Presentation by John Carter, CEO of Travis Perkins Plc at the FIS 2015 Conference. More information at www.thefis.org/fis-events/fis-conference/

1. UK Construction. September 2015UK CONSTRUCTION. 2015

2. UK Construction. September 2015
Agenda
Travis Perkins today
The Travis Perkins Group
What drives our markets
Current trends in UK construction
How construction will change
It’s still about relationships

3. UK Construction. September 2015
TRAVIS
PERKINS
TODAY

4. UK Construction. September 2015
Leading building materials distributor
Contracts
TP Group
General
Merchanting
Plumbing &
Heating
Consumer
£1.9bn sales, ~15% share £1.3bn sales, ~15% share £1.1bn sales, ~20% share £1.3bn sales, <10% share
Supply Chain – fast & efficient available range
Commercial – better sourcing & product innovation
IT – enabling strategy & efficiency
Property – enterprise wide network planning
HR & Finance

5. UK Construction. September 2015
Customer
innovation
Optimising
network
Scale
advantage
Portfolio
management
• Improved value
• Extended range
• Product
development
• Format renewal
• Technology
enabled
• Multi-channel
• TP expansion &
modernisation
• Wickes national
footprint
• Plumbing & Heating
format clarity
• Implants intensify
returns
• Trade parks
• Supply chain
investment
• Leverage property
capability
• Group sourcing
benefits
• Shared technology
investment
• Streamlined
central functions
• Devolved
management
responsibility
• Disciplined
planning & capital
allocation
• Regular market
updates
Enabled through people & evolution of unique culture
Levers of value creation

6. UK Construction. September 2015
Further areas of growth
• Accelerate expansion into
new channels for key
product areas
• Buy or Build trade-off
where valuations
prohibitive
TP Group Product
Manufacturing
Installation
Geography
Online
New categories
• Targeting under-served
catchments with existing
business models
• International only in
exceptional circumstances
• Access specialist markets
& adjacent categories
(e.g. electrical)
• Focus on product areas
attractive to existing
customers
• Buy or Build trade-off
where valuations
prohibitive or lack of
targets
• Demonstrable IP /
innovation key target
areas
• Strategic investments to protect supply chain
• Share in categories which bypass distribution
• Installation risk / potential competition with
customers
• Not a focus
Channel

7. UK Construction. September 2015
MARKET.
DRIVERS

8. UK Construction. September 2015
Key drivers for construction
● GDP growth
● Housing transactions (and mortgage approvals)
● Consumer confidence - for RMI
● Public Spending
Consensus 2015 - 2019
Average 3 - 4% Growth
A STABLE ENVIRONMENT FOR THE NEXT 4 - 5 YEARS

9. UK Construction. September 2015
Indicators for our business are mixed
18ptSite visitors
24ptSite reservations
+5%
Mortgage
approvals
+0%
Housing
transactions
+3%Housing prices
+7pt
Consumer
confidence
+17pt
Climate for
purchases
(0.3)%Equity withdrawal
(1.0)%Retail Sales growth
+3%Construction output FlatExpected workload
+1ptTrade confidence +1.9%
New construction
orders
(24)%Architect work
loads

10. UK Construction. September 2015
Medium-long term sustainable RMI growth
Smaller
families driving
225,000 new
households
per year
27.8m
homes
across the
country
Source: Office of National Statistics
Only 60%
maintained to
a satisfactory
level

11. UK Construction. September 2015
Mortgages and transactions linked
Source: HM Revenue & Customs / Bank of England, Sep 2015
Our market lags this by 9 months

12. UK Construction. September 2015
Resurgent consumer confidence
Source: GFK, Sept 2015
201520132011200920072005
Bank of England Base Rate
Consumer Confidence Consumer Confidence
- Rolling 12 Months

13. UK Construction. September 2015
Prospects are good but summer has been soft
“Glenigan expect ,,,, a rise in
project starts during the second
half of the year.” Allan Wilén,
Economics Director - Glenigan
“Prospects for the construction industry are very
bright. Construction output is forecast to increase
4.9% in 2015 – and 21.7% overall by 2019. ” Dr
Noble Francis, Economics Director - CPA
“The weather may have been a washout this month, but the sun has
certainly been shining on the British economy. (August) The pace of
growth has been energised across the sectors, and it is good news that
this is set to continue as we head into the autumn.” Rain Newton-
Smith, CBI Director of Economics
“UK construction companies remained
on a reasonably strong growth footing
in August.” Tim Moore, Senior
Economist - Markit
“Since the Help to Buy scheme was introduced in 2013
house building activity has increased strongly. Private
housing starts in 2014 were up nearly 40% …….we are
still only building around half the number of new homes
the country needs,.” Stewart Baseley, Executive
Chairman of the HBF
"The summer lull continued into August, ….. a tick up
in activity is expected for September." Savills
Commercial activity report

14. UK Construction. September 2015
Conclusion - overall positive with some challenges
● New house building buoyant
● RMI edging forward but could do with more
transactions
● Commercial lagging - but will come through
● Infrastructure continuing strongly
● Public sector flat and unlikely to change

15. UK Construction. September 2015
LOOKING
FORWARD

16. UK Construction. September 2015
Major
Contractors
1
Housebuilders
2
Changing
Relationships3
• Safety requirements getting more important
• Struggling to make economic returns
• Strong move towards project management
• Set for a fabulous run over the medium term
• Focus on land buying and marketing
• Concentrating even more on efficiency and cost management
• More paperwork and complex contracts
• Main contractors driving framework agreements both for
product and merchant
• Manufacturers seeking to gain more influence
• Merchants investing in supply chains
Trends and observations

17. UK Construction. September 2015
CHANGING
MARKETS

18. UK Construction. September 2015
Technology enabling customers
15
years
ago we
did this
Research Design Source
Now we
can do
this

19. UK Construction. September 2015
Product innovation
Improving cost
effectiveness of solar
energy
3D printing enabling rapid
advancement in materials
Brian Peters 3D printed ceramic bricks

20. UK Construction. September 2015
Construction innovation
On-site fabrication to high
specification
Advancements in modular
(off-site) construction
Facit Homes on-site timber processing Culver Build modular construction

21. UK Construction. September 2015
How long until we see this?

22. UK Construction. September 2015
BIM - is it a game changer?
It will affect
everything we do
… lead through
major projects and
public sector
The full impact will
take time to come
through
We need to work together to manage the impact;-
manufacturers; merchants; contractors

23. UK Construction. September 2015
Customer relationships are key
Change is accelerating but can be an opportunity
○ Stay close to each other
○ Focus on our respective strengths
○ Embrace the change don’t resist it
○ Others will make you irrelevant if you don’t move
○ Look for mutual ‘Wins’
○ Open relationships with shared measures

24. UK Construction. September 2015
QUESTIONS.