, which is less than
the workforce as a whole but in line
with other management increases.
The Chief Financial Officer was
appointed on 9 January 2024 and his
salary will not be reviewed until 2025.
Executive 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
and Buy As You Earn.
Executive Directors participate in a
defined contribution arrangement
or receive a cash allowance.
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Rewards achievement
of annual
performance objectives.
Maximum annual
bonus opportunity
of 180% of salary.
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.
The 2024 annual bonus will be based on the
following measures:
Targets are determined in relation to
the Group’s budget.
For 2024, there is no bonus payment
below the target level of performance,
25% of the bonus is payable for target
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.
• 55% on adjusted operating profit
• 25% on adjusted operating cash conversion
• 20% on strategic performance
For 2024, strategic performance will include:
• Deepening customer relationships to drive greater
share of customers’ business
• Evolution of Group operating model to enable
greater collaboration, efficiency and effectiveness,
reflecting the power of the Group
• Progress against the Group’s
sustainability strategy
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 the business
and return value to shareholders.
Strategic measures ensure there is also focus on key
opportunities that will deliver long-term growth and
sustainable performance.
Restricted Share Plan (change to vesting period for awards granted in 2024 onwards)
Aligns participants
with the shareholder
experience, whereby
participants build up a
shareholding in Travis
Perkins plc and are
incentivised to deliver
sustainable financial
performance and
enhance shareholder
value over the
longer term.
Helps retain executives.
Maximum annual
award of 125%
of base salary.
For RSP awards granted in 2024, the performance
underpins remain as follows:
• Average 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 material reputational
damage to the Company.
Share ownership requirement
Aligns the interests of
executives and
shareholders.
Executive Directors
are required to hold
shares valued at
200% of salary
within five years
of appointment.
100% of the award vests after three
years, subject to a holding period
of a further two years.
If the Group 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.
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.
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Bonus targets are considered to be commercially sensitive, and disclosure of such may provide an unfair advantage to the Group’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 Group’s pension scheme.
• The review date for Non-executive Directors’ fees is 1 April. The basic fee was last increased by 4% with effect from 1 April 2023,
in line with the approach for the wider workforce. The Chair’s 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
£64,272
£17,510
£12,875
£12,360
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
Executive Directors and the Group Leadership Team is variable and linked to business performance compared to the wider workforce.
The Group has prioritised its salary review budget on lower earners in recent years in recognition of continuing cost of living challenges.
The longer-term aim is to continue to work towards meeting the Real Living Wage across the Group over time, whilst acknowledging the need
to remain competitive at all levels in the organisation and to protect fair and appropriate internal pay relativities reflective of the skills, capabilities
and experience of the workforce.
When times have been tough, the Group has provided additional support to colleagues, such as topping up furlough pay and contributing towards
heating and electricity costs for home-working colleagues during the pandemic, as well as making a one-off cash payment in January 2023 to over
17,000 colleagues (around 95% of the workforce) to support with cost of living pressures, at a total cost to the Group of £8m.
The Group’s wellbeing and benefit programmes are well established and provide comprehensive support to colleagues and their families during
the moments that matter. Benefits include pension, share acquisition schemes, an employee assistance programme, recognition awards, discounts
on Group products, an extensive retailer discount programme (which provides savings on average of between 6–7% of spend to help colleagues
manage their essential household expenditure) and a range of health, wellbeing, financial and lifestyle benefits. 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 direct with
colleagues, as well as through line managers and offline communication methods such as driver handheld devices, to ensure that everyone is
aware of the support that is available.
The benefits offering is regularly reviewed and has steadily expanded over the past few years, with positive feedback from colleagues.
• In 2021, the Group significantly enhanced its family friendly policies, improving and introducing paid leave for maternity, paternity, adoption,
surrogacy and IVF treatment.
• In 2022, the focus on financial wellbeing was increased, with regular and ongoing communications and webinars around financial wellbeing
topics, for example providing advice and support on retirement savings, budgeting, cost of living, mortgages, pre-retirement planning and the
gender pension gap.
• The financial wellbeing tool, Wagestream, was also launched to all colleagues in June 2022, which allows colleagues 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. 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 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, building their longer-term
financial resilience through challenging times.
• In 2023, the Group also introduced a free mortgage advice service as well as a new health and wellbeing benefit, accessible by all colleagues
and their families, which includes virtual GP advice, health checks, second medical opinion, mental health and nutritional support.
All colleagues based in the UK and the Netherlands also have the opportunity to participate in the Sharesave plan, which allows colleagues 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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Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section
Audited information
Single total figure of remuneration
£000
Executive Directors
Nick Roberts
Alan Williams
Non-executive Directors
Jasmine Whitbread
Marianne Culver
Heath Drewett
Jora Gill
Louise Hardy3
Jez Maiden4
Coline McConville5
Pete Redfern6
Total
£000
Executive Directors
Nick Roberts
Alan Williams
Non-executive Directors
Jasmine Whitbread
Marianne Culver
Heath Drewett
Jora Gill
Coline McConville
Pete Redfern
Total
Notes:
Salary
Benefits
Pension
Total fixed
Bonus
LTI1
Total
variable
2023
675
549
320
64
81
76
65
45
80
51
30
19
68
55
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
773
623
320
64
81
76
65
45
80
51
2,006
49
123
2,178
–
–
–
–
–
–
–
–
–
–
–
318
259
318
259
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Salary
Benefits
Pension
Total fixed
Bonus
LTI2
Total
variable
2022
577
577
2,755
651
529
320
61
79
71
79
74
29
19
–
–
–
–
–
–
65
104
–
–
–
–
–
–
745
652
320
61
79
71
79
74
1,864
48
169
2,081
–
–
–
–
–
–
–
–
–
1,160
947
1,160
947
–
–
–
–
–
–
–
–
–
–
–
–
2,107
2,107
4,188
Total
1,091
882
320
64
81
76
65
45
80
51
Total
1,905
1,599
320
61
79
71
79
74
1.
2.
Long-Term Incentives (LTI) reported for 2023 relate to RSP awards granted in 2021, of which the first tranche (75% of award) is due to vest in March 2024, based on the
performance underpins. The value of these awards has been calculated based on the average share price for the last quarter of 2023 of £7.76. For 2021 RSP awards, the
share price on the date of grant on 14 June 2021 was £16.26. As the share price used to value LTI for the single figure table is £7.76, none of the value reported is attributable
to share price appreciation for either Executive Director.
The LTI figures for 2022 reported last year (£1,081 for Nick Roberts and £882 for Alan Williams) were calculated on an estimated basis using the average share price of the
final quarter of 2022 of £8.83. These figures have been restated to reflect the actual share prices on vesting (£9.41 for the PSP awards vesting on 17 March 2023 and £9.54
for the CIP awards vesting on 3 April 2023).
3.
Louise Hardy was appointed to the Board on 1 January 2023 and as Chair of the Remuneration Committee on 1 December 2023.
4.
Jez Maiden was appointed to the Board as Senior Independent Director on 1 June 2023.
5.
Coline McConville relinquished the role of Chair of the Remuneration Committee on 1 December 2023 and stepped down from the Board on 31 December 2023.
6.
Pete Redfern relinquished the role of Senior Independent Director on 1 June 2023 and stepped down from the Board on 19 September 2023.
Travis Perkins plc Annual Report and Accounts 2023
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Explanatory notes for the single total figure of remuneration table
Salary
Annual salaries for the Executive Directors increased by 4% on 1 April 2023. Non-executive Director fees also increased by 4% on 1 April 2023.
The Chair’s fee has not been increased since her appointment on 31 March 2021.
Benefits
Benefits for 2023 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 Group’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 2023 are outlined in the table below.
£000
Pension value in the year from employer 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
£8,496
£59,009
£67,505
n/a
£54,918
£54,918
Annual bonus for 2023
Annual bonuses for 2023 were based on adjusted operating profit (55%), adjusted operating cash conversion (25%) and performance against
strategic measures (20%).
The following table summarises the bonus targets and achievement for 2023:
Performance measure
Adjusted operating profit
Adjusted operating cash conversion
Weighting
55%
25%
Threshold
(0%)
£259m
65%
Targets
Plan
(50% bonus)
Maximum
(100% bonus)
Actual
performance
Achieved
(% of maximum)
£280m
75%
£301m
85%
£180m
81%
0%
80%1
50%1
Strategic performance
20% The Committee assessed performance against a number of
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 50% of maximum for this element
of the bonus plan.
1 In light of financial performance and lower bonus payments
across the wider workforce than in previous years, aligned with
Management’s recommendation, the Committee used its discretion
and did not award a bonus payout against the strategic measures or
operating cash conversion measure for 2023.
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Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Committee’s assessment
Mostly delivered
Partly delivered
Mostly delivered
Partly delivered
Strategic measure
Summary of strategic performance during 2023
Future sources of profit
growth for the Group
Operational efficiency
Critical foundational
programmes
Sustainability
Year-on-year revenue growth of 9% across TP value-add services such as Managed
Services, Tool Hire and Benchmarx. 17% of Group revenue delivered from all value-add
services (including specialist services such as Intelligent Solutions), up from 15% in the
prior year. Delivery of carbon reporting proposition in CCF and external launch of
“WholeHouse” programme.
Reduction in central and regional headcount alongside Group supply chain efficiencies,
delivering annualised savings of £35m and a one-off restructuring charge of £17m in
2023. Overhead cost reduction delivered in line with budget at above branch levels.
Cost savings driven in Goods Not For Resale, but not to the level that had been
targeted for the year.
The Oracle implementation programme will deliver better stock accuracy, simpler
margin reporting, more streamlined and efficient finance processes and compliance
with new audit standards. The technical build, integration of heritage systems and
processes, data integration and general ledger balances was completed by October
2023. Full functionality is due to go live in 2024 for the Group excluding Toolstation
and BSS, slightly later than planned in order to mitigate risk and complexity in
relation to the scale of legacy processes and cultural change.
Following the implementation of the supply chain element of the Kerridge (Enterprise
Resource Planning) system for BSS last year, the finance element of the system went
live in November 2023 and is operating in line with expectations. The final stage of the
project (roll out to branches) is due to be delivered in 2024.
7% reduction in Scope 1 and 2 carbon was delivered during 2023, including an 11%
reduction in transport carbon and a 31% deterioration in buildings carbon. Carbon from
buildings has increased from a low base due to increased gas consumption in the year.
Carbon from buildings has reduced by 69% from 2020. New site openings in 2023
have included net zero carbon measures such as PV solar panels, heat pumps and
EV chargers and LED lighting has been installed across multiple sites. The roll-out
of carbon awareness training has supported branch managers in identifying ways of
reducing energy usage. Delivery diesel usage has reduced during the year, and other
savings in the fleet carbon footprint have been achieved through the introduction of
electric fork-lift trucks and vans, the trial of HVO vehicles across a number of sites
and the ongoing upgrade of the fleet to switch to higher-efficiency engines.
57% of Group spend on products for resale during the year was with centrally-managed
suppliers who have calculated their Scope 1 and 2 carbon and set their own carbon
reduction target by the end of 2023 (vs 54% at the end of last year).
85% of colleagues completed training on the Group’s environmental commitments,
including a section on carbon awareness, in excess of the target of 25% set at the
beginning of the year.
8.0% of all new hires in 2023 were apprentices, a reduction in the number of new
apprentice recruits compared to the year before due to lower levels of recruitment
across the Group as a whole. 414 TP/industry partner apprentices graduated during
2023, a 22% increase on graduations in the prior year.
More detail on the Group’s progress against its sustainability and ESG objectives is
detailed on page 30.
Travis Perkins plc Annual Report and Accounts 2023
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Long-term incentives (LTI)
Long-term incentives in the single total figure of remuneration for 2023 comprise the following awards, based on the average share price for the
three months from 1 October 2023 to 31 December 2023, which was £7.76.
Nick Roberts
£318,370
Restricted Share Plan
48,931 shares granted
36,698 shares due to vest in March 2024 (75% of award, held for a further two years)
The remaining 25% of the award (12,233 shares) are due to vest in March 2026 and will be included in the single
figure for 2025.
5,781 shares in respect of dividend equivalents added in the vesting period
41,034 shares in total represented in the single total figure of remuneration for 2023 (75% of shares and dividends)
Alan Williams
£259,001
39,806 shares granted
29,855 shares due to vest in March 2024 (75% of award, held for a further two years)
The remaining 25% of the award (9,951 shares) are due to vest in March 2026 and will be included in the single
figure for 2025.
4,702 shares in respect of dividend equivalents added in the vesting period
33,382 shares in total represented in the single total figure of remuneration for 2023 (75% of shares and dividends)
Consideration of performance underpin for 2021 RSP awards
When considering the long-term incentive vesting outcome, the Committee also considered the underlying performance of the Group in the
context of the underpins that were set for the three-year performance period from 1 January 2021 to 31 December 2023. Average ROCE
performance over the three financial years ended 31 December 2023 at 10.5% was above the underpin threshold and there were no governance
issues resulting in reputational damage to the Group. Therefore the Committee concluded that it was appropriate that RSP awards vest in full for
Executive Directors, the Group Leadership team and the extended group of senior leaders and managers across the business that received RSP
awards in 2021. In accordance with the remuneration policy in force at the time of grant, for Executive Directors, 75% of the award vests in March
2024, subject to a further two-year holding period, and the remaining 25% of the award vests in March 2026, subject to the achievement of the
performance underpins.
The Committee also noted that there were no windfall gains, since the share price is currently lower than the share price at grant. No discretion was
consequently exercised by the Committee to adjust the vesting of 2021 RSP awards.
Overall, the Committee considers that the Remuneration Policy has operated as it intended during 2023.
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 during 2023.
Departing Chief Financial Officer
The Chief Financial Officer, Alan Williams, stepped down from the Board and retired as Chief Financial Officer on 9 January 2024 and his
employment with the Group ceased on 31 January 2024. Alan will not receive any payments or compensation for loss of office.
In accordance with the remuneration policy, Alan received salary and benefits until his last date of employment with the Group on 31 January 2024.
As outlined on pages 123 to 124, Alan will not receive an annual bonus payment for performance during 2023. As a good leaver under the Policy,
Alan remains eligible for a pro rata bonus for the 2024 performance year to the date of his retirement on 31 January 2024, with 50% of any bonus
to be delivered in shares under the Deferred Bonus Share Plan and 50% in cash. In accordance with good leaver treatment under the Plan Rules,
Alan’s unvested RSP awards will vest on their normal vesting dates, subject to time pro-ration and will remain subject to applicable holding periods.
Alan’s existing Deferred Share Bonus Plan award will vest in full on its normal vesting date, will not be pro-rated and will remain subject to the
applicable holding period. All other long-term incentive plan awards have vested but are, and will remain, subject to their applicable holding
periods. Alan will continue to meet the shareholding requirement policy for a period of two years after stepping down from the Board.
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Duncan Cooper was appointed CFO and Executive Director on 9 January 2024. Duncan’s annual base salary is £525,000, which is 5% lower than
the previous incumbent. Duncan’s annual incentive opportunity and RSP grant value are set at the same level as the previous incumbent at 180%
of salary and 125% of salary respectively. His pension entitlement is 10% of salary, which is at the same level as the CEO and in line with the rate
available across the wider workforce.
As compensation for long-term incentives that have been forfeited on leaving the previous employer (comprising the performance share awards
and deferred bonus share awards granted in 2021 and 2022), Duncan will be awarded replacement share awards under the RSP in 2024. The
vesting of these replacement awards will be subject to the original performance conditions of the previous employer (Crest Nicholson plc) and
subject to the original vesting and release schedule. The total face value of the replacement awards will be £1,084,891 (137,502 Travis Perkins plc
shares), with £890,639 (112,882 Travis Perkins plc shares) subject to performance and the remaining £194,252 (24,620 Travis Perkins plc shares)
subject to employment on the vesting date. The face value of the forfeited awards and replacement awards was based on the average share price
in January 2024 for both Crest Nicholson plc and Travis Perkins plc.
The awards will be granted in accordance with the RSP Rules and subject to standard terms, including malus and clawback provisions. The vesting
outcome will be subject to the discretion of the Remuneration Committee and may be scaled back in the event of a windfall gain.
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 2023, 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, although the share price at grant was lower
than the prior year, it was not significantly lower and therefore they felt that it was appropriate 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.
2023 Restricted Share Plan (RSP) awards
Date of award
Type of award
Basis
Nick Roberts
Alan Williams
20 March 2023
Restricted shares
125% of salary
Face value*
£819,230
(87,078 shares at
£9.408 per share)
£666,472
(70,841 shares at
£9.408 per share)
Underpin period
1 January 2023 to 31 December 2025
(75% of award) and 1 January 2023 to
31 December 2027 (25% of award) (for
the purposes of assessing underpins only)
75% of the award vests after three years
and 25% of the award vests after five
years. 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 Group 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.
2023 Deferred Share Bonus Plan (DSBP)
As no bonus was earned in 2023, there will be no share awards under the Deferred Share Bonus Plan in 2024. There was also no annual bonus
payout for 2022 (and therefore no deferred share award in 2023).
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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
200% of salary within five years of appointment.
As at 31 December 2023, Nick Roberts’ total shareholding which counts towards the shareholding guideline was 344,606 and represents 392%
of salary. Alan Williams’ total shareholding which counts towards the shareholding guideline was 463,469 shares and represents 648% of salary,
based on the average share price for the last quarter of 2023 which was £7.76.
Directors’ shareholdings and share interests as at 31 December 2023 are outlined in the table below:
Executive Director
Nick Roberts
Alan Williams
Beneficially
owned shares1
Unvested RSP
options2
Unvested
unconditional shares
under DSBP3
Unconditional
options under
Sharesave4
Vested but
unexercised
options5
Total
interests
Total interests which count
towards shareholding
requirement6
Shareholding
(% of salary)6
96,299
297,329
215,580
175,379
39,284
31,959
4,692
2,004
213,639
569,494
106,134
612,805
344,606
463,469
392%
648%
1.
2.
Includes ordinary shares beneficially held at 31 December 2023 by the executive and their spouse/partner.
Includes outstanding awards made under the Restricted Share Plan (RSP). Vesting of these awards may be scaled back if one or more of the performance underpins is not met,
subject to Remuneration Committee discretion.
3.
Includes outstanding awards made under the Deferred Share Bonus Plan (DSBP), which are not subject to performance conditions.
4.
Includes outstanding options under the Sharesave (Save As You Earn) plan.
5.
Includes outstanding awards under PSP and CIP which have vested but have not yet been exercised. No PSP and CIP awards have been granted since 2020.
6.
Interests qualifying towards the shareholding requirement comprise ordinary shares beneficially held at 31 December 2023 by the executive and their spouse/partner and
the post tax value (53%) of outstanding DSBP and RSP awards and any other share options which have vested but have not been exercised. Shareholding as a % of salary is
calculated based on the Executive Director’s salary as at 31 December 2023.
During 2023 the following awards were exercised:
Nick Roberts
2020 Deferred Share Bonus Plan
Alan Williams
2020 Deferred Share Bonus Plan
Director’s shareholding and share interests – Non-executive Directors
Exercise date
Number of shares
Price per share
30 March 2023
16,986
£9.601
Exercise date
Number of shares
Price per share
30 March 2023
22,918
£9.601
Non-executive Director
Jasmine Whitbread
Coline McConville
Pete Redfern
Marianne Culver
Heath Drewett
Jora Gill
Louise Hardy
Jez Maiden
Beneficial shareholding
(as at 28 February 2024)
Beneficial shareholding
(as at 31 December 2023)
Beneficial shareholding
(as at 31 December 2022)
6,660
4,003
10,012
728
–
–
–
6,660
4,003
10,012
728
–
–
–
1,000
1,000
4,528
4,003
10,012
728
–
–
–
There were no material changes in Directors’ share ownership between 31 December 2023 and 28 February 2024. Nick Roberts acquired an
additional 28 shares through the all-employee Buy as you Earn (“BAYE”) scheme.
128
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Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section 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 Group’s
registered office. These contracts provide for six months’ notice from the Directors and 12 months’ notice from the Group. 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
• Duncan Cooper – 9 January 2024
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 Group’s registered office.
Non-executive Directors’ and the Chair’s letters of appointment do not have expiry dates, however, other than in the most exceptional
circumstances, Non-executive Directors and the Chair of the Board will not serve for more than nine years.
Director
Jasmine Whitbread
Marianne Culver
Heath Drewett
Jora Gill
Louise Hardy
Jez Maiden
Expiry of appointment letter
March 2030
November 2028
May 2030
August 2030
January 2032
June 2032
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 was appointed as an independent
Non-Executive Director of Cranswick plc on 24 July 2023.
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 2023, the Trust held 1,668,682 shares.
Travis Perkins plc Annual Report and Accounts 2023
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Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Directors’ remuneration report continued
Total shareholder return performance graph
For comparative purposes the FTSE 350 index has been selected as this is the index of which the Group was a member during the reporting year.
n
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Jan 14
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Dec 22
Dec 23
Travis Perkins plc
FTSE 350
TSR is rebased to 100 from 1 January 2014.
Historical CEO pay
Single figure remuneration (£000)
£2,634 £2,360 £2,575 £2,532 £2,258 £2,622
£696 £4,446 £1,905
£1,091
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Annual bonus payout (% of maximum)
89%
32%
24%
72%
35%
89%
–
–
–
–
–
–
–
–
97%
0%
0%
–
–
100%
45%
97%
54%
40%
40%
46%
40%
94%
65%
–
44%
97%
100%
100%
100%
100%
100%
100%
–
–
Vesting of Restricted Share Plan
(% of maximum)
Vesting of Performance Share Plan
(% of maximum)
Vesting of Co-Investment Plan
(% of maximum)
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.
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
2023
2022
2021
2020
2019
Method
Option A
Option A
Option A
Option A
Option A
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
45
79
206
37
133
39
69
168
30
109
32
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 2023.
Option A was chosen as it is considered to be the most accurate way of identifying the relevant employees.
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Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section
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
Element of pay
2023
Salary
Total remuneration
25th percentile
employee Median employee
75th percentile
employee
£23,205
£26,062
£31,581
£24,372
£28,035
£34,349
The ratio is consistent with the Group’s wider policies on employee pay, reward and progression.
There is a decrease in the CEO pay ratio for 2023. This reflects the fact that there was again no bonus payout for 2023 and a lower value for
the long-term incentive since the value of the RSP award at grant in 2021 (vesting in 2023) is less than half of the value of the previous combined
PSP and CIP awards vesting in 2023.
There are no changes attributable to changes in the Group’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
2023
2022
2021
2020
2023
2022
2021
2020
2023
2022
2021
2020
Comparative employee group1
5.8% 5.2%
1.5%
1.7% (72.9%)
(74.8%) 69.0% (38.0%)
4%
13% (8.5%)2 8.4%
Executive Directors
CEO – Nick Roberts3
CFO – Alan Williams3
Non-executive Directors
Jasmine Whitbread4
Marianne Culver
Heath Drewett4
Jora Gill
Louise Hardy5
Jez Maiden5
Coline McConville4
Pete Redfern4
3.7% 2.4% 5.3% (4.0%)
3.8%
2.1% 5.3% (3.5%)
0% 32.8%
4.9%
1.7%
2.5% 71.7%
7.0% 184.0%
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1.3% 2.6% 5.4% (2.0)%
(31.1)% 2.8% (3.6)% 11.4%
-
-
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
(100.0%) 97.0% (89.0%) 4.3%
1.1%
1.4% 0.0%
(100.0%) 97.0% (89.0%) (39.8)%
– (6.9%)
(5.0%)
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1.
2.
3.
4.
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.
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.
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.
Jasmine Whitbread, Heath Drewett and Jora Gill were appointed during 2021, whilst Pete Redfern and Coline McConville stepped down during 2023, and therefore the
higher fees received in 2022 and 2023 reflect the comparison of a full year to a part year.
5. Louise Hardy and Jez Maiden were appointed during 2023 and therefore no prior year comparison is shown.
Travis Perkins plc Annual Report and Accounts 2023
131
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Contents_GEN_Page
Contents_GEN_PageL2
Directors’ remuneration report continued
Relative importance of spend on pay
Capital expenditure is shown, for comparison, as an indicator of investment by the Group 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 Group’s
operations and is the actual amount of corporation tax paid in the relevant reporting periods.
£1,000m
£750m
£500m
£250m
667
665
254
82
148
142
Distribution to
shareholders
Capital
investment
58
41
Corporation
tax
Employee
remuneration
2023
2022
Governance
During the year the Committee comprised Coline McConville (Chair until 1 December 2023), Louise Hardy (Chair from 1 December 2023),
Pete Redfern (until 19 September 2023) 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 Group
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 Group 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 £48,550 for advice provided to the Committee.
In addition Nick Roberts (Chief Executive Officer), Alan Williams (Chief Financial Officer), Robin Miller (General Counsel & Company Secretary),
Emma Rose (Chief Human Resources Officer), Jon Erb (Director of Group Finance) and Leonie Clarke (Group Reward Director) have assisted the
Committee in its work and attended Committee meetings where appropriate. No individual is involved in the setting of their own remuneration.
132
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Contents Generation – Section
Contents_GEN_Page
Contents_GEN_PageL2
Responsibilities
The Remuneration Committee is responsible for developing and implementing the remuneration policy within the Group. It determines and agrees
with the Board the policy for the remuneration and benefits of the Chair, Executive Directors and Group Leadership Team members and other
senior executives. The Committee also oversees the administration of the Group’s share plans. The Committee’s terms of reference are available
on the Travis Perkins plc website (www.travisperkinsplc.co.uk) or on request from the Company Secretary.
Key items discussed in 2023 meetings
The Remuneration Committee held three routinely scheduled meetings during the year, with four additional meetings. The Remuneration
Committee discussed the following matters:
Date
Key issues considered
30 January
20 February
• Approval of annual salary review for Executive Directors and the Group Leadership Team
• Review of annual bonus targets for 2023
• Review of Remuneration Committee terms of reference
• Approval of annual bonus targets for 2023
• Approval of outturn of 2022 annual bonus scheme and 2023 deferred share bonus plan awards
• Approval of vesting of 2020 long-term incentive awards (PSP and CIP)
• Approval of grant of 2023 RSP awards, including consideration of windfall gains
• Approval of Remuneration Committee terms of reference
5, 14, 15 June
• Retirement of Alan Williams, Chief Financial Officer
• Appointment of Duncan Cooper, Chief Financial Officer
29 June
• Review of Directors’ remuneration policy
• Approach to shareholder consultation
14 December
• Review of Directors’ remuneration policy and feedback from shareholder consultation
• Context and considerations for the 2024 annual salary review for the wider workforce
• Performance update on the 2023 annual bonus scheme
• Vesting update on 2021 long-term incentive awards (RSP)
• Design of 2024 bonus plan
Shareholder voting
The following resolutions in relation to remuneration were put to the Group’s AGM (2022 Directors’ remuneration report and 2020 Policy):
Resolution
Votes for
For (%)
Votes against
Against (%)
Votes withheld
To receive and approve the 2022 Directors’ remuneration report
(2023 AGM)
To receive and approve the Directors’ remuneration policy
(2021 AGM)
158,666,616
94.90%
8,521,913
5.10%
12,312
178,947,921
89.38%
21,267,740
10.62%
31,205
The Directors’ remuneration report has been approved by the Board of Directors and is signed on its behalf by:
Louise Hardy
Chair of the Remuneration Committee
11 March 2024
Travis Perkins plc Annual Report and Accounts 2023
133
Directors’ report
For the year ended 31 December 2023
The Directors present their annual report and audited accounts of
Travis Perkins plc and its subsidiaries (the “Group”) for the year ended
31 December 2023. 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
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
Page
90
88
106
14
29
55
74
72
135
48
188
110
175
188
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 64 to 69. 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; 169 Toolstation branches in Belgium, France and
The Netherlands.
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/investors/.
Board of Directors
The names, biographies and committee memberships of all
Directors are provided on pages 88 to 89 and details of the Directors
that held office during the 2023 financial year are set out on page 92.
The powers and responsibilities of the Directors are set out in the
Corporate Governance report on pages 90 to 93. The appointment
and removal of directors is regulated by the Company’s Articles, the
Act, the UK Corporate Governance Code (the “Code”) and related
legislation. Under Article 83 of the Company’s Articles all Directors
are required to retire and seek re-election annually and accordingly
all will do so at the Annual General Meeting.
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 and the Chair of the Board are
set out in the Remuneration Report on pages 106 to 122 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 2023, including
holdings, if any, of spouses and of children under the age of 18 are
provided in the Remuneration report on pages 106 to 133
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 2023.
The Company maintains Directors’ and Officers’ liability insurance
cover in respect of potential legal action brought against its Directors.
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 2023, 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.
Direct /
Indirect
Number
of Shares
Voting
Rights
BlackRock, Inc.
Indirect
10,860,539
5.1%
Sprucegrove Investment Management Ltd Direct
10,569,923 5.0%
Artemis Investment Management LLP
Indirect
10,751,952
5.1%
Schroders Plc
Indirect
11,136,777
5.2%
Pzena Investment Management, Inc
Indirect
15,587,458
6.9%
Ameriprise Financial, Inc
Indirect
11,121,830
5.2%
Results and dividend
The Group’s results for the year ending 31 December 2023 are set out
in the income statement on page 145 and dividends for the year ending
31 December 2023 are set out in note 20. The Directors recommend
a final dividend of 5.5 pence per share for approval at the Company’s
Annual General Meeting. If approved by shareholders, the final dividend
will be paid on 9 May 2024 to those shareholders on the register at the
close of business on 2 April 2024.
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Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Balance sheet and post-balance sheet events
The balance sheet on page 191 shows the Group’s financial position.
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 48 and an overview of
the Company’s approach to diversity can be found in the Sustainability
report and the Nominations Committee report on pages 98 to 100.
The Group’s 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
reassignment. 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.
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 2023 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. Full details
of her activities during the year can be found on page 90.
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 106 to 133.
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/.
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 2023 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. As at 31 December 2023,
there were no Ordinary Shares of the Company held 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.
The rights and obligations attaching to its shares are set out in the
Company’s Articles of Association. Fully paid shares in the Company
are freely transferable. There are no persons that hold securities
carrying special rights with regard to the control of the Company.
Details of the structure of the Company’s share capital and changes
in the share capital during the year are also included in the notes to
the financial statements on page 193.
As at 31 December 2023 the Travis Perkins Employee Share
Ownership Trust owned 1,668,682 shares in the Company (0.8% 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 for that provisions of the Company’s share
schemes and plans may cause options and awards granted to
employees under such schemes and plans to vest on a takeover.
Robin Miller
General Counsel & Company Secretary
11 March 2024
Travis Perkins plc Annual Report and Accounts 2023
135
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Directors’ statement of responsibilities
For the year ended 31 December 2023
Responsibility statement of the Directors in respect
of the annual financial report
We confirm that to the best of our knowledge:
• The financial statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the company and the
undertakings included in the consolidation taken as a whole; and
• The Strategic Report 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.
The Statement of Directors’ Responsibilities has been approved by the
Board and is signed on its behalf by:
Nick Roberts
Chief Executive Officer
Duncan Cooper
Chief Financial Officer
11 March 2024
11 March 2024
The Directors are responsible for preparing the Annual Report and the
Group and Parent Company financial statements in accordance with
applicable law and regulations. Company law requires the Directors
to prepare Group and Parent Company financial statements for each
financial year. Under that law they are required to prepare the Group
financial statements in accordance with UK-adopted international
accounting standards and applicable law and have elected to prepare
the Parent Company financial statements in accordance with UK
accounting standards and applicable law, including FRS 101 Reduced
Disclosure Framework. Under company law, the Directors must not
approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Group and Parent
Company and of the Group’s profit or loss for that period. In preparing
each of the Group and Parent Company financial statements, the
Directors are required to:
• Select suitable accounting policies and then apply them consistently;
• Make judgements and estimates that are reasonable, relevant, and
reliable and, in respect of the parent Company financial statements
only, 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 (“DTR”)
4.1.14R, the financial statements will form part of the Annual financial
report prepared under DTR 4.1.17R and 4.1.18R. The auditor’s report
on these financial statements provides no assurance over whether
the annual financial report has been prepared in accordance with
those requirements.
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Financial statements
Financial statements
138
Independent Auditor’s report
145 Consolidated income statement
145 Consolidated statement of comprehensive income
146 Consolidated balance sheet
147 Consolidated statement of changes in equity
148 Consolidated cash flow statement
149 Notes to the consolidated financial statements
191 Company balance sheet
192 Company statement of changes in equity
193 Notes to the Company’s financial statements
205 Five-year summary
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1. Our opinion is unmodified
We have audited the financial statements of Travis Perkins plc (“the
Company”) for the year ended 31 December 2023 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 2023 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 nine
financial years ended 31 December 2023 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
£10.0m (2022: £11.5m)
4.4% (2022: 4.7%) of normalised
Group profit before tax
fromcontinuing operations*
88% (2022: 89%) of normalised
Group profit before tax
fromcontinuing operations*
Key audit matters vs 2022
Recurring risks
Accounting for inventory
Gross defined benefit
obligations
Parent Company’s key
audit matter: Recoverability
of parent Company’s
investment in subsidiaries
*
In 2022 our materiality was based on Group profit before tax
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
2022), 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.
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Our response
Accounting
for inventory
(£728 million;
2022: £728
million)
Refer to page 101
(Audit
Committee
Report) and
page 164
(accounting
policy and
financial
disclosures).
Gross defined
benefit
obligations
(£996 million;
2022: £962
million)
Refer to page 101
(Audit
Committee
Report) and
page 169
(accounting
policy and
financial
disclosures).
Accounting for inventory
(quantities, cost and deferral
of rebates into inventory)
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.
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 17) disclose
the sensitivity estimated by the Group.
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 analytics and substantive tests of detail.
Our results:
• We found the accounting for inventory to be acceptable (2022: 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 by comparing them to 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
(2022: acceptable).
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The Risk
Our response
Recoverability
of Parent
Company’s
investment in
subsidiaries
(£1,922 million;
2022: £1,869
million)
Refer to page 194
(accounting policy
and financial
disclosures).
Low risk, high value
The carrying amount of the Parent
Company’s investments in subsidiaries
represents 72% (2022: 74%) 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 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 in addition to the carrying value of
the cash generating units that these investments represent.
• 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 balance of the Company’s investments in subsidiaries and the related
impairment charge to be acceptable (2022: acceptable).
3. Our application of materiality and an overview
of the scope of our audit
Materiality for the Group financial statements as a whole was set at
£10.0m (2022: £11.5m), determined with reference to a benchmark
of normalised Group profit before tax from continuing operations
(2022: Group profit before tax) of £229m (2022: 245m).
We normalised Group profit before tax from continuing operations
by adding back adjustments that do not represent the normal,
continuing operations of the Group and by averaging over 3 years.
The items we adjusted for were Administrative expenses – adjusting
items (2022: not applicable) disclosed in note 3. We selected
3 years (2022: not applicable) to average profit before tax from
continuing operations to account for the fluctuations in the business
Group’s performance due to the downturn in performance due high
interest rates resulting in low levels of newbuild housing and the
impact that this has had on sales and overall profitability
of the Group.
Materiality for the Parent Company financial statements as a whole
was set at £8.0m (2022: £8.0m), determined with reference to a
benchmark of the Parent Company total assets, of which it
represents 0.3% (2022: 0.3%).
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% (2022: 65%) of materiality
for the financial statements as a whole, which equates to £6.5m
(2022: £7.5m) for the Group and £5.2m (2022: £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 £0.4m (2022: £0.5m),
in addition to other identified misstatements that warranted reporting
on qualitative grounds.
Of the Group’s 29 (2022: 29) reporting components, we subjected
8 (2022: 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% (2022: 5%) of total Group revenue, 12%
(2022: 11%) of the total profits and losses that made up the Group profit
before tax and 13% (2022: 7%) of total Group assets is represented by
21 (2022: 22) reporting components, none of which individually
represented more than 5% (2022: 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 £1.8m to £8.0m (2022:
£3.3m to £10.3m), having regard to the mix of size and risk profile of
the Group across the components. The work on 3 of the 8 components
(2022: 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 group team performed procedures on the
items excluded from normalised group profit before tax.
The scope of the audit work performed was predominantly substantive
as we placed limited reliance upon the Group’s internal control over
financial reporting.
The Group team visited 3 (2022: 2) component locations in the UK
and France (2022: all in the UK) to assess the audit risk and strategy.
Video and telephone conference meetings were also held with these
component auditors. At these visits and meetings, the findings
reported to the Group team were discussed in more detail, and
any further work required by the Group team was then performed
by the component auditor.
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£10.0m (2022: £11.5m)
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.
£8.0m
Range of materiality at 8
components (£1.8m-£8m)
(2022: £3.3m to £10.3m)
£0.4m
Misstatements reported to the
audit committee (2022: £0.5m)
Normalised PBT
Group materiality
Group revenue
95%
2022: 95%
88%
2022: 89%
95%
88%
Group total assets
87%
2022: 93%
90%
Full scope for group audit
purposes 2023
Full scope for group audit
purposes 2022
Residual components
*
In 2022 our materiality was based on
Group profit before tax from continuing
operations, excluding adjusting items.
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 page 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 key personnel and those charged with governance, 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.
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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
Company or to cease their operations, and as they have concluded
that the Group’s and the 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.
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 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.
• Challenged the reasonableness of the Group’s budgets and
forecasts and evaluated whether the growth targets are within
a reasonable range.
• 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 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 on page 133
to the financial statements on the use of the going concern basis of
accounting with no material uncertainties that may cast significant
doubt over the Group and Company’s use of that basis for the going
concern period, and we found the going concern disclosure 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
Company will continue in operation.
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:
• 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.
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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.
As the Group is regulated, our assessment of risks involved gaining
an understanding of the control environment including the entity’s
procedures for complying with regulatory requirements.
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.
7. We have nothing to report on the other information in
the Annual Report
The directors are responsible for the other information presented in the
Annual Report together with the financial statements. Our opinion on
the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except as explicitly
stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the
financial statements or our audit knowledge. Based solely on that work
we have not identified material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic report
and the directors’ report;
• in our opinion the information given in those reports for the financial
year is consistent with the financial statements; and
• in our opinion those reports have been prepared in accordance with
the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with the Companies
Act 2006.
Disclosures of emerging and principal risks
and longer-term viability
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ disclosures in respect of
emerging and principal risks and the viability statement, and the
financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw
attention to in relation to:
• the directors’ confirmation within the Viability assessment 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 assessment 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.
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7. We have nothing to report on the other information in
the Annual Report continued
Our work is limited to assessing these matters in the context of only the
knowledge acquired during our financial statements audit. As we cannot
predict all future events or conditions and as subsequent events may
result in outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the absence of anything to
report on these statements is not a guarantee as to the Group’s and
Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ corporate governance
disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements and
our audit knowledge:
• the directors’ statement that they consider that the annual report
and financial statements taken as a whole is fair, balanced and
understandable, and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy;
• the section of the annual report describing the work of the Audit
Committee, including the significant issues that the audit committee
considered in relation to the financial statements, and how these
issues were addressed; and
• the section of the annual report that describes the review of the
effectiveness of the Group’s risk management and internal
control systems.
We are required to review the part of the Corporate Governance
Statement relating to the Group’s compliance with the provisions
of the UK Corporate Governance Code specified by the Listing
Rules for our review. We have nothing to report in this respect.
8. We have nothing to report on the other matters on
which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if,
in our opinion:
• adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the parent Company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are
not made; or
• we have not received all the information and explanations we require
for our audit.
We have nothing to report in these respects.
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.
The Company is required to include these financial statements in
an annual financial report prepared under Disclosure Guidance and
Transparency Rule 4.1.17R and 4.1.18R. This auditor’s report provides
no assurance over whether the annual financial report has been
prepared in accordance with those requirements.
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
12 March 2024
144
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Consolidated income statement
For the year ended 31 December 2023
£m
Revenue
Gross profit
Charge for impairment losses for trade receivables
Selling and distribution
Administrative expenses – other
Profit on disposal of properties
Other operating income
Adjusted operating profit
Administrative expenses – adjusting items
Administrative expenses – amortisation of acquired intangible assets
Operating profit
Interest on lease liabilities
Other finance costs
Finance income
Profit before tax
Tax
Profit for the year
All profit for the year is attributable to the owners of the Company.
Earnings per share:
Adjusted basic earnings
Adjusted diluted earnings
Basic earnings
Diluted earnings
The accompanying notes form an integral part of these financial statements.
Consolidated statement of comprehensive income
For the year ended 31 December 2023
£m
Profit for the year
Items that will not be reclassified subsequently to profit and loss:
Actuarial loss 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 (loss)/gain on cash flow hedges
Deferred tax on cash flow hedges
Total other comprehensive loss for the year net of tax
Total comprehensive income for the year
All other comprehensive income is attributable to the owners of the Company.
Notes
1
13
4
3
2
6
6
6
7
Notes
19
19
19
19
Notes
17
7
26
7
2023
4,861.9
1,305.1
(16.8)
(835.0)
(297.1)
15.1
9.1
180.4
(60.0)
(10.5)
109.9
(26.2)
(25.8)
12.1
70.0
(31.9)
38.1
2023
45.7p
45.0p
18.1p
17.8p
2023
38.1
(41.0)
10.2
(1.2)
(1.4)
0.4
(33.0)
5.1
2022
4,994.8
1,384.7
(11.0)
(805.4)
(314.0)
25.3
15.7
295.3
–
(10.5)
284.8
(21.5)
(27.5)
9.2
245.0
(52.8)
192.2
2022
94.6p
92.9p
90.8p
89.2p
2022
192.2
(145.3)
36.3
5.5
4.3
(1.1)
(100.3)
91.9
Travis Perkins plc Annual Report and Accounts 2023
145
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Consolidated balance sheet
As at 31 December 2023
£m
Assets
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use assets
Long-term prepayments and other receivables
Deferred tax asset
Derivative financial instruments
Retirement benefit asset
Total non-current assets
Current assets
Inventories
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
Short-term provisions
Total current liabilities
Total liabilities
Total equity and liabilities
Notes
2023
2022
8
8
9
10
13
15
27
17
11
13
22
26
18
21
10
15
14
21
10
27
16
14
847.9
99.9
848.4
530.4
14.2
18.0
2.9
100.6
2,462.3
727.6
689.6
14.5
131.5
1,563.2
4,025.5
23.8
545.6
2.9
326.5
10.8
(14.1)
8.4
1.4
1,135.0
2,040.3
445.1
518.8
92.8
3.8
1,060.5
–
89.6
0.4
795.4
39.3
924.7
1,985.2
4,025.5
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
The financial statements of Travis Perkins plc, registered number 824821, were approved by the Board of Directors on 11 March 2024 and signed
on its behalf by:
Nick Roberts
Director
Duncan Cooper
Director
146
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section
Consolidated statement of changes in equity
For the year ended 31 December 2023
Cash flow
hedge
reserve
Merger
reserve
Revaluation
reserve
Own
shares –
treasury
Own
shares –
ESOT
Foreign
exchange
reserve
Retained
earnings
Total
equity
Other
326.5
10.5
(53.8)
(7.6)
£m
At 1 January 2022
Profit for the year
Other comprehensive income
for the year net of tax
Total comprehensive income
for the year
Dividends paid
Adjustments in respect of
revalued fixed assets
Shares purchased in share
buyback
Sale of own shares
Own shares movement
Cancelled shares
Equity-settled share-based
payments net of tax
Tax on revalued assets
At 1 January 2023
Profit for the year
Other comprehensive income
for the year net of tax
Total comprehensive income
for the year
Dividends paid
Adjustments in respect of
revalued fixed assets
Own shares movement
Equity-settled share-based
payments net of tax
Tax on revalued assets
Share
capital
Share
premium
25.2
545.6
–
–
–
–
–
–
–
–
(1.4)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4.3
4.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
23.8
545.6
4.3
326.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1.4)
(1.4)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1.1)
–
–
–
–
–
2.7
12.1
–
–
–
–
(1.3)
–
–
–
–
–
–
–
_
–
–
–
–
–
(125.5)
(46.6)
3.8
16.1
–
–
–
(34.3)
–
–
–
–
–
20.2
–
–
–
–
179.3
–
–
–
–
–
–
–
–
–
–
–
–
4.1
–
5.5
5.5
–
–
–
–
–
–
–
–
9.6
–
(1.2)
(1.2)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,387.3 2,237.8
192.2
192.2
(110.1)
(100.3)
82.1
91.9
(81.7)
(81.7)
1.1
–
_
(16.1)
_
(172.1)
3.8
–
–
1.4
(179.3)
–
–
14.7
14.7
5.1
7.8
1.4
1,213.2 2,102.2
–
–
–
–
–
–
–
38.1
38.1
(30.4)
(33.0)
7.7
5.1
(82.1)
(82.1)
1.3
(20.2)
14.6
–
–
14.6
–
1.4
0.5
0.5
1,135.0 2,040.3
At 31 December 2023
23.8
545.6
2.9
326.5
10.8
(14.1)
8.4
Travis Perkins plc Annual Report and Accounts 2023
147
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Consolidated cash flow statement
For the year ended 31 December 2023
£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
Gain on disposal of property, plant and equipment
Purchase of tool hire assets
Decrease/(increase) in inventories
Decrease/(increase) in receivables
(Decrease) in payables
Adjusting items payments less than / (greater than) the charge
Cash generated from operations
Interest paid and debt arrangement fees
Interest on lease liabilities
Income taxes paid
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
Net cash (outflow)/inflow from investing activities
Cash flows from financing activities
Shares purchased in share buyback
Sale of own shares
Repayment of lease liabilities
Payments to pension scheme
Dividends paid
Drawdown of borrowings
Repayment of bonds
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 22)
148
Travis Perkins plc Annual Report and Accounts 2023
2023
2022
109.9
284.8
80.3
91.1
4.6
10.5
14.6
(15.1)
(7.8)
0.2
36.3
(58.7)
49.5
315.4
(31.0)
(26.2)
(40.6)
217.6
6.0
69.1
(2.9)
(33.2)
(97.9)
(58.9)
–
–
(84.5)
(3.8)
(82.1)
100.0
(180.0)
(250.4)
(91.7)
223.2
131.5
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
1.4
22.5
(7.0)
(38.0)
(94.1)
(115.2)
(172.1)
3.8
(78.8)
(3.7)
(81.7)
75.0
(120.0)
(377.5)
(236.6)
459.8
223.2
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Notes to the consolidated financial statements
For the year ended 31 December 2023
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 201. The nature of the Group’s operations and its principal activities are set out in the Strategic Report on pages 1 to 86.
These financial statements are presented in pounds sterling, the currency of the primary economic environment in which the Group operates,
and presented rounded to the nearest £100,000 unless otherwise stated.
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 191 to 202.
Basis of preparation
The financial statements have been prepared on the historical 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,
reduced overhead investment and dividend suspension
• The committed debt facilities available to the Group and the covenants thereon
• The Group’s debt maturity profile
• 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 74 to 85 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.
Travis Perkins plc Annual Report and Accounts 2023
Travis Perkins plc Annual Report and Accounts 2023
149
149
Financial statementsOther informationGovernanceStrategic reportFinancial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section General information continued
Key judgements and estimates
The preparation of financial statements requires the Directors to make estimates and assumptions about future events that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities. Future events and their effects cannot be determined with
certainty. Therefore, the determination of estimates requires the exercise of judgement based on various assumptions and other factors such
as historical experience and current and expected economic conditions. The Directors frequently re-evaluate these significant factors and make
adjustments as facts and circumstances dictate. Some financial information 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 a material
misstatement in the information calculated by these 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
172
186-187
Note
17
28
Description
Pension assumptions
Impairment review of Toolstation Benelux CGU
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 sheet 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 revenue 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
All revenue arose in the UK except for £132.0m (2022: £115.5m) arising in Europe.
150
150 Travis Perkins plc Annual Report and Accounts 2023
Travis Perkins plc Annual Report and Accounts 2023
2023
4,693.0
168.9
4,861.9
2022
4,836.0
158.8
4,994.8
Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section b. Revenue reconciliation and like-for-like sales
£m
2022 revenue
Network change
Trading days
2022 like-for-like revenue
Like-for-like change
2023 like-for-like revenue
Network change
2023 revenue
Like-for-like revenue %
Total revenue growth %
Merchanting
Toolstation
Total
4,219.8
775.0
4,994.8
(52.0)
20.2
4,188.0
(185.5)
4,002.5
33.3
4,035.8
(4.4%)
(4.4%)
(2.7)
2.3
774.6
30.9
805.5
20.6
826.1
4.0%
6.6%
(54.7)
22.5
4,962.6
(154.6)
4,808.0
53.9
4,861.9
(3.1%)
(2.7%)
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
Operating profit
Adjusted operating profit
Adjusted operating profit before property disposals
2023
4,861.9
(3,556.8)
1,305.1
(851.8)
(367.6)
15.1
9.1
109.9
180.4
165.3
There are no gains or losses on the disposal of property, plant and equipment except for the profit on disposal of properties of £15.1m
(2022: £25.3m).
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
Tax on amortisation of acquired intangible assets
Adjusted profit after tax
Adjusted profit excludes adjusting items and amortisation of acquired intangible assets.
2023
70.0
60.0
10.5
140.5
(31.9)
(9.7)
(2.6)
96.3
2022
4,994.8
(3,610.1)
1,384.7
(816.4)
(324.5)
25.3
15.7
284.8
295.3
270.0
2022
245.0
–
10.5
255.5
(52.8)
–
(2.6)
200.1
Travis Perkins plc Annual Report and Accounts 2023
Travis Perkins plc Annual Report and Accounts 2023
151
151
Financial statementsOther informationGovernanceStrategic reportFinancial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Income and expenses continued
3. Adjusting items
Accounting policy
Adjusting items are those items of income and expenditure that, individually or in aggregate, 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
one-year or multi-year restructuring programmes, onerous contracts, write-downs or impairments of 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, pension scheme
curtailment gains and the effect of changes in corporation tax rates on deferred tax balances.
£m
Restructuring
Benchmarx branch closures
Toolstation France impairments
Restructuring
2023
16.8
10.1
33.1
60.0
2022
–
–
–
–
As part of the Group’s strategy of simplifying how its businesses interact with each other and in response to the continued weakness in the
construction market, the Group has commenced the restructuring of its central functions, regional sales and support teams and supply chain.
The first steps in this programme were completed in 2023 with associated costs as follows:
• £5.4m of property and fixed asset impairment costs
• £11.4m of redundancy and other people costs
It is expected that this programme will complete in 2024.
Benchmarx branch closures
A charge of £10.1m has been recognised in respect of the impairment of right-of-use assets of £5.0m and tangible fixed assets of £2.6m and the
recognition of property-related provisions for 39 standalone Benchmarx branches, following impairment reviews performed using value-in-use
models based on approved 2024 budgets. Consistent with the accounting policy disclosed in note 28, each branch is an individual CGU. Their
recoverable amount was assessed as £3.0m. The Benchmarx branches all form part of the Travis Perkins General Merchant group of CGUs.
These branches were closed after the balance sheet date in February 2024.
Toolstation France impairment
Following a change in strategy, a charge of £33.1m was recognised as a result of the impairment review of the Toolstation France cash-generating
unit. This charge consists of a £14.4m impairment of right-of-use assets, a £7.2m impairment of tangible fixed assets, a £9.6m impairment of
goodwill and a £1.9m impairment of other intangible fixed assets. Further information on this impairment included in note 28.
4. Other operating income and auditor’s remuneration
a. Other operating income
£m
Rental income
Transitional Service Agreement income
2023
4.4
4.7
9.1
2022
5.3
10.4
15.7
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 decreased significantly in 2023 as
components of the service agreements expired and will reduce further in 2024.
Costs of £14.8m were incurred in 2022 in respect of restructuring activity which did not meet the Group’s accounting policy for disclosure as an
adjusting item.
152
152 Travis Perkins plc Annual Report and Accounts 2023
Travis Perkins plc Annual Report and Accounts 2023
Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section 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
2023
2022
294
1,700
99
90
2,183
270
1,561
60
85
1,976
A description of the work of the Audit Committee is set out in the Audit Committee report on pages 101 to 105 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, the amortisation of acquired intangible assets 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 Toolstation segment sells building materials at a fixed price, with a fixed range in each store. The Merchanting segment
sells building materials at prices specifically negotiated with customers, with variation in the products offered in each branch.
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
Average capital employed
Segment assets
Segment liabilities
Consolidated net assets
Capital expenditure
Capital expenditure excluding property
Amortisation of acquired intangible assets
Depreciation of fixed assets and software amortisation
Depreciation of right-of-use assets
Merchanting
Toolstation
Unallocated
Consolidated
2023
4,035.8
198.9
7.6
20.9
227.4
(15.1)
212.3
5.6%
2,250.7
2,943.4
(1,070.6)
1,872.8
123.4
89.5
7.6
67.8
56.8
826.1
(55.6)
2.9
38.3
(14.4)
–
(14.4)
(1.7%)
596.0
764.6
(375.1)
389.5
19.1
19.1
2.9
17.1
34.3
–
(33.4)
–
0.8
(32.6)
–
(32.6)
–
(215.0)
317.5
(539.5)
(222.0)
–
–
–
–
–
4,861.9
109.9
10.5
60.0
180.4
(15.1)
165.3
3.7%
2,631.7
4,025.5
(1,985.2)
2,040.3
142.5
108.6
10.5
84.9
91.1
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5. Business segments continued
£m
Revenue
Operating profit
Amortisation of acquired intangible assets
Adjusted operating profit
Less property profits
Adjusted operating profit excluding property profits
Merchanting
Toolstation
Unallocated
Consolidated
2022
4,219.8
775.0
331.3
7.6
338.9
(25.3)
313.6
(11.8)
2.9
(8.9)
–
(8.9)
–
(34.7)
–
(34.7)
–
(34.7)
4,994.8
284.8
10.5
295.3
(25.3)
270.0
Adjusted operating margin excluding property profits
7.4%
(1.1%)
–
5.9%
Average capital employed
2,181.3
572.9
(83.4)
2,670.8
Segment assets
Segment liabilities
Consolidated net assets
Capital expenditure
Capital expenditure excluding property
Amortisation of acquired intangible assets
Depreciation of fixed assets and software amortisation
Depreciation of right-of-use assets
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
Deferred tax liabilities
Interest-bearing loans, borrowings and loan notes
Unallocated corporate liabilities
2,959.1
(1,083.3)
1,875.8
91.6
60.1
7.6
65.6
49.5
743.8
(309.4)
434.4
49.9
49.9
2.9
14.6
29.5
433.6
(641.6)
(208.0)
4,136.5
(2,034.3)
2,102.2
–
–
–
–
–
141.5
110.0
10.5
80.2
79.0
2023
2022
2.9
17.5
131.5
118.7
14.4
14.5
18.0
317.5
(92.8)
(445.1)
(1.6)
(539.5)
4.3
25.5
235.7
135.9
16.5
0.7
15.0
433.6
(96.0)
(541.6)
(4.0)
(641.6)
Non-current assets with a carrying value of £111.7m (2022: £148.0m) owned by the Toolstation Europe businesses are located in foreign countries.
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section 6. Net finance costs
a. Finance costs and finance income
£m
Items in the nature of interest:
Interest on bonds and other loans
Interest on bank facilities and overdrafts
Pension scheme SPV interest
Other finance costs:
Amortisation of issue costs of bank loans
Unwinding of discounts – property provisions
Remeasurement:
Net loss on remeasurement of derivatives at fair value
Loss on remeasurement of foreign exchange
Finance costs before lease interest
Interest on lease liabilities – property
Interest on lease liabilities – equipment
Finance costs
Items in the nature of interest:
Interest receivable
Remeasurement:
Net gain on remeasurement of foreign exchange
Other finance income – pension scheme
Finance income
Net finance costs
2023
2022
(20.6)
(1.5)
(1.7)
(1.5)
(0.1)
(0.2)
(0.2)
(25.8)
(25.3)
(0.9)
(52.0)
5.7
–
6.4
12.1
(22.8)
(0.8)
(1.7)
(1.5)
(0.4)
(0.3)
–
(27.5)
(21.2)
(0.3)
(49.0)
1.8
2.1
5.3
9.2
(39.9)
(39.8)
The Group’s interest cover covenants are calculated using those items of finance income and finance cost that are in the nature of interest,
including interest on lease liabilities. In 2023 these were in total £44.3m (2022: £45.0m).
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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
2023
2022
33.0
(6.1)
26.9
(1.4)
6.4
5.0
31.9
56.2
1.4
57.6
(2.5)
(2.3)
(4.8)
52.8
The total tax charge in 2023 includes a credit of £9.7m relating to costs recognised as adjusting items (2022: £nil).
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section The differences between the total tax charge and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax
for the Group is as follows:
Profit 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
Impairment of goodwill and intangibles
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
2023
2022
£m
70.0
16.5
1.3
3.3
2.0
2.7
–
7.1
(1.2)
(0.1)
0.3
31.9
%
23.5
45.6
£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
For accounting periods beginning after 31 December 2023 the Group will be required to comply with the OECD Pillar Two model rules which will
require the Group to pay a minimum level of tax on income arising in the jurisdictions in which it operates. The Group’s current analysis of these
rules and their application in jurisdictions relevant to the Group indicate that no material additional tax liability will arise. The Group has applied
the mandatory temporary exception to the accounting for deferred taxes arising from the implementation of the Pillar Two model rules.
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
Share-based payments
2023
2022
0.4
10.2
10.6
(1.1)
36.3
35.2
2023
2022
–
0.5
0.1
0.6
0.1
7.8
(2.4)
5.5
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8. 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. 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.
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.
a. Goodwill by reportable segment
£m
At 1 January 2022
Measurement period adjustments
Effect on movement in exchange rates
At 1 January 2023
Impairment
Effect on movement in exchange rates
At 31 December 2023
b. Other intangible assets
Merchanting
Toolstation
682.5
2.3
–
684.8
–
–
684.8
170.5
–
3.7
174.2
(9.6)
(1.5)
163.1
Total
853.0
2.3
3.7
859.0
(9.6)
(1.5)
847.9
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.
Amounts paid to third parties in respect of the development of software and other intangible assets not controlled by the Group are expensed over
the period where the Group receives the service. The cost of configuring and customising software is treated as a prepayment and recognised over
the period the Group benefits from the implemented software only if the configuration and customisation service is not distinct from the provision of
the software itself. Licence fees for using third-party software are expensed over the period the software is in use.
Acquired customer relationships are amortised over their estimated useful lives, which range from 5 to 15 years. The remaining lives of
amortised customer relationships range from one to seven years. No amortisation is charged on computer software under construction.
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section £m
Cost or valuation
At 1 January 2022
Additions
Transfers between categories
At 1 January 2023
Additions
Impairment
Derecognition
At 31 December 2023
Amortisation
At 1 January 2022
Charged on acquired intangibles
Charged on internally generated intangibles
At 1 January 2023
Charged on acquired intangibles
Charged on internally generated intangibles
At 31 December 2023
Net book value
At 31 December 2022
At 31 December 2023
Computer
software
Customer
relationships
Assets under
construction
Brand
150.4
–
–
150.4
–
(1.9)
–
101.5
6.8
2.4
110.7
1.1
–
–
151.6
–
–
151.6
–
–
–
148.5
111.8
151.6
71.4
2.3
–
73.7
2.3
–
76.0
76.7
72.5
91.6
_
6.5
98.1
–
4.6
102.7
12.6
9.1
117.5
8.2
–
125.7
8.2
–
133.9
25.9
17.7
Total
406.2
7.2
–
413.4
3.1
(1.9)
(2.1)
412.5
280.5
10.5
6.5
297.5
10.5
4.6
312.6
2.7
0.4
(2.4)
0.7
2.0
–
(2.1)
0.6
–
–
–
–
–
–
–
0.7
0.6
115.9
99.9
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 10 to 20 years. The
Directors consider that the other brands, which are also all leading brands in their sectors with significant histories and significant growth
prospects, have an indefinite useful life. They are reviewed annually for impairment; details of impairment tests are shown in note 28.
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8. Goodwill and other intangible assets continued
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 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
Travis Perkins
Keyline
CCF
BSS Industrial
Staircraft
TF Solutions
Toolstation
Toolstation UK
Toolstation Benelux
Toolstation France
2023
2022
Intangibles
Goodwill
Total
Total Intangibles
Goodwill
Total
–
–
–
49.3
–
–
–
–
–
49.3
482.6
100.2
43.6
26.8
23.8
7.8
103.4
59.7
–
847.9
482.6
100.2
43.6
76.1
23.8
7.8
103.4
59.7
–
897.2
–
–
–
49.3
–
–
–
–
–
49.3
482.6
100.2
43.6
26.8
23.8
7.8
103.4
61.1
9.7
859.0
482.6
100.2
43.6
76.1
23.8
7.8
103.4
61.1
9.7
908.3
9. Property, plant and equipment
Accounting policy
Property, plant and equipment is stated at cost or deemed cost less accumulated depreciation and any impairment in value. Assets are
depreciated to their estimated residual value on a straight-line basis over their estimated useful lives as follows:
• Buildings – 50 years or, if lower, the estimated useful life of the building or the life of the lease
• Leasehold improvements – the life of the lease
• Plant and equipment – 4 to 10 years
• Freehold land is not depreciated
The estimated useful lives are estimated taking into consideration the potential impact of climate change.
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.
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section £m
Cost or deemed cost
At 1 January 2022 (previously presented)*
At 1 January 2022 (restated)
Additions
Disposals
Reclassification between categories
Effect of movements in exchange rates
At 1 January 2023 (restated)
Additions
Disposals
Impairments
Reclassification between categories
Effect of movements in exchange rates
At 31 December 2023
Accumulated depreciation
At 1 January 2022 (previously presented)*
At 1 January 2022 (restated)
Charged in the year
Disposals
Reclassification between categories
Effect of movements in exchange rates
At 1 January 2023 (restated)
Charged in the year
Disposals
Impairments
Reclassification between categories
Effect of movements in exchange rates
At 31 December 2023
Net book value
At 31 December 2022
At 31 December 2023
Freehold
Long
leasehold
Leasehold
improvements
Plant and
equipment
483.9
500.4
38.6
(15.3)
7.6
–
531.3
4.7
(46.6)
–
(2.4)
–
32.0
29.6
–
–
–
–
29.6
22.1
(0.5)
–
–
–
154.8
217.6
31.9
(13.4)
(21.1)
–
508.4
655.2
71.0
(8.4)
13.5
1.6
Total
1,179.1
1,402.8
141.5
(37.1)
–
1.6
215.0
732.9
1,508.8
35.0
(6.0)
(12.5)
(10.0)
–
80.7
(74.0)
(10.5)
12.4
(0.6)
142.5
(127.1)
(23.0)
–
(0.6)
487.0
51.2
221.5
740.9
1,500.6
48.8
65.3
2.0
(3.2)
(3.1)
–
61.0
7.0
(6.4)
–
0.3
–
61.9
470.3
425.1
14.2
11.8
0.8
–
–
–
12.6
0.8
–
–
–
–
13.4
17.0
37.8
6.4
69.2
11.2
(1.3)
3.1
–
82.2
14.6
(6.6)
(5.2)
(0.3)
–
84.7
309.6
456.4
59.6
(10.8)
–
0.5
505.7
57.9
(63.2)
(8.0)
–
(0.2)
379.0
602.7
73.6
(15.3)
–
0.5
661.5
80.3
(76.2)
(13.2)
–
(0.2)
492.2
652.2
132.8
136.8
227.2
248.7
847.3
848.4
* The cost and accumulated depreciation of tangible fixed assets has been restated as at 1 January 2022 to reinstate certain assets with nil NBV value which had been
derecognised in the accounting for the sale of the Group’s Plumbing & Heating business and the demerger of the Wickes business in 2021. The assets remain within the business.
The assets have been reinstated as at 1 January 2022.
Included within freehold property is land with a value of £215.6m (2022: £230.7m) which is not depreciated. No assets are pledged as security for the Group’s liabilities, other
than 16 freehold properties disclosed in note 17. Included within leasehold improvements is £21.4m (2022: £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.
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Assets and liabilities continued
10. Leases
Accounting policy
Identifying a lease
At the inception of a contract, the Group assesses whether a contract contains a lease. At inception the Group allocates the consideration in the
contract to each lease component on the basis of their relative stand-alone prices except for fleet leases for which the Group does not separate
non-lease components and accounts for the lease and non-lease components as a single lease component.
Recognition exceptions
The Group takes the lease recognition exemption for leases with a lease term of 12 months or less and containing no purchase options and
leases where the underlying asset has a low value when new. 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.
Lease terms
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 that includes renewal
options and break clauses. 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 most relevant is normally the profitability of the leased branch or warehouse and future plans for the business. If there
are significant penalties to terminate or not extend, the Group is typically reasonably certain to not terminate or extend.
Lessee accounting
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 and any initial direct costs incurred, 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 and otherwise at the incremental borrowing rate.
Variable lease payments that are not included in the measurement of the lease liability are recognised in the period in which the event or
condition that triggers payment occurs.
Subsequent measurement
After lease commencement, the Group measures right-of-use assets at cost less accumulated depreciation and accumulated impairment.
The lease liability is subsequently remeasured to reflect changes in the lease term, the assessment of a purchase option and future lease
payments resulting from a change in an index or a rate used to determine those payments. 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 to the earlier of the end of the useful life of the right-of-use
asset or the end of lease term. Estimated useful lives 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.
Sale and leaseback transactions
If an asset transfer satisfies the requirements of IFRS 15 – Revenue from Contracts with Customers to be accounted for as a sale, the Group
measures the right-of-use asset at the proportion of the previous carrying amount that relates to the right-of-use retained. Accordingly, the
Group only recognises the amount of gain or loss that relates to the rights transferred to the buyer.
162
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section a. Amounts recognised in the balance sheet
All right-of-use assets relate to land and buildings except for £29.6m in respect of plant and equipment (2022: £16.4m).
Lease liability maturity analysis – contractual undiscounted cash flows:
£m
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities at 31 December
Additions to right-of-use assets in 2023 were £182.4m (2022: £111.3m).
b. Amounts recognised in the statement of profit and loss
The statement of profit and loss shows the following amounts relating to leases:
£m
Expense relating to short-term leases
Expense relating to leases of low-value assets
(Reversal of impairment) / impairment of right-of-use assets
Gains on lease terminations
2023
106.9
337.8
316.5
761.2
2023
4.9
3.2
(1.7)
(2.5)
2022
88.5
282.3
262.1
632.9
2022
4.7
3.0
3.3
(3.1)
All impairments of right-of-use assets relate to land and buildings. Total depreciation of right-of-use assets of £91.1m (2022: £79.0m) represents
£79.8m in respect of land and buildings (2022: £70.3m) and £11.3m in respect of plant and equipment (2022: £8.7m). The total cash outflow for
leases in 2023 was £118.8m (2022: £108.0m).
c. The Group’s leasing activities
The Group leases various properties, motor vehicles and equipment. Rental contracts are typically made for fixed periods but may have extension
options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. Extension and termination
options are included in a number of property and equipment leases across the Group and are used to maximise operational flexibility.
d. The Group as lessor
The Group leases a number of ex-trading properties and surplus units in trade parks owned by the Group to third parties. Property rental income
earned during the year in respect of these properties was £4.4m (2022: £5.3m). At the balance sheet date, the Group had contracts with lessees
for the following undiscounted future minimum lease payments:
£m
Within one year
One to five years
After five years
2023
4.6
22.8
5.0
32.4
2022
4.0
21.4
7.4
32.8
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11. 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
2023
727.6
2022
727.8
The cost of inventories recognised as an expense in 2023 was £3,381.4m (2022: £3,437.2m). A charge of £2.0m (2022: £3.3m) was recognised
as a result of the movement of provisions against inventory.
12. Supplier income
Accounting policy
Supplier income comprises fixed price discounts, volume rebates and customer sales support.
Fixed price discounts and volume rebates received and receivable in respect of goods which have been sold are initially deducted from the cost
of inventory and therefore reduce cost of sales in the income statement when the goods are sold. Where goods on which the fixed price discount
or volume rebate has been earned remain in inventory at the year end, the cost of that inventory reflects those discounts and rebates.
The Group receives customer sales support payments that are made entirely at the supplier’s option, that are requested by the Group
when a specific product is about to be sold to a specific customer and for which payment is only received after the sale has been completed.
All customer sales support receipts received and receivable are deducted from cost of sales when the sale to the third party has been
completed, i.e. when the customer sales support payment has been earned.
Supplier income receivable is netted off against trade payables when there is a legally binding arrangement in place and it is management’s
intention to do so, otherwise amounts are included in other receivables in the balance sheet.
Supplier income balances included within the Group balance sheet are as follows:
£m
Other receivables
Trade payables
Inventories
Net balance sheet position
2023
104.0
82.0
(52.0)
134.0
2022
84.0
66.1
(45.4)
104.7
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section 13. 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
Prepayments and accrued income
Total current trade and other receivables
Non-current:
Other receivables
Prepayments and accrued income
Trade non-current trade and other receivables
2023
2022
547.1
(21.5)
525.6
129.2
34.8
689.6
–
14.2
14.2
581.4
(17.7)
563.7
124.0
38.2
725.9
12.3
4.9
17.2
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 (2022: 56 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% (2022: 4%) p.a. 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
technology upgrade programmes.
Movement in the allowance for doubtful debts
£m
At 1 January
Amounts written off during the year
Charge for impairment losses for trade receivables
At 31 December
2023
17.7
(13.0)
16.8
21.5
2022
13.7
(7.0)
11.0
17.7
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13. Trade and other receivables continued
Expected credit loss assessment
Loss rates are based on actual credit loss experience over the past seven years and existing market conditions, as well as forward-looking
estimates 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 2023.
£m
Current (not past due)
Days overdue:
1–30
31–60
61–90
91–120
More than 120
Gross carrying
amount
Weighted average
loss rate
506.8
0.8%
Net loss
allowance
(3.5)
10.6
3.5
1.5
0.7
24.0
547.1
6.8%
15.0%
25.0%
48.3%
85.7%
(0.6)
(0.4)
(0.3)
(0.3)
(16.4)
(21.5)
Credit
impaired
No
No
No
No
No
Yes
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
Weighted average
loss rate
534.2
0.7%
Loss
allowance
(3.0)
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)
Credit
impaired
No
No
No
No
No
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section 14. 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 significant 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, 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.
£m
At 1 January 2022
Charge to income statement
Utilisation of provision
At 31 December 2022
Charge to income statement
Utilisation of provision
At 31 December 2023
Included in current liabilities
Included in non-current liabilities
Property
Insurance
Restructuring
15.9
3.3
(6.8)
12.4
8.3
(3.6)
17.1
13.3
3.8
17.1
20.1
4.5
(5.6)
19.0
7.7
(5.6)
21.1
21.1
–
21.1
–
–
–
–
4.9
–
4.9
4.9
–
4.9
Total
36.0
7.8
(12.4)
31.4
20.9
(9.2)
43.1
39.3
3.8
43.1
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.
£m
2023:
Property
Insurance
Restructuring
2022:
Property
Insurance
0–1 year
1–2 years
2–5 years
5+ years
Total
13.3
21.1
4.9
39.3
7.5
19.0
26.5
1.4
–
–
1.4
1.7
–
1.7
1.2
–
–
1.2
1.6
–
1.6
1.2
–
–
1.2
1.6
–
1.6
17.1
21.1
4.9
43.1
12.4
19.0
31.4
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15. 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
Deferred gains on property disposals
IFRS 16 lease liability
IFRS 16 right-of-use asset
Cash flow hedge
Deferred tax liability
Net deferred tax
£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
Deferred gains on property disposals
IFRS 16 lease liability
IFRS 16 right-of-use asset
Cash flow hedge
Deferred tax liability
Net deferred tax
At 1 Jan 2023
Recognised in
income
Recognised
in equity
Recognised
in other
comprehensive
income
At 31 Dec 2023
(15.0)
(15.0)
8.5
3.4
(3.5)
4.8
9.3
25.0
33.9
31.1
(3.0)
(3.0)
12.6
–
0.7
(0.4)
(0.5)
(3.2)
1.4
(1.8)
(130.5)
(20.5)
112.9
1.1
96.0
81.0
19.7
–
8.0
5.0
–
–
–
(0.5)
(0.1)
–
–
–
–
–
–
–
–
(0.6)
(0.6)
–
–
–
–
–
–
–
–
(10.2)
–
–
–
(0.4)
(10.6)
(10.6)
(18.0)
(18.0)
21.1
2.9
(2.9)
4.4
8.8
21.8
25.1
29.3
(151.0)
132.6
0.7
92.8
74.8
At 1 Jan 2022
Recognised in
income
Recognised
in equity
Recognised
in other
comprehensive
income
At 31 Dec 2023
(13.9)
(13.9)
2.8
11.2
(5.9)
5.8
10.4
27.2
68.8
32.8
(122.7)
110.0
-
140.4
126.5
(1.1)
(1.1)
5.7
–
–
(1.0)
(1.1)
(2.2)
1.4
(1.7)
(7.8)
2.9
–
(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
(130.5)
112.9
1.1
96.0
81.0
The deferred tax asset in respect of trading losses relates to the Toolstation Netherlands business. No deferred tax asset has been recognised on
losses of £76.5m (2022: £53.3m) in the Group’s other European Toolstation businesses as there is currently insufficient evidence that these losses
would be utilised.
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section The Group considers it is appropriate to recognise a deferred tax asset on unused trading losses in Toolstation Netherlands as forecasts, based on
the existing Netherlands store network and the store maturity profile of Toolstation stores in the UK and the Netherlands, indicate that the business
will be able to fully utilise these losses against future profits within a measurable time frame.
16. 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
2023
576.3
48.6
76.9
93.6
795.4
2022
600.6
63.7
80.3
107.8
852.4
Included in trade payables at 31 December 2023 are amounts of £91.3m (2022: £87.2m) 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 107 days (2022: 93 days), an extension of 45 days (2022: 31 days). The total net amount outstanding
where terms have been extended at 31 December 2023 was £10.1m (2022: £13.8m). 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.
17. 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. Both schemes fund their management and administrative expenses.
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17. Pension arrangements continued
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
Gross assets Gross obligations
Net
Gross assets Gross obligations
Gross pension asset as at 1 January
1,097.4
(961.5)
135.9
1,742.2
(1,466.4)
2023
2022
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 gain arising from experience
adjustments
(2.3)
51.5
1.4
0.2
(44.1)
(7.2)
–
–
–
Gross pension asset as at 31 December
1,096.9
–
(45.1)
–
(0.1)
44.1
–
8.6
(2.3)
6.4
1.4
0.1
–
(1.5)
33.4
1.5
0.8
(50.4)
(7.2)
(628.6)
8.6
–
–
–
1,097.4
(20.4)
(20.4)
(21.9)
(996.3)
(21.9)
100.6
550.6
550.6
(74.8)
(961.5)
(74.8)
135.9
Net
275.8
(1.7)
5.3
1.5
0.3
–
(628.6)
7.5
(0.2)
(28.1)
–
(0.5)
50.4
–
7.5
The asset valuation of £1,096.9m (2022: £1,097.4m) at 31 December 2023 consists of the TP DB Scheme £843.1m (2022: £839.2m)
and the BSS DB Scheme £253.8m (2022: £258.2m). The obligation valuation of £996.3m (2022: £961.5m) consists of the TP DB Scheme
£755.8 (2022: £729.2m) and the BSS DB Scheme £240.5m (2022: £232.3m).
The actual loss on scheme assets of £44.3m (2022: return of £595.2m) is represented by the interest income and ‘return on plan assets
(excluding amounts included in net interest)’ figures above.
The deferred tax liability of £25.1m (2022: £33.9m) has been recognised at the standard rate of corporation tax, as this rate best reflects
the rate at which the liability will unwind. The pension surplus, net of deferred tax, as at 31 December 2023 is £75.5m (2022: £102.0m).
There are no restrictions on the current realisability of the pension surplus. The Group has an explicit right to a surplus in respect of the
TP DB Scheme and, based on the operation of trust law in a winding up of the BSS DB Scheme following a gradual settlement, has an
unconditional right to receive any surplus in the BSS DB Scheme.
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section 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 2023 by a qualified actuary.
The defined benefit pension schemes expose the Group to actuarial risks such as investment risk, interest rate risk and longevity risk. A summary
of the risks and the management of those risks is given below and continued overleaf.
Investment risk
Interest risk
Longevity risk
The present value of the defined benefit liabilities of the schemes is calculated using a discount rate
predetermined by reference to high-quality corporate bond yields. If the return on scheme assets is
below this rate it may create a plan deficit.
A decrease in corporate bond yields will increase the schemes’ liabilities, but the effect will be partially
offset by an increase in the return on the schemes’ bond and gilt assets.
The present value of the liabilities of the schemes is calculated by reference to the best estimate of
mortality of pension scheme members both during and after their employment. An increase in the
life expectancy of the schemes’ members will increase the schemes’ liabilities.
ii. Major actuarial assumptions
Rate of increase of pensions in payment (post 2006 entitlement)
Rate of increase of pensions in payment 1997–2006
Discount rate
Inflation assumption – RPI
Inflation assumption – CPI
At 31 December 2023
At 31 December 2022
2.85%
3.00%
4.55%
2.95%
2.45%
2.10%
3.00%
4.80%
3.10%
2.60%
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 2023
was 21.1 years for men and 23.2 years for women (2022: 21.2 years for men and 23.2 years for women).
iii. Maturity profile of obligations
The weighted average duration of the obligations of the defined benefit pension schemes is 14 years, with circa 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.
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17. Pension arrangements continued
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.
The estimated effects of changing the key assumptions (discount rate, inflation and life expectancy) on the IAS 19 – Employee Benefits balance
sheet position as at 31 December 2023 is given below.
£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
(35.9)
37.5
19.8
(26.3)
31.5
(31.9)
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 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 schemes are 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.
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section 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
2023
At 31 December
2022
36.3
0.8
37.9
510.5
1.5
870.4
(500.7)
–
23.2
117.0
9.1
3.1
149.9
476.4
0.9
926.4
(569.8)
0.2
25.1
76.1
1,096.9
1,097.4
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 £19.9m (2022: £19.8m).
f. Pension scheme contributions for the year
The total charge to the income statement disclosed in note 31 of £22.2m (2022: £21.3m) comprises defined benefit scheme current service costs
of £2.3m (2022: £1.5m) and £19.9m (2022: £19.8m) of contributions payable to the defined contribution schemes.
Capital
18. Share capital and reserves
Accounting policy
Equity instruments represent the ordinary share capital of the Group and are recorded at the proceeds received, net of directly attributable
incremental issue costs.
Consideration paid by the Group for its own shares is deducted from total shareholders’ equity. Where such shares vest to colleagues under
the terms of the Group’s share incentive schemes or the Group’s Sharesave schemes or are sold, any consideration received is included in
shareholders’ equity.
a. Share capital
Ordinary shares
At 1 January 2022
Cancellation of share capital
At 1 January and 31 December 2023
Authorised, issued and fully paid
No.
225,025,926
(12,516,592)
212,509,334
£m
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.
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18. Share capital and reserves continued
2022 share buyback
The Group concluded a share buyback programme in May 2022 with a total of 12.3m shares purchased, of which none were held as treasury
shares and 3.5m were transferred to the Employee Share Ownership Trust (‘ESOT’). The shares were acquired at an average price of £13.70 per
share, with prices ranging from £11.72 to £16.20. The total cost of £172.1m, including £2.2m of after-tax transaction costs, was deducted from
shareholder’s equity.
b. Own shares
No.
At 1 January
Shares purchased in share buyback and held as
treasury shares
Reissued
At 31 December
2023
2022
ESOT shares
Total
Treasury shares
ESOT shares
Total
2,596,684
2,596,684
3,533,419
507,371
4,040,790
–
–
(3,533,419)
3,533,419
_
(928,002)
(928,002)
1,668,682
1,668,682
–
–
(1,444,106)
(1,444,106)
2,596,684
2,596,684
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.
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 revaluation reserve represents the revaluation surplus that arose from property revaluations in 1999 and prior years
• The own shares reserve represents the cost of shares purchased in the market and held by the Employee Share Ownership Trust to satisfy
options under the Group’s share option schemes
• The foreign exchange reserve represents the exchange differences recognised on translation of the assets and liabilities of the 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 less cumulative dividends paid
19. Earnings per share
a. Basic and diluted earnings per share
£m
Profit attributable to the owners of the parent
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
Diluted earnings per share
2023
38.1
2022
192.2
210,530,726
211,630,413
3,616,786
3,789,212
214,147,512
215,419,625
18.1p
17.8p
90.8p
89.2p
A total of 620,310 share options (2022: 528,262 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.
174
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section b. Adjusted earnings per share
Adjusted earnings per share is calculated by excluding the effect of adjusting items and the 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
Tax on amortisation of acquired intangible assets
Earnings for adjusted earnings per share
Adjusted earnings per share
Adjusted diluted earnings per share
2023
38.1
60.0
10.5
(9.7)
(2.6)
96.3
45.7p
45.0p
2022
192.2
–
10.5
–
(2.6)
200.1
94.6p
92.9p
20. 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 2022 of 26.5 pence (2021: 26.0 pence) per ordinary share
Interim dividend for the year ended 31 December 2023 of 12.5 pence (2022: 12.5 pence) per ordinary share
Total dividend recognised during the year
2023
55.8
26.3
82.1
2022
55.5
26.2
81.7
The Directors are recommending a final dividend of 5.5 pence in respect of the year ended 31 December 2023. The anticipated cash payment in
respect of the proposed final dividend is £11.7m (2022: £55.8m).
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21. 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 72. At 31 December 2023, all borrowings were denominated in sterling (2022: sterling).
a. Summary
£m
Liability to pension scheme
Bonds
Finance charges netted off borrowings
Term loan
Senior unsecured notes
Overdraft
Current liabilities
Non-current liabilities
2023
24.6
250.0
(4.5)
75.0
100.0
–
445.1
–
445.1
445.1
2022
26.7
430.0
(2.6)
75.0
–
12.5
541.6
192.5
349.1
541.6
The Group’s term loan, senior unsecured notes and committed revolving credit facility are subject to two financial covenants:
• Leverage: Net Debt / Adjusted EBITDA < 4.0x
• Interest cover: Adjusted operating profit / Net interest payable > 2.0x
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 2023, the following facilities were available:
£m
Drawn facilities:
£250m bond
£180m bond (repaid September 2023)
£75m term loan
£100m senior unsecured notes
Undrawn facilities:
Five-year committed revolving credit facility
Bank overdrafts
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2023
2022
–
325.0
124.6
449.6
(4.5)
445.1
192.5
325.0
26.7
544.2
(2.6)
541.6
2023
2022
250.0
–
75.0
100.0
425.0
375.0
15.0
390.0
250.0
180.0
75.0
–
505.0
400.0
15.0
415.0
Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section The outstanding £180m principal amount of the 2023 guaranteed notes was repaid in September 2023, with £120m having previously been
repurchased and cancelled in April 2022.
In August 2023 the Group issued £100m of senior unsecured notes to a syndicate of investors. These notes are split into three equal tranches
maturing in 2029, 2030 and 2031.
In November 2023 the Group completed its renegotiation of its revolving credit facility with a syndicate of banks. The terms of this agreement
reduced the facility to £375m (2022: £400m) with a maturity date of 2029. The terms of the agreement state that at the discretion of the lender
the banking facility may be extended to a maximum maturity date of 2031.
The disclosures in note 21(c) do not include leases or the effect of finance charges netted off bank debt.
d. Interest
The weighted average interest rates received on assets and paid on liabilities were as follows:
%
Assets:
Short-term deposits
Liabilities:
2026 £250m bond
2023 £300m bond
£75m term loan
£100m senior unsecured notes
Bank loans and overdrafts
2023
2022
4.7
3.8
4.5
4.6
6.2
8.7
1.0
3.8
4.5
4.6
–
2.1
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:
2026 £250m bond
2023 £300m bond
Term loan
Senior unsecured notes
2023
2022
Effective
interest rate
£m
Effective
interest rate
£m
5.2%
101.5
3.3%
194.0
3.8%
4.5%
4.6%
6.2%
250.0
–
75.0
100.0
425.0
3.8%
4.5%
4.6%
–
250.0
180.0
75.0
–
505.0
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 £250m of bonds as at 31 December 2023,
where the assessed fair value based on quoted mid-market prices was £236.9m (2022: £430m of bonds with an assessed fair value of £399.6m).
Details of the fair values of derivatives are given in notes 26 and 27.
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21. Borrowings continued
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, CCF Limited, Keyline Civils Specialist
Limited, Toolstation Limited and The BSS Group Limited are guarantors of the following facilities advanced to Travis Perkins plc:
• £250m bond
• £75m term loan
• £100m senior unsecured notes
• £375m revolving credit facility (2022: £400m)
• Interest rate swap ¹
• Currency derivatives (note 27)
The Group companies have entered into other guarantee and counter-indemnity arrangements in respect of guarantees issued in favour of
Group companies by several banks amounting to approximately £31.8m (2022: £32.0m).
Other guarantors
¹ The interest rate swap is guaranteed by Travis Perkins Trading Company Limited, Travis Perkins (Properties) Limited, CCF Limited and Keyline Civils Specialist Limited
22. 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.
Movement in net debt
£m
At 1 January 2022
Additions to leases
Disposals of leases
Cash flow
Finance charges and fees
Discount unwind on liability to pension
scheme
Discount unwind on lease liabilities
At 1 January 2023
Additions to leases
Disposals of leases
Cash flow
Finance charges and fees
Discount unwind on liability to pension
scheme
Discount unwind on lease liabilities
31 December 2023
Less: lease liability
Net debt before leases
Cash and cash
equivalents,
including
overdraft
(459.8)
–
–
236.6
–
–
–
(223.2)
–
–
91.7
–
–
–
(131.5)
Term loan
Senior
unsecured
notes
Liability to
pension scheme
(1.5)
548.2
28.5
–
–
75.0
(0.1)
–
–
–
–
(120.0)
0.8
–
–
73.4
429.0
–
–
–
(1.9)
–
–
71.5
–
–
(80.0)
–
–
–
349.0
–
–
(3.7)
–
1.9
–
26.7
–
–
(3.7)
–
1.6
–
24.6
Leases
489.2
114.7
(12.5)
(100.3)
–
–
21.5
512.6
185.5
(5.2)
(110.7)
–
–
26.2
608.4
Total
604.6
114.7
(12.5)
87.6
0.7
1.9
21.5
818.5
185.5
(5.2)
(102.7)
(1.9)
1.6
26.2
922.0
(608.4)
313.6
Cash and cash equivalents comprises short-term deposits of £101.5m (2022: £194.0m) and cash of £30.0m (2022: £29.2m).
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section 23. Cash flow metrics
a. 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
b. Cash conversion
£m
Adjusted operating profit excluding property profit
Movement on working capital
Depreciation of property, plant and equipment
Amortisation and impairment of internally-generated intangibles
Share-based payment
Capital expenditure excluding freehold purchases
Adjusted free cash flow for cash conversion
Cash conversion
24. Net debt to adjusted EBITDA
£m
Operating profit
Depreciation and amortisation
Adjusting operating items
Adjusted EBITDA
Net debt
Net debt to adjusted EBITDA
2023
180.4
(15.1)
165.3
14.6
(25.0)
(26.2)
(40.6)
(22.2)
80.3
4.6
(108.6)
2.0
44.2
2023
165.3
(22.2)
80.3
4.6
14.6
(108.6)
134.0
81%
2023
109.9
186.5
60.0
356.4
922.0
2.6x
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
270.0
(76.5)
73.6
6.5
17.0
(110.0)
180.6
67%
2022
284.8
169.6
–
454.4
818.5
1.8x
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25. Return on capital employed
Group return on capital employed is calculated as follows:
£m
Operating profit
Amortisation of acquired intangible assets
Adjusting items
Adjusted operating profit
Opening net assets
Net pension surplus
Net debt
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
Return on capital employed
Risk
2023
109.9
10.5
60.0
180.4
2022
284.8
10.5
–
295.3
2,102.2
2,237.8
(102.0)
818.5
(207.0)
604.6
2,818.7
2,635.4
2,040.3
(75.5)
922.0
2,886.8
2,102.2
(102.0)
818.5
2,818.7
2,852.8
2,727.1
2023
180.4
2,852.8
6.3%
2022
295.3
2,727.1
10.8%
26. 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 to 75. The Group’s accounting policy for its cash flow hedges is set out in note 27.
a. Derivatives
During 2022 the Group obtained a 5-year term loan facility for £75m and at the same time entered into an equal interest rate swap arrangement to
hedge the full variable component of the interest rate for the life of the instrument. 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 has the following derivative financial instruments in the balance sheet:
£m
Non-current assets
Interest rate swap – cash flow hedge
Total non-current derivative financial instrument assets
2023
2022
2.9
2.9
4.3
4.3
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section The Group’s hedging reserve relates to the following hedge instrument:
£m
At 1 January
Change in fair value of hedging instrument recognised in OCI
Deferred tax
At 31 December
2023
2022
3.2
(1.4)
0.4
2.2
–
4.3
(1.1)
3.2
A net loss of £0.2m (2022: £0.3m) on foreign currency forwards not qualifying as hedges was recognised in the Group’s profit and loss and
included in other losses. 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 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 6 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
27. Financial instruments
Accounting policy
Investments and other financial assets classification
2023
2.9
75.0
2022
4.3
75.0
15 August 2027
15 August 2027
1:1
(1.4)
4.6%
1:1
4.3
2.4%
The Group classifies its financial assets in the following measurement categories:
• Those to be measured subsequently at fair value (either through Other Comprehensive Income ‘‘FVOCI’’, or through profit or loss “FVTPL”)
• Those to be measured at amortised cost
The classification depends on the business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are
not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the
equity investment at FVTPL or at FVOCI.
The Group reclassifies debt investments when and only when its business model for managing those assets changes.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs
that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in
profit or loss.
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27. Financial instruments continued
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics
of the asset. There are two measurement categories into which the Group classifies its debt instruments:
• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and
interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate
method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in finance income or finance costs, together
with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the income statement.
• FVTPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVTPL. A gain or loss on a debt instrument that is
subsequently measured at FVTPL is recognised in profit or loss and presented net within other gains and 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.
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section 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.
a. The carrying value of categories of financial instruments
£m
Financial assets:
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 21a)
Trade and other payables (including overdrafts) at amortised cost
2023
2022
786.3
2.9
789.2
0.4
445.1
653.2
923.4
4.3
927.7
0.2
541.6
681.0
1,098.7
1,222.8
Loans and receivables exclude prepayments of £34.8m (2022: £38.2m). Trade and other payables exclude taxation and social security and
accruals and deferred income totalling £142.2m (2022: £171.5m). 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 2: Interest rate swap
Included in liabilities:
2023
2022
2.9
4.3
Level 2: Foreign currency forward contracts at fair value through profit and loss
(0.4)
(0.2)
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27. Financial instruments continued
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.
In 2022 the Group entered into an interest rate swap arrangement to hedge the variable interest rate risk on a £75m 5-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.
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 EUR6.0m and US$21.5m (2022: EUR10.0m and US$30.0m). The fair value of these derivatives was £0.4m liability
(2022: £0.2m liability). These contracts are not designated cash flow hedges and accordingly the fair value movement has been reflected in the
income statement.
e. Interest rate sensitivity analysis
A sensitivity analysis has been determined based on the exposure to interest rates for both derivatives and non-derivative financial instruments
at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming that the amount of liability outstanding at the balance
sheet date was outstanding for the whole year. A 1.0% increase or decrease is used when reporting interest rate risk internally to key
management personnel.
At 31 December 2023 the Group had no floating rate liabilities. There was £101.5m on short-term deposit at 31 December 2023 (2022: £194.0m).
A 1.0% increase or 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 2023 would have increased or decreased by £1.0m (2022: increased or decreased by £1.9m)
due to the short-term deposits
• Net equity would have increased or decreased by £0.8m (2022: increased or decreased by £1.6m)
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.
2023
£m
0–1 year
1–2 years
2–5 years
5+ years
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
Leases
Total financial instruments
(22.9)
1.9
(21.0)
(24.9)
(653.2)
(108.9)
(787.0)
–
1.9
1.9
–
3.1
3.1
–
–
–
(24.9)
(366.2)
(143.9)
–
(101.1)
(126.0)
–
(237.8)
(604.0)
–
(316.6)
(460.5)
Total
(22.9)
6.9
(16.0)
(559.9)
(653.2)
(764.3)
(1,977.5)
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section 2022 (restated*)
£m
0–1 year
1–2 years
2–5 years
5+ years
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
Leases
Total financial instruments
(33.9)
0.5
(33.4)
(203.6)
(681.0)
(88.5)
(973.1)
–
1.5
1.5
(18.6)
–
(81.5)
(100.1)
–
2.8
2.8
(361.8)
–
(200.8)
(562.6)
–
–
–
(38.1)
–
(262.1)
(300.2)
Total
(33.9)
4.8
(29.1)
(622.1)
(681.0)
(632.9)
(1,936.0)
* The 2022 liquidity analysis has been restated to include £80.5m of projected interest payments on the Group’s borrowings. The previously reported undiscounted cash
outflow on borrowings disclosed was £541.6m which had not included projected interest payments.
28. Impairment
Accounting policy
Impairment of tangible and intangible assets
The carrying amounts of the Group’s tangible and intangible assets with a definite useful life are reviewed at each balance sheet date to
determine whether there is any indication of impairment to their value. If such an indication exists, the asset’s recoverable amount is estimated
and compared to its carrying value. Where the asset does not generate cash flows that are independent from other assets, the Group estimates
the recoverable amount of the CGU to which the asset belongs. The recoverable amount of an asset is the greater of its fair value less disposal
cost and its value-in-use (the present value of the future cash flows that the asset is expected to generate). In determining value in use the
present value of future cash flows is discounted using a pre-tax discount rate that reflects current market assessments of the time value-of-
money in relation to the period of the investment and the risks specific to the asset concerned.
Where the carrying value exceeds the recoverable amount a provision for the impairment loss is established with a charge being made to the
income statement. When the reasons for a write down no longer exist the write down is reversed in the income statement up to the net book
value that the relevant asset would have had if it had not been written down and if it had been depreciated.
For intangible assets that have an indefinite useful life the recoverable amount is estimated on an annual basis
Measuring recoverable amounts
The Group tests goodwill and other non-monetary assets with indefinite useful lives for impairment annually or more frequently if there are
indications that an impairment may have occurred. The recoverable amounts of the goodwill and other non-monetary assets with indefinite useful
lives are determined from value-in-use calculations, except for the Toolstation Benelux and Toolstation France CGUs where fair value less cost of
disposal (“FVLCOD”) calculations have been used. The valuation is considered to be level 3 in the fair value hierarchy due to unobservable inputs
used in the valuation.
The key assumptions for the value-in-use 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. The FVLCOD calculations are those regarding the discount
rate, growth rates, sales volume and operating margin 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 projection.
In developing these assumptions, management has considered the possible impacts of climate risks. 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 for all CGUs except for Toolstation France and certain Benchmarx branches discussed in note 3. The Benchmarx branches form
part of the Travis Perkins General Merchant group of CGUs. The value-in-use and FVLCOD calculations require the use of assumptions.
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28. Impairment continued
Key assumptions
The key financial assumptions used in the estimation of the recoverable amount for the UK CGUs are set out below. The key financial
assumptions for the Toolstation France and Toolstation Benelux CGUs are discussed separately. 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
2023
2022
12.1%-13.3%
12.8%-14.1%
2.0%
1.7%
The pre-tax discount rate used in the estimation of the recoverable amount for the Travis Perkins General Merchant CGU was 12.9%.
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 for the UK CGUs are:
• Sales market volume growth on which the approved corporate plans are based are derived from a variety of sources including construction and
consumer outlook reports, current and forecast housing-market transaction numbers and mortgage-approval levels. The Directors consider this
to be the principal operating assumption as it determines management’s approach to the interlinked factors underlying the operating margin
percentage.
• Operating margin percentage is forecast in the context of the sales market volume growth assumptions and is based on historical experience of
operating margins, adjusted for the impact of changes to product costs and cost-saving initiatives.
For the less-mature Toolstation Europe businesses, the key operating assumption is future average sales growth. This assumption is set in the
context of the store opening profile and historical data from the Toolstation UK and Toolstation Europe businesses on the store maturity profile.
Cash flows beyond the corporate plan period (2027 and beyond for the UK CGUs, 2034 and beyond for non-UK CGUs) have been determined
using the long-term growth rate. The longer period used in the FVLCOD models for the Toolstation France and Toolstation Benelux CGUs are
consistent with market practice for valuing high-growth loss-making businesses.
Result
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, except in respect of the Toolstation France CGU discussed below and in respect of certain Benchmarx
branches as disclosed in note 3. No impairments were recognised in 2022.
There are no reasonably possible changes in the key assumptions used in the impairment reviews that would cause the recoverable amounts of £1,833.1m
to be materially lower than the carrying amounts, except in respect of the Toolstation Benelux CGU for which sensitivity disclosures are provided.
The Benchmarx branches form part of the Travis Perkins General Merchant CGU for which no impairment was recognised and for which there are
no reasonably possible changes in the key assumptions used that would cause the recoverable amount to be materially lower than the carrying
amount of £1,215.0m.
Toolstation France
Following the annual impairment review of goodwill and intangible assets, an impairment of £33.1m has been recognised in respect of the Toolstation
France CGU. Trading conditions in the French market have been challenging and as a consequence expectations of future sales growth were reduced
in the FVLCOD calculations. This impairment charge relates to £14.4m of right-of-use assets, £7.2m of tangible fixed assets, £9.6m of goodwill and
£1.9m of other acquisition-related intangible fixed assets. The carrying value of these fixed assets relating to the Toolstation France business is now nil.
There are no reasonably possible changes in the key operating assumptions used in this impairment review that would result in a materially different
impairment charge. The pre-tax discount rate used in this calculation was 11.8% and the long-term growth rate was 2.0%.
Toolstation Benelux
The recoverable amount calculated in the impairment review of the Toolstation Benelux CGU exceeded the carrying amount of £134.9m by
£210.4m. Whilst the Directors believe the assumptions are realistic, there are reasonably possible changes in key assumptions that would cause
the recoverable amount of the Toolstation Benelux CGU to be lower than the carrying amount. The key variables applied to the fair value less cost
of disposal calculations and the value at which the recoverable amount would be equal to the carrying amount were:
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Pre-tax discount rate
Average annual sales growth (2023–2033)
Peak operating profit in 2033
Assumption
Sensitivity
9.5%
17.6%
11.7%
17.1%
15.4%
4.0%
The Toolstation Benelux impairment review is not sensitive to reasonably possible changes to the long-term growth rate. All other variables have
been held equal.
Key estimates over assumptions used in value-in-use calculations
In testing for impairment, the recoverable amount of goodwill and intangible assets is determined by reference to the value-in-use or fair value
less cost of disposal of the CGU grouping to which they are attributed. In addition the Directors have made certain estimates concerning discount
rates, future cash flows and the future development of the business that are consistent with its corporate plan. Whilst the Directors consider their
assumptions to be realistic, should actual results, including those for future sales growth, be different from expectations, for instance due to a
worsening of the Dutch or Belgian economy, then it is possible that the value of goodwill and other intangible assets included in the balance sheet
could become materially impaired. The range of reasonably possible outcomes includes an impairment charge in respect of the £134.9m carrying
value of assets of up to £17.4m, arising in a scenario where the pre-tax discount rate is 1ppt higher and sales are cumulatively 27.6% lower over the
period of the modelled cash flows.
29. Capital commitments
£m
Contracted for but not provided in the accounts
Group structure
30. Business combinations and disposals
2023
9.9
2022
8.3
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
Liabilities for contingent consideration are classified as fair value through profit and loss.
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.
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31. Staff costs
a. Average number of persons employed
The average monthly number of persons employed (including Executive Directors):
No.
Sales and distribution
Administration
b. Aggregate remuneration
£m
Staff costs – wages and salaries
Staff costs – social security costs
Staff costs – other pension costs (note 17)
Share-based payments (note 32)
2023
17,703
1,469
19,172
2023
586.1
57.0
22.2
14.6
679.9
2022
18,453
1,503
19,956
2022
594.7
54.2
21.3
17.0
687.2
Director’s remuneration, including pension contributions and Long-Term Incentive plan awards, is set out in the Single Total Figure of Remuneration
table in the Directors’ Remuneration report on page 123.
The total amounts received or receivable by Directors under long-term incentive schemes in respect of qualifying service in the year
is £81,000 (2022: £127,000). The aggregate of gains made by the Directors in the year on the exercise of share options equated to
£nil (2022: £nil). Details with respect to share options exercised in the year are set out on page 128.
32. 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 (%)
2023
2022
SAYE
Nil-price options
SAYE
Nil-price options
828.6
690.0
35.6%
3.4
4.4%
4.4%
828.6
–
40.4%
3.0
3.4%
4.0%
889.4
710.0
44.5%
3.3
4.4%
2.5%
1,245.0
–
44.0%
2.9
1.4%
1.8%
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.
188
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Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section The risk-free interest rate of return is the yield on zero-coupon UK Government bonds on a term consistent with the vesting period. Dividends used
are based on actual dividends where data is known and future dividends estimated using a dividend cover of three times (within the Board’s target
range).
The expected life of options used in the model has been adjusted, based upon management’s best estimate, for the effect of non-transferability,
exercise restrictions and behavioural considerations.
b. Income statement charge and shares granted
A description of the share schemes operated by the Group is contained in the Remuneration Report on page 108. The estimated fair values of the
shares under option granted under the Group’s share schemes in 2023 are as follows:
Share scheme
Restricted Share Plan (nil-price options)
Deferred Share Bonus Plan (nil-price options)
Restricted Share Plan (nil-price options)
Restricted Shares Plan (nil-price options)
Save As You Earn
Grant date
20 March 2023
20 March 2023
4 April 2023
8 September 2023
27 September 2023
Fair value for
the Group
£m
5.1
–
0.4
0.1
8.1
The Group charged £14.6m (2022: £17.0m) 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:
The Group
2023
2022
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
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
823
652
747
690
527
352
5,276
(2,649)
(4)
2,509
5,132
201
2,568
(279)
(925)
865
2,229
417
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
Details of the options outstanding at 31 December are as follows:
The Group
2023
2022 (restated*)
Executive options
SAYE
Nil price options
Executive options
SAYE
Nil price options
Range of exercise prices (pence)
898-1,958
690-1,411
Weighted average exercise price (pence)
1,328
Number of shares (thousands)
Weighted average expected remaining life
(years)
Weighted average contractual remaining
life (years)
3
–
–
749
5,132
2.7
3.2
–
–
2,229
1.8
8.6
1,061-1,958
710-1,411
1,200
120
0.2
7.7
814
5,156
2.6
3.1
–
–
2,568
1.2
8.1
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32. Share-based payments continued
d. Impact of vesting and exercise
If all SAYE shares are acquired on the first possible day, 1.5m of shares will be issued for a consideration of £13.6m in the years below:
2024
2025
2026
2027
2028
Options
SAYE
No. m
0.3
0.2
£m
–
3.3
No. m
0.5
1.1
£m
–
8.4
No. m
–
–
£m
–
0.6
No. m
0.1
0.2
£m
–
1.2
No. m
–
–
£m
–
0.1
The table above shows theoretical amounts. For the Group 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 Group, or leave on good terms
If none of the requirements are met then the Group will receive no consideration.
33. 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
2023
9.9
0.5
5.2
15.6
2022
10.9
0.4
7.8
19.1
34. Related party transactions
The Group has a related party relationship with its subsidiaries, its Directors and with its pension schemes (note 17). Transactions between Group
companies, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Other
35. 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:
• 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)
• International tax reform – Pillar Two Model Rules (amendments to IAS 12)
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:
• Lease liability in a sale-and-leaseback (amendments to IFRS 16 – Leases)
• Classification of liabilities as current or non-current, and non-current Liabilities with covenants (amendments to IAS 1 – presentation of Financial
Statements)
• Supplier finance arrangements (amendment to IAS 7 – Statement of Cash Flows and IFRS 7 – Financial Instruments: Disclosures)
Based on their 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.
190
190 Travis Perkins plc Annual Report and Accounts 2023
Travis Perkins plc Annual Report and Accounts 2023
Notes to the consolidated financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Company balance sheet
As at 31 December 2023
£m
Assets
Non-current assets
Tangible assets
Investment in subsidiaries
Derivative financial instruments
Total non-current assets
Current assets
Debtors
Cash and cash equivalents, excluding bank overdrafts
Total current assets
Total assets
Equity and liabilities
Capital and reserves
Issued capital
Share premium account
Cashflow 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
2023
2022
2
9
4
5
6
7
6
9
7
10
3
0.1
1,921.9
2.9
1,924.9
644.0
108.9
752.9
0.2
1,868.6
4.3
1,873.1
472.2
195.7
667.9
2,677.8
2,541.0
23.8
545.6
2.9
326.5
(14.1)
1.4
1,317.2
2,203.3
420.5
–
420.5
–
0.4
36.1
17.5
–
54.0
474.5
2,677.8
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
The Company’s profit for the year was £296.7m (2022: loss of £2.8m), and total comprehensive income for the year was £295.7m
(2022: profit of £0.4m).
The financial statements of Travis Perkins plc, registered number 824821, were approved by the Board of Directors on 11 March 2024
and signed on its behalf by:
Nick Roberts
Director
Duncan Cooper
Director
Travis Perkins plc Annual Report and Accounts 2023
191
Financial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – Section
Company statement of changes in equity
For the year ended 31 December 2023
£m
Share capital
Share
premium
Merger
reserve
Hedging
reserve
Own shares
Treasury
Own shares
ESOT
Other
Retained
earnings
Total equity
25.2
545.6
326.5
–
(53.8)
(7.6)
–
–
–
–
–
–
–
1.4
–
1.4
–
–
–
–
–
–
–
–
1,373.2
2,209.1
(3.9)
(81.7)
0.4
(81.7)
–
–
–
(16.1)
(179.3)
(125.5)
(46.6)
3.8
–
–
15.6
15.6
1,107.8
1,975.1
297.1
(82.1)
295.7
(82.1)
–
–
–
(20.2)
–
–
–
–
–
–
14.6
14.6
–
–
–
(46.6)
3.8
16.1
–
–
(34.3)
–
–
–
–
–
20.2
–
–
(125.5)
–
–
–
179.3
–
–
–
–
–
–
–
–
–
–
–
(14.1)
1.4
1,317.2
2,203.3
At 1 January 2022
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 net of tax
4.3
–
–
–
–
–
–
–
–
–
(1.4)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At 31 December 2022
23.8
545.6
326.5
4.3
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 net of tax
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1.4)
–
–
–
–
–
–
–
At 31 December 2023
23.8
545.6
326.5
2.9
192
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section Notes to the Company’s financial statements
For the year ended 31 December 2023
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 86. 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 201.
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 historical 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.
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
• 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, reduced
overhead investment and dividend suspension
• The committed debt facilities available to the Group and the covenants thereon
• The Group’s debt maturity profile
• 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 74 to 85 during periods of uncertain economic
outlook and challenging macroeconomic conditions.
Travis Perkins plc Annual Report and Accounts 2023
Travis Perkins plc Annual Report and Accounts 2023
193
193
Financial statementsOther informationGovernanceStrategic reportFinancial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section General information continued
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.
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.
Revenue represents dividend income from subsidiaries of the Company and totalled £426.2m (2022: £255.5m) in the year.
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 51 (2022: 52).
2. Investments in subsidiaries
Accounting policy
Investments in subsidiaries are carried at cost less impairment.
£m
Cost
At 1 January
Additions
At 31 December
Provision for impairment
At 1 January
Impairment charge
At 31 December
Net book value at 31 December
194
194 Travis Perkins plc Annual Report and Accounts 2023
Travis Perkins plc Annual Report and Accounts 2023
2023
6.5
0.9
0.2
5.4
13.0
2022
6.6
0.9
0.2
7.5
15.2
2023
2022
3,003.6
144.2
3,147.8
(1,135.0)
(90.9)
(1,225.9)
1,921.9
2,930.1
73.5
3,003.6
(921.2)
(213.8)
(1,135.0)
1,868.6
Notes to the Company’s financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section The additions to investments in 2023 represent the capitalisation of a £44.8m (2022: £53.2m) intercompany loan with Toolstation Europe Limited,
other additions recorded as part of the Group’s ongoing project to simplify its legal structure and share-based payments to employees of subsidiary
undertakings.
The impairment charge in 2023 relates to the Company’s investment in Travis Perkins Finance Company Limited and followed the payment of
intercompany dividends in 2023 which resulted in a reduction in the subsidiary’s net assets below the carrying amount of the investment held by
the Company. Accordingly an impairment loss was recognised.
The Directors have carried out an impairment review of the Company’s investments and concluded that the investments are not impaired, except
in respect of the specific legal-entity restructuring activity.
A full listing of all related undertakings is provided in note 11.
3. Deferred tax
At 1 Jan
2022
Recognised
in income
Recognised
in equity
(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 1 Jan
2023
Recognised
in income
(0.7)
1.1
(0.3)
0.1
(1.3)
–
0.1
(1.2)
Recognised
in other
comprehensive
income
–
(0.4)
–
(0.4)
At 31 Dec
2023
(2.0)
0.7
(0.2)
(1.5)
£m Liability/(asset):
Share-based payments
Cash flow hedge
Other timing differences
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
2023
2022
572.4
1.7
69.9
644.0
376.3
4.0
91.9
472.2
Amounts owed by subsidiaries include loans and other balances. The loans are interest-free and repayable on demand.
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 2022
Share consolidation
At 1 January and December 2023
No.
225,025,926
(12,516,592)
212,509,334
£m
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 18 for the explanation of movements in share capital and own shares.
Travis Perkins plc Annual Report and Accounts 2023 195
Travis Perkins plc Annual Report and Accounts 2023 195
Financial statementsOther informationGovernanceStrategic reportFinancial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section General information continued
5. Share capital and reserves continued
b. Own shares
No.
At 1 January
Transferred to ESOT
Reissued
At 31 December
2023
ESOT
shares
2022
Treasury
Total
shares ESOT shares
Total
2,596,684 2,596,684 3,533,419
507,371 4,040,790
–
– (3,533,419) 3,533,419
–
(928,002)
(928,002)
(1,444,106)
(1,444,106)
1,668,682 1,668,682
– 2,596,684 2,596,684
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.
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.
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
Bonds
Finance charges netted off borrowings
Term loan
Senior unsecured notes
Overdraft
Current liabilities
Non-current liabilities
196
196 Travis Perkins plc Annual Report and Accounts 2023
Travis Perkins plc Annual Report and Accounts 2023
2023
250.0
(4.5)
75.0
100.0
–
420.5
–
420.5
420.5
2022
430.0
(2.5)
75.0
–
12.5
515.0
192.5
322.5
515.0
Notes to the Company’s financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section £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
2023
2022
–
325.0
100.0
425.0
(4.5)
420.5
192.5
325.0
–
517.5
(2.5)
515.0
At 31 December 2023 all borrowings were denominated in sterling (2022: sterling).
6. Interest bearing loans and borrowings continued
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:
2026 £250m bond
2023 £300m bond
£75m term loan
£100m senior unsecured notes
2023
2022
Effective interest
rate
Effective interest
rate
£m
£m
5.2%
101.5
3.3%
194.0
3.8%
4.5%
4.6%
6.3%
–
250.0
–
70.0
100.0
420
3.8%
4.5%
4.6%
–
2023
–
36.1
36.1
250.0
180.0
75.0
–
505.0
2022
32.9
0.8
33.7
2023
2022
2.9
2.9
4.3
4.3
Details of the bonds, term loan and senior unsecured notes are given in note 21 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.
8. Financial risk management
For more details of the Group’s hedging instruments see notes 26 and 27 of the Group financial statements.
£m
Non-current assets
Interest rate swap – cash flow hedge
Total non-current derivative financial instrument assets
Travis Perkins plc Annual Report and Accounts 2023
Travis Perkins plc Annual Report and Accounts 2023
197
197
Financial statementsOther informationGovernanceStrategic reportFinancial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section General information continued
8. Financial risk management continued
The Company’s hedging reserve relates to the following hedge instrument:
£m
At 1 January 2022
Change in fair value of hedging instrument recognised in OCI
Deferred tax
At 1 January 2023
Change in fair value of hedging instrument recognised in OCI
Deferred tax
At 31 December 2023
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)
£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
Interest rate
swaps
–
4.3
(1.1)
3.2
(1.4)
0.4
2.2
2022
(0.3)
2022
4.3
75.0
2023
–
2023
2.9
75.0
15 August 2027 15 August 2027
1:1
4:3
1:1
4.3
4.61%
2.43%
9. Financial instruments
For the full details of the cashflow hedging instrument and the resulting accounting policy, see notes 26 and 27 of the Group accounts.
a. The carrying value of categories of financial instruments
£m
Financial assets:
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
2023
2022
686.1
2.9
689.0
0.4
420.5
44.2
465.1
583.0
4.3
587.3
0.2
515.0
44.7
559.9
198
198 Travis Perkins plc Annual Report and Accounts 2023
Travis Perkins plc Annual Report and Accounts 2023
Notes to the Company’s financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section 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
2023
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
(22.9)
1.9
(21.0)
(20.9)
(47.4)
(68.3)
–
1.9
1.9
–
3.1
1.9
–
–
–
(20.8)
(353.5)
(143.9)
–
–
–
(20.8)
(353.5)
(143.9)
2022 (*restated)
£m
0–1 year
1–2 years
2–5 years
5+ years
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)
(199.8)
(44.7)
(244.5)
–
1.5
1.5
(14.7)
–
(14.7)
–
2.8
2.8
(349.4)
–
(349.4)
–
–
–
–
–
–
Total
(22.9)
6.9
(16.0)
(539.1)
(47.4)
(586.5)
Total
(33.9)
4.8
(29.1)
(563.8)
(44.7)
(608.5)
* The 2022 liquidity analysis has been restated to include £48.8m of projected interest payments on the Company’s borrowings. The previously reported undiscounted cash
outflow on borrowings disclosed was £515.0m which had not included projected payments.
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
2023
8.1
9.4
17.5
2022
4.9
12.0
16.9
Travis Perkins plc Annual Report and Accounts 2023 199
Travis Perkins plc Annual Report and Accounts 2023 199
Financial statementsOther informationGovernanceStrategic reportFinancial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section 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
TP Property Company 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
Travis Perkins Group Holdings Limited
Travis Perkins (Properties) Limited
Travis Perkins Finance Company 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)
Benchmarx Kitchens and Joinery Limited
Other subsidiary companies
British Steam Specialties (International) Limited (The)
BSS (Ireland) Limited5
Gestion Tolstation inc.6
Toolexpert Benelux BV7
Toolstation BV7
Toolstation NV/SA8
Toolstation Europe BV7
Toolstation Europe Limited
Toolstation Netherlands BV7
Toolstation SAS10
Travis Perkins Hong Kong Limited11
Travis Perkins Sourcing (Shanghai) Ltd12
BSS (UK) Limited
BSS GPS Trustee Limited
Builders Mate Limited
Built For Trade Limited*3
Cobtree Nominees Limited
E. East & Son Limited
IJM Enterprises Limited*3
JS Towell Limited*3
MD-DOR3 Limited*3
MD-DOR4 Limited
Monteith Building Services Limited*4
P. H. Properties Limited1.
P.T.S. Plumbing Trade Supplies Limited
Terant Supplies Limited
Tile It All (UK) Limited *3
The BSS EBT Company Limited
Tile Giant Holdings Limited
TP Directors Ltd
TP General Partner (Scotland) Limited1
TPG Management Services Limited
Travis Group Limited
Travis & Arnold Limited
Travis Perkins Capital Partner Limited
Travis Perkins Financing Company No.3 Limited
Travis Perkins Merchant Holdings Limited
Travis Perkins (PSL2015) Limited*3
Tricom Group Limited
* companies in voluntary liquidation
200
200 Travis Perkins plc Annual Report and Accounts 2023
Travis Perkins plc Annual Report and Accounts 2023
Notes to the Company’s financial statements continuedFor the year ended 31 December 2023Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Investments
Company Name
Hermitage Park Management Company Limited13
Registered
% ownership
Status
United
Kingdom
25
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, 1st Floor Two Chamberlain Square, Birmingham, B3 3AX, United Kingdom
4 C/O Mazars LLP, Restructuring Services Apex 2, 97 Haymarket Terrace, Edinburgh, EH12 5HD, United Kingdom
5 White Heather Industrial Estate, South Circular Road, Dublin, 8, Ireland
6 5303 boul. Saint-Laurent, Montréal Québec H2T1S5, Canada
7 Brandpuntlaan Zuid 12, 2665NZ, Bleiswijk, Netherlands
8 Boomsesteenweg 58, 2630 Aarlselaar, Belgium
9 Regus Building, Kranhaus 1, Business Centre GmbH Co KG, Im Zollhafen 18, 50678 Koln, Germany
10 61 Route de Grenoble, 69800 Saint Priest, Lyon, France
11 Suite 2401, 24/F, China Insurance Group Building, 141 Des Voeux Road, Central, Hong Kong
12 Building No.17, No. 800 Changde Road, JingAn District, Shanghai 200040
13 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 108 and pages 126 to 128 and in note 32 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 106 to 133. 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 4 and 7 and in the balance sheet on page 191.
Travis Perkins plc Annual Report and Accounts 2023 201
Travis Perkins plc Annual Report and Accounts 2023 201
Financial statementsOther informationGovernanceStrategic reportFinancial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Five-year summary
Consolidated income statement
Revenue
Operating profit before amortisation and adjusting items
Amortisation
Adjusting items – operating
Operating profit
Adjusting items – business acquisitions
Share of associates’ results
Net finance costs
Profit/(loss) before tax
Adjusting items – deferred tax
Income tax expense
Net profit/(loss) from continuing operations
Net profit from discontinued operations
Profit/(loss) for the period
Basic earnings/(loss) per share from continuing operations
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
2023
£m
2022
£m
4,861.9
4,994.8
180.4
(10.5)
(60.0)
109.9
–
–
(39.9)
70.0
–
(31.9)
38.1
–
38.1
18.1p
–
45.7p
18.0p
295.3
(10.5)
–
284.8
–
–
(39.8)
245.0
–
(52.8)
192.2
–
192.2
90.8p
–
94.6p
39.0p
1,507
19,172
1,484
19,956
2021
£m
4,568.7
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
2020
(re-presented)
£m
2019*
£m
3,697.5
6,955.7
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
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
* The comparative numbers for 2019 were not re-presented for discontinued operations
202
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section S
t
r
a
t
e
g
c
i
r
e
p
o
r
t
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
2023
£m
180.4
(15.1)
165.3
80.3
4.6
14.6
(22.2)
(25.0)
(26.2)
(40.6)
(108.6)
2.0
44.2
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
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
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
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
* The comparative numbers for 2019 were not re-presented for discontinued operations.
Travis Perkins plc Annual Report and Accounts 2023 203
Financial statementsOther informationGovernanceContents_GEN_PageContents_GEN_PageL2Contents Generation – Section
Five-year summary continued
Consolidated balance sheet
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
204
Travis Perkins plc Annual Report and Accounts 2023
2023
£m
2022
£m
2021
£m
2020
£m
2019
£m
848.4
947.8
530.4
–
14.2
100.6
–
2.9
18.0
727.6
689.6
14.5
–
131.5
–
4,025.5
23.8
545.6
326.5
(14.1)
23.5
1,135.0
2,040.3
–
2,040.3
445.1
518.8
–
–
3.8
92.8
–
89.6
0.4
795.4
–
39.3
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
–
2,102.2
2,237.8
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
830.4
1,670.5
1,145.5
–
–
178.4
9.2
–
–
840.7
892.7
6.5
–
505.6
–
6,079.5
25.2
545.6
326.5
(39.5)
15.5
1,840.5
2,713.8
–
2,713.8
575.7
1,168.3
–
–
21.9
77.2
–
158.8
1.6
1,304.2
–
58.0
1,985.2
–
4,025.5
2,034.2
–
4,136.4
2,162.3
3,365.7
–
–
4,400.1
6,079.5
882.0
1,691.7
1,276.8
1.9
–
57.5
6.7
–
–
937.8
1,239.7
–
–
207.9
138.0
6,440.0
25.2
545.6
326.5
(50.8)
13.6
1,722.6
2,582.7
4.4
2,587.1
583.3
1,253.6
–
4.9
8.0
62.7
–
158.7
2.5
1,613.9
13.4
60.4
3,761.4
91.5
6,440.0
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section ESG data report (including SASB data)
Unit of Measure
SASB reference
2023
2022
2021
2020
2019
Energy and fuel
Total energy consumed
Total UK energy consumed
kWh
kWh
N/A (SECR
compliance)
311,809,636
322,116,912 364,826,976 339,716,233 415,844,450
306,260,839 313,744,004 358,494,358 334,383,277 415,844,450
Total Non-UK energy consumed kWh
5,548,797
8,372,908
6,332,618
5,332,957
0
Total energy consumed
Gigajoules (GJ) CG-MR-1.30a.1
1,122,515
1,080,095
1,313,377
1,222,978
1,497,040
CG-MR-1.30a.1
CG-MR-1.30a.1
34.58
21.85
34.67
23.50
28.35
5.83
33.35
0
27.40
0
19,600,396
20,680,219 22,650,200
21,430,651
28,068,903
%
%
Litres
Tonnes
Tonnes
Tonnes
Tonnes
Tonnes
Tonnes
#
%
#
£
%
Rate
Rate
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
labor law violations
Workforce Diversity and Inclusion
N/A
N/A
N/A
N/A
N/A
N/A
N/A
CG-MR-230a.2
CG-MR-230a.2
CG-MR-230a.2
28,149
27,238
252
1,075
10,837
16,237
28,401
0
0
0
297
1,622
8,656
16,960
27,535
0
0
0
28,175
229.0
1,492
10,084
16,829
28,404
0
0
0
18,946
236
1,353
9,614
8,216
19,182
1
100
9
12.4
7.4%
27,561
457
1,773
11,535
14,710
28,018
1
100
4
12.2
4.4%
Text
CG-MR-230a.1
“See text below the table”
CG-MR-310a.1
13.21
13.54
12.8
CG-MR-310a.1
0.0%
0.0%
0.7%
CG-MR-310a.2
17.3%
20.6%
19.6%
10.7%
20.3%
CG-MR-310a.2
7.1%
5.7%
4.2%
9.9%
5.5%
£m
CG-MR-310a.3
0.0
0.0
0.0
0.0
0.0
Gender
Management
Female
Male
Not available or Not disclosed
All other employees
Female
Male
Not available or Not disclosed
%
%
%
%
%
%
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
CG-MR-330a.1
21.6%
78.4%
0%
25.0%
75.0%
0%
23.6%
76.4%
0%
25.6%
74.4%
0%
20.6%
79.4%
0%
25.7%
74.3%
0%
18.3%
81.7%
0%
20.7%
79.3%
0%
19.6%
80.4%
0%
19.6%
80.4%
0%
Travis Perkins plc Annual Report and Accounts 2023 205
Travis Perkins plc Annual Report and Accounts 2023 205
Other informationGovernanceStrategic reportFinancial statementsFinancial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section ESG data report (including SASB data) continued
Ethnic group
Management
Asian
Black or African American
Hispanic or Latino
White
Other
Not available or Not disclosed
All other employees
Asian
Black or African American
Hispanic or Latino
White
Other
Not available or Not disclosed
Total amount of monetary
losses as a result of legal
proceedings associated with
employee discrimination
Unit of Measure
SASB reference
2023
2022
2021
2020
2019
%
%
%
%
%
%
%
%
%
%
%
%
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
2.4%
0.7%
0.9%
80.0%
0.3%
15.7%
2.7%
1.3%
1.5%
CG-MR-330a.1
64.0%
CG-MR-330a.1
CG-MR-330a.1
2.5%
28%
2.5%
0.7%
0.8%
80.1%
0.3%
15.7%
2.5%
1.2%
1.5%
65.1%
0.5%
29.3%
1.9%
0.5%
0.9%
82.5%
0.4%
13.7%
2.6%
1.0%
1.6%
64.3%
0.7%
29.8%
2.0%
0.3%
0.7%
85.9%
0.5%
10.7%
2.0%
0.7%
1.4%
67.8%
0.7%
27.4%
2.0%
0.3%
0.6%
74.3%
0.3%
22.5%
1.5%
0.6%
1.2%
60.3%
0.5%
36.0%
£m
CG-MR-330a.2
0.01
0
0
–
0.04
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
£m
CG-MR-410a.1
407
538
555
386
445
Text
CG-MR-410a.2 “See text below the table”
Discussion of strategies to
reduce the environmental
impact of packaging
Water consumption
Water consumption
Text
m3
CG-MR-410a.3 “See text below the table”
N/A
277,610
258,321
316,852
281,050
260,845
206
Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – Section CG-MR-230a.1: Description of approach to identifying and addressing data security risks
Travis Perkins Group approaches the identification of vulnerabilities in its information systems through a combination of people,
process and technology, and uses the NIST CyberSecurity Framework to track its maturity and alignment to ISO 27001.
The activities of building, procuring, deploying, running and managing IT systems (some or all of which are underway at any point in time) are
conducted in accordance with policy and standards, the currency of which is maintained through periodic review. Any exceptions to policies
or standards are risk-assessed, managed and monitored via a stringent exceptions process, including sign off by system and data owners.
The Group allocates specific funding for delivery of security-related projects to improve our security maturity and manage risk within appetite.
Regular 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 using a market leading approach.
Technology is deployed across the IT estate to both protect and detect against cyber threats and attacks, such as firewalls, proxies, data loss
prevention, XDR and continuous monitoring and logging into a Security Information and Event Management (SIEM). 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, actioned and tracked by the Information Security Team.
The Group also regularly tests its incident response capabilities via table top exercises to ensure the effectiveness of its incident response plans and
playbooks.
The approach described above forms part of the Group’s internal control and assurance framework and will be reviewed as determined by the
Internal Audit Plan, to ensure that risks are adequately mitigated.
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/media/eywditos/2542360-
group-plc-supplier-commitments-document-update-july-2021-hr-3.pdf#62). 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
(i.e. solvents). This includes, for example,
• corrosive products, under the Offensive Weapons Act 2019, including acids and chemicals which may burn the skin but not normal strength
household bleach and cleaners); and
• solvents, under the Psychoactive Substances Act 2016, including glues and adhesives, flammable products such as fire lighter fluid, solvent
cement, paint stripper, thinners, essentially any substances which are capable of producing a psychoactive effect in a person who consumes it
and it is not an exempted substance; and
• spray paint and aerosols; under the Anti-Social Behaviour Act 2003.
There is a requirement in the Group Supplier Manual (https://www.travisperkinsplc.co.uk/media/r5mjnvcm/2554116-group-plc-supplier-manual-
update-oct-21-v01-2.pdf) for suppliers delivering to the Group’s sites to provide a safety data sheet for all substances delivered which are
harmful to health.
CG-MR-410a.3: Discussion of strategies to reduce the environmental impact of packaging
The Group is committed to reducing its environmental impact relating to packaging. For more information on objectives and progress, please refer
to page pages 40 to 41. The Group held a number of webinars during 2023 focusing on different ESG topics. A ‘Packaging & Waste’ webinar was
attended by over 50 suppliers in September 2023. The session focussed on the new EPR requirements and outlined some of the good practice
packaging reductions achieved by suppliers through-out the year. The webinar also reiterated the request for suppliers to review packaging
materials and continue eliminating single use plastic, increase the amount of recycled content and improve recyclability. Throughout 2023 the
Group also worked with the direct sourcing team to optimise the amount of material used, achieving packaging reductions and improvements.
The Group continued to obtain packaging data from its suppliers which is differentiated by packaging levels; primary, secondary and tertiary,
and by material type.
In terms of influencing others, the Group will continue its work with the Supply Chain Sustainability School (SCSS) to raise awareness and share
best practice on packaging reductions and transitioning to more sustainable packaging solutions.
Travis Perkins and BSS branches continue to backhaul cardboard, plastic and wood packaging to their distribution centres where it is processed
and sent for reprocessing.
Travis Perkins plc Annual Report and Accounts 2023 207
Travis Perkins plc Annual Report and Accounts 2023 207
Other informationGovernanceStrategic reportFinancial statementsFinancial statementsOther informationGovernanceStrategic reportContents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Other shareholder information
Financial diary
Ex-dividend date
Record date
Annual General Meeting
Trading statement
Payment of final dividend
28 March 2024
2 April 2024
22 April 2024
25 April 2024
9 May 2024
Annual General Meeting (“AGM”)
The AGM will be held on 22 April 2024 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
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:
Lodge Way House
Lodge Way
Harleston Road
Northampton
NN5 7UG
Email: cosec@travisperkins.co.uk
Electronic shareholder communications
The Company prefers that you receive your shareholder
communications electronically. This is a faster, more environmentally
friendly and more effective way to communicate with you. If you
have received a paper copy of this report or notification of its
availability by post and would like to receive fully electronic
communication, please register your preference on the
shareholder portal www.travisperkins-shares.com.
Shareholder services
The Company’s registrars provide a number of other services that, as a
shareholder, might be useful to you:
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, or notification by
post of its availability online, 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.
Shareholders outside the United Kingdom may be able to make use
of Link’s International Payment Service facility to have dividends
converted into your chosen currency. For further details please contact
Link or visit https://ww2.linkgroup.eu/ips.
Dividend Re-Investment Plan (“DRIP”)
This is a scheme which allows shareholders resident in the United
Kingdom, Channel Islands and Isle of Man 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 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).
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.
Share-dealing services
Share-dealing services are available to shareholders resident in the UK,
Channel Islands and Isle of Man 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
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Travis Perkins plc Annual Report and Accounts 2023
Contents_GEN_PageContents_GEN_PageL2Contents Generation – SectionContents_GEN_PageContents_GEN_PageL2Contents Generation – Section Travis Perkins plc
Lodge Way House, Lodge Way,
Harleston Road, Northampton, NN5 7UG
www.travisperkinsplc.co.uk