Travis Perkins (TPK)
Travis Perkins: Travis Perkins: Publication of 2019 Annual Report
03-March-2020 / 15:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Publication of the Annual Report 2019
Further to the release of its results announcement this morning, Travis
Perkins plc (the "Company") announces that it has today published its Annual
Report for the year ended 31 December 2019. The Company's Annual Report 2019
can be viewed on the Company's website - www.travisperkinsplc.co.uk [1]
In accordance with rule 9.6.1 of the Listing Rules, copies of the following
documents have been submitted to the National Storage Mechanism and will
shortly be available for inspection at www.morningstar.co.uk/uk/NSM [2]
? Annual Report and Accounts 2019;
A condensed set of the Company's financial statements and information on
important events that have occurred during the year and their impact on the
financial statements were included in the Company's announcement. That
information together with the information set out below which is extracted
from the Annual Report constitute the requirements of Disclosure and
Transparency Rule ("DTR") 6.3.5 which is to be communicated via a Regulatory
Information Service in unedited full text. This announcement is not a
substitute for reading the full Annual Report. Page and note references in
the text below refer to page numbers in the Annual Report. To view the
preliminary announcement, visit the Company's website:
www.travisperkinsplc.co.uk [1]
Enquiries:
Graeme Barnes
Graeme.barnes@travisperkins.co.uk
+44 (0) 7469 401819
Robin Miller
Ribin.miller@travisperkins.co.uk
+44 (0) 1604 592533
STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES
For the year ended 31 December 2019
The Group's risk management activities continue to be developed to support
management in identifying both threats and opportunities that could
materially impact strategic delivery, performance, compliance and
reputation. The Group operates in markets and an industry which, by their
nature, are subject to a number of inherent risks. In common with most large
organisations the Group is also subject to general commercial, political and
economic risks. The Group is able to mitigate those risks by adopting
different strategies and by maintaining a strong system of internal control
which is routinely tested and assured. However, regardless of the approach
that is taken, the Group must accept a certain level of risk in order to
generate suitable returns for shareholders, and for that reason the risk
management process is closely aligned to the Group's strategy.
Risk management framework
The Board has developed a risk reporting framework that ensures it has
visibility of the Group's key risks, the potential impacts on the Group and
how and to what extent those risks are mitigated. Further details of the
Group's risk management processes and oversight are given in the Corporate
Governance Report on page 75.
The Board undertook an enhanced exercise during 2019 to consider the nature
and level of risk it is prepared to accept to deliver the strategy. Risk
appetite is set across a suite of risk categories directly relevant to the
Group, supported by high-level risk statements which set out the
expectations for the management and control of each category of risk. The
resulting assessment of risk appetite has been set to balance opportunities
for growth and business development in areas of potentially higher risk and
return, whilst prioritising safety and maintaining the Group's reputation,
legal and regulatory compliance and the desired high levels of customer
service and satisfaction.
Principal risks
At least twice a year, the Board and Group Leadership Team formally assess
the Group's principal risks. The table on pages 40 to 51 sets out, in no
particular order, the principal risks that are currently considered by the
Board to be material to the achievement of the Group's objectives, their
potential impacts, mitigating factors and those areas of the businesses'
strategies that are potentially impacted. The inherent risk (before the
operation of mitigating controls) is stated for each risk area together with
an indication of the current trend for that risk.
The nature of risk is that its scope and potential impact will change over
time. As such the list below should not be regarded as a comprehensive
statement of all potential risks and uncertainties that may manifest in the
future. Additional risks and uncertainties that are not presently known to
the Directors, or which are currently deemed immaterial, could also have an
adverse effect on the Group's future operating results, financial condition
or prospects.
Key changes in the year
***********************
The risk environment in which the Group operates does not remain static. As
part of the ongoing risk review process, the Board and Group Leadership
Team: identify new risks for the Group, assess the inherent risk associated
with each principal risk, and determine whether the risk trend facing the
Group is increasing, decreasing or unchanged.
Whilst the risk profile for the Group remains relatively stable relative to
2018, the following key changes were identified in 2019:
? One additional principal risk has been disclosed in relation to IT
systems and infrastructure. This risk previously formed part of the risk
associated with change management and has been separated given the Group's
plans to modernise its IT infrastructure and replace a number of legacy
systems
? The inherent risk associated with business transformation initiatives,
including the IT modernisation programme, has been reassessed as "high" to
reflect the scale of change activities ongoing or planned within the Group
? The inherent risk associated with cyber threats and data security has
been increased to "high" to acknowledge that the continual changes in both
threat sources and the tactics employed by cyber criminals present an
ongoing challenge for all companies, including the Group
Emerging risks
**************
The Board is required to undertake a robust assessment of the emerging risks
that may impact the Group under the 2018 UK Corporate Code, which is
effective from 1 January 2019. In response to this requirement,
consideration of emerging risk has been integrated into the Group's current
risk management practices, which continue to be developed and refined. The
Board regularly considers the latest risk research alongside views on
emerging risks collated from assessments made by the business unit and
functional leadership teams. These risks are monitored but are not currently
assessed as sufficiently material to be considered as principal risks.
The Group is monitoring the potential impact of COVID-19 carefully. The
Group will continue to review the possible impacts on the business and
refine its contingency plans as more information about the epidemic emerges.
Risk workshops are undertaken periodically with the most significant
business units and are structured to consider a number of risk categories,
including "disruption", being the risks that may emerge and impact the
viability of a strategy or business model. The current statement of
principal risks recognises the potential for such disruption in the
competitor and customer landscape, as well as in relation to suppliers.
Category Principal risks Risk trend Inherent risk
External Changing customer High Medium High
and competitor High
landscape
?
Supplier risks
?
Brexit
?
Market conditions
?
Strategic Capital allocation Medium High
?
Change Management Medium
?
Portfolio
management ?
Technological IT systems and ? High High
infrastructure
?
Cyber threat and
data security
Operational Health and safety Medium
Talent management ? Medium Medium
Legal compliance ?
?
Key disruptive risks are also identified and mitigated by the Group. None of
them are currently considered to be principal risks
Risk Trend: ? Increasing ? Decreasing ? Unchanged
CHANGING CUSTOMER AND
COMPETITOR LANDSCAPE
INHERENT RISK RISK MITIGATION
RISK: High DESCRIPTION
The Board is
TR: The Group cognisant of the
Unchanged sells and risks and
distributes opportunities
building presented by the
materials changing customer
STRATEGY: through a and competitor
number of landscape and
channels. The evaluates
number of developments both
Best-in-class outlets and in terms of
services channels where threats and
building opportunities for
materials can the Group.. One
be purchased example of this in
Focus on continues to 2019 is the
trade grow with new decision to pursue
competitors the demerger of
entering the the Wickes
market. These business, and for
Advantaged new entrants the Group to focus
businesses may operate on the service of
business trade rather than
models which retail customers.
differ
IMPACT: significantly
from the
traditional The Group
merchanting, continues to build
Adverse retail and multi-channel
effect online formats capabilities that
from which the complement its
Group existing
currently operations and
on financial operates and enable customers
results may take to transact with
market share. the Group through
channels that best
suit their needs.
Loss of
market share The demerger
of the Wickes
business will The Group is able
change the to use its sites
risk profile flexibly to
of the Group respond to
in the coming changes.
year, as Alternative space
exposure to utilisation models
the retail are possible,
sector is including
reduced. maintaining
smaller stores and
implanting
additional
Customer services into
purchasing existing branches.
habits also During 2019,
continue to Toolstation opened
evolve with an its first high
increasing street store.
percentage of
transactions
for the Group
now The development of
originating new, innovative
online. and competitive
Customers' supply solutions
preference for is a key strength
purchasing of the Group. It
materials works closely with
through a customers and
range of suppliers on a
supply programme of
channels and continuous
not just improvement to
through the enhance the
Group's customer
traditional proposition.
competitors
may adversely
impact the
profitability Pricing strategies
of across the Group
branch-based are regularly
operations and reviewed and
the Group's refined as
overall necessary to
performance. ensure they remain
competitive.
Increasing
price
transparency
could lead to
a perception
that the Group
is less price
competitive
leading to
downward
pressure on
price and
margins.
TALENT MANAGEMENT
INHERENT RISK RISK MITIGATION
RISK: Medium DESCRIPTION
The Group's
TR: People are key employment
Unchanged to the Group's policies and
success. The practices are kept
ability to under regular
recruit, review. Staff
develop, engagement and
retain and turnover by job
motivate type is reported
suitably regularly to the
STRATEGY: qualified and Group Leadership
experienced Team and the
staff is an Board. A
important Group-wide talent
Best-in-class driver of the and succession
services Group's exercise was
overall undertaken in 2019
performance. and reviewed by
The Group may the Board.
Focus on also be Succession plans
trade exposed to are reviewed
skills annually; the
shortages in process was
certain areas reviewed for 2020
Simplifying which can to ensure that
the Group result in plans are in place
salary cost for the Board,
pressures. senior management
This may be positions and
IMPACT: compounded by other critical
Brexit if roles and to
significant promote the
numbers of EU development of
Adverse citizens diverse and
effect on decide to inclusive
delivery of leave the UK pipelines.
strategy (see also page
47). In
particular,
the The Group's reward
Competitive availability and recognition
disadvantage of suitably systems are
qualified actively managed
commercial to ensure high
drivers is an levels of employee
area of engagement.
ongoing focus Salaries and other
for the Group, benefits are
which is benchmarked
critical to regularly to
the operation ensure that the
of its fleet Group remains
to meet competitive and
customer the Group operates
delivery incentive
expectations. structures to
ensure that
high-performing
colleagues are
The strength adequately
of the Group's rewarded and
customer retained.
proposition is
underpinned by
the quality of
people working A wide range of
throughout the training
Group, programmes are in
particularly place to encourage
in branch and staff development.
other Management
customer-facin development
g roles. Many programmes are
colleagues available to those
have worked identified for
for Travis more senior
Perkins for positions. The
many years, Group's "Learn and
during which Earn"
they have Apprenticeship
gained Programme ("LEAP")
valuable has been in place
product and for a number of
customer years and has a
knowledge and track record of
expertise. successful
delivery of
apprenticeships in
both branch-based
The Group and functional
faces roles.
competition
for the best
people from
other
organisations.
Ensuring the
retention and
development of
colleagues and
that robust
succession
plans exist
for key
positions is
important for
the Group to
ensure it has
the right
skills and
experience to
deliver on its
strategic
objectives.
SUPPLIER RISKS
INHERENT RISK RISK MITIGATION
RISK: Medium DESCRIPTION
Making decent
TR: The Group returns is one of
Unchanged faces a number the Group's
of supplier cornerstones which
risks in requires it to
relation to treat both
STRATEGY: key customers and
dependencies suppliers fairly.
and The commercial and
relationships, financial teams
Best-in-class overseas have established
services sourcing and strong
disintermediat relationships with
ion, all of the Group's key
which could suppliers and work
Focus on adversely closely with them
trade impact upon to agree contracts
ranging and that are
price. beneficial to both
parties and
Simplifying facilitate
the Group continuity of
The Group is quality materials.
the largest This interaction
customer to a continues as the
Financial number of its Wickes demerger is
strength suppliers. In progressed and
some cases, revised
those contractual
suppliers are arrangements are
large enough put in place.
to cause the
Group
significant
IMPACT: difficulties Where possible,
and disruption contracts exist
if they are with more than one
unable to meet supplier for key
Adverse their supply products, to
effect on obligations reduce the risks
financial due to either of dependency on a
result economic or sole supplier.
operational
factors.
Alternative
Adverse sourcing may The Group has made
effect on be available, a significant
reputation but the investment in its
volumes Far East
required and infrastructure to
the time it support its direct
may take those sourcing
suppliers to operation. This
increase allows the
production development of own
could result brand products,
in significant thereby reducing
stock-outs for the reliance on
a considerable branded suppliers.
time, The Group has also
adversely adopted a
impacting conservative
customer hedging policy to
service and, reduce its
potentially, exposure to
leading currency
customers to fluctuations.
switch to a
competitor in
the short- or
long-term. Independent checks
are undertaken on
the factories
producing products
The Group for the Group,
sources a including the
number of quality and
products from suitability of
overseas those products
factories, before they are
which shipped to the UK.
increases the The results of
Group's these checks are
exposure to kept under review
sourcing, with action taken
quality, as necessary to
trading, address any
warranty and concerns
currency
issues. This
again may
adversely
impact
customer
service and
choice.
Manufacturers
of materials
and products
sold by the
Group may also
look to sell
directly to
end customers
in the future,
diminishing
the role of
distributors..
The Group's
intended
demerger of
the Wickes
business, as
well as the
potential
future sale of
its Plumbing &
Heating
businesses,
will reduce
the size of
the Group,
which may
impact on its
ability to
renegotiate
future supply
contracts on
equivalent or
favourable
terms.
HEALTH AND SAFETY
INHERENT RISK RISK MITIGATION
RISK: Medium DESCRIPTION
The Group
TR: Keeping the continues to
Unchanged Group's challenge its
colleagues, thinking and
customers, approach to
suppliers and improving its
STRATEGY: the public safety performance
safe is a through its now
cornerstone of well established
the business "Stay Safe" brand.
Best-in-class and at the
services heart of how
it operates.
The Group Governance of Stay
expects Safe is well
Financial everyone to go established and
strength home to their designed to
families promote a
continual focus on
health and safety.
IMPACT: Stay Safe
safely performance is
everyday. reviewed at all
Board Meetings, by
Harm to our the Group
colleagues, Leadership Team
customers and The Group and by the
the wider operates over dedicated Stay
community two thousand Safe Committee,
sites, many which is chaired
with complex by a Non-executive
and busy Director. Safety
Potential yards. It also performance is a
legal action, operates one focus at the
fines and of the largest leadership
penalties vehicle fleets meetings for each
in the UK, of the Group's
distributing business units,
heavy and with regular
Adverse bulky consideration of
effect on materials. continuous
financial Poorly improvement plans
results implemented in this area.
safety These forums also
practices on monitor the
site, on the achievement of
Adverse road and at transport-related
effect on delivery compliance
reputation locations requirements,
could result including driver
in significant licensing and
harm to people professional
which would competence. In
damage the addition, a number
Company's of the business
reputation and units, including
could impact Travis Perkins,
trading have retained FORS
performance. accreditation of
their vehicle
fleets.
During 2019 a
programme of
"Safety Deep Dive"
reviews was
introduced to
assess how
effectively key
safety risks are
managed and to
benchmark the
Group to leading
practice. Safety
management
arrangements are
periodically
assessed and
accredited by
members of the
Safety Schemes in
Procurement Forum.
Incidents are
monitored,
investigated and
corrective action
taken to reduce
the likelihood of
similar incidents
in future. Stay
Safe assurance
reviews are
regularly
undertaken at all
sites by dedicated
safety
professionals with
any resulting
improvement
actions tracked to
completion.
De-risking the
Group's
operations,
improving health
and safety
awareness and
implementing
improved ways of
working are at the
forefront of the
Group's
activities.
Further
information on
progress made
during the year
can be found in
the Health and
Safety report on
pages 52 to 67.
CAPITAL ALLOCATION
INHERENT RISK RISK MITIGATION
RISK: Medium DESCRIPTION
Return on capital
TR: The Group is one of the
Decreasing manages a Group's key
number of performance
different indicators as
businesses in shown on page 21.
STRATEGY: the UK which The Group's
operate in decision to refine
different, but its strategy and
complementary focus on trade
Focus on channels. As customers in the
trade the Group's most advantaged
markets businesses has
continue to influenced the
develop, it is allocation of
Advantaged investing to capital during
businesses enhance its 2019, with more
existing focused management
businesses and attention and
also to capital deployment
Financial develop new in areas of higher
strength propositions return. This
to better capital allocation
serve its policy is also a
customers. driver for the
Wickes demerger,
enabling both
Wickes and the
While the remaining Group to
IMPACT: Group operates pursue separate
a disciplined strategies and
capital priorities for
allocation investment and
Adverse process, there growth.
effect on is a risk that
financial it may be
results over-investing
in channels Responsibility for
which may identifying and
decline or implementing
that it may opportunities to
not be expand, improve or
allocating modify the Group's
sufficient operations rests
capital to new with each of the
propositions business unit
and advantaged leadership teams.
businesses Capital is
resulting in deployed or
sub-optimal re-deployed
returns on through a
capital. Group-led forum to
strategically-alig
ned projects
expected to
achieve the best
return on capital.
Projects are
required to
present a
comprehensive
business case and,
for the largest
investments, Board
approval is
sought.
Major projects are
reviewed by the
Group Leadership
Team, which
introduced a
monthly programme
review during
2019. Progress
against plan is
kept under close
review.
Post
implementation
reviews are
undertaken of all
major projects and
returns are
monitored on an
on-going basis to
ensure that the
expected returns
are achieved, but
also to allow the
Group to modify
its capital
allocation when
appropriate.
CHANGE MANAGEMENT
INHERENT RISK RISK MITIGATION
RISK: High DESCRIPTION
As set out in
TR: The Group relation to
Increasing undertakes a capital
variety of allocation, all
projects potentially
throughout its significant
STRATEGY: business in projects are
order to subject to
generate detailed
returns for investigation,
Best-in-class its assessment and
services shareholders. approval prior to
These projects commencement.
include the
modernisation
Advantaged of the Group's
businesses core IT Dedicated teams,
systems and including
infrastructure financial
, on-going resource, are
Simplifying development of allocated to each
the Group its supply project, with
chain additional
operations and expertise being
branch and brought into the
Financial store Group to
strength networks, and supplement
the existing resource
simplification when necessary.
of the Group
IMPACT: to speed up
decision-makin
g and reduce All strategic
costs. projects are
Adverse supported by an
effect on appropriate
financial governance
results By their structure and are
nature, such closely monitored
strategic through the Group
projects are Leadership Team's
Adverse often programme review
effect on complicated, with regular
shareholder interlinked reporting to the
value and may Board.
require
considerable
resource to
deliver. As a Regular
result, the communications are
expected undertaken to keep
benefits, colleagues
timescale for informed.
delivery and
the costs of
implementation
of each When projects do
project may not deliver
deviate from against
those expectations,
anticipated at exercises are
their outset. undertaken to
Colleague capture the
engagement may "lessons learned"
be impacted which are fed into
during a future projects.
period of
significant
change and
cost-focus.
Following the
announcement
in 2019 to
delay the
Merchant ERP
replacement
programme, the
Group is
considering
its approach
to
implementation
of the various
elements of an
ERP system,
after
modernisation
of the core IT
architecture.
The results
and delays to
this programme
are
illustrative
of the
challenges
associated
with major
transformation
projects in
Group with a
number of
complex legacy
systems.
BREXIT
INHERENT RISK RISK MITIGATION
RISK: High DESCRIPTION
It remains
TR: The result of difficult to
Unchanged the UK vote to determine the full
leave the impact of Brexit
European Union on the Group. The
("Brexit") and Board continues to
STRATEGY: the subsequent monitor
process to developments and
determine the market conditions
terms of the and will react
Best-in-class withdrawal accordingly.
services agreement has
caused
considerable
market The Board has
Financial uncertainty undertaken a
strength throughout process to assess
2019 and the risks
continues to associated with
do so. It Brexit. This
IMPACT: remains includes
difficult to assessment of
predict the existing risk
economic mitigations and
Adverse outlook and actions in
effect on impact to the progress and is
financial Group in the updated on a
results short term or regular basis.
long term. The
Group
continued to
experience The Group
significant continues to
volatility in invest in the
the value of business where
sterling those investments
against the are expected to
principal realise acceptable
currencies returns, but it is
used to pay prepared to flex
for imported activity levels
goods during should market
2019. conditions so
dictate.
Future trading
relationships Throughout 2019,
with overseas exercises were
markets have undertaken by the
yet to be business unit
determined and leadership teams
these may to assess the
result in level of stock
higher tariffs holding required
or duties on in each business
imports of unit to minimise
construction disruption to
products as customers as a
well as consequence of
extended lead Brexit. The Group
times on has taken steps to
imported minimise
supplies or disruption to its
result in the imports from the
need to source EU and was granted
some products Authorised
elsewhere. Economic Operator
These risks status by HMRC in
have the early 2019.
potential to
impact the
Group
significantly. Regular
Of less risk communication
to the Group, continues with
but both customers and
potentially key suppliers. A
significant customer statement
for its is in place and
customers, are will be reassessed
the as agreements with
significant the EU are
numbers of clarified.
non-UK
nationals
employed in
the Where the cost of
construction goods increases
industry and due to the
the exchange rate
distribution deteriorating or
and logistics additional tariffs
markets. If and duties, the
the UK becomes Group will seek to
a less pass those price
attractive increases through
place for them to its customers,
to work this but its ability to
could result do so will depend
in labour upon market
shortages and conditions at the
consequent time.
salary cost
pressures and
could change
dynamics in The processes in
our key place around the
markets. recruitment and
Whilst retention are set
significant out in the related
changes to principal risk on
product page 43.
standards and
legislative
requirements
more generally
are not
anticipated in
the short
term, they
could impact
the Group if
introduced in
the future.
The Group
operates a
small number
of branches in
Northern
Ireland and
the Republic
of Ireland.
During 2019,
the Group
acquired a
controlling
share of the
Toolstation
Europe
business.
Whilst not
material to
the Group,
business
operations in
these
territories
may be
impacted by
the final
agreements
made with the
EU including
those in
respect of
borders,
tariffs and
information
flow.
The continued
uncertainties
that surround
Brexit mean
that a more
precise
assessment of
the impact on
the Group's
operations is
unlikely to be
possible until
further detail
becomes
available in
respect of the
future trading
relationships
of the UK
after the
transition
period.
MARKET CONDITIONS
INHERENT RISK RISK MITIGATION
RISK: High DESCRIPTION
The Board conducts
TR: The Group's an annual review
Unchanged products are of strategy, which
sold to includes an
businesses, assessment of
trades and likely competitor
STRATEGY: retail activity, market
customers for forecasts and
a broad range possible future
of end uses in trends in
Best-in-class the built products, channels
services environment. of distribution
The Group's and customer
markets are behaviour.
cyclical in
Focus on nature and the
trade performance of
those markets The Group
is affected by maintains a
general comprehensive
Advantaged economic tracking system
businesses conditions and for lead
a number of indicators that
specific influence the
drivers of market for the
IMPACT: construction, consumption of
Renovation, building materials
Maintenance in the UK.
and
Adverse Improvement
effect on and DIY
financial activity, Significant events
results including including those in
mortgage the supply chain
availability that may affect
and the Group are
affordability, monitored by the
housing Group Leadership
transactions Team and reported
and the timing to the Board
and nature of monthly by the
government Group CEO.
activity to
stimulate
activity, net
disposable Should market
income, house conditions
price deteriorate then
inflation, the Board has a
consumer range of options
confidence, dependent upon the
interest rates severity of the
and change.
unemployment. Historically these
have included
amending the
Group's trading
A significant stance, cost
downturn in reduction,
economic lowering capital
conditions or investment and
major reducing the
uncertainty dividend.
about the
future outlook
could affect
the levels of
construction
activity in
the Group's
markets and
the confidence
levels of the
Group's
customers,
which could
reduce their
propensity to
purchase
products and
services from
the Group's
businesses.
PORTFOLIO MANAGEMENT
INHERENT RISK RISK MITIGATION
RISK: Medium DESCRIPTION
All portfolio
TR: The Group management
Unchanged undertakes activities are
acquisition subject to a
and disposal detailed appraisal
activity to process and
STRATEGY: optimise its ultimate approval
portfolio of by the Board.
businesses and
drive
Focus on shareholder
trade return. In A formal programme
December 2018, of work, with
the Group dedicated resource
announced a is put in place
Advantaged strategy to for the
businesses simplify the larger-scale
Group and transactions
concentrate on including those in
its relation to
Simplifying trade-focused Plumbing & Heating
the Group businesses. In and Wickes.
the last year, External expertise
the Group has: and advisers are
involved as
Financial required to
strength support the
? Set out programme teams.
its
intention to
IMPACT: explore the
potential The Plumbing &
divestment Heating businesses
of the were successfully
Adverse Plumbing & separated both
effect on Heating functionally and
financial businesses. in system terms
results The Group during 2019 to the
confirmed in agreed timescales.
January the The Wickes
sale of its demerger activity
Adverse Primaflow is progressing in
effect on F&P line with plans.
shareholder wholesale
value business to
Newbury
Investments All activity of
(UK) Ltd. this kind is
Adverse Further supported by
effect on activity in robust governance
reputation relation to and monitoring.
the The largest
remaining programmes are
businesses closely monitored
has been by a Steering
paused Committee, with
sponsorship and
? Announced representation
a proposed from members of
demerger of the Group
the Wickes Leadership Team
business in and, when
2020 appropriate based
on the
? Acquired a significance of a
controlling transaction, the
shareholding Board. Both the
in Group Leadership
Toolstation Team and the Board
Europe receive regular
updates on all
portfolio
management
Programmes to activities
separate
businesses for
sale or
demerger can
be complex
given the many
linkages to
Group systems
and processes.
Communication
of the impacts
to colleagues
both in the
affected and
remaining
businesses
require
careful
consideration
to ensure that
colleagues
remain
informed,
engaged and
also that
confidentialit
y is not
breached.
The projected
benefits,
costs and
timescale for
portfolio
management
activities may
deviate from
those
originally
planned, which
could in turn
impact the
progression of
the process
and the value
realised or
price paid.
IT SYSTEMS AND
INFRASTRUCTURE
INHERENT RISK RISK MITIGATION
RISK: High DESCRIPTION
To mitigate the
TR: The Group is risk of disruption
Increasing dependent on a in the event of a
wide range of system failure, an
IT systems and IT disaster
supporting recovery plan is
STRATEGY: infrastructure in place, together
for its with broader
day-to-day business
operations and continuity plans.
Best-in-class technology Arrangements are
services plays a in place for
significant alternative data
role in the sites. Off-site
future growth back-up routines
Simplifying and success of are in place.
the Group the Group. The Plans are
current IT regularly tested
landscape is and the results
complex and assessed to drive
includes some further
legacy systems improvements. The
that lack the incident
functionality management process
IMPACT: of modern is designed to
software and prioritise and
where respond to any
expertise is incident quickly
Adverse diminishing. and effectively,
effect on with escalation
financial and communication
results protocols.
System Recovery targets
failures or are in place and
outages could are designed to
Adverse disrupt the minimise the
effect on day-to-day operational and
reputation operations of customer impact.
the Group and, Internal Audit
in turn, reviewed the
impact disaster recovery
Adverse customer plans and incident
Effect on service and management
delivery of the Group's processes during
strategy financial the year.
performance.
Competitive In relation to the
disadvantage The Group is modernisation of
developing a the Group's IT
comprehensive systems and
modernisation infrastructure,
plan that will the IT strategy is
include the currently being
replacement of updated. A
a number of governance
legacy structure is in
systems. This place for change
will bring programmes from
greater idea generation
stability, through to
capability and deployment. This
longevity to includes
the Group's protocols,
systems and reviewed by
infrastructure internal audit
. during the year,
to ensure that
upgrades and
improvements are
In its digital delivered to the
offerings, the business in a
Group's controlled manner
ability to and limit the
meet customer potential for
demand will disruption.
impact
longer-term
growth and
delivery of The Group
the strategy. Leadership Team
receives regular
progress reports
and larger
There is programmes are
significant reported to the
risk Board. This
associated structure has been
with IT change refreshed during
programmes the year and is
including designed to ensure
risks in that programmes
relation to are appropriately
prioritisation resourced and
and progress to plan.
sequencing,
resource
allocation,
cost and time Any system change
overruns, is rigorously
testing and tested in respect
business of functionality
acceptance. and that it meets
These risks, business
alone or in requirements
combination, before it is
could impact implemented.
the financial
results and
reputation of
the Group, and Following the
achievement of cancellation of
the the Merchant ERP
longer-term replacement
strategy. programme, a full
lessons learned
exercise was
undertaken, as is
standard at the
end of every
programme, with
insights captured
and rolled into
future change
programmes.
CYBER THREAT AND DATA
SECURITY
INHERENT RISK RISK MITIGATION
RISK: High DESCRIPTION
The Group takes
TR: Incidents of its
Increasing sophisticated responsibilities
cyber-crime and legal
represent a obligations in
significant respect of data
STRATEGY: and increasing security and
threat to all protection
businesses seriously and
including the continues to make
Best-in-class Group. The investments to
services tactics of protect data,
cyber including customer
criminals data, and ensure
evolve on a that its
Financial daily basis, confidentiality,
strength finding new integrity and
ways to availability is
compromise maintained.
organisations,
IMPACT: which presents
a continuous
challenge for The Group takes a
Information two-pronged
Adverse Security teams approach to data
effect on in terms of security: through
financial cyber risk technology
results protection and (protective tools
preparation and
for potential countermeasures)
incidents. and people
Adverse Threat sources (awareness and
effect on change training).
reputation continually
such that,
while the
Group may be Best of breed
Potential targeted by technical
legal action, cyber-criminal solutions are
fines and s, it may also deployed across
penalties be impacted by the Group's
attacks aimed infrastructure
at impacting including
the UK's firewalls, virus
infrastructure protection, email
more threat protection,
generally. intrusion
detection and
vulnerability
scanning. There is
Information an ongoing review
Security process to ensure
incidents can that these
be caused solutions provide
externally or optimal benefit
internally, and protection to
accidentally the Group, through
or appropriate tuning
deliberately. and configuration.
The Group's An outsourced
business Security
activities are Operations Centre
heavily has recently
dependent on launched to
IT systems provide round the
that are clock monitoring
available when of the Group's
needed, based infrastructure
on accurate using
and complete market-leading
data. An tools. This will
external deliver mature
cyber-attack levels of threat
or insider intelligence to
threat (or an support proactive
equivalent defence against
incident at a cyber threats.
third party
with whom
Group data is
shared New IT projects
legitimately) are scrutinised
could result and supported by
in disruption the Information
to Security team,
customer-facin ensuring security
g, by design. All
supplier-facin changes to
g and technology
financial solutions require
systems information
through theft security review
and misuse of and approval.
confidential
data, damage
to or
manipulation An information
of security
operationally improvement
critical data project was
or initiated in 2019
interruption with the objective
to IT of continuously
services, any advancing the
of which may Group's
have serious information
consequential security profile
impacts on the and maturity
Group's against the
reputation, recognised
ability to National Institute
trade and of Standards and
compliance Technology - Cyber
with data Security
protection Framework. This
regulations. has led to the
introduction of a
new governance
framework,
Whilst cyber including a
incidents have steering group and
not "Security
significantly Champion" forum,
impacted the and the
Group to date, development of a
these threats new policy
continue to framework.
evolve and
can, in turn,
impact the
effectiveness The Group
of mitigating continues to
actions. The maintain
Group compliance with
continues to the Payment Card
be vigilant Industry - Data
and assess its Security Standard.
exposure.
The Group has a
comprehensive set
of data protection
and information
security policies
in place and all
colleagues are
required to
undertake regular
training regarding
the protection of
information. This
emphasises the
importance of
keeping personal
information safe
and secure in
whatever format it
is held by the
Group. A Data
Governance
Committee is in
place to support
the Group's data
governance and
information
security
framework. Its
remit includes
reviewing and
approving key
information
security policies,
supporting
development of a
positive culture
of compliance
(including by
promoting
awareness of key
information
security policies)
and, where
appropriate,
reviewing the
response to data
security breaches.
In the event of an
incident, the
response protocols
and recovery plans
in place are
designed to
mitigate the
impact and support
a rapid and
efficient recovery
of systems and
service.
LEGAL COMPLIANCE
INHERENT RISK RISK MITIGATION
RISK: Medium DESCRIPTION
The Group's
TR: The Group is in-house legal
Increasing subject to a team is
broad range of responsible for
existing and monitoring changes
evolving to laws and
STRATEGY: governance regulations that
requirements, affect the
environmental, business and is
health and supported by
Best-in-class safety and external advisers.
services other laws,
regulations,
standards and
best practices
Focus on which affect
trade the way the
Group operates
and give rise The Group has a
to significant comprehensive
Advantaged compliance framework of
Businesses costs, policies in place
potential that set out the
legal ways colleagues
liability and suppliers are
Simplifying exposure for expected to
the Group non-compliance conduct
and potential themselves. Those
expectations are
widely
Financial disseminated using
strength limitations on a range of methods
the to ensure
development of colleagues and
the Group's suppliers
IMPACT: operations. understand their
responsibilities
to comply with the
law and other
Adverse regulations
effect of affecting the
reputation Group at all
times.
Adverse
effect on
financial and
operational
performance
In recognition of
the ongoing
changes and
Potential requirements
legal action, across the Group's
fines and regulatory
penalties compliance
landscape, a
Regulatory Risk
Business Partner
has recently been
appointed who will
support the
business
in meeting new
requirements and
continue to
develop and
improve the
existing
framework.
The Group provides
online training to
colleagues in key
areas of legal and
regulatory
compliance,
including a suite
of mandatory
training for those
that join the
Group.
The Group
Leadership Team
and the Board
regularly monitor
compliance with
laws and
regulations.
The Group operates
a whistleblowing
process that
allows the
anonymous
reporting, through
an independent
hotline, of any
suspected
wrongdoing or
unethical
behaviour,
including
reporting
instances of
non-compliance
laws and
regulations. All
reported cases are
investigated.
ISIN: GB0007739609
Category Code: MSCH
TIDM: TPK
LEI Code: 2138001I27OUBAF22K83
OAM Categories: 1.1. Annual financial and audit reports
Sequence No.: 50088
EQS News ID: 988481
End of Announcement EQS News Service
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(END) Dow Jones Newswires
March 03, 2020 10:00 ET (15:00 GMT)
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