FULL YEAR RESULTS FULL YEAR RESULTS. 2017 FULL YEAR RESULTS FULL - PowerPoint PPT Presentation

FULL YEAR RESULTS FULL YEAR RESULTS. 2017 FULL YEAR RESULTS FULL YEAR RESULTS . 2017 . 2017 . 2017 Full Year Results Full Year Results. 2017 . 2017 1 1 Full Year Results Full Year Results . 2017 . 2017 1 1

Agenda Agenda Agenda Agenda Chairman’s introduction Chairman’s introduction Chairman’s introduction Chairman’s introduction Stuart Chambers Stuart Chambers Stuart Chambers Stuart Chambers p3 Financial Financial Financial review Financial review review review Alan Williams Alan Williams Alan Williams Alan Williams p4 Operational Operational update Operational Operational update update update John Carter John Carter John Carter John Carter p19 Plumbing & Heating and Toolstation Plumbing & Heating and Toolstation Plumbing & Heating and Toolstation Plumbing & Heating and Toolstation Tony Buffin Tony Tony Tony Buffin Buffin Buffin p25 Appendices Appendices Appendices Appendices p32 Full Year Results Full Year Results. 2017 . 2017 2 2 Full Year Results Full Year Results . 2017 . 2017 2 2

INTRODUCTION INTRODUCTION INTRODUCTION. INTRODUCTION . . . STUART CHAMBERS STUART CHAMBERS STUART CHAMBERS STUART CHAMBERS Full Year Results Full Year Results. 2017 . 2017 3 3 Full Year Results Full Year Results . 2017 . 2017 3 3

FINANCIAL FINANCIAL FINANCIAL FINANCIAL REVIEW. REVIEW REVIEW REVIEW . . . ALAN WILLIAMS ALAN WILLIAMS ALAN WILLIAMS ALAN WILLIAMS Full Year Results Full Year Results. 2017 . 2017 4 4 Full Year Results Full Year Results . 2017 . 2017 4 4

Introduction Introduction Introduction Introduction Challenging market Secondary housing transactions broadly unchanged from 2016 levels • Input cost inflation elevated – driven by FX and commodity prices • Consumer confidence declined steadily through the course of 2017 • 2017 performance Input cost inflation largely offset through price activity • Investment in customer propositions, IT and digital • Cash generation remained strong • 2018 outlook Anticipate market conditions will remain mixed • Focus on trading execution and actions to drive efficiency and control cost • Selective capital investment aligned to key priorities - reducing year-on-year • Full Year Results. 2017 Full Year Results . 2017 5 5 Full Year Results Full Year Results . 2017 . 2017 5 5

Key financial highlights Key financial highlights Key financial highlights Key financial highlights Year- Year Year Year -on - - on on on- - - -year year year year Year e Year ended 31 December Year e Year e nded 31 December nded 31 December nded 31 December FY 2017 FY 2017 FY 2017 FY 2017 FY 2016 FY 2016 FY 2016 FY 2016 change change change change Revenue £6,433m £6,217m 3.5% Like Like Like Like- -for - - for- for for - - -like like like like sales growth sales growth sales growth sales growth 3.3% 3.3% 3.3% 3.3% 2.7% 2.7% 2.7% 2.7% 0.6ppt 0.6ppt 0.6ppt 0.6ppt Adjusted EBITA £380m £409m (7.1)% Adjusted EBITA excluding property profits Adjusted EBITA excluding property profits £351m £351m £392m £392m Adjusted Adjusted EBITA excluding property profits EBITA excluding property profits £351m £351m £392m £392m (10.5)% (10.5)% (10.5)% (10.5)% Adjusted earnings per share 110.4p 120.4p (8.3)% Net debt Net debt Net debt Net debt £(342)m £(342)m £(342)m £(342)m £(378)m £(378)m £(378)m £(378)m £36m £36m £36m £36m Dividends per share 46.0p 45.0p 2.2% Lease Lease Lease adjusted ROCE Lease adjusted ROCE adjusted ROCE adjusted ROCE 10.1% 10.1% 10.1% 10.1% 10.9% 10.9% 10.9% 10.9% (80)bps (80)bps (80)bps (80)bps Strong cash flow leading to continued reduction in net debt Strong cash flow leading to continued reduction in net debt Strong cash flow leading to continued reduction in net debt Strong cash flow leading to continued reduction in net debt Full Year Results Full Year Results. 2017 . 2017 6 6 Full Year Results Full Year Results . 2017 . 2017 6 6

Successful recovery of input cost inflation Successful recovery of input cost inflation Successful recovery of input cost inflation Successful recovery of input cost inflation Group revenue growth Group revenue growth Group revenue growth Group revenue growth • Like-for-like sales growth of £6,433m £36m £(25)m 3.3% £217m £6,217m • Volume flat, price up 3.5% as £(12)m input cost inflation was 3.5% 3.5% 3.5% 3.5% recovered 2016 2016 2016 2016 Volume Volume Volume Volume Price / mix Price / mix Price / mix Price / mix Net new Net new Net new Net new Trading Trading Trading Trading 2017 2017 2017 2017 space* space* space* space* days days days days • Toolstation and Benchmarx LFL Q1 Q1 Q1 Q1 Q2 Q2 Q2 Q2 H1 H1 H1 H1 Q3 Q3 Q3 Q3 Q4 Q4 Q4 Q4 H2 H2 H2 H2 FY FY FY FY network expansion continued 5.1% 6.3% 5.7% 2.6% 1.4% 2.0% 3.8% 2015 4.2% 2.3% 3.1% 2.0% 2.5% 2.2% 2.7% 2016 • Improving like-for-like trend in 2.7% 2.7% 2.7% 4.1% 3.2% 3.7% 3.3% 2017 2yr LFL Q1 Q1 Q1 Q1 Q2 Q2 Q2 Q2 H1 H1 H1 H1 Q3 Q3 Q3 Q3 Q4 Q4 Q4 Q4 H2 H2 H2 H2 FY FY FY FY H2, also reflected in 2-year like- 9.5% 8.7% 9.0% 4.7% 3.9% 4.2% 6.6% 2016 2017 7.0% 5.1% 5.9% 6.2% 5.8% 6.0% 6.1% for-likes *Net new space includes acquisitions Full Year Results. 2017 Full Year Results . 2017 7 7 Full Year Results Full Year Results . 2017 . 2017 7 7

EBITA reflects investment in future growth EBITA reflects investment in future growth EBITA reflects investment in future growth EBITA reflects investment in future growth of which: of which: of which: of which: Network expansion £(23)m £54m Customer proposition improvement £(14)m Inflation on rent, rates, wages £(20)m Depreciation £(10)m £(78)m Other £(11)m £409m £409m £409m £409m £(17)m £392m £392m £392m £392m £29m £380m £380m £380m £380m £(17)m £351m £351m £351m £351m 2016 adjusted 2016 property 2016 EBITA Gross profit Operating cost Unallocated 2017 EBITA 2017 property 2017 adjusted 2016 EBITA 2016 EBITA 2016 EBITA 2016 EBITA 2017 EBITA 2017 EBITA 2017 EBITA 2017 EBITA EBITA profits (ex. property) growth growth central cost (ex. property) profits EBITA (ex. Property) (ex. Property) (ex. Property) (ex. Property) (ex. Property) (ex. Property) (ex. Property) (ex. Property) growth Full Year Results. 2017 Full Year Results . 2017 8 8 Full Year Results Full Year Results . 2017 . 2017 8 8

Group investments impacting EBITA margins Group investments impacting EBITA margins Group investments impacting EBITA margins Group investments impacting EBITA margins General General General General Plumbing & Plumbing & Plumbing & Plumbing & Contracts Contracts Contracts Contracts Consumer Consumer Consumer Consumer Group Group Group Group Merchanting Merchanting Merchanting Merchanting Heating Heating Heating Heating FY 2016 adjusted operating margin 9.3% 2.6% 6.0% 6.7% 6.3% 6.3% 6.3% 6.3% (excluding property profits) Change in gross margin Change in gross margin Change in gross margin Change in gross margin (0.2)% (0.2)% (0.2)% (0.2)% (0.8)% (0.8)% (0.8)% (0.8)% 0.6% 0.6% 0.6% 0.6% (0.3)% (0.3)% (0.3)% (0.3)% (0.2)% (0.2)% (0.2)% (0.2)% Margin impact of change in operating costs (0.4)% 0.5% (0.3)% (1.2)% ( (0.6)% ( ( 0.6)% 0.6)% 0.6)% FY 2017 adjusted operating margin FY FY FY 2017 adjusted operating margin 2017 adjusted operating margin 2017 adjusted operating margin 8.7% 8.7% 8.7% 8.7% 2.3% 2.3% 2.3% 2.3% 6.3% 6.3% 6.3% 6.3% 5.2% 5.2% 5.2% 5.2% 5.5% 5.5% 5.5% 5.5% (excluding property profits) (excluding property profits) (excluding property profits) (excluding property profits) • Gross margins 40bps lower in H2 (H1 flat) • Operating cost increase includes: Weak K&B Q4 performance in Wickes Extension of range centre coverage • • Selective price investment in GM Increased digital investment • • Mix of sales in Plumbing & Heating Higher payroll, rent, rates and depreciation • • Full Year Results. 2017 Full Year Results . 2017 9 9 Full Year Results Full Year Results . 2017 . 2017 9 9