Slide 1: Final Results 2017
Final Results 2017 Financial Year Ended 31 December 2017
Slide 2: Cautionary Statement and Notes
Cautionary Statement and Notes Cautionary Statement Certain statements made in this presentation are forward-looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially fro
Slide 3: Introduction & Highlights
Introduction & Highlights Gavin Slark CEO 3
Slide 4: Group Financial Highlights
Group Financial Highlights Revenue up 9% to £2.7bn (7% in constant currency) Adjusted operating profit before property profit up 17% to £160.9m Adjusted EPS up 15% and dividend up 13% Adjusted operating profit margin (pre property profits) up 40bps to 5.9% ROCE up 110bps to 13.6% 4
Slide 5: Another Year of Group Progress
Another Year of Group Progress Growth in profitability across all segments and geographies Saw benefit of organic growth and exposure to multiple markets Opened record number of new Selco branches Delivered benefits of 2016 restructuring in UK Merchanting Increased Dutch network by 19 stores through
Slide 6: Operating Profit Margin and ROCE
Operating Profit Margin and ROCE 14.0% 13.6% 13.0% 12.5% 12.2% 12.0% 11.1% 11.0% 10.0% 9.0% 7.8% 8.0% 7.0% 6.1% 5.9% 6.0% 5.2% 5.6% 5.5% 4.6% 5.0% 4.0% 3.8% 4.0% 3.4% 2.4% 2.7% 3.0% 2.0% 1.0% 0.0% FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 ROCE Adjusted operating margin pre property profit 6
Slide 7: Financial Review
Financial Review David Arnold CFO 7
Slide 8: Income Statement
Income Statement Movement Dec Dec Constant Reported £m 2017% 2016% Currency Revenue 2,715.8% 2,496.4% +8.8% +6.8% Adjusted operating profit pre property profits 160.9% 137.1% +17.4% Property profit 2.7% 4.9% Adjusted operating profit 163.7% 142.0% +15.2% Exceptional charge -% (19.7)% Amortisation an
Slide 9: Key Income Statement Metrics
Key Income Statement Metrics £m 2017% 2016%Movement Adjusted operating margin pre property profits 5.9% 5.5% +40 bps Adjusted operating margin 6.0% 5.7% +30 bps Headline tax rate 17.2% 18.5% (130 bps) Underlying tax rate 18.5% 19.0% (50 bps) Adjusted earnings per share 54.9p 47.7p +15.1% Dividend pe
Slide 10: Revenue Growth Analysis
Revenue Growth Analysis £’m 2,750 48 2,716 2,700 33 2,650 139 2,600 Revenue 2,550 2,496 2,500 2,450 2,400 2,350 2016 Organic Growth Acquisitions FX 2017 10
Slide 11: Organic Revenue Growth Analysis
Organic Revenue Growth Analysis (Constant Currency) £’m 250 200 60.3 150 139.4 14.4 7.1 (52.3) Revenue 33.9 4.6 0.6 100 70.8 50 0 UK Ireland Netherlands Belgium Retail Manufacturing Growth 2016 Branch Organic Initiatives Closures Growth Merchanting LFL Business 11
Slide 12: Adjusted Operating Profit Analysis
Adjusted Operating Profit Analysis £’m 170 165 20.5 3.0 2.2 163.7 1.6 160 (2.2) (3.4) Adjusted EBITA 155 150 145 142.0 140 135 130 2016 Like-for-Like Growth Branch Acquisitions Property FX 2017 Business Initiatives Restructuring Disposals 12
Slide 13: Incremental Operating Profit Drop Through Analysis
Incremental Operating Profit Drop Through Analysis £’m 25.0 3.0 20.0 3.2 (1.0) 1.7 15.0 5.6 0.4 Group 20.5 10.0 7.6 5.0 0.0 UK Ireland Netherlands Belgium Retail Manufacturing Central Like for Like Merchanting Business 13
Slide 14: Incremental Operating Profit Drop Through Analysis
Incremental Operating Profit Drop Through Analysis £’m 25.0 42% 15% 22% 20.0 283% 17% 9% 15.0 Group 10.0 11% 5.0 0.0 UK Ireland Netherlands Belgium Retail Manufacturing Central Like for Like Merchanting Business 14
Slide 15: UK Merchanting
UK Merchanting £m 2017% 2016% Movement% Revenue 1,845.1% 1,762.3% +4.7% Operating profit pre property profit 100.9% 94.8% +6.5% Operating margin pre property profit 5.5% 5.4% +10bps Revenue and like-for-like growth rate similar – growth from new Selco branches offset by branch closures in Plumbase a
Slide 16: Irish Merchanting
Irish Merchanting Movement Constant% £m 2017% 2016% Reported% Currency% Revenue 403.6% 347.3% +16.2% +8.9% Operating profit pre property profit 34.5% 27.1% +27.3% +19.7% Operating margin pre property profit 8.5% 7.8% +70bps Fourth consecutive year of double digit like-for-like revenue growth Continu
Slide 17: Netherlands Merchanting
Netherlands Merchanting Movement Constant% £m 2017% 2016% Reported% Currency% Revenue 131.0% 87.7% +49.4% +39.8% Adjusted operating profit 12.6% 9.1% +38.1% +29.3% Adjusted operating margin 9.6% 10.4% (80bps) Like-for-like revenue growth of 5.4% Three acquisitions completed in 2017 which increased n
Slide 18: Belgium Merchanting
Belgium Merchanting Movement Constant% £m 2017% 2016% Reported% Currency% Revenue 89.6% 83.4% +7.5% +0.5% Operating profit/(loss) 0.9% (0.7)% +234.4% +220.0% Operating margin 1.0% (0.8%) +180bps Achieved first base objective to return to profitability Focus on improving gross margins through mix and
Slide 19: Retailing
Retailing Movement Constant% £m 2017% 2016% Reported% Currency% Revenue 180.4% 157.1% +14.8% +7.4% Operating profit 11.2% 7.3% +53.1% +44.3% Operating margin 6.2% 4.7% +150bps Like for like revenue growth of 9.1% - average transaction value up 5% to €26 Sales responded well to transformation program
Slide 20: Manufacturing
Manufacturing £m 2017% 2016% Movement% Revenue 66.1% 58.7% +12.5% Operating profit 15.1% 12.1% +24.5% Operating margin 22.9% 20.7% +220bps Outstanding performance from UK market leading dry silo mortars business Record volumes achieved in year with significant growth from new house build market Sign
Slide 21: Balance Sheet
Balance Sheet Dec Dec £m 2017% 2016% Intangible assets 646.1% 610.8% Tangible assets 531.5% 491.8% Working Capital 169.5% 166.7% Other assets/(liabilities) (86.1)% (76.5)% Pension Deficit (23.5)% (31.3)% 1,237.5% 1,161.5% Net Debt (62.9)% (96.3)% Equity 1,174.6% 1,065.2% ROCE 13.6% 12.5% Net debt/EB
Slide 22: Cash Flow
Cash Flow Dec Dec £m 2017% 2016% Cash from operations 210.7% 168.6% Interest and tax (23.9)% (21.9)% Replacement capex net of disposals (23.3)% (12.9)% Free cash flow 163.5% 133.8% Investment capex (49.3)% (37.6)% Dividends (33.7)% (30.0)% Share issue 1.9% 0.5% Acquisitions (40.4)% (11.9)% Net cash
Slide 23: LSDM, Current Trading & Outlook
LSDM, Current Trading & Outlook Gavin Slark CEO 23
Slide 24: Acquisition of Leyland SDM
Acquisition of Leyland SDM Purchase Consideration - £82.4m Completed 16 February 2018 2017 revenue £47.8m and underlying EBITA £7.3m Possesses key characteristics our customers want: • Convenience • High product availability • Comprehensive offering • Exceptional service 24
Slide 25: Leyland SDM – Convenience Led
Leyland SDM – Convenience Led Exceptional locations in areas with strong demographics Often set in prominent position on high street and/or on arterial routes in/out of London Many with loading bays/parking 25
Slide 26: Leyland SDM – Proven Format
Leyland SDM – Proven Format Proven track record Market leading brands Exceptionally wide range of stock Great product knowledge 26
Slide 27: Acquisition of LDSM Increases Coverage in London and Complements Selco
Acquisition of LDSM Increases Coverage in London and Complements Selco 27
Slide 28: Acquisition of LDSM Increases Coverage in London and Complements Selco
Acquisition of LDSM Increases Coverage in London and Complements Selco 28
Slide 29: Acquisition of LDSM Increases Coverage in London and Complements Selco
Acquisition of LDSM Increases Coverage in London and Complements Selco 29
Slide 30: Leyland SDM – Future Growth Potential
Leyland SDM – Future Growth Potential We believe that in the long run capital cities grow faster Continued expansion of London branch footprint Potential to experiment with a broader product offering Possible expansion of LSDM format into other UK cities Opportunity for further acquisitions in this
Slide 31: Current Trading – 1 January 2018 to 18 February 2018
Current Trading – 1 January 2018 to 18 February 2018 Like-for-like daily revenue 1 January 18 – Q4 2017 18 February 18 Merchanting UK 3.0% 1.0% Ireland 5.1% 5.6% Netherlands 5.8% 11.0% Belgium 2.5% 7.2% Retailing 12.5% 17.0% Manufacturing 14.0% 25.7% Total Group 4.4% 3.8% 31
Slide 32: Outlook
Outlook UK • Overall conditions expected to remain flat • Further progress focused on continuing self help, not reliant on the market • Acquisition of Leyland SDM gives medium term options Ireland • Market leading positions in Merchanting and Retail • Economic outlook remains favourable • Rate of gr
Slide 33: Summary – Strong Performance
Summary – Strong Performance Delivered growth in profitability across all segments and geographies Made further progress to medium term financial targets Strength in depth across the management Another year of strong cash conversion– balance sheet in excellent shape Continue to see good growth oppor
Slide 34: Questions
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Slide 35: Appendices
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Slide 36: Appendix 1 Notes & Definitions
Appendix 1 Notes & Definitions Notes As amounts are reflected in £’m some non-material rounding differences may arise. Definitions Adjusted earnings per share is earnings before intangible asset amortisation relating to acquisitions and exceptional costs Adjusted operating profit is operating profit
Slide 37: Appendix 2 Operating Profit Bridge – Statutory to Adjusted
Appendix 2 Operating Profit Bridge – Statutory to Adjusted 2017 2016 Change £’m £’m £’m Revenue 2,715.8 2,496.4 +219.4 Statutory operating profit 160.9 120.1 +40.8 Exceptional items 0.0 19.7 (19.7) Amortisation of acquired intangible assets 2.8 2.2 +0.6 Adjusted operating profit 163.7 142.0 +21.6 Pr
Slide 38: Appendix 3 Operating Margin Analysis
Appendix 3 Operating Margin Analysis* H2 H1 H2 H1 2017 2017 2016 2016 UK Merchanting 5.5% 5.5% 5.4% 5.3% Irish Merchanting 9.0% 8.0% 8.7% 6.8% Netherlands Merchanting 8.9% 10.4% 9.5% 11.3% Belgium Merchanting 1.1% 0.9% (1.3%) (0.3%) Total Merchanting 6.1% 6.0% 5.9% 5.6% Retailing 6.7% 5.6% 5.0% 4.2%
Slide 39: Appendix 4 Revenue Growth
Appendix 4 Revenue Growth 2017 Like-for-Like 2017 Q1 Q2 Q3 Q4 FY Total Revenue Constant Merchanting Reported Currency UK 4.4% 4.7% 6.3% 3.0% 4.5% 4.7% 4.7% Ireland 14.6% 10.2% 10.6% 5.1% 10.1% 8.9% 16.2% Netherlands 4.2% 4.4% 6.8% 5.8% 5.4% 39.8% 49.4% Belgium (4.5%) 6.2% (0.1%) 2.5% 1.4% 0.5% 7.5%