Travis Perkins plc

Robert Walker - Chairman John Carter - Chief Executive Tony Buffin - Group Finance Director

Andy Murphy - Bank of America Merrill Lynch Emily Biddulph - JPMorgan Charlie Campbell - Liberum Capital Howard Seymour - Numis Securities Olivia Peters - RBC Capital Markets Paul Checketts - Barclays Capital John Messenger - Redburn Europe Limited Dan Porter - UBS Robert Eason - Goodbody Stockbrokers Clyde Lewis - Peel Hunt

Right so welcome, everyone, to Travis Perkins' 2015 interims, and to the former assembly hall at the City of London School. I had questions about the acoustics when we walked in here, but it sounds like, from what I can see, that they're okay.

Just a brief introduction from me, as usual I'm not going to give any numbers, because John and Tony will cover them in some detail. Just to say that it may not seem like it to you, or to us, but we are only 18 months into our five-year plan that Tony and John outlined in December 2013.

And, of course, part of that plan, and our commitment, was to maintain a high level of communication with you around the progress of that plan. So, we had an update last November.

A few weeks back we had an update on the role that property plays in that plan. And I think we've got a date in November, November 6, and that's in the papers today, when we'll talk more about our supply chain, which, in terms of our enablers, is further down the road in terms of completing than some of the others.

And I know that, just to repeat, John, Tony, and Matt will continue, throughout the process, to communicate with you at a very high level. My own simple description of what we're doing over the five-year period is simple, I call it three by three: three priorities, three enablers.

The priorities, the modernization of TP; the re-segmentation, the re-branding of plumbing and heating; and the transformation of Wickes and the three enablers are property, supply chain, and IT. And I think that the sole message that I'd like to offer this morning from today's presentation is, as we look 18 months into the plan, we are exactly where we planned to be at this stage.

Of course, CapEx is now starting to ramp up. The half year shows 131 million, I think, versus 65 million in same period last year.

And we are guiding towards 200 million, providing the freeholds all come in. So, that's it from me.

One last comment and that is that, as part of the confidence that the Board has in the progress of the plan, we are increasing our dividend 20% to 14.75p. So, in the spirit of being in the City Hall at City of London school hall, our head wrangler, John, will take over; and then our [Tripoth] award winner, Tony, will take over.

So, thank you very much.

Robert, thank you very much. Good morning, everyone.

As usual, I'm just going to let me just then welcome our people on the telephones, and on the webcast. We will come to those elements for questions, after the presentation, but good morning to everyone.

I'm going to run through some of the operational highlights; Tony's then going to do a financial review in more depth of the numbers in the first half, and give some background to the numbers of the individual divisions; and then, I'll come back and give a strategic update, in particular, looking at some of the strategic projects and the work streams that go on across the Group. In terms of putting it in context, three sorts of messages, when we set out with our plan back in December 2013, we always based it on outgrowing the markets, or each of our businesses outgrowing the markets in the segments that they operate within.

And I think 18 months on, we are seeing that continue. We are investing, and, as Robert alluded to, we have increased our capital investment, primarily in the areas of enhancing our supply chain; enhancing our IT systems; and growing our networks.

And we're very much on track in terms of that initiative. The last real point and context for me is that we don't feel that we're constrained by market growth alone.

And we have a number of initiatives going on across the Group that very much are self-help, and helping drive our outperformance as a Group. So, looking at the six-month numbers at a very high level, a top-line growth of nearly 8%, underlying 5.7% like for like, to 2.9 billion.

Extracting the property profits, which we've always said is a bit lumpy between the halves we've got an underlying 9% growth in our EBIT. We've always guided to low double-digits for a full year as we move through this project, and we feel we're very much on track, very happy with that.

We are increasing our investments and, therefore, up to 131 million in the first six months. Tony will give you a bit more guidance in terms of the full year, but that number contains a sizable investment in our supply chain, and about 45 million of freehold properties.

Despite that increase in the investment, we've managed to hold our lease-adjusted ROCE, which is a key initiative for our medium term to grow between 200 basis points and 300 basis points, at 10.5%. And that, in terms of the overall performance, has given us confidence to grow our dividends just over 20% to 14.75p for the interim payment.

So Tony's going to give you a little bit more in detail, and I'll come back and talk about some of the strategic initiatives.

Thanks, John. The first thing I've got to do is thank Adrian, one of our interns.

He's lent me his tie because you know I'm not a big fan of ties but I've got a new one on today. I think the start point, really, is to go through just a summary financial metrics.

In our view, we had a very good performance in the first half. Our sales were up by 7.8%, as John said; like-for-like sales growth of 5.7%; and adjusted EBITA, including property profits, up also 5.7%.

If you exclude those property profits, which are a bit lumpy and will be weighted, like they were last year, to the second half, our EBITA grew by 15 million, and 9%. So, pretty much on track with where we expected it to be.

Owing to an increase in finance charges, which was the result of a non-cash charge for the mark-to-market valuation of our forward foreign exchange contracts, adjusted profits grew by a little over 3% to 134 million. But it is worth noting, if we'd marked to market that contract a week later our profit-after-tax growth would have been bang in line with our EBITA growth.

So, it really is a non-cash timing difference on our mark to market valuation of contracts. Free cash flow generated of 156 million was slightly lower than last year, where we did benefit from a number of favorable working capital movements.

But not withstanding our free cash flow conversion of 84%, we think it's still a very good result, and much more in line with our expectations over the medium and longer term. The performance that we delivered, and the plans we have in place, provided us and the Board with confidence to increase the dividend by over 20% to 14.75p per share.

Our lease-adjusted debt remained broadly flat with June last year, and was actually slightly lower than the year end, as we continue our modest leveraging plans. Giving you a bit of rundown on sales, as I said good sales growth 7.8% and despite tough comparatives, particularly in our plumbing and heating division, volume growth was also strong.

Output price inflation was mixed. And we did have higher inflation in the heavy-side categories, and this was offset by some deflation in the light-side categories, particularly around commodity price deflation, for items like copper pipe and copper -- copper tube and copper fittings.

We also continued, as we have over the last 18 months, our price investment program and clearance activity in Wickes. As a result, we saw, overall, a modest decline of 0.3 percentage points from price and mix -- from price inflation and mix combined.

New branch openings in Travis Perkins, in Benchmarx, and in Toolstation, together with a benefit of the Primaflow and Rudridge acquisitions, were the principal contributors to adding 2.1 percentage points of non like-for-like revenue growth. Given these new stores and branches will not fully mature for three to five years, we expect to continue to benefit from additional like-for-like growth over the coming years.

And I continue to draw your attention to the table on the bottom left-hand side of this chart, which shows our two year like-for-like comparative sales growth. You'll see from the table that our two-year growth moderated in the second quarter, but remained strong at just under 15%.

We indicated last year, and I said this two or three year times, that we expected a tougher second quarter, owing to a step-down in housing transactions and uncertainty over the general election. Despite these effects, we were pleased with the performance, and it gives us real confidence that the actions we're taking are the right ones.

On Slide 8, I've tried to outline the underlying profit position, as I have over the last 18 months, or so. As we set out in December 2013, we expect to sustain our operating margins in general merchanting, but increase margins in the other three divisions over the medium term.

Excluding the effect of property profits, we improved our underlying margin by 10 basis points to 6.5% in the half, despite the increased investment to build on our market-leading positions. Our EBITA margin, including property profits, reduced by 10 basis points to 6.3%, this is owing to 5 million of lower property profits in the first half this year compared to last year.

We fully expect, though, to deliver on our guidance of around 20 million of property profits for the year as a whole. So, then turning to the first column here in general merchanting, in general merchanting we increased our operating margins by 40 basis points, excluding property profits, to 10.2%.

In 2014, general merchanting included 8 million of property profits in the first half, the largest component relating to the completion of our St. Pancras redevelopment.

However, in the first half this year we benefited from just 1 million of property profits, resulting in net reported EBITA margin of 9.4%. We still plan to remain -- maintain our margin between 9% and 10% over the medium term.

In the second column, in plumbing and heating, as you know, it's midway through our re-segmentation program. We expect margins to improve over the medium term.

However, the impact of disruption and lower volumes reduced operating leverage in the half, and we did not benefit from the repeat of the ECO scheme revenues in the first quarter of 2014. In contracts, the very significant growth in Keyline and CCS, which are lower-margin businesses, was the principal driver behind the 50 basis points reduction in operating margins to 6.3%.

Both businesses are growing profits, and significantly improving returns on capital. We're, therefore, confident to continue with our plans, although we do expect growth to moderate, reducing the mix effect on operating margins in the future.

And despite continued investment in Wickes and in Toolstation and deflation through active price investment and clearance activity, our underlying margins were maintained at 5.6% in the consumer division. The consumer division also benefited from a modest amount of property profits, around 2 million in the half, with reported margins up to 5.9%.

I'll now go through each of the four divisions. Travis Perkins and Benchmarx revenues grew by almost 8%, and a little under 7% on a like-for-like basis.

This demonstrates a continued outperformance of the market by both businesses with good growth delivered in all regions across the UK. We continued our modernization program in TP, and the expansion of Benchmarx.

These plans were ramped up in the second half of 2014, as we guided to at the full-year results, and continued through the first half of this year. Following recent range reviews and new branch rollout over the last 18 months, Benchmarx performed particularly well.

Adjusted EBITA, on a reported basis, grew by 3.4% to 92 million. However, excluding property profits, underlying profits grew by 10 million to 91 million; up by more than 12%.

When we set out our plans, we were clear that we needed to invest in TP. We have made significant progress in landing our new range centers in Cardiff and Tilbury, operating our new primary distribution center in Warrington, and investing in IT to provide a more modern platform for the future.

Despite these investments, we maintained our sector-leading returns at 16%, and expect these investments to provide us with a capability to outperform our markets in the medium and longer term. Revenue growth in plumbing and heating was lower in the half, largely owing to strong sales in quarter 1 2014, as we previously guided, around one-off contracts sourcing gains in the ECO scheme.

Our reconfiguration plans, however, progressed rapidly, with 48 sites converted to the CPS format, bringing the total to 94; and, therefore, we're well over halfway through our planned 180 conversions. Obviously, with such significant change, there were some disruptions to sales, resulting in headline revenues down just under 1%, and like-for-like sales 2.9% lower.

Excluding property profits and the one-off effect of short-term contracts in the ECO scheme, underlying profitability decreased by 1 million to 21 million, this was achieved, despite the significant disruption from the estate reconfiguration, and reinforces our commitment to creating the right network for our customers' needs. Despite the continued investment and disruption to revenues, lease-adjusted returns were maintained at 8% as we continued to withdraw capital from the PTS network.

The strong growth in Keyline and CCF over the last 18 months continued in the half, with a solid performance from BSS. Revenue grew by almost 18% to 605 million, and 13.9% on a like-for-like basis.

The acquisition of Rudridge at the start of the year also contributed to the strong revenue growth. Investments in improved ranges in new categories in our sales teams and in technical expertise, particularly in BSS, helped all businesses achieve market share gains.

As I explained earlier, the reduction in operating margins was principally as a result of the mix of business towards CCF and Keyline. Despite these lower margins, adjusted EBITA grew by nearly 9%, up 8.6% to 38 million.

And lease-adjusted returns increased to 13% from 12% this time last year. The results in our consumer division were particularly pleasing, continuing the strong performance throughout 2014.

Headline sales grew by nearly 9%, and 6.5% on a like-for-like basis. In Wickes, further improvement's been made in value, in range, in availability, and share gains were recorded throughout the half.

Despite some commodity price-led deflation, and continued investment in better prices in Wickes and in Toolstation, growth margins were held. This was a combination of positive mix benefits towards our kitchen category, and significantly improved sourcing arrangements in a number of major categories as we go through those range reviews.

We explained last year that 2015 would be a year of more significant change in Wickes as we began to reset our ranges. As a result, we incurred 4 million of clearance costs in the half.

Wickes investment in its online capability continued with click-and-collect items now available inside the hour. And our investment in Toolstation also continued with 18 new stores opened in the half.

And we've also launched one-hour click-and-collect there, as well. EBITA increased by almost 14% to 41 million.

This did include an extra 2 million of property profits compared to last year. Excluding those property profits, our underlying profits were up 8.3% to 39 million.

Again, a very pleasing performance, given the investments we're making in all of those businesses, so now turning to items below EBITA. Finance costs increased by 5 million.

As I said before, 4 million of this was down to a non-cash charge for the mark-to-market of those forward contracts as at June 30. The underlying cash interest charge of 9 million was up just 1 million; a good result given the public bond we issued last year, and the balance sheet liquidity headroom that we're carrying.

The effective tax rate remained flat with a charge in the half of 33 million; up from 32 million this time last year. And consistent with the Group's plans, as John said earlier, the Board increased the dividend by a little over 20% to 14.75p per share.

Despite good volume growth, and more significant growth in the credit sales mix in both TP and towards the contract businesses, we generated 156 million of free cash flow; a conversion rate of 84%. This included a net working capital outflow of 31 million, which was within line with our expectations, and the sales credit volume growth that we saw.

As I've outlined in the table, free cash flow funded our growth CapEx; the acquisition of Rudridge; higher dividends; and our cash contribution to the pension scheme. And, as we've previously explained, we intend to increase on-balance sheet debt to fund freehold purchases.

In line with these plans, freehold purchases of 45 million were partly funded by free cash flows, and partly as a result of increase in net debt of 37 million. So, what are we spending our money on?

As we said before, a key feature of our plan is to balance growing returns to shareholders now with investing to drive sustainable longer-term returns through both the dividend and capital appreciation. We delivered on our commitment to step up capital investment in the half to 131 million, or 86 million excluding freehold purchases.

A major component of the increase was the 45 million investment in freehold property. And, of that 45 million, around 17 million was for range centers, which, clearly, only one of which opened in the first half.

The other one, in Coventry, will come on-stream next year. We held a brief in our property strategy a couple of weeks ago in our Bracknell branch, where we outlined the rationale for our investment plans in freehold property.

Freehold property, obviously, is important to us; but it remains enabler of our first priority, which is to extend leadership with new branches and stores. In addition, we intensified our use of space across the estate through Benchmarx and new bathroom showrooms, as well as plumbing and heating spares concessions.

Investing in our customer propositions to grow returns is our second area of focus. Trialing of new TP and Wickes formats continued, and, as I said earlier, we converted over 48 branches to our CPS format.

The new heavy-side Rain Center investment provides us with a strong platform to meet our throughput projections, and enhance the range and availability we give to our customers. Finally, we've made it clear that more investment in our IT and supply chain infrastructure was needed to maintain and enhance our market-leading positions.

And we have made a good start with additional investment in our multi-channel capability, in our customer-facing delivery systems in our network and in our hardware. Despite the significant increase in CapEx, we've remained disciplined in our capital management.

Group lease-adjusted returns were maintained at 10.5%. Although our step up in capital deployment is still in its early stages, we are pleased with our progress so far, and with the improvement in returns.

That said, we expect further improvements in the second half as we deliver on our medium-term ambition to increase returns by 200 to 300 basis points. We also continued to make good progress on our key financial metrics.

As planned, our net debt increased, and our lease debt reduced. Our all-in lease-adjusted debt fell by 3 million from the year end.

This decrease was despite our significant increase in capital expenditure, freehold property purchases; increasing dividends; and working capital investment to support our growing businesses. Lease-adjusted gearing reduced by 40 basis points to under 44%.

And fixed charge cover increased to 3.3 times, with lease-adjusted debt-to-EBITDA remaining flat at 2.8 times. I'll end by reiterating our 2015 guidance.

We expect sales growth of 6% to 7%; property profits of around 20 million; and, importantly, EBITA to grow at low double-digits. Given our increased investment in freehold property, we now expect capital expenditure to be above 200 million, although, I've said many times before, this remains dependent on the availability; timing; quality and quantum of future property purchases.

In conclusion, our market monitoring, our continued outperformance, and the results we have seen from our investment so far give us further encouragement that we're on the right track, and confidence to bring our dividend well into the medium-term cover range, John, strategy?

Thank you, Tony. Just giving a strategic update, you've seen the overall performance of the business units, but a lot of activity is going on.

But, just before that, the three real strands of why we believe that the timing of our investment and growth of the business is based on good foundations. We still operate, both in our consumer and in our trade businesses, with about 50% held in independent and regional hands.

Our businesses across the Group normally hold number-one or number-two position in each of their respective markets. We think, given our scale and breadth of the business, that we have structural advantages in a number of areas.

And our aim was always to exploit those structural advantages during the five-year plan. And, as you heard from Tony, and I'm going to go in a little bit more detail, we are developing, across all of our businesses, much stronger customer positions, making ourselves more attractive to the customers against our competition.

The other fundamentals of the sector, that we operate within is the high demand for new homes and a limited supply. But the Group as a whole has about 75% of its business in the RMI market.

And it's the 28 million homes across the UK that is our primary focus; and, in particular, the repair maintenance. But the improvement area is the area that we monitor most closely.

And we know, from the OMF study, that nearly 40% of householders feel that their property requires renovation in one form or another. Tony's touched on it, but after the mortgage market review last April we saw a softening of mortgage approvals, which led to a softening in the latter part of the summer of housing transactions.

We've always maintained that 100,000 housing transactions a month is a great level for us to invest and exploit our strategy. Therefore, as we came through to Q2 we always expected there to be softening of our markets, which I think you've seen in both the single and two-year like for likes.

Equally, if we follow that lag trend, we are expecting a moderate improvement in our markets in Q3 and H2. The other massive lever for dictating trends for us is consumer confidence.

And I just brought the chart up really over a 10-year period as we hadn't actually seen consumer confidence in positive territory for the last 10 years. I understand, in the last week we've seen a little dip from that point, but it is still positive, and, therefore, gives us good confidence to grow our business.

A slide that Tony and I used back in November I think in December, sorry, in 2013, and we wheel it out on every occasion because it was our roadmap, and continues to be our roadmap, and direction of the areas that we're focusing to drive the business performance and deliver the enhanced returns. Just going into a little bit of detail, in terms of this customer proposition work, if I just take you through some of the activity of each of the divisions, some great work is going on within the TP brand in determining new format for the TP trade business.

We're extending our range that we can offer our customers on a next-day delivery, and through the investment in supply chain. Only last week, we launched a new trade site for trade offers across the TP Group.

And Benchmarx shouldn't be overlooked. We've been really pleased with the growth and development of the business.

And they've enhanced a selection center that is really actually capturing customers' imagination. I think, pointing to the area of plumbing and heating, you've heard us say now for some time what a big project the Build the Best project is undertaking.

We're now actually tipped over and just moved into being over halfway through this project, so I wouldn't underestimate the disruption that this business has been going through, and how good and supportive our colleagues have been. 180 branches that we will convert over an 18-month period, and seeing some really nice trends now start to develop.

Whilst we're converting a lot of the PTS branches to CPS, we are focusing on improving our logistics and operational efficiency of the PTS business as we move forward. In contracts, we've developed a new format for Keyline; super-low cost to serve, which, we believe, will be instrumental in driving both sales and returns.

The division is pulling BSS, CCF, and Keyline together to help project track and develop a more coordinated approach on large projects that exist across the country. We go deeper and wider in specialization and sector of key product specialization.

And we now, actually, can boast a national chain, across BSS, of higher outlets, which is proving very successful. Tony sort of alluded to it, and we have Simon with us today, but a lot of change has been going on in Wickes in the last 18 months, to great effect.

We launched three new trial stores in Chatham, Doncaster, and Letchworth during the first quarter, to really good effect, lots of learnings. And we've incorporated a toolstation-type counter to offer range extension and assisted sale.

A lot of conversions as you've seen from the numbers, in terms of developing better range changes, and, therefore, we took quite a sizeable delete cost during that period. Often, we are asked the question is that a one-off?

But we have still a number of work to do across the estate, and to continue investing in enhancing our range to our customers. Our business online is traveling extremely well.

Around 9% of our total sales are actually booked online. And a big driver of that has been our enhanced approach to one hour on click-and-collect.

So, a lot of activity on customer propositions that's really helping drive our long-term outperformance of sales. This is almost a bit of a school report over the last 18 months.

But we've opened 17 new Travis Perkins; seven new Wickes; 50 Toolstation; and 54 Benchmarx; a couple of Tile Giants; and three new CCFs. As we go forward, we're giving a range of five to 15 new Travis Perkins per annum; 10 to 15 new Wickes per annum; at least 30 new Toolstation per annum; and for Frank and the contracts department, they'll be growing their estate by between 1% and 2% additional square footage.

It was never, we always said, just about network expansion; we're working hard to use the existing estate to better effect with implants, and developing concessions within our branches. The big segmentation project of plumbing and heating, as I say, we're really pleased with the progress that that's making, but we've completed in that 18 months a further 100 implants into our existing branches of Toolstation; Benchmarx; Tool Hire; Tile Giant; Spares, and they will continue as we move forward to use our space in a more productive way.

We converted around 16 branches from a Keyline brand to a TP brand, and we're starting to see the benefits of that come through now. We have seven trade paths, and many of you visited our Bracknell example.

But we have five planned for next year, and growing the pipeline. So a lot of activity on growing the estate, but optimizing our existing space.

I've always, actually, argued that being the largest gives us scale advantage, and we're really focused on utilizing that scale wherever we can. The work that's going on, and the investment that we're putting into our unique supply chain within our sector, we've opened now our second primary distribution center in Warrington.

And we're in the process of unwinding the four regional PTS distribution units, which will be completed during the second half of this year. As Tony mentioned, we opened Tilbury, our third range center, complementing Warrington and Cardiff.

Work has commenced on our fourth and final, at this stage, range center in Coventry. With Tilbury coming on-stream, that covers 60% of the TP branches; and with Coventry, we'll move that to 90 branches during 2016.

And it's very much a focus on continuous improvement of product availability, range extension, and flow of product through the system on an efficient basis. The whole area of sourcing is really key to using our scale as a strategic advantage, and that continues to be a major focus on reducing our cost of goods sold.

We work really well and hard with our major suppliers. But we are leveraging and utilizing the 55 nationals that we have in China in terms of helping us grow our direct sourcing and take cost out of our supply chain.

And not really underestimating the good work the teams are doing with our own label offerings and our own brands across the Group, we're seeing good growth of good quality products, offering customers great value. Many of you would have been at the briefing at Bracknell for the property, so Martin and property team did a great job.

But it is very much about managing our tail estates, and moving capital from underachieving locations and redeploying it in higher performing. But it's really very much also about putting the right business in the right location.

There is an ongoing program, as Tony said, about releasing profits from our property estate. And we remain on target for our 20 million in 2015.

In terms of IT, and it doesn't get harder than IT for us. We have a big task and we're making good developments in developing both our core systems; but also, moving to a digital mindset and multi-channel.

A good example of that is our rollout of electronic proof of delivery, which is the foundation for us to move to an OTIF, or a first time in full measurement, which our customers are seeking in terms of measurement of our performance; and a big focus on our customer relations management across many of our businesses in terms of accessing our customers and working with them to develop business between us. A big part, but a subtle part, of what Tony and I are doing in managing the business is moving from what was quite a centrally governed organization to a more devolved and empowered management.

And the progress of that, we feel, will actually enhance our ability to grow our businesses and enhance our profits. We're seeing good progress on the devolved management responsibility, but at the same time maintaining a very disciplined approach to our capital allocation.

And I think it's important to make that message, given that we have doubled our capital approvals in the first six months of this year. But we believe, as Tony indicated, we're targeting that investment on areas that we can get a very good blend of high and strong performing through to some of the infrastructure investment.

And that direction of travel is around streamlining a number of our central functions, and moving some of that responsibility and resource into the businesses where they're closer to the customer. A slide I tend to use, which provokes normally lots of questions from the analysts, is how we look at our growth over the medium term.

The market volumes will be the market volumes, and we believe that over the medium term they're likely to be around 2% to 3%. Inflation, we give a guidance of between 0% and 2%.

At the moment, we're closer to the bottom of that range. And our outperformance we signal between 1% and 2% better than the market.

And of our new space, between 1% and 2%, as you've seen from the slide earlier, that new space was 2.1% in the first six months. So, given the range between 4% and 9%, we are calling, on the medium term, between 6% and 7% overall growth for the Group.

And really, just to reiterate where we feel we are, we have, in the last 18 months, continually outperformed on the majority of our businesses, the markets and segments that we operate. We will continue to push hard on achieving that.

As Tony indicated, with the operating margins we will hold TP in and around the 9% and 10%. But we believe, the three other business units, we can move that operating margin over fullness of the project; although, I would indicate that contracts, given the real strength of CCF and Keyline, is likely to show that growth towards the back end of that cycle.

We're targeting, on an annual basis, low double-digit earnings and across the Group, but with that medium-term aim of growing our lease-adjusted capital returns between 200 basis points and 300 basis points. Notwithstanding that we actually believe we've got good growth opportunities in contracts and Toolstation, our three priorities remain the modernization and growth of the TP brand; the transformation and growth of Wickes; and the re-segmentation and return to earnings and returns of our plumbing and heating branch.

I've been really pleased with all four of our businesses, and, therefore, the collective aggregated numbers of the Group in this six months. And we remain very much happy and positive about full-year consensus.

So, shall we go to questions?

Andy, can definitely be first this time, given I missed him last time.

Andy Murphy, Bank of America. I'm just interested in a few more operational items that you raised in the presentation there.

So, I've got, basically, three questions. Around TP, you mentioned trade offers as a new initiative, and I just wondered whether you could flesh out what that is, and how big you think it could be.

And within the contracts, you talked about the super-low cost to serve, so similar question; what is that, and what are you doing that's different? Secondly, I was interested in your Tool Hire business.

You've got 200 now, 205 I think it was. What sort of plans do you have to roll that out further across the TP network?

And then finally, if you're prepared to do it, within your consumer business, could you talk a bit about the like-for-like growth rates between Wickes and Toolstation, please?

Well, let me take the last one, Andy. We won't be talking about the separation.

Tony, did you want to pick up on the TP trade type?

Yes. On trade offers, we've been running it now, I guess, for about two and a half years.

It's a growing part of the offer. I've got the numbers slightly wrong, but it's roughly about 50 million of sales through trade offers on a fixed-price basis in TP.

And we've now started to get better at communicating those trade offers to our customers. So we offer a promotional catalogue in the stores every two months when we change the offers.

We're starting to email our customers through TP. We're starting to grow the email base in TP, so we can communicate that offer to them.

And now we've Norman and the team have launched trade offers' website, which takes all of those roughly about 200 offers every eight weeks and puts them online so customers can order them online, and then obviously pay for them, and then collect them or get them delivered. It's the start of our multi-channel journey.

It would say it's only the start, because we haven't got the full range of TP products on there. But we can pretty much guarantee the availability because these trade offers are applicable to every branch we've got across the country.

So it's the start, but it's a good start, I think. And we're pretty pleased with the progress so far, so yes.

Andy, and in terms of the Keyline model, it's on a low-cost site that essentially is concrete base. We're using pre-fabricated sheds and mobile units for offices, so it's super-low cost to get into.

Racking is limited because the produce is bulky. And we're really focused on our distribution costs.

So we see operating on a lower cost to serve gives us more scope to win work and enhance our returns. In terms of Tool Hire, we continually are developing the Tool Hire business.

Over the last four or five years, it's grown at around 20% compound. It is an addition service to many of our merchants.

And we've introduced it into both Keyline and to BSS. And we would see that sort of continued growth over the forthcoming period, between 20% and 25% growth.

Interestingly, the investments we're making in the range centers enable us to move Tool Hire kit around more effectively. So it's a key area for our focus, but for growth in around 20%, 25%.

Apologies for not being able to split the Wickes and Toolstation but it is quite sensitive.

Thanks very much.

But they're both good. We’re going to go Emily.

Emily Biddulph from JPMorgan, I've got three questions, if that's all right. The first one, on the general merchanting gross margin I was quite surprised to see that it was up.

And you were still guiding, obviously, to that gross margin compression on a long-terms basis, and offsetting any operating leverage. What changes in there?

Or what happened in the first half that we shouldn't expect to continue? Or why can't it happen again?

And secondly, the inventory performance looked really good. Given that at the end of last year, I think, you were running -- from what I can remember, I think you were running two warehouses at the end of last year.

Given that inventory is flat year on year at the moment, what should we expect for the coming year? Or what should be the full-year impact?

And then thirdly, that 4 million impact to the range re-set in consumer in the first half, you say to expect something in the second half, but how much should we be thinking about? Thanks.

Tony, did you want to pick the range re-set, and the likely unwinding of the PTS.

Yes. On the first one, the range re-set, we had just over 4 million of costs in the first half coming through the margin line.

So, as you can see, our gross margins were held up, so we obviously got some good sourcing benefits as well, particularly in the kitchen area, as I mentioned. We've done a lot of range reviews in the first half: we did timber, we did doors, we did adhesives and power tools.

We did a fair amount of work. But we've got some more range re-set work to do in kitchens and in bathrooms in the second half.

We're getting some better sourcing benefits, but clearly we need to re-lay some of the stores in those areas. So there's still a fair amount of work for us to do.

I think we'll be through the bulk of the range reviews this year, and then we'll be back to more business-as-usual range review work. I expect the number to probably be 3 million-ish in the second half, but notwithstanding we're expecting to see earnings growth come through from Wickes in the consumer division.

So that shouldn't hold up our earnings progression. As we said, earnings grew by over 8% in the first half on an underlying basis, and we'd expect that to continue, even may be a little bit better, in the second half.

And on TP general merchant, we've got Andrew Harrison with us today; he's done a great job with the team. I think it's a combination, as always.

We've worked hard on reducing some of the COGS of the products. We've worked hard at extending the range.

We've got the advantage of the maturing Warrington. We've, obviously, undertaken a lot of work regarding the modernization program.

But equally, going forward, you can't always guarantee that those price pressures won't come down. We've got some of the good pricing through, but that won't always happen.

So, it's a cycle. We book it where we can.

The business is in really good shape, as you can see. But that's why we're guiding to that 9% and 10%, because we think at that level we can outgrow the market, and it's obviously the largest operator in its field, as well as expand the network to grow it further.

And sorry, I missed your point on inventory, as well. Sorry, Emily.

The point on inventory, we would expect to close the PTS warehouse in Witney in the second half of the year. But as we go into the start of next year, we we'll be starting to potentially stock some of the Coventry warehouse as well; and we'll be fully functioning from Warrington, the primary distribution center.

So, there's a number of ups and downs. I think, in general merchanting in the first half we had a particularly good half, I think, in terms of stock management.

And we've got some significant plans in, particularly, the plumbing and heat division in the second half. It's a bit difficult to guide exactly where we'll net out.

But I think if you go back to the working capital number, we expect to be roughly the same in terms of working capital outflow in the second half, maybe a bit better.

Charlie?

Just two from me, the first question is on your operating costs. I think, if my math are right, operating costs have gone up about 11% H1 to H1, so just trying to get an idea of the moving parts within that.

And obviously, there's some temporary measures in there's; so retraining in plumbing and heating, I guess, happens once and isn't necessarily recurring, as well as some of the other restructuring issues. But I'm trying to understand, really, how the 11% change occurs from H1 to H1.

Perhaps, numbers of people, and also wage increases, will help us to get understanding of that. And the second question a bit more detailed on general merchanting.

You've talked about an increase in the number of customers taking credit. Is that a deliberate policy, or just a result of the change in mix that's naturally occurring?

Yes, costs were up in the first half. We said we invested pretty significantly in the second half of last year, Charlie, and that's carried on into the first half of the year to some extent.

There were a couple of other things, as well. Having the second heavy-side range center in Cardiff operating as well, clearly some of those supply chains costs come through; as well as the second primary distribution center in Warrington.

And we have invested in people and service, as well so a number of factors. We'd expect the cost curve to be lower in the second half of the year, so we'd expect to benefit from some better fractionalization of costs as we drive volume through the second half of the year.

Charlie I forget the second question; I was going to do the first one but…

It was just a question on the use of credit in general merchanting [Multiple Speakers].

There is no conscious decision. We've obviously grown our Keyline business and CCF business faster, and that's been taking the credit, and increasing the capital.

Thank you.

Howard Seymour, Numis. A couple from me please, first one, a general one, John, you showed before the Q2 slowdown, and it seems that there's been a lot more talk about price competition over that period as well.

Just interested if you can see price competition across the pieces increasingly structural, or is it just as well a function of [mark-to- market] slowdown over that period?

I am I think we'd point to the slower Q2 in sales, which a number of our competitors have also reported. You can see it in our numbers.

I wouldn't have said it was any more intensive on pricing in Q2 than Q1. I think we've done pretty well on our grosses.

And second question, I suppose, is a bit more specific. You mentioned the implants today's 18 months in, so you've got a good idea of what these things are trading at now.

Is there any indication you can give us as to what sort of you give us an overall indication of new space, but what implants do tend to do in terms of the businesses on a pounds basis. I know they're all going to be different, but just to give us an indication as to where these businesses can get to?

It is a bit hard, because spares is very different from Benchmarx, it's very different from Toolstation; different from the Endeavour showrooms, and so on, but well, let me start off with returns. Returns on them are very, very, very good, because we are deploying no more capital other than the fit-out costs.

It costs 150,000-ish to fit out a proper Benchmarx; about 120,000 to do a Toolstation; less for an Endeavour showroom; and a lot less for a spares concession; and a lot, lot less for Tool Hire, but we do have to put, obviously, the Tool Hire assets in.But in terms of space cost, it's not consumptive. There is some fit-out costs; and clearly, in Tool Hire there's some assets going in.

But we are getting really good returns at these, as you'd expect, because it's just incremental margin on top of a variable cost base, with limited fixed cost pickup. So we're seeing across all of those implants we are going well.

If I look at them, Tool Hire is going exceptionally well. Benchmarx is doing well.

Toolstation, we put 20 in. And we haven't put any more in in the first half, because the team in Wickes, as you've seen from the new format, if you've been to it, they've decided to do their own counters now, because they work so well.

So they're off on that track. But notwithstanding, we still think we can open a significant number of Toolstation standalone.

So, across the board, they're doing really well. And it's difficult to give you an absolute sales number, because they're all different.

It would be wrapped up in that 1% to 2%.

Yes, absolutely. Would you assume, as well, that they come to maturity a lot quicker?

We are actually seeing yes, in the Toolstations in particular, we've seen a rapid ramp in the sales. So they step up quickly.

And you'll have been to the one on Barking, which we went to not so long ago. And they do -- the question is whether they outperform in the longer term.

I don't think they'll probably outperform in the longer term, but their step up and their early returns are really good.

Okay.

Olivia Peters, RBC. Just three questions, please.

Going back to Howard's question, I was wondering what the maturity difference is between a standalone Toolstation and an implant? Whether there is a big difference there.

Also, on the pricing in the consumer division, obviously, it seems that there was some pricing pressure there. I was wondering how much of that is you is due to discounting, and then how much is due to the rebasing of prices, going forwards?

And then, just on the last question, the range centers and the DCs, can you talk a bit more about the timing of cost savings coming through? When do you see most of the impact from the putting in place of these centers?

Thank you.

We are doing a briefing on Tilbury, as Robert said, on November 6. We're probably going to give a little bit more detail then, because we'll have more maturity, Olivia, on the range centers.

But sufficient to say that, because we continue to invest, we are seeing benefits come through, even in the early stages.

Yes, on the maturity in Toolstation, we, again, it's a bit variable across the estate, but on the implants, as I've said, we've got 20, it looks like we're probably heading for a two- or three-year maturity. But they may well cap out at slightly less than the standalone outlet; three year to five-year maturity on a standalone.

But I should say, even some of the stores that have been open nine years, 10 years are still growing on a like-for-like basis. Underlying sometimes we get competition impacts and so on, but underlying, still seeing like-for-like growth, so that's encouraging.

And then price deflation, do you want to in consumer, in price investment it's across of a number of things. We have seen some deflation in commodity prices, as I said, mentioned earlier, things like copper.

We have, as I called out, some clearance activity, which is a conscious decision by us. We've put in some better promotions, again, a conscious decision by us, to drive volume in bigger fewer bigger promotions.

And we've also continued to invest in price to maintain, and in some areas enhance, the differential to the competition. Our sales growth, I think, demonstrates that that's working for us.

So, I think it's a combination of all of those things. And at certain points clearance may pull back a bit, promotional investment may pull back a bit.

And, indeed, at other times, if we have got a long way ahead of the market on price investment and we're not seeing additional volume come through from further price investment, we may well pull back on a bit of that. So, a lot of it is within our control, I think.

The bit that hasn't been in our control in the first half has been principally copper price deflation; some of the steel price deflation; and so on; and the currency effects. So strengthening sterling impacts some of those purchases in dollar -- particularly, in euros, to be honest, and European currencies.

We have two more from floor and then go to phone [indiscernible].

Paul Checketts from BarCap, I've got two questions, please. The first is on plumbing and heating business in a broad sense.

And we've seen this price competition, and you've referenced it quite a lot today. I'm interested in your thoughts on have we seen a structural permanent step down to pricing, which makes that market less attractive and may lead you to tweak your strategy?

And second is, I know it's early days, but as we look into next year, Tony, what level of investment do you think the business will need? Thanks.

Paul was that specifically about plumbing and heating, did you say?

Yes.

Well, I'll take that and Tony take the second. Plumbing and heating, as a sector, is quite difficult.

The biggest single item is the boiler, and the boiler margins are pretty low. We've seen a dip over the last 13 months, 14 months of boiler demand, so it has put pressure.

The work we're doing, effectively, in the project of segmentation is taking capital out of PTS, which is a low-returning business, and we're putting it with our City Plumbing business, which is a higher-returning business. Because it's focused on a different market, it's focused on the jobbing plumber, and a different mix of products and services, so it gives us a better return.

I think if you -- the contract volume end will remain very, very competitive. We feel we can make a good return with the project we're going through, but we shouldn't under estimate how difficult and how big that initiative is.

And just, in terms of investment, I'd go back to reiterating what we said before: we are -- we want to drive double-digit earnings growth, low double-digit earnings growth, we want to drive a 200 basis points to 300 basis points return in lease-adjusted returns. And we'll carry on investing as we see the returns come through.

And then, if you look across the four divisions, I think we've been investing steadily in contracts. But earnings of growth has come through and returns have gone up, so we're going well.

In consumer, earnings growth of 22% last year; we've got another 8% in the first half of this year. It's up about 15% CAGR over two years.

So, that feels pretty useful. But we can still put some more capital in to drive those returns.

And returns are up again. You'll see, in the first quarter this year -- first half this year we've gone from 6% to 7% return.

So we've moved returns up and grown profits. There will be more investment in the consumer business.

We're going to put more tool stations down. And we're going to -- as we go from year one, fixing some of the basics last year in Wickes, to this year fixing range, to next year thinking about the format and different deployment of different aspects of some of those range changes, and so on, potentially across the estate there's going to be some more investment.

But as long as we can drive returns at double-digit levels -- sorry, earnings at double-digit level and returns growth, as we're seeing, we'll keep going. And then, in TP, which is a big one, I think, again, we invested in it in the first half of this year.

But 12% underlying profit growth, or just over, feels like we're in pretty good order. But there's going to be a bit of a different shape to the investment in TP over time, I think.

So -- but across the board, if we see investment opportunities and we get good returns on it, we'll keep investing; and if we don't, we won't invest. It's a bit hard to read it, but that's my pen portrait of where we'll invest, I think.

We have last one down -- oh sorry, John and then we come across -- we're going to lose him lately and then we [indiscernible].

John Messenger form Redburn. Three, if I could.

Can I just come back to general merchanting for a minute, in that 1.8% on price but gross margin up 1.7%, and then obviously operating costs ate that away. Behind all of that, is there a structural issue here in terms of what you're doing with the HR fees that is actually driving a better growth on a lump of that revenue; and then, obviously, the operating costs come in and match against it?

Because you look at it and think, actually, for a division where, by your own admission, you need to be more price competitive to have had that plus 1.8%, and effectively that to ratchet through in growth, just if you could give us a bit of a flavor as to what actually -- how you're thinking about gross margin in GM. Second one was just on contracts.

What has been the enabler? When we think over the last 18 months and the way Keyline and CCF have performed, what has driven that?

Is it you kicking the guys to really go out there and give the competitors a run for their money, or has there been something else? And why -- is it a capacity constraint that's pulling you back now?

I think you alluded to that, that kind of growth rate slowing? And then the third one was just on the PTS distribution centers.

For some reason, in my head I had seven as the number of different DCs, and I think you mentioned four closing. Can you just give us a -- do they sit against P&H in terms of costs?

Do they sit against GM as in some of the light-side activity? Just from a cost point of view, do you look at them as being broadly neutral with the opening of the second [Multiple Speakers]?

Shall I knock that one off, first? Yes, the last one to close will be Witney in the second half of this year.

Those costs sat against the P&H division. Obviously, when we've now got two primary distribution centers, one in Northampton and one in Warrington, serving them, they will pick up some costs from those DCs, of course; we can't put all cost on to TP, so they'll be picking up some of that cost.

But, obviously, in the first year of operation they've taken a bit more cost actually from that operation than they would be when they're up to full run rate. Yes, and that's part of the as Charlie mentioned earlier, that's part of the cost investment, really, of getting those primary DCs, particularly Warrington, up to speed.

If we just take, in terms of TP, this isn't a new phenomenon, John. You've covered us for many years.

It is a great business, and we're pushing it hard at a time when we're modernizing. There is a lot of moving parts in there.

The range centers are an initiative that we feel is going to give us competitive advantage. We're still really in the early stages of actually seeing what that actually will look like and how it will manifest itself in overall performance, but we can certainly see a sales uplift and an efficiency benefit.

And we aim to work that really hard. I think, we're going to probably have to drip-feed you information on that rather than actually because we haven't really got that full picture.

Our aim, really, is try and give a better impression of how it's positively impacting the business on November 6. In terms of the contracts and why is CCF and Keyline performing so well, we've got Frank Elkins with us, he'd probably say it's because of him and his great leadership; and he would be, probably, right.

We've got two spectacular teams in Keyline and CCF, and for the long run they've been growing extremely well. Clearly, Keyline has benefited from Burdens' demise from what it was as an independent parts of it went into Wolseley, and at a time when the Keyline team really picked their game up under Keiran.

Our CCF business is really aggressive and winning work against its major competitors, but still giving us really good returns in terms of both earnings and return on capital. Again, super stock turn in insulation and dry wall.

So I think it's more about taking initiative; really getting close to the customers, giving service levels that we think is better than the competition, and driving them in that way. And, at some point, they will have to moderate.

They have grown really well.

And CCF, John, just in part of the channel strategy as well, we've been going after new channels with CCF and insulation, like in new build. And I spend a day out with Howard, and if you want to be really bored about insulation go and spend a day with Howard.

But he can you tell you about EMI, and IMI, and loft laggers, which I didn't realize was a whole new profession of loft laggers, but apparently it is. But he's been going after different channels with a different sales team, and that's one of the reasons why he's grown sales so well.

We are between 40% and 50% growth over two years. So saying it's going to moderate, it's bound to moderate from 50% growth or 45% growth over two years.

Dan Porter from UBS. Just a few from me.

Just in terms of some clarification, you talk about guiding to 6% to 7% sales growth for the full year. You've just done 7.8% in the first half, yet you're talking about market conditions improving.

Can you just clarify if that's like for like, or sales growth [Multiple Speakers].

No, this is a pretty high level, Dan, in terms of it's a medium-term guidance that we'd be expecting to grow the Group; 6% to 7% over that medium term. It's not a forecast for this year.

Okay. And just in terms of P&H then, in terms of the second-quarter growth rate, you looked at 1% like for likes there.

If you could just talk about what you think the market grew through that period as well, and what you think the outlook is for the second half for that business. And just, finally, in terms of the contracts margin, just in light of that extra growth that you've seen in Keyline and CCF, can you talk about the margin development over the second half of the year, and into next year as well?

Yes. The mix, obviously, is working against us, because they are a lower return than our BSS businesses in that.

So the mix will really be dependent on the growth that we achieve next year. I'd use this as a bit of proxy.

But the fact is that we've already signaled we'll probably moderate some of our sales of both those businesses, because the growth has been so strong. And that will probably impact not necessarily our earnings, but our operating margin.

So it's difficult for me to call until we really see how the market. On P&H, when you look at the market, it is really difficult to predict it.

I would suggest it's probably growing a little bit faster than we are because we're in the middle of very disruptive projects. But I wouldn't know what to call.

We'll have to wait for Wolseley to actually give their numbers.

And just in terms of the outlook for the second half in that business, are conditions picking up?

We have still a lot of disruption going into the second half. But we're actually really positive with the progress we're making, and feel we're at a good stage with plumbing and heating in terms of how we're deploying our capital and what returns we think we'll get, all right, so can we go to the phones?

Just a few questions, in the release you talk about how well the new TP format is going, and you're seeing the initial positive signs from the conversion within plumbing and heating. Just was looking for a bit more color on what is the uplift that you're seeing in those respective businesses through those changes?

In terms of CapEx, just a point of clarification, you have increased your CapEx guidance for this year. Are you increasing it over the medium term, or is it kind of just pulling forward of CapEx just due to timing effects of when property comes available, etc.?

And I know it's only a small part of your business, but can you just give us an update on how well the Toolstation trial is going in the Netherlands?

Shall I do CapEx? In the Netherlands, Robert we're going okay.

It's still a trial, as we've said for some time. And we did open a couple more branches in the first half, so that probably tells you that we're encouraged by the performance of the individual branches.

We've now got all of the seven branches we're trading from to make some money, so they're now all trading profitably. The question then is can we get them profitable enough to roll out and, therefore, cover all of the overhead.

And it's a scale question, I guess. But we're making encouraging progress.

And Mark Goddard-Watts, the guy that runs it for us, as I said before, has moved his family over there and is committed to the project. He's done it before with Screwfix, he's done with Toolstation, and we certainly hope he can do it with Toolstation in the Netherlands.

But we're making encouraging progress. On CapEx, we guided to over 200 million; in the first half, 45 million is freehold.

And, as I said before, 17 million of that is in Tilbury and Coventry. So none of those assets were productive in the first half of the year, so we are carrying a bit of drag from having some non-productive assets on the balance sheet until they start operating, and Tilbury now is.

What I've been trying to do is point you back to return on capital employed really. We want to grow that between 200 basis points and 300 basis points over the medium term.

CapEx will move up and down a little bit, depending on the investments we're making, as I previously described to Paul. And it will depend quite significantly on the freehold properties we buy, and, actually, the quality of that estate we can get hold of.

I think best thing for us to do is sort of guide each year really on where we are with CapEx, but point you back to what we want do with earnings growth and returns; that's the most important thing.

Robert, I don't want to be unhelpful but, obviously, we've tried to give guidance on overall sales expectations over the medium term. We report TP on a six-monthly basis, and you've seen in the first six months it grew really well.

And that's the whole combination of different initiatives that are going on. Our plumbing and heating, at the moment, is clearly being disrupted with the change of formats that's going on.

But we are upbeat and expecting a good return, as we go through that project. As I say, overall, we've given you the medium-term guidance.

We've signaled that we're keen to outgrow our markets that we operate, and return single-digit returns on earnings.

Maybe if I could have one follow-up question on the [Technical Difficulty] business. In previous calls you've given an estimate of the [Technical Difficulty].

Would you care to put a similar figure on [Technical Difficult] construction?

We haven't, Robert. And I wouldn't want to do that over the phone now.

But, no, we haven't put a figure on construction. It will be a couple of points to sales, that's for sure.

And the last questions -- oh Clyde Lewis from Peel Hunt.

Clyde Lewis from Peel Hunt, just a couple, if I may. Coming back on costs, and Charlie's point, and obviously the increase that you posted, can you just give us an idea as to how much employment costs have gone up -- employment people costs have gone up within the overall mix?

And also, looking at the 6% to 7% growth that you're targeting for the medium term, what would you expect employment costs to grow at? If you're growing revenue at 6% to 7%, how would your employment costs compare with that?

On another adjunct to the cost question was on diesel. Can you give us an idea as to how much you've benefited from lower diesel costs in the first half of the year compared to last year?

And the other one I had was on regional differences, both in terms, I suppose, growth, but also in terms of competition as well. Can you just give us the highlights and lowlights, I suppose, on that side of things?

Shall I do the easy one on regionals? We've enjoyed good growth across all our territories.

Actually, one of the nicest things over the last 2-1/2 years has been the consistent growth and split between our Northern, our Midlands, our East, South East, and our South West divisions. So, actually, it's been a really balanced growth.

London oscillates. Sometimes it's stronger; sometime, in the last period it's been a bit quieter.

But generally speaking, where we really focus is at that spread. So it's been pretty good.

I don't know the employment costs.

No, I can tell you a couple of components of it. We've employed just over 1,000 extra people, so it would be over 4% in terms of the extra employees we've taken through to stand behind that 8% sales growth.

And there's a couple of points of inflation, as well. What I would say is it's important to think about it as and that should fractionize overtime, because as we put new estate down those stores and branches mature.

So, as we put down 50-odd Benchmarx, 50 Toolstations, 20 TPs in the last 18 months, you put the bodies in, and then clearly you'll get some productivity gains over time. So you shouldn't expect that to continue at quite that rate.

And we've been a bit more judicious actually, looking forward over the next six months in terms of headcount increase, so it shouldn't be a size there.

In essence, we are in a period where the range centers, the primary distribution, the step-up in our IT spend are all areas of step aside. Our aim would always be to hold overhead increases below our sales increase, as a measure.

But we've made some strategic investments that we think we'll get medium-, longer-term benefits from.

The diesel?

Diesel, we're in a couple of million quid, last one, then, Kevin?

Just a question around the consumer, really and that is, arguably, it's been the area of greatest expansion across the divisions. I just wondered if you'd be to help us measure the success of that, is it conceivable that you could give us a per-square-foot rate of growth in

Didn't hear the start of the question, Kevin, the motorbike went past us.

Just in the consumer area, where, arguably, you've had the greatest level of expansion investment, as it were. To just sort of help us judge how successful that's been, is it possible to give us any idea of the per-square-foot growth of the business like-for-like, in either the last six, 12, or 18 months?

We can do. But can I take that offline, because I haven't got those numbers with me?

I've got the branch numbers. I haven't just got the square footage numbers, but I can we can calculate and bring that to you.

And I had a related one to that, and that is are you likely to quicken even further that pace of growth in view of the ground that's being conceded by your main competitor? Is that an even bigger opportunity for you to invest in the business, do you think?

So, there's two bits to that, I think. Screwfix and Toolstation combined will put down 100 shops this year, more weighted to probably 60-40 probably in their favor.

But we are going at a rate. It's been widely documented that the big boxes will come down by about 100.

Clearly, that's taking capacity out of that shed market. We think part of that is taken up by Screwfix and Toolstation, so we're going to keep going pretty high.

And they are compelling propositions with good maturity curves, and good like for likes, and fantastic returns. And we operate a smaller box than the competitor, and we think the returns we get out of it on a unit basis are very good.

Well, they are very good, so we're going to keep going with that. In terms of Wickes, as that capacity comes out, those 100 shops or so come out, we've always said we think we're structurally advantaged.

We're lower on price, about 10% we think, maybe 20% against our competitors as they move prices up. And we drive hard, and we're seeing the benefits of that through sales growth.

So, we're better priced. We've got online range extension capacity, and that's working really well for us.

We've gone to about 6,000 or 7,000 extra products online. And we're seeing, as we've said before, 20%, 25% growth in online; becoming a bigger part of our business, and it's not cannibalizing our existing estate.

So, that's working for us. So I think you'll see us investing harder after online and range extension, both in Toolstation and in Wickes over time.

And then in terms of our boxes, we operate from 25,000 square foot in Wickes, and about 4,000 in Toolstation. Both those boxes are smaller than the competition and, therefore, we think we can provide a convenient service to customers.

And part of click-and-collect is having enough national coverage in convenient locations. We've got 220, or so, Wickes; and the competition's got closer to 400 in both green and orange formats.

As they take it down, we think we can add some space. And actually, we can have some space in catchments which are underserved, because we've got a 25,000 square foot harder discounting box, which we think, and demonstrably to date, customers are responding to.

So we think there's definitely opportunity to put space down yet.

I think, under Simon's leadership we're getting good returns from the new stores, so we're pushing hard, within the guidance we gave within the presentation, Kevin.

Okay. Thank you.

Great, I've not let anyone down, have I? Thank you very, very much for your time.

Really appreciate it.