Q&A: Steve Webster, on the final results of Wolseley Group

Steve Webster, Wolseley Group CFO

The group’s performance continues to be significantly impacted by
market conditions. Talk me through the key numbers.

Well it’s certainly been a challenging year but despite that the sales have
risen by 2 per cent to around £16.5bn. The trading profit declined by 22 per
cent because of that challenging set of conditions to about £683m. We’ve had
some one-off impairment charges this year and we’ve also had some exceptional
restructuring costs around £76m in the year. After those items are taken into
account, the operating profit declined by about 60 per cent.

I think the success of the year really has been the working capital on the
cash side. We’ve improved our working capital cash to cash days by over 11 per
cent. We’ve also increased our cash flow conversion rate from 148 to 185 per
cent.

You’ve been working hard at improving cash flow and working capital in the
business for quite some time now, so what actions have you put in place to
strengthen the balance sheet?

Well we certainly had some very aggressive working capital reduction targets.

There have been some great performances in the businesses – Ferguson, DT, UK
in particular – so we have reduced our cash to cash days by just over 11 per
cent because of all those actions.

We’ve also set a target for the current year to improve the working capital
cash to cash days by more than 10 per cent and again, we do expect some benefit
from asset disposals and business disposals during the year.
Of course, we’re also expecting the benefit to come through from the
restructuring actions that we’ve taken in the previous financial year.

Can I confirm that’s 11 per cent over the last year?

It’s 11 per cent over the last year, but 10 per cent more going forward. So
10 per cent on top of the 11 per cent that’s been achieved so far.

Finally, are you worried about running out of cash?

We’re very pleased with the success of the action we’ve taken this year which
have collectively increased our covenant headroom by over £1bn. We will carry on
with those actions and we’re confident that we will remain fully in compliance
with our borrowing covenants through to 31 July 2009 and beyond.

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