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Annual Report and Accounts - Hemscott IR

Annual Report and Accounts - Hemscott IR

Chairman’s

Chairman’s StatementFor the year ended 31 December 2011“Our businesses aresupported by sector leadingIT, and a strong people culturebased on clear values andleadership behaviours”Robert WalkerChairmanIntroductionTravis Perkins is the UK’s largest distributor ofbuilding and construction materials.Through our various group companies, weaim to offer the widest range of products to ourprofessional and retail customers, providingthe highest levels of customer service atcompetitive prices.Our organisation model devolvesmanagement responsibility close to customersand provides the benefits of innovative andshared central services.Our businesses are supported by sectorleading IT, and a strong people culture basedon clear values and leadership behaviours.We aim to deliver consistent and increasingshareholder value over time.Results2011 was a good year for Travis Perkins. Ourprimary focus was integrating the formerBSS businesses into the Group to maximisesynergies, but we have also outperformed in themajority of our markets through the continuedimplementation of self-help initiatives, all this,in spite of the markets in which we operatedeclining by between 4% and 5%.Revenue increased by 52% to £4.8bn andour adjusted pre-tax profits rose by 37% to£297m; adjusted earnings per share were upby 21% to 93.1 pence. On a proforma basis,assuming BSS had been owned for all of 2010,adjusted profit before tax was 11% higher, andadjusted earnings per share were up 11%, or9.0 pence.We have made excellent progress with ourplanned BSS financial systems integrationand organisational changes, and our synergyproject is running ahead of schedule. In2011, we realised £20m of synergies andwe anticipate that we will beat our previouslypublished target of £25m, achieving £30m in2012.Strong cash flows and working capitalmanagement, which includes £27m from thesale of Buck and Hickman, have reduced debtby £191m to £583m.On 3 January 2012, the Group exercised itsoption to acquire the remaining share capital ofToolstation. The company, which sells lightsideproducts through its network of 103 UK basedretail stores, a catalogue operation and online,has grown rapidly and profitably in recentyears. We welcome our new colleagues tothe Group and look forward to their continuedsuccess.DividendThe Board’s stated intention is to reduce themultiple by which dividends are covered bypost tax earnings to between 2.5 times and3.5 times over the medium term from the12

T R A V I S P E R K I N S A N N U A L R E P O R T A N D A C C O U N T S 2 0 1 1current cover of 4.7 times. As a step towardsmeeting that target, the Board is pleased torecommend a final dividend of 13.5 pence pershare, payable to shareholders on the registeron 4 May 2012, which will give a total dividendfor 2011 of 20 pence per share. The proposed33% increase in dividend over 2010 will resultin a cash outflow of £47m.Board of DirectorsI am delighted that Ruth Anderson joinedthe Company as a non-executive directorin October. She has extensive experience ofadvising a broad range of companies acrossmany business sectors and so will be of greatvalue to the Board.As a result of re-organising the Group’soperations into four divisions and makingother organisational changes, John Carter,who has successfully served as the Group’sChief Operating Officer for the past sevenyears, was promoted to Deputy Chief Executiveon 1 January 2012. I am sure that John willcontinue to make a very significant contributionto the Group in his new role.them, on behalf of the Board, for all their effortsduring the year.OutlookThe markets in which we operate are likely toremain subdued for much of 2012. We expectnew house starts and mortgage applications,which are key indicators for our business,to remain relatively flat and public sectorexpenditure to fall as the government strivesto reduce the deficit. Consumer markets arelikely to be soft as disposable income is furthersqueezed.Our investment in Toolstation will realisefull year profits for the first time, the 13 storesacquired from Focus in the summer are tradingprofitably and our synergy projects will continueto deliver strong benefits. When these projectsare taken together with our ongoing initiativesto improve customer service and our carefulmanagement of costs, we are confident 2012will be another year of progress for the Group.REPORTSEmployeesOur engaged and hard working colleagues arecritical to our success. Yet again, they havedelivered outstanding results for shareholdersin difficult circumstances. I should like to thankRobert WalkerChairman21 February 201213

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