Investment case

Our strategy remains unchanged. We will continue to extend our position in plumbing and heating and building materials distribution. These are generally fragmented markets and the structural growth opportunity is significant. Our process of top-down resource allocation to those businesses which have or can achieve market leadership will give us the best returns. In addition, through bottom-up detailed business unit strategies we want to make sure we grow our best businesses faster than the competition. This parallel path of resource allocation and performance management is outlined in our value creation model. 

There is an important correlation in our business between building scale and our ability to make attractive returns. We have continued to exit those businesses where we do not see a path to market leadership. 

We want to drive profitable growth in each business unit and during the monthly performance reviews we review like-for-like revenue growth, balancing this with a focus on protecting gross margin. Given the tough economic backdrop in many of our markets we are keeping a keen eye on operating costs to ensure that we convert revenue growth strongly into trading profit. Finally, over the past three years we have deleveraged the balance sheet and this has been achieved through driving strong cash generation. 

While organic growth remains the key priority, over the last two years we have invested over £50 million in selected small bolt-on acquisitions. Our strong preference is to expand in this way in our existing geographies, so that we can integrate these acquisitions rapidly with our strong businesses and deliver attractive returns.