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Travis Perkins Plans To Divest Plumbing And Heating Division

Travis Perkins plc (TPK.L) said that it plans to divest the Plumbing and Heating Division following successful transformation. The Group reconfirmed its medium-term target for lease adjusted debt to EBITDAR of 2.5x and will maintain a progressive dividend policy.

The free cash flow generation of the Group is expected to strengthen over the medium term, driven by improving earnings and lower capital expenditure. Future capital investment will be focused on reinvigorating the General Merchanting business, completing the major IT programmes and expanding both the Toolstation UK and Europe businesses.

This strong free cash flow generation will further strengthen the Group's balance sheet. The Group reconfirms its medium-term target for lease adjusted debt to EBITDAR of 2.5x and will maintain a progressive dividend policy.

The Group said it will focus on simplifying the business to reduce complexity, speed up decision making and improve agility whilst further reducing the above-branch and distribution cost base. The Group is targeting further annualised cost savings of 20 million pounds - 30 million pounds which will be delivered over the next 18 months.

Following on from the success of the Plumbing & Heating transformation programme, the Board has concluded that as part of the process of simplification, now is the time to explore the potential sale of the Plumbing & Heating division. This will facilitate more focused management attention and capital deployment on the higher returning areas, and creates further opportunities to simplify the Group and reduce costs.

Today, the Travis Perkins plc management team is hosting a capital markets update in London. There will be no new disclosures on current trading conditions with overall performance consistent with expectations at the time of the third quarter trading update in October. The event will cover the Group's immediate priorities and ambitions for the future. Following a comprehensive review, the Board has concluded that the Group will focus on serving trade customers through advantaged businesses in attractive markets, and will simplify the Group to reduce complexity and cost to drive returns, Travis Perkins said.

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