Travis Perkins PLC

LSE:TPK

Earnings Call Analysis

Earnings Call Transcript 2021-Q4

[Nicholas John Roberts]

Well,

good

morning

to

you

all,

and

a

warm

welcome

to

everybody

in

the

room

and

on

the

webcast,

for

our

first

in-person

results

briefing

in

two

years,

which

has

been

rather

denuded

unfortunately

by

the

Tube

strike.

I

would

also

say

to

you,

Dydd

Gŵyl

Dewi

Hapus,

Happy

St.

David's

Day

from

me

to

you

all.

I'll

open

with

some

reflections

and

then

hand

over

to

Alan

for

our

financial

and

operational

update

before

I

return

with

a

strategic

update

and

look

ahead.

Let

me

first

capture

the

year,

if

I

may.

2021

was

a

year

of

significant

progress

for

the

group.

We

successfully

navigated

a

very

challenging

market

in

all

our

businesses

and

produced

what

we

think

is

a

superb

financial

performance.

Our

performance

underpinned

by

operational

and

strategic

progress

across

the

group.

We

were

true

to

our

promise

to

focus

on

the

trade

and

simplify

the

group.

We

demerged

the

Wickes

business,

we

sold

our

Plumbing

&

Heating

business,

we

strengthened

our

balance

sheet,

and

we

repatriated

excess

capital

to

shareholders,

all

the

while

growing

our

business;

new

branches,

new

propositions,

new

digital

channels,

and

winning

share

by

focusing

on

our

strategy

for

the

future

to

be

the

leading

partner

to

the

construction

industry.

That

means

doing

more

for

our

customers

by

adding

new

and

exciting

capability

to

our

business

and

it

strengthens

our

investment

story

for

new

and

existing

shareholders.

All

of

which

is

enabled

through

our

energized

and

confident

teams

across

the

business,

full

of

confidence,

full

of

self-belief

after

a

challenging

yet

exhilarating

couple

of

years

in

the

business.

And

they

feel

that

they

have

the

support

and

the

capability

to

win

and

execute

the

strategy.

So,

I'm

incredibly

proud

of

what

we've

achieved

last

year

and

how

now

we

are

well-positioned

for

the

future,

remaining

true

to

who

we

are

and

our

purpose.

We're

here

to

build

better

communities

and

enrich

lives.

And

that's

a

theme

I'll

return

to

later.

But before that, over to Alan.

[Alan Richard Williams]

Thanks,

Nick.

And

good

morning,

everyone.

So

as

Nick

mentioned,

the

group

delivered

a

really

excellent

performance

in

2021

in

addition

to

delivering

the

demerger

of

Wickes

and

the

disposal

of

Plumbing

&

Heating.

On

that

note,

I

should

remind

you

that

the

2020

income

statement

and

cash

flow

have

been

restated

to

exclude

the

discontinued

operations.

And

any

comparisons

that

I'll

draw

to

2019

will

also

be

on

a

continuing

operations

basis.

The

group

recovered

strongly

from

the

pandemic

with

annual

revenue

growth

of

24%,

helped

by

both

strong

execution

and

the

market

recovery.

Perhaps

more

meaningfully,

revenue

was

over

10%

higher

than

in

2019

with

broadly

similar

growth

overall

in

each

half

on

a

two-year

basis.

Adjusted

operating

profit

was

also

significantly

ahead

of

2020,

and

some

19%

of

ahead

of

2019

on

a

comparable

basis

with

consequent

growth

in

operating

margin.

The

strong

operational

performance

alongside

continued

disciplined

capital

management

led

to

a

much

improved

return

on

capital

employed

at

12.1%

excluding

property

profits.

Net

debt

to

EBITDA

leverage

on

an IFRS

16

basis

reduced

to

1.2

times.

And

on

a

pro

forma

basis,

that

is

adjusting

for

the

proceeds

of

the

P&H

disposal

still

to

be

returned

to

shareholders

at

the

yearend.

We're

at

the

lower

end

of

the

range

that

we

laid

out

in

September

last

year,

namely

around

1.5

times.

While

cash

conversion

was

lower

in

2021,

this

was

entirely

down

to

the

growth

in

credit

sales

year-on-year,

and

cash

conversion

looked

at

over

2020

and

2021

combined

with

over

100%.

Finally,

the

Board

is

proposing

a

final

dividend

of

£0.26

per

share

to

take

the

ordinary

dividend

distribution

for

the

year

to

£0.38

per

share

or

around

35%

of

adjusted

EPS.

This

is,

of

course,

in

addition

to

the

special

dividend

we've

paid

at

£0.35

per

share.

Looking

at

the

revenue

performance

in

more

detail,

slide

7

provides

a

bridge

of

the

key

drivers

from

2019

to

2021.

I

would

highlight

three

key

features.

Firstly,

you

can

see

the

impact

to

the

volume

declines

in

2020

from

both

the

pandemic

and

the

branch

closure

program

in

June

of

that

year.

In

2021,

there

is

an

annualization

impact

from

the

latter

but

a

very

significant

positive

contribution

from

underlying

volume

growth

at

£655

million.

The

second

key

feature

is

pricing

and

mix.

This

was

a

negligible

feature

in

2020,

but

it

contributes

£305

million

of

growth

in

2021,

an

indication

of

the

scale

and

the

successful

recovery

of

input

cost

inflation.

Finally,

in

both

years,

you

can

see

the

positive

impact

from

the

expansion

of

Toolstation.

In

aggregate

versus

2019,

revenue

was

10.6%

ahead.

Underlying

volume

has

grown

by

7%,

partly

offset

by

the

net

space

reduction

of

3%,

and

pricing

and

mix

have

contributed

a

growth

of

7

percentage

points.

Turning

to

slide

8,

I've

broken

out

the

year-on-year

drivers

of

the

strong

operating

performance

at

£353

million.

Versus

2020

of

course,

the

largest

driver

is

the

gross

profit

growth

from

incremental

volume

at

£249

million.

This

gross

profit

delivery

was

further

boosts –

bolstered

to

the

tune

of

£49

million

by

strong

margin

management.

Both

the

successful

recovery

of

input

cost

inflation

and

the

year-on-year

recovery

in

volume

related

supplier

incentives.

I've

then

highlighted

various

cost

increase

elements,

namely

the

non-recurrence

of

government

assistance

which

was

received

in

2020,

inflationary

elements,

including

the

return

to

payment

of

bonus

programs

after

zero

in

the

prior

year

and

variable

costs

to

service

the

incremental

volume.

Next,

you

can

see

the

contribution

of

£50

million from

the

annualization

of

the

branch

closure

program.

This

disciplined

approach

to

overheads

led

to

a

strong

drop

through

of

gross

profit,

resulting

in

an

operating

margin

before

property

profits

of

6.6%.

And

finally,

in

terms

of

property

profits,

these

totaled

£49

million

in

the

year,

with

cash

receipts

of

£78

million.

Our

property

team

did

an

outstanding

job

in

exiting

sites

closed

in

June

2020,

along

with

the

disposal

of

the

former

Tilbury

distribution

center.

I'm

now

turning

to

segmental

views.

If

we

start

the

reporting

segments

with

Merchanting,

the

excellent

performance

was

driven

by

the

operational

initiatives

put

in

place

over

the

last

24

months

to

strengthen

the

business

underpinned

by

the

recovery

in

end

markets.

Compared

to

2019, like-for-like

sales

were

some

12%

ahead.

Now,

as

you're

well

aware,

the

speed

of

recover

caused

some

availability

issues

and

led

to

significant

supply

price

increases.

Our

businesses

are

highly

adept

at

managing

these

issues,

and

while

availability

issues

have

now

largely

eased,

we

do

anticipate

further

cost

price

increases

throughout

2022.

At

the

Capital

Markets

Update

in

September,

Kieran

covered

the

actions

taken

over

the

last

couple

of

years

to

improve

the

competitive

position

of

the

General

Merchant

to

enhance

service,

build

capability,

and

these

actions

enabling

the

business

to

benefit

from

the

volume

recovery.

Our

specialist

merchants

also

benefited

from

improved

efficiency

following

the

2022

branch

rationalization

program

with

both

BSS

and

Keyline

achieving

record

profits.

CCF

recovered

well

despite

having

the

biggest

challenges

from

product

availability

with

key

products

and

allocation

for

much

of

2021.

Given

the

strong

operating

leverage,

operating

margin

in

2021

was

8.4%,

some

70

basis

points

ahead

of

2019.

And

as

we

discussed at

the

Q3

trading

update,

around

40

basis

points

of

this

recovery

stemmed

from

inflation

gains

and

stock

and

this

is

not

expected

to

repeat

in

2022.

I

do,

however,

expect

that

operating

margin

will

remain

around

the

8%

mark

with

mid-to-high-teens

return

on

capital

employed.

Toolstation's

outperformance

continues

with

growth

of

over

20%,

taking

a

two-year

growth

figure

to

over

50%.

Growth

in

the

second

half

was

lower

as

the

business

cycled

the

strongest

comparators

from

2020.

We

anticipate

this

will

also

be

the

case

in

the

first

four

months

or

so

of

2022

before

the

comparators

ease.

Importantly,

the

business

continues

to

perform

well

with

its

core

trade

customers.

During

H2

2021

in

the

UK

business,

we

saw

those

higher

spending

trade

customers

continuing

to

grow

at

over

20%.

In

the

UK,

revenue

grew

by

19%

and

was

54%

ahead

of

2019

with

operating

profit

growth

of

£42

million

and

an

operating

margin

of

6.3%

in

line

with

our

expectations

at

the

stage

of

the

businesses

development

and

despite

the

heavy

investments

in

the

branch

network

over

the

last

couple

of

years.

Encouragingly,

branches

open

during

the

last

three

years

are

maturing

more

quickly

than

those

open

in

previous

years.

We

anticipate

opening

a

further

60

branches

in

2022

in

the

UK

to

take

the

total

to

close

to

600

branches.

In

late

2022,

Toolstation

UK

will

open

a

new

500,000

square

feet

direct

distribution

center,

initially

servicing

Toolstation

only

but

with

the

potential

to

service

direct

light

side

sales

for

the

General

Merchants

as

well.

We

anticipate

startup

costs

expensed

through

the

operating

profit

line

of

around

£5

million

in

each

of

H2

2022

and

H1 2023.

Turning

to

Europe,

revenue

grew

by

35%

to

£92 million

as

the

network

was

expanded

by

40

branches

to

123 branches

in

total.

In

the

Benelux,

sales

grew

by

32%

with

the

Dutch

business

narrowing

losses

and

on

track

for

breakeven

by

the

end

of

2023.

In

France,

we

opened

a new

distribution

center

to

support

future

growth

in

the

southeast

and

doubled

the

number

of branches.

At

this

early

stage

of

2022,

I

would

anticipate

a

similar

loss

overall

in

Europe

to

2021.

Free

cash

flow

generation

in

2021

was

£65

million

as

working

capital

was

rebuilt

given

the

trading

recovery.

The

increase

in

working

capital

of

£152

million was

driven

entirely

by

the recovery

in

credit

sales.

The

credit

book

continues

to

be

really

well-managed

with

record-low

overdues

as

a

percentage

of

credit

sales.

The

increase

in

stock,

including

the

impact

of

cost

price

inflation,

was

fully

offset

by

the

increase

in

the

corresponding

creditor

position.

And

as

we

discussed

at

the

Capital

Markets

Update

in

September,

we

remain

very

focused

on

the

conversion

of

profits

into

cash.

And

as

I

said

earlier,

taken

together,

we

delivered

cash

conversion

of

111%

across

2020

and

2021.

Looking

at

the

breakdown

of

capital

expenditure

on

slide

12,

around

70%

of

the

base

expenditure

of

£95

million

was

on

our

strategic

priorities,

specifically

Toolstation

branch

roll

out,

putting

down

new

larger

General

Merchant

branches,

TF

Solutions

expansion,

and

tool

hire.

Maintenance

CapEx

was

lower

in

2021

as

vehicles

were

redeployed

from

closed

branches

and

the

group

experienced

lengthening

lead

times

for

vehicles

and

manual

handling

equipment.

I

would

expect

maintenance

CapEx

in

2022

to

form

around

35%

of

total

spend.

As

measured –

as

mentioned,

sorry,

earlier

in

connection

with

property

profits,

excellent

progress

was

made

on

the

disposal

of closed

sites

and

a

cash

inflow

of

£81

million

– £82

million fully

funded

the

acquisition

of

a

number

of strategic

freehold

sites

for

the

merchants

and

businesses.

Turning

to

2022,

our

updated

guidance

is

for

base

CapEx

of

around

£140

million,

ahead

of

the

previous

expectation

of

£125

million.

This

increase

is

driven

by

a

decision

to

automate

the

new

Toolstation

direct

distribution

center

and

thus

enable

us

to

better

manage

the

labor

requirement

while

delivering

a

more

efficient

and

lower

cost

service.

If

I

move

on

to

capital

structure,

the

balance

sheet

has

been

transformed

as

a

result

of the

portfolio

actions.

Net

debt,

as

measured

for

covenant

purposes,

was

£87

million

at

the

31st

of

December,

with

lease

liabilities

reduced

by

over

£900

million

over

the

last

two

years.

At

the Capital

Markets

Update

in

September.

I

set

out

for

you

a

target

leverage

range

of

1.5 times

to

2

times

on

a

lease

adjusted

basis.

This

is

compatible

with

investment

grade

debt

metrics,

and

hence

an

optimized

cost

of

funds

for

the

group.

I

said

we

want

to

operate

towards

the

lower

end

of

the

range

in

the

next

couple

of

years,

and

on

a

pro

forma

basis

adjusting

for

P&H

proceeds

still

to

be

returned

via

buyback,

yearend

leverage

was

1.5

times.

You

will

have seen

that

we

have

announced

this

morning

the

final

tranche

of

that

buyback

program,

having

completed

£170

million

to-date

to

return

the

P&H

proceeds

to

shareholders

in

full.

The

significantly

strengthened

balance

sheet

enables

the

group

to

invest

in

strategic

growth

opportunities,

such

as

the

expansion

of

Toolstation

and

the

acquisition

of

Staircraft,

while

at

the

same

time

creating

a

scope

for

additional

shareholder

returns

over and

above

the

ordinary

dividend.

So

in

terms

of

the

outlook,

the

lead

indicators

for

our

markets

remain

encouraging

with

improved

levels

of

housing

transactions,

leading

to

ongoing

strength

in

both

RMI

and

new

house-building.

We've

seen

an

improvement

in

commercial

markets

particularly

in

commercial

RMI,

and

the

outlook

for

infrastructure

is

positive.

As

we've

demonstrated

in

2021,

we're

very

adept

of

recovering

input

cost

inflation

through

pricing

activity

and

at managing

availability

challenges

effectively.

The

group

is

in

great

shape,

and

given

the

robust

end-market

demand

and

a

positive

start to

the

New

Year,

we

are

confident

of

making

further

progress

in

2022.

And

with

that,

I'll

hand

back

to

Nick

and

look

forward

to

taking

questions

later.

[Nicholas John Roberts]

Excellent.

Thanks,

Alan.

I

hope

you

agree

that

what

Alan

has outlined

represents

a

tremendous

operational

and

financial

performance.

So

now,

I'm

just

going

to

touch

on

some

elements

of

the

strategic

progress

that

we've

made

since

we

last

met

at

the

end

of

September.

First,

let's

just

remind

ourselves

of

the

dynamics

of

some

of

our

end-markets,

just

to

build

out

some

of

the

comments

that

Alan

made.

Being

blunt,

the

planning

system

and

the

construction

industry

is

failing

to

meet

the

needs

of

the

country

in

terms

of

new

and

affordable

housing.

And

UK's

legacy

housing

stock

remains

underinvested,

particularly

in

terms

of

energy

efficiency.

Furthermore,

we

have

to

continue

to

repair,

maintain

and

improve

our

social

infrastructure;

schools,

hospitals,

prisons,

other

public

buildings,

and

that

work

is

well-served

by

our

specialist

merchants,

BSS,

CCF

and

the

General

Merchant.

And

infrastructure

continues,

quite

rightly,

to

attract

high levels

of

investment

and

a

positive

policy

backdrop

from

the

government.

But

these

needs

support

our

view

that

our

markets

remain

robust

in

the

long-term,

particularly

from

the

RMI

perspective.

In

addition,

our

customer's

requirements

and

their

needs

and

their

behaviors

continue

to

change

in

the

construction

process,

the

industry

we

serve

continues

to

change

as

we

face

into

labor

and

skills

challenges

and

the

need

to

use

different

materials

and

materials

more

efficiently

in

the

construction

process

and

to

continue

to

take

out

cost

and

complexity.

So

against

this

backdrop,

we

continue

to

feel

that

we

are

uniquely

placed

to

be

at

the

forefront

of

the

change

and

benefit

from

those

positive

market

dynamics.

So

against

that

backdrop,

let's

have

a

quick

recap

of

what's

at

the

core

of

our

strategy

that

we

ran

through

back

at

the

end –

at

the

back

end

of

September.

We

remain

absolutely

relentless

in

our

focus

on

our

relationship

with

our

customers

to

meet

their

needs

now

and

in

the

future.

And

that

is

all

in

service

of

us

achieving

our

ambition

to

become

the

leading

partner

to

the

construction

industry,

but

this

requires

us

to

do

more

for

our

customers.

So

how

are we

doing

that?

So

as

before

we

recognize

two

key

customer

cohorts

for

our

business;

our

professional

trades

and

general

builder

customers

who

really

need

price

transparency,

stock

accuracy,

convenience,

particularly

around

and

increasingly

around

Click

&

Collect,

delivered

fulfillment, accuracy, expertise

on

materials particularly

with

respect

to

sustainability

increasingly.

And

our

larger

developer

and

contractor

customers

who

need

fulfillment

reliability,

accuracy,

seamless

data

integration,

sustainability

advise

again

increasingly,

and

removing

time

and

complexity

on

their

sites.

So,

we're

actively

deepening

our

relationship

with

our

customers

to

earn

a

greater

share

of

their

wallet

by

doing

what

we

do

in

a

simpler

and

more

convenient

way

for

them.

But

we're

also

elevating

our

relationship

with

our

customers

by

adding

new

value

and

more

value

to

their

businesses,

taking

away

costs,

taking

away

complexity,

reducing

time

on

sites,

introducing

them

to

more

efficient

materials

and

ways

of

working.

And

we're

to

solve

our

customers'

problems

fundamentally.

As

we

made

progress,

we

remain

focused

on

delivering

this

value

through

our

five

leading

business

units.

But

we're

also

leveraging

the

power

of

our

group

assets

to

bring

additional

value

to

our

customers. And

I'll

cover

that.

So,

let

me

take

you

through

some

areas

of

progress.

And

I

stress

that

these

are

not

exhaustive.

We've

got

multiple

areas

in

play.

But

I

just want

to

give

you

a

sense

of

the

progress

we're

making

and

how

we're

putting

capital

effectively

to

work.

So,

we

continue

to

make

great

progress

in

deepening

our

relationship

with

our

customers

by

really

optimizing

our

branch

channel

experience

and

really

being

disciplined,

as

Alan

said,

in

our

investment

in

our

branch

channels.

And

it's

all

in

service

of

making

us

more

convenient

and

simple

to

do

business

with;

accurate,

simple,

convenient,

right

stuff

at

the

right

place

at

the

time

for

our

customers,

all

underpinned

by

our

knowledgeable

colleagues

in

our

branches.

So,

we

continue

to

open

new

destination

branches

where

we

can

further

grow

market

share

and

actually

integrate

services

around

the

core

product

offer.

So,

that's

higher

and

Benchmarx

into

our

TP

branches.

As

Alan

mentioned,

TF

Solutions

and

higher

into

our

BSS

branches.

And

these

new

and

existing

branches,

we're

really

investing

in

capability

in

our

colleagues

to

really

increase

the

penetration

of

our

customer

base

with

a

deeper

and

broader

offer.

When

you

visit

these

destination

branches,

I

was

out

in a

number

last

week,

they

really

work

and

customers

love

them.

They

really

love

the

fact

that

integrated

services

are

juxtapositioned

with

our

core

product

offer.

But

we

continue

to

invest

in

new

branches

as

well.

New

CCFs

in

West

London

and

East

Birmingham,

and

we've

expanded

our

TF

branch network – TF Solutions

branch

network

by

five

last

year.

And

we

anticipate,

as

we

said

at

the

CMU,

a

more

than

30%

return

on

the

investment

in

new

and

redeveloped

General

Merchant

branches

alike.

As

Alan

touched

on,

we

continue

to

roll

out

our

Toolstation

network.

77

new

branches

in

the

UK,

that's

now

a

total

of

just

over

530,

123

now

in

Europe.

And

we're

successfully

deepening

the

relevance

of

our

Toolstation

branches

to

our

trade

customers

by

our

new

essentials

front-of-house

range

core

trade

items

that

are

regularly

needed

for

replenishment

right

at

the

front

of

the

branch.

And

our

trade

customers

absolutely

love

that

sort

of

development.

And

it's

coupled

with

new

trade

credit

services

in

our

Toolstation

business,

uptake

of

which

has

accelerated

over

the

last

few

months.

And

we've

also

opened

our

first

Toolstation

branch

in

a

new

TP

branch

in

Swindon.

Absolutely

true

to

us

furthering

the

collaboration

between

our

businesses

and

again

making

it

simpler

and

more

convenient

for

our

customers

to

get

what

they

need

in

one

place

and

deepening

our

relationship

with

them.

So,

it's

too

early

to

discuss

progress

on

that,

but

we're

moving

forward

with

that

collaboration

really

positively.

But

it

doesn't

stop

there.

So,

we're

using

technology

to

further

deepen

our

relationship

with

our

customers.

Progress

through

our

online

and

app

channels

has

been

really

positive

over

the

last

year.

This

time

last

year,

we

had

a

basic

online

presence

in

our

General

Merchant

and

a

good

robust

online

presence

in

Toolstation.

We've

now

got

vastly

improved

online

channels

for

our

customers

using

AI

to

really

optimize

the

experience

that

they

get, and

the

feedback

for

that

online

channel

has

been

fabulous.

And

we

got

great

trust

pilot

scores,

but

we've

also,

as

we

mentioned

at

the

CMU

so

many

of

you

will

be

aware,

got

now

new

mobile

apps,

which

actually

put

in

our

customers'

pockets

access

to

their

account,

their

pricing,

and

the

ability

to

organize

transactions

and

fulfillment

with

us.

And

they've

been

extremely

popular,

and

they

are

generating

at

least

a

25%

increase

in

AOV.

So,

we've

also

implemented

a

simple

digital

onboarding

process

for

our

trade

credit,

and

that's

rapidly

increasing

participation

through

the

back

end

of

last

year.

We're

also

building

on

our

fabulous

five-minute

Click &

Collect

proposition

in

Toolstation

by

adding

a

one-hour

Click

&

Collect

within

the

General

Merchant

for

our

heavy

building

materials.

That's

really

enhancing

our

customers'

time

efficiency

for

picking

up

whatever

they

need

in

getting

back

to

their

sites,

and

it's

rounded

out

now

by

the

complete

rollout

across

our

Merchant

businesses

of

our

delivery

management

system,

so

customers

can

track

the

vehicle,

having

booked

a

timeslot,

see

the

vehicle,

know

what

time

it's

going

to

come

to

them,

and

they

can

track

it

directly

to

the

site,

which

really

optimizes the

efficiency

with

which

they

are

managing

their

sites.

And

we're

building

out

that

platform

with

further

enhancements

to

come.

So

for

our

a

cohort

of

larger

developer

and

contractor

customers,

we're

really

working

with

them

and

now

moving

from

pilot

phase

into

operation,

bespoke

Web

channels

to

them

allowed –

allowing

seamless

account

management

and

fulfillment

capability,

really

taking

time

and

complexity

out

of

their

business.

We're

also –

and

this

is

important

for

all

people,

we're

also

using

our

mobile

apps

to

digitize

the

colleague

in-branch

experience.

We're

digitizing

analog

paper-based

processes,

goods

in,

permanent

inventory

counts,

and

now

ticketing

services

within

our

branch,

so

our

customers

and

our

colleagues

are

seeing

the

benefits

of

our

use

of

technology,

and

again,

taking

time

and

complexity

out

of

our

business.

So,

this

is

all

enabling

us

to

really

focus

on

deepening

our

relationship

with our

customers

and

earning

a

greater

share

of

their

wallet.

So,

how

are

we

doing

in

what

we

call

elevating

our

relationship

with

our

customers

to

add

more

value?

So,

we're

using

our

technology

capability

and

our

knowledge

of

our

materials

and

sustainability,

to

add

more

value

to

our

larger

customers,

wherein

– where

we're

in

long-term

trusted

relationships.

So,

for

example,

we're

using

our

branch

assets

to

create

dedicated,

local,

efficient

replenishment

centers

and

hubs

for

our

customers

to

work

with

their

teams in

those

locations.

And

true

to

our

purpose

of

developing

the

next

generation

of

skills

for

our

industry,

we're

also

involving

local

college

students

in

those

locations,

to

introduce

new

and

low

carbon

technologies

to

our

customers

and

actually

train

their

operatives

alongside

our

colleagues

to

fit

technologies

like

PV

and

air

source

heat

pumps.

And

we're

optimizing

our

technology

platform

for

those

customers

to

ensure

that

their

fulfillment

requirements

are

met

really

efficiently.

That's

also

increasing

as

value

added.

The

participation

and

use

of

our

higher

business

and

we've

also

introduced

new

waste

management

solutions

for

those

customers

through

the

elevation

of

our

relationship

with

them,

so

really

positive

progress

made

there.

As

you

know,

we

acquired –

fully

acquired

Staircraft

in

the

autumn

as

a

way

of

really

enhancing

our

business

with

new

capability.

They

have

leading

design-led

timber

engineering

capability

and

complex

structural

elements

of

houses.

So

in

addition

to

the

staircase,

floors,

door

kits,

precut

moldings,

all

elements

that

take

time

and

complexity

out

of

a

build.

So,

we've

applied

artificial

intelligence

to

the

design

of

modular

floor

systems,

joists,

and

floors

that

are

now

being

supplied

to

five

of

the

UK's

largest

house

builders.

They

dramatically

improve

the

structural

integrity

of

the

floor

system.

They

reduce

installation

time,

they

reduce

waste

dramatically,

they

reduce

costs

and

improve

safety

on

site.

And

we're

applying

this

capability

to

many

more

customers

and

it

is

taking

out

time

and

complexity

in

the

construction

progress.

So

as

you

can

see,

we're

being

true

within

that

elevating

our

customer

relationship

to

playing

our

part

in

modernizing

the

construction

process

in

the

UK

with

clever

design

and

new

ways

of

working.

So

to

recap

then,

we've

made

good

early

progress

in

our

strategy.

We're

making

sound

investments

which

really

deepen

our

relationship

with

our

customers,

and

we're

also

finding

ways

based

on

our

relationships

to

elevate

our

relationship

with

our

customers

and

add

more

value

and

really

progressively

achieve

the

partnership

role

that

we

want.

Our

customers

are

really

appreciating

it

and

our

colleagues

are

really

energized

by

it.

So,

all

of

this

supports

and

is

completely

aligned

with

our

very

clear

purpose

that

we

shared

in

September.

We're

here

to

build

better

communities

and

enrich

lives.

Our

ambition

is

clear;

to

be

the

leading

partner

to

the

construction

industry

and

we're

making

really

good

progress.

I've

also

outlined

that

we're

playing

our

part

in

modernizing

the

construction

process, but

we're

also

at the

heart of

decarbonizing

our

industry.

We've

set

our

Scope

3

target,

which

we

announced,

and

for

our

Scope

1, 2,

and

3

carbon

targets,

we

received

approved

Science-Based

Target

initiative

for

the

1.5-degree

pathway.

We've

published

on

our

website

and

are

delivering

our

carbon

reduction

roadmaps.

And

we're

also

at

the

heart

of

generating

the

next

generation

of

skills.

We

invested

in

nearly

1,000

apprenticeships

for

new

and existing

colleagues

during

the

year,

and

we

brought

500

Kickstart

colleagues

into

the

business,

75%

of

whom

are

remaining

with

a

business

on

a

permanent

basis.

That

is

us

being

really

true

to

our

purpose

and

developing

our

business.

So,

what

you've

seen

over

the

last

three

years

is

a

fundamental

shift

in

the

shape,

the

focus

and

the

strength

of

this

group.

We're

serving

our

customers

through

five

leading

trade-focused

businesses

and

we've

strengthened

the

group

and

its

balance

sheet.

We've

accelerated

much

needed

change

and

we're

really

at

the

forefront

of

changing

our

industry.

And

we

have

a

unique

set

of

assets

and

capabilities

that

we're

deploying

for

our

customers

by

deepening

and

elevating

our

relationship

with

them,

not

as

a

home

improvement

retailer,

but

as

a

best-in-class

value-added

distributor,

really

helping

our

customers

solve

their

problems

by

adding

value

and

finding

ways

forward,

all

on

the

way

to

becoming

the

leading

partner

to

the

construction

industry.

So,

I

think

we've

made

a

fantastic

start

to

this

journey.

We're

very

respectful

of

our

history,

but

we're

not

looking

back,

we're

only

looking

forward.

We

laid

out

in

September,

we

got

a

clear,

repeatable

model

focused

on

delivering

TSR,

positioning

our

five

principle

businesses

to

grow

above

the

market,

deepening

and

elevating

our

relationship

with

customers,

strong

cash

conversion,

management

of

working

capital

as

Alan

outlined,

and

funding

growth

from

within

our

business

through

our

rigor

and

disciplined

allocation

of

capital,

providing

attractive

earnings

growth

and

good

dividends

for

our

shareholders

and

the

potential

to

return

further

excess

capital

to

shareholders

in

the

future.

So,

I'm

incredibly

proud

of

what

we've

achieved

in

2021,

delivering

on

our

promises,

doing

exactly

what

we

said

we

would

do,

delivering

our

strategy

relentlessly,

rigorously

with

real

discipline

and

at

pace,

and

focusing

on

our

customers

and

building

better

communities,

being

at

heart

of

the

construction

industry,

and

changing

the

lives

of

many

for

years

to

come.

So

thank

you

for

that.

Alan

and I

will

now

take

your

questions.

What

I propose

to

do

is

to

prioritize

questions

in

the

room,

if

I

may.

And

then

we

will

go

out

to

the

phone

lines.

So,

if

we

can

have

some

microphones,

Matt. Thank

you.

[indiscernible]

[Matt Worster, Director-Investor Relations, Travis Perkins Plc]

(00:33:19)

that's probably

the

best

way

to

do

it.

[Aynsley Lammin, Analyst, Investec Bank Plc]

Okay.

Thanks.

Just

two

from

me.

Aynsley

Lammin

from

Investec.

I

wondered,

firstly,

if

you

could just

comment

on

the

kind

of

outlook

for

volumes

this

year.

I

know there's

some

fear

that as

kind

of

the

wider

economy

opens

up,

RMI's

had

this

big

boost

and

certainly

we're going

to

see

a

[indiscernible]



(00:33:37). Just

wondered

what

your

view

on

that

was

and

are

you

confident

volumes

are

at

least

kind

of

flat

for

the

market

this

year?

And

then

secondly,

you

talked

about

– you

expect

to

make

more

progress

this

year.

Would

that

be

correct

to

understanding in

that

progress

kind

of

group

profit

include

in

the

property

this

year?

So,

obviously

property

profits

towards

£25

million,

so

is

that

right

interpreting

that

way?

Thanks.

[Alan Richard Williams]

Do

you

want

to

me

start, Nick?

It

felt

quite

financial.

So,

on

the

volume

outlook,

and

I'll

let

Nick

comment

as

well,

of

course.

I

think

we're

confident

in

the

market

volume

outlook.

So,

I

don't

see

any

reason

why

volume

should

go

down

in

trade-focused

markets.

When

we

talk

to

our

customers,

they

still

have

strong

order

books.

I

took

you

through

earlier

some

of

the

segments

and

I've

used

there.

So,

RMI,

why

do

I

think

domestic

RMI

is

well

supported

where

we

saw

a

significant

uptick

in

housing

transactions?

Housing

transactions

may

do

their

thing

during

the

year.

They

could

be

lower

than

last

year,

but

we

know

– history

shows

us

that

when

people

move

home,

they

spend

money

on

the

new

home

in

the

18, 24

months

after

moving.

So,

I

think

that's

a

supportive

environment.

We

know

from

the

house

builders –

the

volume

house

builders,

they

are

looking

to

build

more

units

each

year.

I

mentioned

that

we'd

seen

a

pickup

in

commercial

markets

including

in commercial

RMI.

We've

seen

a

corresponding

pickup

in

things

like

social

housing

as

well.

Some

of

those

areas

that

were

the

slowest

to

recover

from

the

pandemic,

we've

seen

those

accelerate

recently.

And

we're

doing

more

in

infrastructure

going

forward

as

well. So I think the volume environment overall is favorable for us.

In terms of the second question, Aynsley, more progress. We do mean more progress on operating profit. You're right to point out that the guidance is that property profits will go from £49 million to £25 million, but not withstanding that,

I

expect

a

nudge

forward

on

the

total

operating

profit

for

the

group.

[Nicholas John Roberts]

Aynsley,

I'd

only

add

from

a

non-financial perspective

just

to

Alan's comments,

look,

the reason

we think RMI

remains

robust

is that

people

make

long-term

decisions,

and many

of

those people

who

are making

long-term

decisions

haven't necessarily

been

disadvantaged

by

the

pandemic.

And

indeed,

the

pattern

of

work

is

such

that

people

will

– many

people

will

remain

in

a

kind of

hybrid

mode.

So

investments

in

their

property,

if

we

look

at

domestic

RMI,

we

think

will

remain

robust

through

the

year.

And

as

I

and

Alan

said,

the

social

infrastructure

RMI

remains

very

pressing

indeed.

And

the

progress

we

intend

to

make

against

our

strategy

is,

as

I

outlined

there,

really

we're

making

some

early

good

progress

and

we

will

be

relentless

in

prosecuting

that

through

the

year.

Thanks,

Aynsley.

[Matt Worster, Director-Investor Relations, Travis Perkins Plc]

Will?

[Will Jones, Analyst, Redburn Partners]

Thanks.

Will

Jones

from

Redburn.

Three,

please. I

think

around

Merchanting.

The

first

was

just

on

the

issue of

the

gross

margin.

Clearly,

the

inventory

gain of 40

bps

drops

out.

Is

there anything

else

to

bear

in

mind

around

gross

margin

in

2022? I

was

particularly

wondering around

customer

mix

if

new

build

is

faring

better

than

RMI

within

the

mix?

Second

one

was just

whether

you

had

any

early

view

around

how

Merchanting

performed

last

year

against

the

market,

perhaps

it's

affected

by

the

comps

in

2020, so

maybe

a

two-year

view,

but

just

any

sense

of

outperformance

or

not

in

that

business?

And

then

just

more

coming

back

to

price,

I

guess

if we

look

last

year, your

Merchanting

we

went

from

low-single

digits

to

low-double

digit

through

the

year,

I

think to

[ph]



average

9 (00:37:36).

Could

we

get

a

mirror

image

to

average

something

similar

do

you think

in

2022? Thanks.

[Alan Richard Williams]

I'd

better

start

on

those,

Nick.

They

feel

quite

financial.

So

on

gross

margin,

Will,

you're

right

the

40

basis

points

from

stock

inflation

will

drop

out

to

a

certain

extent.

I'm

not

sure it

will

fully

100%

drop

out.

And

the

reason

for

that

goes

a

bit

to

your

point

around

the

– your

third

question,

Will,

on

pricing

outlook.

So,

the

higher

the

level

of

cost

price

inflation

you

see,

the

more

likely

you

are

to

retain

in

effect

some

of

that

40

basis

points

because

you've

got

inflation

gains

on

the

stock

that

you

had

at

31st

of

December

2021.

In

terms

of

other

features,

I

think

it's

neutral

overall.

So,

you're

right

that

as

volumes

in

areas,

the

large

volume

areas

like

new

house

building,

social

housing

recover,

that's

a

slight

drag

on

the

gross

margin

but

it's

offset

by

some

of

the

added

value

things

that

we're

doing

including

areas

like

tool

hire.

So,

we

have

over

250

tool

hire

branches

within

TP

branches.

They've

all

been

adding

colleagues

because

of

the

level

of

demand

that

we're

seeing

at

the

moment.

So,

we're

better

able

to

service

that

demand.

In

terms

of

outperformance

or

not

in

Merchanting

in

2021,

to

a

certain

extent

it

was

a

year

of

two

halves

for

the

General

Merchant

where

we

are

annualizing

for

the

first

half

against

the

closure

of

branches.

But

as

we

got

into

the

second

half

of

the

year,

and

we're

no

longer

annualizing

that,

we're

confident

on

the

outperformance

there.

And

I

think

we

know

from

our

specialist

merchants,

they

have

been

outperforming

their

markets

for

six

or

seven

years.

They're

in

the

best

shape

they've

been

and

continue

to

perform

really

strongly.

And

then

on

the

question

on

pricing

outlook,

you

were

quite

right,

9%

inflation –

price

inflation

overall

on

2021,

6%

in

the

first

half,

growing

to

12%

in

the

second

half.

I

think

you're

right,

the

best

view

I've

got

at

the

moment

is

a

mirror

image

of

2021,

so

double-digit

cost

price

inflation,

low

double-digit,

I

should

stress

in

the

first

half

and

then

tailing

off

in

the

second

half.

We

are

still

seeing

manufacturer

price

increases

come

through.

Not

surprisingly,

anything

that's

energy

intensive,

I

would

expect

to

see

continued

price

increases

coming

through.

But

we're

very

confident

in

the

way

that

we

manage

those

through

with

our

customers.

[Matt Worster, Director-Investor Relations, Travis Perkins Plc]

Thanks,

Will.

[Gregor Kuglitsch, Analyst, UBS AG (London Branch)]

So,

Gregor

Kuglitsch

from

UBS.

Maybe

a

couple

of

questions,

touching

maybe

on

Toolstation,

which

obviously

dipped,

I

think

slightly

negative

against

a

hard

comp

in

Q4.

If

you

just

care

to

comment

how

that

is

expected

to

evolve.

I

guess

the

comparators

are

still

pretty

challenging,

and

perhaps

if

you

could

give

us

sort

of

the

component

that

you

think

is

sort of

exposed

to

a

little

bit

of

DIY

unwind?

And

the

second

question,

if

you

just –

the

acquisition

that

you

made,

if

you

just

care

to

perhaps

elaborate

what

the

profit

and

sales

contribution

of

that

would

be? And

then

finally,

back

on

the

Merchanting

margin,

I

mean,

you

kind

of

just

in

your

answer

there,

you

were suggesting

you're going

to

have

basically

the

same

again.

So

the

question

is

why

should

the

stock

[indiscernible]



(00:41:29)

at

all,

perhaps

it's

a

more

2023

event

rather

than

2022? Thank

you.

[Matt Worster, Director-Investor Relations, Travis Perkins Plc]

You want to

start

with

Staircraft,

Nick?

[Nicholas John Roberts]

Yes.

So

Staircraft

is

a

£55

million

revenue

business.

I

think

there are

some

details

in

the

back

of

the

note

there,

that

you'll

find

Gregor.

So,

a

£55

million

business

at a

kind

of

6%

operating

margin

that

obviously

now

a

big

part

of

the

group

with

value-added

that

we're

bringing

to

our

customers

and

the

integration

particularly

with

the

customers

in

the

General

Merchant

but

increasingly

the

BSS

and

CCF,

we

believe

that

will

move

favorably

over

the

next

few

years.

Alan,

do

you

want

to

come back on

Toolstation?

[Alan Richard Williams]

Yeah.

So

on

Toolstation,

Gregor,

I

think,

when

I

covered

on

slide

10,

my

comments

in

relation

to

Toolstation,

the

sales

mix

normalized

during

the

second

half,

so

we

saw

that

large

uptick

in

DIY

volumes

dropping

back

out

from

Q3

onwards.

So,

I'd

expect

that

to

continue

as

I

said

through

the

first

four

months or

five

months

of

2022

until

we're

no

longer

cycling

that.

The

key

factor

I

want

to

stress

about

Toolstation

is

that

our

regular

customers,

so

those

heaviest

spending

customers,

the

stats

there

on

the

page,

we

grew

22%

with our

customers

who

spend

over

£1,000 annually

with

this

in

the

second

half.

So

all we're

seeing

is

a

challenging

comp

as

the

DIY piece drops

through.

We're

very

confident

and

we

wouldn't

have

made

the

comments

we've

made

about

the

future

outlook

if

we're

not

confident

with

the

direction

of

travel

being

spot

on

what

we

had

expected

with

the

business.

So,

getting

to

a

6%

–

6.3%

operating

margin

in

the

UK

with

further

growth

to

come,

we're

confident

in

the

£1 billion-plus

outlook

for

2025.

And

we're

increasingly

confident

with

the

growth

path

in

Europe

as

well.

[Nicholas John Roberts]

I

think

it's

been

an

absolutely

stunning

propositional

development

within

our

Toolstation

business.

And

that's

what

we're

seeing

particularly

and

focused on

our

trade

customers.

And

that

was

always

the

intention.

So,

we need

to

go

into

a

branch

and

see

what

the

team

have

done

around

the

front

of

house

in

the way

the

trade

interact

with

that

and

the

way

in

which

the

participation

is

increasing

in

our

trade

credit

service

through

Toolstation.

That's

what

we've

been

driving.

That's

what

we'll

return

in

this

business.

And

we

will

exit

the

comps

and

we

will

move

forward

with

the

plan.

So,

we're

really

excited

about

it.

And

I

think

absolute –

that

business

is

different

this

time

this

year

than

it

was

this

time

last

year.

I

mean

stunning

progress.

[Alan Richard Williams]

And

then

Gregor,

I

think

I

understood

your

question

on

Merchanting.

Let

me

answer

it

this

way,

we're

confident

in

where

we

are at

the

moment.

Some

of

the

areas

which

were

the

slowest

to

return

from

the

pandemic

are

big

areas

for

the

TP

Group

in

terms

of

the

Merchanting

segment.

So,

we've

got

momentum

from

those.

And

we're

also

confident

that

the

actions

that

we've

taken

in

the

General

Merchant

put

us

in

a

position

to

outperform.

And

to

operate

around

that

8%

to

8.5%

operating

margin

level

is

perfectly

fine

for

the

business

going

forward.

[Gregor Kuglitsch, Analyst, UBS AG (London Branch)]

Thank

you.

[Clyde Lewis, Analyst, Peel Hunt LLP]

Clyde

Lewis

at

Peel

Hunt.

Three

if

I

may.

One,

I

suppose

coming

back

on

price.

I

suppose

given

the

sort

of

movements

that

we've

seen

in

the

marketplace.

And

obviously, historically

the

group

has

sort of

jumped

around

a

little

bit

about

being

a

price

leader

in

terms

of

sort

of

wanting

to

maximize

price

as

opposed

to

being

a

bit

more

competitive.

What

have

you

done

I

suppose

within

the

key

businesses

in

terms

of

that

approach

over

the

last

6

to

12

months?

So,

have

you

looked

to

be

more

competitive

on

price,

have

you

actually

looked

to

lead

a

bit

more

on

price? And

I

suppose

linked

to

that

is

the

changes

that

you've

made

within

the

Green

&

Gold

in

terms

of

the

website

and

the

increased

pricing

visibility

that

sort

of

smaller

customers

have

got

there?

The

second one

I

had

was

on

Benchmarx.

I

think

it

got

one

very

small

mention

in

the

presentation.

What

do

I

read

from

that

I

suppose

is

the

question

where

does

that

sit

in

your

current

thinking?

And

the

last

one

was

on

really

I

suppose

the

number

of

customer

accounts,

I

suppose

particularly

in

Travis

and

BSS,

Keyline

and

CCF. It'd

be useful

to

sort

of

understand

the

sort

of

development

of

the

total

account

numbers

in

those

major

businesses?

[Nicholas John Roberts]

Let

me

start

Alan

with

Benchmarx

and

come

up

to

the

General

Merchant

and

then

we'll

come

back

on

customer

gaps.

So,

an

interesting

set

of questions.

Thanks

for

that.

Yeah,

look,

I

don't

think

we

look

to

send

any

signal

with

our

comments

on

Benchmarx.

Absolutely

Benchmarx

is

key

to

our

proposition

and

it

was

really

heavily

laid

out

by

Kieran

at

the

CMU

in

September

how

important

Benchmarx

is.

What

we've

done

with

Benchmarx

as

we

outlined

then

is

integrate

it

within

the

General

Merchant.

So,

we're

actually

putting

it

in

where

it

isn't

present

into

our

new

branches

within

the

General

Merchant

and

making

sure

that

our

trade

customers

who

are

coming

in

for

that

product –

for

a

project

is

a

seamless

integration

with

the

kitchen

that

they

need

if

that's

part

of

the

project.

And

we're

seeing

a

fantastic

response

to

that.

Our

customer

penetration,

which

due

to

lack

of

integration

of

those

two

businesses,

wasn't

where

we

wanted

it

to

be,

continues

to

improve.

And

where

we

have

our

new

destination

branches,

deliberately

building

in

that

Benchmarx

showroom

and

branch

into

the

core

Travis

Perkins

offer

is

proving

extremely

successful.

So

Benchmarx

is absolutely

key.

Not

only

that,

we

are

working

now

with

our

Managed

Services

customers

and

obviously

the

addition

of

the

expertise

from

Staircraft

gives

us

the

opportunity

to

think

about

kitchen

solutions

and

modular

kitchen

solutions.

It's

again

taking

time,

cost

and

complexity

out

of

replacing

kitchen

units

in

social

landlord

units

where

access

is

constrained.

So

Benchmarx

gives

us

a

real

edge

in

that

core

trade

customer

proposition

and

the

integration

of

that

business

with

the

General

Merchant

has

proved

to

be

extremely

successful.

So

we're

really

pleased

about

that.

Your

point

on

price.

I

think

we

outlined

through

2020

and

through

2021

actually

the

changes

we've

made

in

our

pricing

architecture,

much

greater

simplicity,

much

greater

transparency.

You

cannot

have

a

credible

web

offer

or

anything

on

an

app

without

actually

being

competitive

in

your

pricing.

So

many

of

our

customers,

our

regular

customers,

trade

customers

will

have

their

negotiated

pricing

architecture

with

us.

That

will

appear

on

their

app,

and

on

their

account

on

the

website.

But

actually

for

non

– for

non-account

holders

of

which

we

have

many,

you

have

to

be

competitively

priced.

And

I

think

that's

what

we've

achieved

through

our

key

value

item

pricing

as

well

as

our

overall

pricing

architecture.

But

that's

a

story

from

2020

through

2021

as

well.

And

we're

really,

as

I

said,

we're

really,

really

pleased

with

what

we've

seen

through

our

digital

channels.

I mean,

that's

an

investment

we

made

because

customers

want

to

do – they

want

to

have

the

choice.

It's

going to

be

either

or

necessarily

they

want

to

use

both

the

branch

channel

and

digital

channel.

So

actually

having

provision

for

both

is

really

important

to

our

business.

Do

you want

to comment

on

customer

accounts?

[Alan Richard Williams]

So,

Clyde,

I'd

actually

link

in

some

way

the

point

about

the

overall

pricing

architecture

and

the

number

of customer

accounts.

So,

in

essence,

we

saw

the

number

of

accounts

we

got grow

during

2021.

And

the

reason

for

the

linkage

that

I

make,

I

think

it's

fair

to

say

that

by

being

a

price

leader

going

back

to

–

that

was

the

strategy

particularly

around

2005

in

the

General

Merchant.

So,

going

back

many

years,

I

think

it

left

a

sour

taste

or

a

bad

impression

with

some

customers

who

tried

this

again

when

they

were

struggling

for

availability

of

product

last

year

so

that they

could

complete

the

jobs.

They

were

favorably

impressed

that

the

pricing

is

very

competitive

within

the

General

Merchant,

so

we

managed

to

gain

customers

with

cash

accounts

and

convert

a

number

of

those

to

credit

accounts

during

2021

in

the

General

Merchant,

which

is

something

we've

not

done

for

a

while

in

big

numbers.

So,

we're

really

pleased

with

the

progress

that

we're

making

there.

[Nicholas John Roberts]

And

Clyde,

you

also

talked about

our

specialist

merchants.

We

got

two

of

our

MDs

in

the

room

here.

We

made

tremendous

progress

last

year

again

and

in

2020

with

simplifying

the

pricing

architecture.

We

made

–

and we

talked

about it at

the

CMU

and

other

presentations

around

the

progress

we've

made

in

simplifying

our

business

by

netting

out

rebates,

for

example,

radically

enhancing

the

kind

of

simplicity

of

the

pricing

architecture

for

our

specialist

merchant

customers

as

well.

So,

progress

made

across

the

board

and

customers

have

really

noticed

it,

so

has

our

competition.

Thanks,

Clyde.

[Sam Cullen, Analyst, Peel Hunt LLP]

Yeah.

Morning. It's

Sam

Cullen

from

Peel

Hunt.

Also,

I've

got

three

as

well,

although

I

think

two

are

interrelated

really.

The

first

one

hopefully,

fairly

simple

is,

you

mentioned

the

destination

branches

in

TP.

Can

you

give

us

an

idea

of

what's

scope

you

see

for

those

expanding?

What

are

the

realistic

numbers

over

time?

And

then

secondly,

when

you

talk

about

the

average

order

value

and

growing

share

of

wallet

in

Toolstation,

how

are

you

disaggregating

share

of

wallet

versus

just

industry

wallet

increasing

over

the

last

year?

And

a

similar

question

in

terms

of the

maturity

profile

of

Toolstation

that you

talked

about

accelerating

in

the

last

three

years.

How

are

you going

to

split

out

what's

happening

in

that

maturity

profile

because

the

market

has

grown

so

much

in

the

last

18

months

versus

the

network

effect

of

Toolstation

doubling

branches

say

in

three

years?

[Nicholas John Roberts]

Good.

Thank

you.

So

we

said

at

the

CMU

that

it's

likely

that

our

branch

numbers

within

the

General

Merchant

will

stay

somewhere

between

550

and

600.

And

we

haven't

changed

that

view.

So

we

are

closing

some

smaller,

more

challenged

branches

because

of

location,

we

want

larger

destination

branches.

We're

opening

new.

Some

we're

repurposing.

So

we

don't

necessarily –

we're

sticking

with

that

sort

of

view

that

overall

the

numbers

will

remain

in

that

range.

Our

focus

though

is

on

getting

these

larger,

more

capable

destination

branches

where

we

bring

higher,

where

we

bring

Benchmarx

and

as

I

said

in

our

new

Swindon

branch,

we

bought

Toolstation

in as

well.

In

March

[indiscernible]



(00:52:34)

next

to

last

year,

we

opened

a

small,

I

suppose

you

could

call

it

small

sort

of trade

location,

trade

parks

where

we

had

TP

alongside

Toolstation

alongside

BSS.

We

know

those

locations

worked

really

well.

They've

become

destinations

for

our

customers

and

that

starts

to

attract

that

opportunity

to

deepen

the

relationship

and

attract

more

share

of

wallet.

In

Toolstation,

we

look

carefully

to

your

point

about

share

of

wallet

at

our

trade

customer

accounts.

That's

where

we're

really

focused,

because

actually

if

we

look

at

the

overall,

we

get

back

into

the

kind

of

comps

with

the

lower

value

purchases

that

we've

seen

through

the

pandemic,

those

DIY

customers,

you

and

I.

And

so,

we

really

see

that

as

we've

enhanced

our

trade

credit

proposition,

as

we've

enhanced

our

app

capability,

project

listings

for

our

trade

customers

so

that

they

can

do

repeat

orders

really

quickly,

enhancing

their

search

capability,

meshing

in

the

trade

credit

clarity

with

the

app,

and

we've

continued

to

enhance

the

trade

relevance

of

our

range

and

the

in-branch

experience,

that's

where

we

see

the

share

of

wallet

going

up.

And

that's

exactly

what

we

want

for those

trade

customers,

as

Alan

said,

those

over

£1,000

a

year

trade

customers,

that's

really

our

key

focus.

And

that's

where

we've

made

some

such

good

progress.

[indiscernible]

(00:53:49)

the

maturity

profile?

[Alan Richard Williams]

Yeah.

On

the

maturity

profile,

Sam,

the

point

that

–

the

good

thing

about

the

Toolstation

business

being

a

very

digital

business

is

we

have

the

history

of

every

sale

from

the

very

first

sale,

and

we

know

the

sales

profile

by

branch

as

well.

So,

we

look

at

the

openings,

and

we

call

them

cohorts

year-by-year,

and

the

simple

point

I'm

making

is

compared

to

the

average

maturity

profile

that

we'd

seen

on

previous

branches,

the

ones

that

we've

opened

in

the

last

three

years

are

very

significantly

ahead,

and

therefore,

we

get

to

a

cash

breakeven

contribution

to

overheads

much

more

quickly

on

the

200

we've

opened

in

the

last

three

years

more

quickly

than

the

previous

330.

I

agree

there'll

be

a

– there

will

be

an

overall

network

scale

effect,

but

that's

the

beauty

of

the

Toolstation

model

in

that

it

– and

why

we're

so

confident

on

hitting

the

£1

billion

for

the

business,

because

you

start

to

get

momentum.

The

more

units

you

have,

the

more

you're

able

to

do

with

trade

credible

products,

expanding

the

SKU

range, the

digital

side

of

the

business,

the

app,

a

strongly

performing

website.

All

of

those

features

build

on

each

other

and

give

you

that

momentum

going

forwards.

And

it's

why

we

can

say

with

confidence

we'll

hit

the

sales

number,

we'll

hit

the

margin

target

that

we've

got

for

the

business.

[Sam Cullen, Analyst, Peel Hunt LLP]

Thanks.

[Priyal Woolf, Analyst, Jefferies International Ltd.]

Thanks.

Its

Priyal here from

Jefferies.

I

think

I've

got

three

questions.

So,

the

first

one,

obviously

you've

talked

about sort

of

supply

constraints

starting

to

ease,

but

are

there

any

metrics

you

sort

of

track

that

help

us to

quantify

this,

things

like

fill

rates

and

how

are

these

progressing

now?

Where

are

they

versus

where

they

usually

are?

And

do

you

sense

sort

of

an

advantage

versus

some

of

the

smaller

independents

on

this

front?

The

second

question,

Nick

I know

you

mentioned that,

actually

most

people

you

sell

into

haven't

been

that

impacted

financially

by

COVID,

but

is

there

any

sort

of

anecdotal

evidence

from

some

of

your

trade

customers

that

maybe

cost

inflation,

which

is

definitely going

to

continue

this

year,

is

starting

to

hinder

some

of

that

demand

even

in

the

short

to

mid-term?

And

then

the

last

question

is

just

the

extra £15

million

that

you're

spending

on

the

fulfillment

center. I mean,

could

we

just

get

a

bit

more

detail

on

that?

I

mean,

what

are you

spending

that

on?

What

does

it

achieve?

Just

sort of

how

revolutionary

is

what

you're

doing

now?

Thanks.

[Nicholas John Roberts]

Brilliant.

Thank

you.

On

the anecdotal

evidence,

we

have

undertaken

three

times

last

year,

I

think,

our

RMI

index,

which

we've

made

available

which –

and

Alan

commented

on

this,

where

we

have

seen

–

this

is

a

survey

of

our

trade

customers,

where

we

have

seen

really

no

change

in

their

forward order

book.

So,

typically

they

might

be

out

at

8

or

so

weeks,

8

to 10

weeks,

and

they've

extended

well

past

that

through

last

year

and

they

are

sustained.

Anecdotally,

you

do

hear

some

stories

probably

more

actually

in

the

commercial

or

social

infrastructure

space

where

projects

might

have

been

delayed

for

concerns

around

price

inflation.

That

was

a

feature

more

of

last

summer

when

there

was

so

much

hubris

around

that.

That

we

think

has

settled

back.

Our

forward

order

books

remain

strong

and

we

don't

see

sustained

evidence

or

significant

evidence

of

projects

being

moved

to

the

right

on

the

basis

of

inflation

or

materials

challenges.

[Alan Richard Williams]

So,

Priyal,

on

the

supply

constraints,

the

way

we

measure

this

is

at

availability

measure.

So,

when

the

branch

needs

a

product

from

a

fulfillment

center,

do

we

have

it

in

the

fulfillment

center

or

not?

And

looking

at

that

across

all

the

SKUs

that

we

sell.

And

on

that

availability

measure,

we're

largely

back

to

where

we

were

pre-pandemic.

I

think

there

will

continue

to

be

some

tight

areas

of

supply

during

the

year,

but

I

don't

think

that's

having

an

impact

on

our

customers,

more

on

the

safety

stock

levels

that

we're

carrying.

On

the

incremental

£15

million

of

CapEx,

first

of

all,

the

fit

out

of

the

new

DC

in

terms

of

the

racking

sprinklers,

those

sorts

of

things

is

all

in

the

base

CapEx

and

was in

the

[ph]



£125

million (00:58:38) that

we

outlined

at

the

end

of

September

at

the

Capital

Markets

Update.

What's

different

is

the

incremental

£15

million is

on

various

elements

of

automation

within

the

warehouse.

So

this

is

a

warehouse

where

we

will

be

picking

individual

items

and

boxing

those.

So,

its

conveyors,

its

boxing

equipment, automation

of

that,

automated

guided

vehicles

to

collect

the

product

from

the

racks,

take

that

to

picking

areas.

The

reason

we're

doing

that

is

to

put

ourselves

in

a

position

where we

can

manage

the

cost

better

going

forwards,

quite

simply.

So, it

will

be

around

three-year

payback

on

the

equipment.

It

helps

you

from

a

labor

efficiency.

And

we

all

know

that

labor

within

the

distribution

space

is

quite

tight

in

the

UK

at

the

moment.

So,

I'd

describe

that

as

absolutely

future-proofing

the

facility

that

we're

putting

in

place.

Now,

my learned

colleague,

the

Finance

Director at

Toolstation,

Richard,

would

tell

me

that

the

technology

that

we're

using

is

Volkswagen

Golf

type

technology.

This

is

not

leading-edge

technology

by

any

means,

so

we're

not

building

a

very

advanced,

I'm

saying

it's

all

tried

and

trusted,

solid

German

and

Swiss

engineering

that

we'll

be

using.

[Arnaud Lehmann, Analyst, Merrill Lynch International]

Thank

you

very

much.

Good

morning.

Arnaud

Lehmann

from

Bank

of

America.

I've

got

four,

but

they

are

short.

[Nicholas John Roberts]

Do

you

promise,

Arnaud?

[Arnaud Lehmann, Analyst, Merrill Lynch International]

I

promise.

Firstly,

just

can

you

confirm

that

the

business

trends

you've

seen

in

January

and

February

are

consistent

with

Q4

and

give

you

this

confidence

into

growing

top

line

and

profits

in

2022?

Secondly,

could

you

– I

mean,

you

are

talking

about

gaining

share

of

wallet.

I

believe

that

was

about

Toolstation,

but

I

think

in

TP,

you

were

also

talking

about

getting

market

share.

Can

you

comment

about

the

competitive

environment,

what

you're

seeing

at

the

likes

of

Selco,

Buildbase,

Jewson,

et cetera?

Are

they

on

track

as

well

as on

the

pricing

and

value

creation

rather than

chasing

volumes?

Thirdly

on

debt,

I

think

your

net

debt

position

including

lease

liabilities

at

the

end

of

December

is

broadly

consistent

with

what

we

saw

back

at

the

end

of

June

[ph]



600-plus (01:01:13).

I

was

hoping

for

maybe

a

bit

more

free

cash

flow

generation

and

being

able

to

bring

the

debt

position

a

bit

lower

December

versus

June.

Was

there

any

one-off

to

think

about

in

the

cash

flow

statement?

And

lastly,

property

profits.

You

spent

2021

increasing

the

guidance

and

eventually

beating

your

own

guidance

at

the

end.

Are

there

any

particular

projects

we

should

have

in

mind

that

could

imply

upside

to

your

2022

property

profit

guidance?

That's

it.

[Nicholas John Roberts]

Good

Arnaud.

Let

me

take

the

first

two

Alan

and

then

we'll – sort

of

you

know why

we

don't

we comment

on

January

and

February

and

we

just

closed

our

books

last

night,

February.

But

as

we've

said

in

the

statement,

positive

start

to

the

year,

confident

for

2022.

So,

I

think

I'll

leave

at

that.

On

our

– lots

going

on

in

the

competitive

environment

in

2021.

I'm

sure

you

have

dived

into

our

competitive

results

that

one

of

whom

obviously Selco came

out

last

week.

[indiscernible]



(01:02:22)

how

they're

getting

on.

Our

view

is

that

we

are

gaining

share

and

performing

very

positively

around

those

respective

competitors.

But

our

side

by

side

against

some

of

our

key

competitors,

as

much

as you

can

dig

into

their

figures

some

times,

to

separate

out

those

businesses

indicates

that

we're

making

really

good

progress.

So,

we're

very

positive

around

that.

We

think

we're

doing

all

the

right

things

on

our

strategy

focusing

on

deepening

that

relationship.

And

then

really

you

talked

about

you used

the

word

value

creation,

I

think

when

we

look

at

how

we're

elevating

our

relationship

and

adding

services

and

solutions

around

our

core

offer, we

really

are

at

the

forefront

of

that

in

our

space.

So,

we're

very

positive

around

the

strategic

progress

we've

made.

Debt,

Alan?

[Alan Richard Williams]

Yeah.

So,

on

the

net

debt,

Arnaud,

there

aren't

any

particular

issues

that

I'd

draw

your

attention

to.

We

did

end

the

year

with

more

stock

in

terms

of

volume

not

just

a

price

impact.

Some

of

that

was

anticipating

some

of

the

availability

challenges

that

we

saw

last

year

and

making

sure

that

we're

well-stocked

on

Keylines and

within

the

General

Merchants

in

particular,

but

there's

nothing

particular

that

I'd

draw

your

attention

to.

A

lot

of

that

is

funded

by

the

trade

creditors.

So

I

think

it

would

be

more

in

the

–

the

key

thing

is

the

increasing

working

capital

of

£150 million

in

the

year

was

all

about

the

trade

debtors.

When

I

look

at

the

trade

credit

book

in

terms

of

days

of

sale,

overdues

as

a

percentage

of

the

debt,

they're

all

at

really

good

levels.

So

I

said

during

the

comments

earlier,

record

lows

on

the

level

of

overdues.

So

there's

nothing

I'd

draw

your

attention

to

that stands

out

in

there.

On

the

property

profits

for

last

year,

first

of

all,

why

did

we

up

the

guidance

to

at

least

£40

million?

Well,

it's

because

we'd

started

marketing

the

Tilbury

distribution

center

and

we were

confident

on

getting

a

transaction

done

in

the

year.

Why

did

it

come

in

at

£49

million?

Well,

we

got

more

for

that

property

than

I

thought

we were

going

to

get,

a

lot

more, and

hence

the

outturn

that

we

had

on

the

year.

The

£25

million

for

this

year,

they

are

very

specific

projects.

It's

always

difficult

to

predict

exactly

the

flow

of

these

things.

But

I'm

confident

that

that

£25

million

of

projects

will

be

there.

If

there's

any

more

that

come

along,

I'll

give

you

good,

early

notice.

[Arnaud Lehmann, Analyst, Merrill Lynch International]

Sounds

good.

Thank

you

very

much.

[Matt Worster, Director-Investor Relations, Travis Perkins Plc]

Charlie.

[Charlie Campbell, Analyst, Liberum Capital Ltd.]

Yes.

It's

Charlie

Campbell

at

Liberum.

Just

two

really

for

me,

please.

Just

–

first

of

all,

just

on

Toolstation,

I'm

thinking

about

the

profile

of

margins

as

the

business

matures.

It

does

sound

to

me

from

the

presentation

today

as

if

actually

trade

might

end

up

being

a

bigger

percentage

of

Toolstation

UK

than

you've

previously

thought

which

is

probably

helpful

for

margin.

So,

I

just

wonder

if

you

–

this

is

the

right

time

to

be

thinking

about

margin

at maturity

being

a

bit

bigger

than

previously

expected

or

perhaps

that story

has

got

bit

longer

to

run.

And

then,

secondly

on

Toolstation

again

on

the

UK

business.

Glad

to

hear

that

this

Volkswagen

Golf technology

in

there.

Is

the

installation

of

that

all

outsourced?

Just

again

to

get

an

idea

of

the

risks

to

that

project.

Automated

system

sounds

quite

risky

to

me.

But

just

on

thoughts

on

mitigation

of

the risk

of

that

program.

[Nicholas John Roberts]

Yes.

So,

Charlie,

just

starting

with

that

one.

The

installation

is

outsourced.

We're

working

with

a

partner

to

manage

all

the

different

contractors.

We

also

have

a

failsafe

mechanism

and

that

is

a

warehouse

that

can

be

operated

manually

if

needed

as

well

as

having

the

automation

there.

On

the

Toolstation

margin

maturity,

I

think

you're

right

that

trade

will

be

a

significant

proportion

of

the

business.

In

my

mind,

we'd

always

anticipated

that

and

that's

reflected

in

the

range

of

products

that

we

stock

and

getting

into

more

and

more

trade

credible

ranges.

I

think

it's

a

little

early

to

start

calling

margin

could

be

bigger

than

expected.

And

the

other

point

I'd

point

out

is

that

we

do

maintain

a

fairly

healthy

price

advantage

versus

the

competition

within

Toolstation.

And

we're

very

keen

on

keeping

that

because

that's

one

of

the

things

that

our

customers

love

about

the business.

[Charlie Campbell, Analyst, Liberum Capital Ltd.]

And

just

as

a supplementary,

has

the

take

up

of

trade

credit

not

surprised you? I

mean,

that

was

sort

of

a

message

it

seems to

have

come

out.

I

mean,

perhaps

I'm

over

reading

that.

[Nicholas John Roberts]

I think the

trade

credit

is

going

really

well.

It's

always

difficult

when

you've

not

done

it

before

in

a

business

like

that

to

know

quite

how

it

will

take

off.

But

we've

automated

the

process.

It's

actually

another

area

of

collaboration

between

the

TP,

General

Merchant,

and

Toolstation

that's

in

place

in

that

it's

the

TP,

General

Merchant

credit

team

have

helped

put

that

automation

and

process

in

place

for

the

Toolstation

business

to

accelerate

qualifying

customers

for

credit.

So

it's

going

–

at

this

stage

it's

going

really

well.

Still

small

overall,

but

really

promising.

[Charlie Campbell, Analyst, Liberum Capital Ltd.]

Thank

you.

[Matt Worster, Director-Investor Relations, Travis Perkins Plc]

Jon

Bell

next.

If

we

could

bring

the

mic.

[Nicholas John Roberts]

No?

No,

Jon.

[indiscernible]



(01:08:15).

Matt,

as

we

got

a

couple

of

minutes

left,

are

there

any

more

questions

in

the room?

[Matt Worster, Director-Investor Relations, Travis Perkins Plc]

We've got three on

the phone lines on

the

conference call.

Would

you

like

to

take those?

[Nicholas John Roberts]

Yeah.

[indiscernible]

[Matt Worster, Director-Investor Relations, Travis Perkins Plc]

(01:08:25).

[Operator Instructions]

[Operator]

And

we

will

take

our

first

question

from

Rajesh

Patki

from

JPMorgan.

[Rajesh Patki, Analyst, JPMorgan Securities Plc]

Yes.

Hi.

Good

morning,

everyone.

I

hope

you

can

hear

me

well.

[Nicholas John Roberts]

Yeah.

[Rajesh Patki, Analyst, JPMorgan Securities Plc]

Hello?

[Nicholas John Roberts]

We

can

hear

you,

Rajesh.

Go

ahead.

[Rajesh Patki, Analyst, JPMorgan Securities Plc]

Hello.

Can

you

hear

me

well?

[Nicholas John Roberts]

Yeah.

Rajesh,

go

ahead

if

you

can.

Thank

you.

[Rajesh Patki, Analyst, JPMorgan Securities Plc]

Yes.

I've

got

two

questions.

First

one

is

on

the

Specialist

Merchanting

business.

You

mentioned

record

profit

delivery

for

BSS

and

Keyline.

Just

wondering

if

that

is

largely

due

to

better

margins

this

year

or

is

the

top

line

for

each

one

of

those

businesses

ahead

of

the

2019

level

as

well?

And

the

second

one

is,

I

think

you

touched

upon –

briefly

on

the

second

half

performance,

but

if

you

can

add

some

color

on

how

you're

thinking

about

the

working

capital

moves for

this

year,

that'll

be

great.

Thank

you.

[Nicholas John Roberts]

Okay.

[Alan Richard Williams]

Rajesh, its

Alan here.

So

on

the

second

half

performance

and

the

outlook

on

working

capital,

I

think

working

capital

as

a

percentage

of

sales

or

on

a

DSO

basis,

I'd

expect

to

see

broadly

consistent

with

2021.

I'd

actually

suspect

there'll

be

a

little

reduction

on

that

basis

of

percentage

of

sales

in

the

Merchanting

business,

which

will

help

us

from

the

continued

expansion

on

Toolstation.

In

terms

of

the

Specialist

businesses

and

BSS

and

Keyline

in

particular,

certainly

on

a

two-year

basis

if

you

look,

they

were

growing

they're

like-for-like

sales

healthily.

The

gross

margins

were

really

solid

in

both

businesses.

But

one

of

the

points

I

highlighted

was

the

efficiency

within

those

businesses,

namely

having

closed

some

branches

during

2020

which

were

lower

than

the

average

revenue

and

difficult

sites

to

operate.

We've

managed

to

effectively

recover

volumes

without

adding

back

as

much

operating

cost

into

the

business.

So

we

saw

an

improvement

in

the

overheads

to

sales

ratios

in

the

businesses

as

well.

That

was

across

the

three

Specialists.

And

I've

no

doubt

if

we

hadn't

been

held

back

by

availability

challenges

within

CCF, we

would

have

seen

a

similar

pattern

given

the

improvement

that

we

made

in

the

network

during

2021

– sorry,

2020.

[Nicholas John Roberts]

Thank

you,

Rajesh.

We

have

time

maybe

for

one

more, Matt.

[Rajesh Patki, Analyst, JPMorgan Securities Plc]

Thank

you.

[Matt Worster, Director-Investor Relations, Travis Perkins Plc]

Yeah.

One

more,

please.

[Operator]

And

we will

take

the

next

question

from

Ami

Galla

from

Citi.

[Ami Galla, Analyst, Citigroup Global Markets Ltd.]

Thank

you,

guys.

Just

a

few

questions

from

me.

First

one

is

a

follow

up

on

Toolstation.

Could

you

give us

some

sense

of

the

possible

timing

of

the

direct

fulfillment

center

reopening

up?

And

in

terms

of

Toolstation,

where

does

the

online

mix

in

the

business

currently

sit?

And

do

we

expect

that

to

increase

over

the

next

couple

of

years

as

you

kind

to

use

the

fulfillment

center

in

that

regard?

My

next

question

was

on

Staircraft.

You've

been

given

– you've

given

a

reasonably helpful

guide

in

terms

of

the

sort

of

house builders

that

you're

working

with.

Is

there

a

number

that

you

can

give

us

in

terms

of

the

average

number

of

sites

that

Staircraft

is

currently

being

used

on?

And

the

last

one

is

just

a

follow

up

on

the

working

capital

flows

for 2022.

Do – is

this

sort

of

level

of debtors

in

the

business

at

the

right

level

or

should

we

see

further

investment

in

that

regard

going

forward?

[Nicholas John Roberts]

Thank

you,

Ami.

Let

me

start

and

Alan

will

pick

up.

If

I

heard

you

rightly,

the

timing

for

the

DC

is

back

end

of

this

year

and

into

early

next.

And

the

online

mix,

we

haven't

set

necessarily

a

target

for

that,

it's

just

a

huge

opportunity

for

us.

And

through

really

driving

the

quality

and

capability

on

our

online

channel

as

well

as

the

app

channel,

there's

just

a

great

opportunity

for

growth

and

we've

been

really

pleased

by

the

positive

uptake

and

performance

so

far.

Staircraft,

I

have

to

come

back

to

you on

the

number

of

sites

specifically.

I

mean

as

I

said,

we're

working

with

all

the

top

house

builders

and

growing

that

business

extremely

positively.

So,

we'll

just

have

to

respond

to

you on

the

number

of

sites,

I'm

not

sure.

No,

no.

Okay.

[Alan Richard Williams]

And

then

on

the

question,

Ami,

around

working

capital

and

trade

debtors,

is

it

at

the

right

level?

I

think

if

you

look

at

the

trade

credit

as

a

percentage

of

Merchanting

sales,

the

trade

debtor

book

that

gives

you

a

very

good

indication

of

where

we

are

on

the

business.

And

as

I was

at

pains

to

point

out

now

for

the

third

time

of

asking

record

low

overdues

as

a

percentage

of

sales

within

the

business

as

well.

[Nicholas John Roberts]

Just

on

Staircraft,

Ami...

[Ami Galla, Analyst, Citigroup Global Markets Ltd.]

Thank

you.

[Nicholas John Roberts]

...our

opportunity

here

extends

way

beyond

the

large

house

builders

who

are

very

important

customers

to

us

for

Staircraft

and

the rest of

the

business.

But

actually

the

opportunity

to

grow

that

business

into

our

regional

and bespoke

house builder

cohort

is

really

exciting

for

us.

And

so,

we

move

beyond

the

traditional

names

that

you

and

I

will

know

and

love

and

into

a

group

of

customers

that

actually,

in

aggregate,

exceed

the

demand

of

the

large

house builders.

So,

it's

a

really

exciting

opportunity

for

us

to

grow

our

Staircraft

business.

Thanks,

Ami.

[Nicholas John Roberts]

I

think

we

are

absolutely

on

time.

So,

thank

you

so

much

to

everybody

on

the

webcast

and

for

those

who have

asked

us

some

questions

and

everybody

in

the

room.

It's

been

a

fabulous

year

for

us

and

one

that

we're

extremely

proud

of.

The

business

is

incredibly

confident,

and

we

look

forward

to

2022,

and

we

look

forward

to seeing

you

again

soon.

Thank

you

very

much.