REG-Halfords Group PLC Halfords Group PLC: Preliminary Results: Financial Year 2021
17/06/2021 07:05
============
Halfords Group PLC (HFD)
Halfords Group PLC: Preliminary Results: Financial Year 2021
17-Jun-2021 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
════════════════════════════════════════════════════════════════════════════════════════════════════════════════════
17 June 2021
Halfords Group plc
Preliminary Results: Financial Year 2021
Strong performance driven by share gains in Motoring services, profitability improvements across the Group, and
share gains and strong demand in Cycling.
Halfords Group plc ("Halfords" or the "Group"), the UK's leading provider of Motoring and Cycling products and
services, today announces its preliminary results for the 52 weeks to 2 April 2021 ("the period"). To aid
comparability, all numbers shown are before the impact of IFRS 16, before non-underlying items, and on a 52-week
basis, unless otherwise stated.
Overview
FY21
• Grew market share in Motoring Services and Cycling; strong growth in areas of strategic focus - Group Services,
B2B and Online; delivered significant cost efficiencies.
• Underlying Profit Before Tax of £96.3m, +£40.4m above last year.
• Strong cash generation; year-end Net Cash of £58.1m, including certain non-recurring benefits.
• Proposed final dividend per share of 5p.
FY22
• Building on strong foundations, we will accelerate investment in our transformation and position the business
for long term success.
• Confident in our prospects but conscious of continued COVID-19 volatility; targeting profit before tax,
post-IFRS 16 adjustments, of above £75m and a proposed full year dividend per share of 9p.
Long term
• Confident in the long-term growth prospects of the motoring and cycling markets and our ability to compete
strongly in each.
• Significant growth opportunity in our Services and B2B businesses.
• Ambition to become the market leader in electric mobility services and support the UK's switch to a more
sustainable future.
• Progressive dividend policy.
Graham Stapleton, Chief Executive Officer, commented:
"We are delighted to have delivered a year of very strong financial and operational progress, especially in light of
the extraordinary challenges presented by the pandemic. As ever, I would like to thank our outstanding colleagues
across the business for their hard work, professionalism, and dedication.
It was a year in which Halfords' transformation into a service-led business was rapidly accelerated, and we were
particularly pleased to achieve a record revenue performance in the strategically important area of Motoring
services. We have continued to increase our scale and capacity in this area and customers can now receive our
services at almost 800 fixed locations, or at home from one of our 143 mobile expert vans.
We have also continued to lead the transition to an electric vehicle future by investing in training and technology.
By the end of the current financial year, we will have trained more than 2,000 of our store and garage colleagues to
service electric cars, bikes and scooters.
Demand for our services remains strong in the new financial year, and our touring categories are currently
performing particularly well given the trend towards staycations this summer. In the longer-term, we remain
confident in the future prospects for the UK's motoring and cycling markets and our ability to compete strongly in
both."
Group financial summary
FY21 FY20 FY20
(52 weeks) (53 weeks) (52 weeks) 52-week change 52-week LFL* Change
£m £m £m
Revenue 1,292.3 1,155.1 1,142.4 +13.1% +13.9%
Retail 1,039.8 961.0 950.6 +9.4% +14.6%
Autocentres 252.5 194.1 191.8 +31.6% +9.7%
Gross Margin 50.8% 51.1% 51.1% -34bps
Retail 48.3% 48.2% 48.2% +10bps
Autocentres 61.1% 65.4% 65.5% -440bps
Underlying EBITDA* 139.8 92.6 95.3 +46.7%
Underlying Profit Before Tax ("PBT")* 96.3 52.6 55.9 +72.3%
Net Non-Underlying Items, pre-IFRS 16 (37.3) (32.1) (32.1)
Impact of IFRS 16 5.5 (1.1) (1.1)
Profit Before Tax, after impact of IFRS 16 64.5 19.4 22.7 +184.1%
Underlying Basic Earnings per Share* 40.7p 22.9p 24.3p +67.5%
*Before IFRS 16, before non-underlying items. *Alternative performance measures are defined and reconciled to IFRS
amounts in the glossary on page 21. The LFL change measure adjusts for the in-year store openings and closures, and
acquisitions.
Key highlights
• Autocentres, including our Halfords Mobile Expert vans ("HME"), gained significant market share, growing 9.7%
LFL against a backdrop of traffic more than 25% below pre-pandemic levels.
• Strong growth in our areas of strategic focus: Group Services growing +23%, B2B +40% and Online +110%.
• In Retail:
◦ LFL sales growth of +14.6% (total revenue +9.4%), with cycling +54.1% LFL and motoring down -12.1% LFL.
◦ In Motoring, essential products such as 3B's ("Blades, Bulbs and Batteries") outperformed traffic levels,
whilst touring, car cleaning and maintenance products finished in strong growth.
◦ In Cycling, we refreshed over 50% of our Adult bikes, attracting new and existing customers with our award
winning and exclusive own brand bikes.
◦ Strong Cycling services growth of +51%, fulfilled by our national coverage of technicians.
◦ Tredz grew revenue by +66% and profit by £7m YoY, as we focussed our investment on one performance cycling
brand following the closure of Cycle Republic.
• In Autocentres:
◦ Total revenue growth of +31.6% (+9.7% LFL) and EBIT, before non-underlying items and IFRS 16 adjustments,
of £12.7m, +89.6% higher than last year. An exceptional performance reflecting significant market share
gains.
◦ Strong growth of our Halfords Mobile Expert ("HME") vans business, growing revenue by +200% and finishing
the year with 143 vans, 14 hubs and over 250 technicians, with established hubs now profit accretive to the
Group.
◦ Expanded our coverage of the commercial market through the acquisition of Universal Tyres, adding 20
garages to our fixed estate and 89 commercial vans.
• Electric mobility:
• E-mobility sales (i.e., e-bikes, e-scooters and associated accessories) up +94%
• By the end of FY22, more than 2,000 of our store and garage colleagues will be trained to service electric
vehicles, bikes and scooters.
• Group gross margin declined by -34bps, reflecting a +680bps improvement in Cycling and underlying improvements
in the Autocentres businesses, largely offsetting the adverse mix impact of a -12 percentage-point change in
high-margin motoring revenues as a percentage of Retail sales and the full year mix impact of the McConechy's
and Tyres on the Drive acquisitions.
• Operating costs were tightly controlled, increasing +5.6% before non-underlying items and IFRS 16 adjustments,
decreasing as a proportion of revenue by -3.1ppts. Costs of operating with COVID-19 were significant,
approximately £33m across the Group. The Group was also eligible for business rates relief, totalling £39m.
• Profit Before Tax ("PBT"), pre-IFRS 16 and before non-underlying items of £96.3m. PBT after the impact of IFRS
16 and including non-underlying items of £64.5m, +£41.8m above FY20.
• Free Cash Flow of £145.3m driven by strong profit generation, lower cycling stocks due to global supply
constraints, and our actions to preserve cash throughout the pandemic.
• Non-underlying items were £37.3m, the majority of which are non-cash in the year and are mainly related to the
previously announced closure of 55 stores and garages, following a strategic review of low-return locations.
Current trading and Outlook
We have seen positive momentum carry forward into the first 9 weeks of FY22, with demand for our motoring services
strong, cycling demand remaining elevated, and staycation products popular in Retail motoring. The two-year LFL
growth rates (vs. FY20) for the first nine weeks of FY22 were as follows: Retail Motoring 6.6%, Retail Cycling
42.0%, Autocentres 6.6%.
Although we expect a continuation of the volatile and unpredictable trading seen throughout FY21, we are positive on
our prospects for FY22. In the short term, we expect the market share gains we have made across our Autocentres
business to continue, alongside an increase in more regular and routine motoring journeys. Within our Retail
business, pent-up demand and the restrictions on foreign travel will give rise to increased demand for our touring
and cycling products, whilst motoring products should benefit from more normalised traffic patterns.
There are, however, external factors that add uncertainty to our outlook. Supply challenges for Cycling products
remain acute, and a return to normal trading patterns remains highly uncertain, particularly in H2, as the
hospitality industry and international travel potentially reopen to a greater extent. The general economic outlook
remains challenging, with consumers likely to be more cautious and expecting greater value from their purchases. We
will address this by making a significant investment in pricing in our Retail Motoring business. Although this may
impact FY22 gross margins, we are confident it will strengthen the business in the medium and long term. After the
strong start to the year, and in consideration of these factors, we are targeting FY22 profit before tax, including
IFRS 16 adjustments, of above £75m.
In the longer term, we are confident in the outlook for the motoring and cycling markets and our ability to compete
strongly in both. We have demonstrated the resilience and growth opportunity in our Services and B2B businesses by
gaining market share through increasing scale and convenience alongside enhancing the overall customer experience.
We also believe that the increased adoption of Cycling will continue, supported by Government investment and a
societal need to tackle climate change. As a business, we will continue to drive our markets by launching more new
and exclusive products, becoming the market leader in electric mobility as the UK switches to a sustainable future,
and continuing to engage our customers by creating a seamless digital and physical experience. Building on the
strong foundations we have created in FY21, Halfords is well-positioned to accelerate its transformation journey.
Capital structure and dividend
We have finished the financial year with a strong balance sheet, ending with net cash of £58.1m, although some of
this is non-recurring, and will unwind as inventory levels return to optimal levels and the timing of creditor
payments normalises. This financial strength gives us the ability to invest in our transformation plan, positioning
the business for long-term success. Considering this opportunity, we have updated our capital allocation priorities
as follows:
1. Maintaining a prudent balance sheet
2. Investment for growth
3. M&A, focused on Autocentres
4. Progressive dividend policy
5. Surplus cash returned to shareholders
Our maximum Net Debt: EBITDA ratio, on a pre-IFRS 16 basis, remains at 1.0x, or up to 1.5x on a short-term basis to
fund M&A activity. However, given the current strength of our balance sheet and the uncertain economic environment,
we will operate with more prudent debt levels in the near-term.
With a robust and proven strategy, it is imperative we invest in our transformation plan, which we believe will
require between £50m and £60m per year of capital expenditure in the medium-term. Our growth plan will be
complemented by acquisitions if we are able to find attractive businesses, with the right strategic fit and for a
fair price. Our acquisition strategy will be focussed on scaling our motoring services business, propelling us to
market leadership in aftermarket service, maintenance and repair.
We understand the importance of the ordinary dividend to many of our investors. Recognising this, and the strength
of the current balance sheet, we are proposing an FY21 final dividend of 5p per share and a reinstatement of the
ordinary dividend from FY22 at 9p per share, intending this to be progressive. Should surplus cash remain in the
business that we feel we cannot deploy with good rates of return, we will return this to shareholders in the most
appropriate way.
Enquiries
Investors & Analysts (Halfords)
Loraine Woodhouse, Chief Financial Officer
Neil Ferris, Corporate Finance Director +44 (0) 7483 360 675
Andy Lynch, Head of Investor Relations +44 (0) 1527 513 189
Media (Powerscourt) +44 (0) 20 7250 1446
Rob Greening halfords@powerscourt-group.com
Lisa Kavanagh
Jack Shelley
Results presentation
A conference call for analysts and investors will be held today, starting at 09:00am UK time. Attendance is by
invitation only. A copy of the presentation and a transcript of the call will be available at
1 www.halfordscompany.com in due course. For further details please contact Powerscourt on the details above.
Next trading statement
On 8 September 2021 we will report our trading update for the 20 weeks ending 20 August 2021.
Notes to Editors
www.halfords.com 2 www.tredz.co.uk 3 www.halfordscompany.com
Halfords is the UK's leading provider of motoring and cycling services and products. Customers shop at 404 Halfords
stores, 3 Performance Cycling stores (trading as Tredz and Giant), 374 garages (trading as Halfords Autocentres,
McConechy's and Universal) and have access to 143 mobile service vans (trading as Halfords Mobile Expert and Tyres
on the Drive) and 192 Commercial vans. Customers can also shop at halfords.com and tredz.co.uk for pick up at their
local store or direct home delivery, as well as booking garage services online at halfords.com.
Cautionary statement
This report contains certain forward-looking statements with respect to the financial condition, results of
operations, and businesses of Halfords Group plc. These statements and forecasts involve risk, uncertainty and
assumptions because they relate to events and depend upon circumstances that will occur in the future. There are a
number of factors that could cause actual results or developments to differ materially from those expressed or
implied by these forward-looking statements. These forward-looking statements are made only as at the date of this
announcement. Nothing in this announcement should be construed as a profit forecast. Except as required by law,
Halfords Group plc has no obligation to update the forward-looking statements or to correct any inaccuracies
therein.
Chief Executive's Statement
Operational review
I am very pleased with our performance in FY21, shown not only in the financial results but also in the operational
agility demonstrated throughout the business to overcome the many challenges presented last year. COVID-19 was
clearly the most significant challenge faced by any retailer, but we have also faced Brexit, container shortages,
port congestion and more recently, the blockage of the Suez Canal. Our performance not only showcases the resilience
of our core business and the relevance of our strategy, but also the importance of our progress in creating a more
efficient and profitable business to provide strong foundations for future growth.
Retail
Retail revenue of £1,039.8m was +9.4% above last year and +14.6% on a LFL basis. We saw a volatile and unpredictable
year of trading, with large swings in LFL performances from week to week, and across our categories. Overall, we saw
strong demand for our Cycling products, +54.1% above last year, with our performance cycling business Tredz
performing even better at +66.3%. Motoring was -12.1% LFL, better than traffic levels but inevitably impacted by the
lockdowns.
Retail Motoring
Retail motoring sales were down -12.1% LFL against the backdrop of -25% fewer car journeys and low consumer
confidence. As an essential retailer we played our part in the COVID-19 response by carrying out over 60k Services
for NHS and key workers during the height of the pandemic and over 1m essential services during full lockdowns. We
also kept innovating our products and services, including the launch of our WeCheck app, which enables colleagues to
digitally record vehicle checks undertaken and the recommended actions for a customer to keep their car safe. We
performed well in product categories related to staycation or car maintenance - Touring was up +1.7%, whilst Car
Cleaning (+7.4%), Body Repair (+5.4%) and Workshop (+6.4%) all grew strongly. We launched new products in Blades,
Bulbs and Car Seats, enabling these categories to perform stronger than the lower traffic levels would suggest, and
helping to mitigate the challenging conditions we faced in discretionary categories, such as Dash Cams and Audio.
Retail Cycling
Cycling performed very well, +54.1% above last year, but presented its own challenges in securing supply and
predicting demand. All mainstream product categories saw strong growth, with Adult Mechanical bikes +113% and
E-bikes +76%, while our Performance Cycling business Tredz also saw strong revenue and profit growth, capitalising
on customer transfer from our closed Cycle Republic business. We identified very early in the pandemic the
unprecedented levels of demand for cycling, enabling us to use our scale and relationships to secure stock from new
and existing suppliers. We also launched a series of customer journey enhancements, beginning online, to optimise
the customer experience at a time of high demand.
In this competitive market we continued to innovate and refresh our exclusive ranges of own brand Carrera, Boardman
and Apollo bikes. Our bikes secured multiple awards from specialist press and magazines throughout the year for
their design, specification, and value. Over 50% of our adult bikes were updated last year, adding new features such
as comfort saddles and puncture resistant tyres, all following customer feedback. Supply was, and remains, a
challenge, but where necessary, we quickly adapted specifications and componentry to mitigate bottlenecks in
production and worked with new suppliers to achieve a steady intake of bikes throughout the year. Keeping customers
updated and engaged was a key priority and we launched a series of digital developments designed to enhance and
assist customers finding their new bike. One example was 'Email me when in stock' or the ability to register
interest in new launches. We also introduced bookable collection slots, next day delivery and tripled our central
bike build capacity, all of which have led to improved NPS scores and customer feedback.
With high demand and limited global supply, many customers opted to fix their existing bike and we ensured our
colleagues and systems were ready to help. Cycling Services grew more than +50% on last year as we offered free
32-point bike checks and took a market-leading share of the government's 'Fix Your Bike' scheme. We repaired and
serviced over 1m bikes and were the only national retailer offering online booking slots, an initiative launched
this year.
Retail gross margin
Despite the extreme, adverse change in motoring mix, Retail gross margin increased by +10bps, highlighting the
importance and timeliness of our work over the last 18 months to improve the profitability of our Cycling business.
We targeted a +300bps improvement in Cycling gross margins and through our work to rationalise componentry, improve
buying terms, and optimise promotional effectiveness, we actually delivered a significant +680bps increase. This
improvement enabled us to offset the -12 percentage-point change in motoring revenues as a percentage of total
sales, and the corresponding impact on gross margins.
Retail operating costs
Our focus on efficiency and procurement saw Retail operating costs increase +1.6% year-on-year. Excluding £24.8m of
COVID-19 related costs and £33.1m of business rate relief, operating costs were 3.6% higher year-on-year but
decreased as a proportion of sales by -2.2ppts.
Our achievements helped mitigate the adverse mix impact described above, whilst also allowing investments in key
strategic initiatives such as centralising customer contact. Our Retail business experienced the greatest disruption
from COVID-19, implementing seven different operating models in six months to safeguard our customers and
colleagues. We also employed front-of-house roles to monitor store capacity and social distancing, alongside
significant investment in PPE. Acknowledging the unwavering commitment of our colleagues in such difficult
circumstances, we launched almost £4m of initiatives during the year, including the Frontline Colleague Support
Scheme and Halfords Here to Help Fund, alongside free flu vaccinations and wellbeing support lines.
Over the year, we continued to work on lowering the underlying costs within our business. As communicated at the end
of FY20, we consolidated our performance cycling business, closing all 22 Cycle Republic stores and saving over £9m
of annualised costs, whilst transferring a significant share of the customer base to our remaining Tredz business.
In addition, we concluded our review of low-returning stores and consequently closed an additional 42 retail stores,
where we are confident that trade-transfer will improve overall returns, generating an annualised cost saving of
£15m. We also saved over £7m of annualised goods not for resale ("GNFR") costs, continued to improve our
sustainability credentials through the continued roll-out of LED lighting and Building Management Systems, and
renewed 19 leases for an average -30% reduction in rent premiums.
Autocentres
Autocentres revenue was £252.5m, growing 31.6% year-on-year and +9.7% on a LFL basis. The overall growth in
Autocentres benefited from the annualisation of our FY20 acquisitions and the continued expansion of our Halfords
Mobile Expert business, launching new vans and hubs to serve this growing and in-demand service.
However, our Autocentres business was not immune to the impacts of COVID-19. The reduction in traffic and MOT
deferments required us to work hard to overcome these challenges, but our LFL and overall growth clearly demonstrate
the significant increase in market share we have secured. This has been achieved by attracting new customers through
our first Group Motoring Services marketing campaign, the ease for customers in booking appointments on our single
Group website, and having their chosen service fulfilled through one of our fixed locations or by mobile experts at
the customer's home or office. We further enhanced convenience for our customers by opening on Sundays in 131
garages, increasing our fleet of Halfords Mobile Expert vans to 143 and adding 20 garages to our business through
our acquisition of Universal Tyres. We are confident that many of our customers will continue to use our services
as their preferred choice, having grown the NPS score to 68.8 across the year and exiting FY21 at 72.6.
Autocentres EBIT was £12.7m on a reported basis, pre-IFRS 16, and £12.0m excluding COVID-19 related costs of £5.3m
and business rates relief of £6.0m. EBIT growth was £5.3m versus FY20. This exceptional performance reflects ongoing
improvements to the customer experience and increased operational efficiency, driven by continued enhancements to
our digital operating model ('PACE'), and resulting in strong market share gains.
Areas of strategic focus
It has been a particularly strong year for our areas of strategic focus, demonstrating the resilience and relevance
of our strategy in the face of a tough operating environment. We have seen market share increases and sales growth
as our investments gain traction.
Group Services1
It was a very good year for Group Services, with revenues exceeding £370m, a growth of +23% on last year and now
accounting for 29% of Group revenue. This was an excellent result under any circumstance but given the backdrop of
-25% fewer journeys on UK roads, it is testament to our focus on this market. We launched several initiatives to
boost customer awareness, including our 'Road Ready' campaign, our Group Services marketing campaign and our free
32-point bike check. We made booking our services easier than ever by enabling customers to book on our single Group
website and we are the first national service provider to allow customers to book timed cycle service appointments
or collections online. With heightened demand, we continued to increase our scale and capacity, making it easier and
more convenient for customers to receive their services at one of almost 800 fixed locations, or at home or work
from one of our 143 mobile expert vans.
Online
It was also a strong year for Group Online sales, which were £580m, growing +110% and accounting for 44% of Group
revenue. Lockdowns and social distancing meant that customer demand for online and delivery channels grew
dramatically. The successful launch of our new web platform in Q4 FY20 meant we were able to cope with a rapid +61%
increase in traffic and provide a flexible platform from which we could continually develop the site and adapt to
fast-changing customer needs. Not only did we change the focus and main content several times across the year, but
we were able to add over 160 new customer-enhancing developments, such as guided selling, local stock availability,
new services, new locations, bundles, recommendations, and personalisation across the Group. The result was a 10x
increase in customers viewing Autocentre content and a conversion increase in Retail of +37%.
B2B2
Finally, B2B also delivered an excellent sales performance, growing +40% and accounting for 17.9% of Group revenue.
We saw strong revenue growth in several areas of B2B. Our market-leading Cycle to Work ("C2W") scheme delivered +85%
revenue growth, driven by a large increase in new clients to our scheme and increased uptake within our existing
client base, with many increasing their employee spend limit above £1,000 for the first time. Our partnerships and
gift card business also grew by over 20%, through increased reach, systems improvements allowing multi-channel
redemption, and an expansion of our bulk product offering into fully-serviced bike fleets. The insurance replacement
business recorded an 8% improvement year on year, supported by a growth in demand for bikes and our diversification
into replacement children's car seats. Our fleet & commercial motoring servicing business grew by 72%, boosted by
the acquisition of McConechy's, and although Tradecard declined -6%, this performance exceeded the consumer-facing
growth rate of the most relevant product categories. Finally, we launched a new salary sacrifice offer, allowing
employees to spread the cost of car maintenance, and improved our C2W offer within the Republic of Ireland.
Sustainability - Environmental, Social and Governance ("ESG")
In our FY20 Annual Report, we set out our ESG strategy and demonstrated its alignment to the Group's purpose: 'To
Inspire and Support a Lifetime of motoring and cycling'. We have since updated our strategy, including a clear
prioritisation on the topics most important to us and our broad stakeholder base, and created a roadmap for building
the capabilities and governance processes to drive further progress against the strategy. Our four priority areas
are shown below, further details of which will be available in our FY21 annual report to be published in July 2021.
• Electrification
• Net Zero
• Diversity & Inclusion
• Product, Packaging and Waste management
Progress on strategy in FY21
'To Inspire and Support a Lifetime of motoring and cycling.'
At our preliminary results in July 2020, reflecting the unprecedented impact and extreme uncertainty of the COVID-19
pandemic, we highlighted that we would moderate our near-term plan. We adjusted our short-term focus to cost
efficiency and cash preservation, ensuring our colleagues are safeguarded and engaged in the success of the business
and, of particular importance, adapting quickly to new customer trends. Our aim was to strengthen the core of our
business during FY21 in the hope that we could return to more transformative investment in FY22 as the pandemic
situation stabilised. Our progress on the key building blocks was as follows:
Continue to transform and build a unique and market-leading Motoring Services offer
• Increased the scale of our Halfords Mobile Expert offer to 143 vans, 14 hubs and over 250 technicians to serve a
wider geographic reach.
• Acquired Universal Tyres, adding 20 garages to our fixed estate, as well as 89 vans, enabling us to expand our
coverage of the commercial market in FY22.
• Continued to invest in our technology:
◦ PACE into McConechy's
◦ Tyres on The Drive (ToTD) integrated into our Group website
◦ WeCheck app launched in Retail stores
• Launched our first Group motoring services campaign, contributing to increased awareness and a +28% uplift in
consideration scores for our Services offer.
• Implemented a new labour operating model in our Retail stores, designed to significantly increase our scale and
capability in motoring and cycling services. We completed consultations with over 5,500 colleagues, with 88%
ultimately retained in the business.
Enhancing our Group web platform and digital customer experience, to create an even more differentiated and
specialist proposition
• Launched over 160 new customer enhancements to our group website, including 'email me when in stock', guided
selling, local store stock availability, and personalisation.
• Transferred inbound phone and digital customer-contact from all 404 retail stores to a centralised, specialist
team. With the pandemic driving contact volumes to at least four times higher than normal, caused by accelerated
online adoption and a buoyant cycling market, this initiative enabled a significant improvement in call answer
rates, to over 95%, improved service speed and query resolution, and the liberation of store-based colleagues to
focus on those customers in front of them.
• With an ongoing focus on improving the customer experience, Retail NPS improved by +1.8 YoY and Autocentres NPS
by +3.8 YoY, a proud achievement in such a challenging year.
A focus on cost and efficiency, creating a leaner and more profitable business
• Cycling profitability improvements of +680bps, far exceeding the targeted +300bps.
• Sustainable working capital improvement of £20m
• In line with our plans announced in November 2019, we closed 80 low-returning stores and garages where we were
confident of trade transfer to neighbouring locations. This includes the exit of 22 Cycle Republic stores,
announced in FY20.
• Negotiated 19 lease renewals in Retail, achieving an average rent reduction of -30%.
• Secured GNFR annualised cost savings of £7m.
Invest in our Colleagues' welfare, engagement and development
• Colleague safety and wellbeing was our number one priority throughout FY21:
◦ We invested £11m in PPE and COVID-19 protocols across the Group.
◦ We invested a further £4m in direct financial support, including a Frontline Colleague Support Scheme and
the Halfords Here to Help fund.
◦ We launched a Wellbeing hub to support colleagues on a range of issues affecting their mental and physical
health.
• We commenced our Services skills intervention, significantly increasing our colleagues' ability to provide a
broad range of motoring and cycling services to customers and providing them with development opportunities to
help further their careers.
FY22 strategy focus
The last 12 months have proven the resilience of our business and the ongoing relevance of our strategy to focus on
the growth of motoring services and B2B. Although we expect the volatile and uncertain trading patterns to continue,
the period of optimisation we have undertaken has strengthened the core business and it is now well-placed to
withstand future challenges. Although we will continue to optimise the business, we will now accelerate the process
of transformation that was paused during the pandemic.
By the end of FY22 we expect to see a different business beginning to emerge, with our areas of focus next year as
follows:
Inspire
• Project Fusion remains an exciting opportunity and we will trial between two and three towns in FY22. We think
of Fusion as 'a customer experience seamlessly, consistently, & conveniently executed across all of our assets
in a town'. It will encompass a destination retail store, an updated Autocentre garage, and a Halfords Mobile
Expert offer, all operating together in conjunction with centralised customer support channels and an online and
home delivery proposition across a major town or city. Focussed primarily on improving the customer experience
and understanding the potential of combining all Halfords services in the most compelling way, the trial will
also test whether a reinvigorated in-store & garage design, focused more heavily on the delivery of services,
can further stimulate sales across the Group.
• We will continue to invest heavily in our digital proposition, whether online through the Group web platform, or
enabling the wider transformation agenda.
• Through Project 'Peloton 2', we will significantly improve our PACs ("parts, accessories and clothing") offering
in Cycling, through better ranging, improved merchandising, and most importantly enabling our colleagues to
provide customers with complete solutions to their needs.
Support
• We will increase our Halfords Mobile Expert van network to at least 200, bringing this popular service to more
parts of the UK and giving us over 80% national coverage.
• We will increase the number of Autocentres garages, bringing us closer to our medium-term goal of 550 in the UK
and ROI.
• We will continue to expand our B2B channel, in particular building on the commercial business we established
through our acquisitions of McConechy's and Universal Tyres.
• We will lead the transition to an electric future by investing in training, technology and introducing new
products and services, positioning Halfords as the leading voice of E-mobility. This will include a commitment
to train over 2,000 Retail and Autocentres colleagues in Electric servicing in FY22.
Lifetime
• We will launch a unique and market-leading motoring services club, rewarding loyal customers with preferential
terms and offers.
• The additional value of customers that shop across our Group remains an exciting and valuable opportunity.
Although the pandemic caused normal shopping behaviours to be interrupted, we will continue to focus on this and
our digital customer experience.
• Our focus on ESG matters will accelerate, centred on four priority areas in which Halfords can make a real
difference: Electrification, our Net Zero commitment, Diversity & Inclusion, and Product, Packaging and Waste
management.
Underpinned by:
• Cost and efficiency will remain a focus and although we do not foresee any further large-scale property closures
in the near-term, we will retain flexibility in our estate and seek to negotiate further rental savings.
• Our frontline colleagues will benefit from the biggest investment in skills to-date, further enhancing our
super-specialist expertise. By the close of H2 we will have completed our skills intervention, resulting in our
skills base increasing from 16,000 to over 40,000, with every colleague trained in all core services.
• We will transition to a new Group operating and reward model, better aligned to our Group strategy and our One
Halfords Family values.
In addition to these strategic priorities, we will continue to optimise the business to further strengthen our
foundations. As mentioned in our Outlook statement above, one key initiative in FY22 will be an investment in core
pricing in our motoring products business. The dramatic acceleration in online shopping and a more challenging
economic picture have brought value into sharp focus and so we believe this is the right time to make this
investment, providing customers with greater value and providing a strong foundation for our services business.
Graham Stapleton
Chief Executive Officer, June 2021
Halfords Group Plc
1. Group Services includes revenues across both Retail and Autocentres and includes associated products
2. B2B includes revenues from C2W, Commercial, Fleet and product sales to businesses in both Retail and Autocentres
Chief Financial Officer's Report
Halfords Group plc ("the Group" or "Group")
Reportable Segments
Halfords Group operates through two reportable business segments:
• Retail, operating in both the UK and Republic of Ireland; and
• Autocentres, operating solely in the UK.
All references to Retail represent the consolidation of the Halfords ("Halfords Retail") and Cycle Republic
businesses, Boardman Bikes Limited and Boardman International Limited (together, "Boardman Bikes"), and Performance
Cycling Limited (together, "Tredz and Wheelies") trading entities. All references to Group represent the
consolidation of the Retail and Autocentres segments.
The "FY21" accounting period represents trading for the 52 weeks to 2 April 2021 ("the financial year"). The prior
period "FY20" represents trading for the 53 weeks to 3 April 2020 ("the prior year"). To ensure a meaningful
comparison with the prior year, all commentary, unless otherwise stated, is against the 52-week period ended 27
March 2020 and is before non-underlying items. Most of our commentary on profit and cost measures is before the
impact of IFRS 16, which is stated where relevant. The impact of IFRS 16 is shown in the table below and further
details of this impact are provided later within this report.
Group Financial Results
FY21 FY20 FY20
52-week
(52 weeks) (53 weeks) (52 weeks)
change
£m £m £m
Group Revenue 1,292.3 1,155.1 1,142.4 +13.1%
Group Gross Profit 656.3 589.7 584.0 +12.4%
Underlying EBIT pre-IFRS 16* 101.8 55.4 58.7 +73.4%
Underlying EBITDA pre-IFRS 16* 139.8 92.6 95.3 +46.7%
Net Finance Costs (5.5) (2.8) (2.8) +96.4%
Underlying Profit Before Tax pre-IFRS 16* 96.3 52.6 55.9 +72.3%
Net Non-Underlying Items (37.3) (32.1) (32.1) +16.2%
Impact of IFRS 16 5.5 (1.1) (1.1) -
Profit Before Tax 64.5 19.4 22.7 +184.1%
Underlying Basic Earnings per Share pre-IFRS 16* 40.7p 22.9p 24.3p +67.5%
* This report includes Alternative Performance Measures (APMs) which we believe provide readers with important
additional information on the Group. A glossary of terms and reconciliation to IFRS amounts is shown on page 21.
The speed with which COVID-19 hit, and the subsequent implications, has challenged every business. Almost overnight,
demand and customer shopping behaviour changed, cashflows and supply chains were interrupted, and the resulting
operational challenges tested everyone and everything. Although I believe the financial strength of Halfords, and
our diverse portfolio of essential products and services, positioned us well going into the pandemic, I am pleased
that the work in the preceding 12 months was designed for exactly this purpose; to strengthen the resilience and
performance of the business in an ever-changing retail environment. The FY21 financial results, therefore, reflect
our operational agility in year but also the positive impact of longer-term initiatives to improve the efficiency
and profitability of our business. We saw revenues and profits grow, gross margins improve in our core categories
and businesses, operational costs fall as a proportion of sales, and a closing net cash position of £58.1m.
The customary financial metrics undoubtably demonstrate our strong performance but, over and above this, we also
undertook further activity in year to safeguard the Group. This included securing £25m of CLBILS funding and
covenant waivers on our existing RCF at the peak of the pandemic and, more notably, the subsequent refinancing of
the Group's debt facility for the next 3 years, securing a competitive rate of borrowing on a reduced facility size
overall.
Group revenue in FY21, at £1,292.3m, was up 13.1%, comprised of Retail revenues of £1,039.8m and Autocentres revenue
of £252.5m. This compared to FY20 Group revenue of £1,142.4m, which saw Retail revenue of £950.6m and Autocentres
revenue of £191.8m. Group gross profit at £656.3m (FY20: £584.0m) represented 50.8% of Group revenue (FY20: 51.1%),
comprising of a Retail gross margin up +10bps year on year at 48.3% and a decrease in the Autocentres gross margin
of 440 bps to 61.1%, reflecting the recent acquisition of lower gross margin businesses. Although the headline Group
gross margin rate declined -34bps, this was a strong result given the dynamics and volatility of the last twelve
months and the outcome reflects our focus on creating a more profitable business. To context this result, it is
worth highlighting three key components within the final overall Group gross margin %. Within Retail, we saw a
significant and adverse change in mix, out of higher margin motoring products and into lower margin cycling.
Motoring revenues were impacted by the almost continuous rhythm of lockdowns and resultant fewer journeys. On the
contrary, our cycling performance was very strong as we worked hard to capitalise on any opportunity within this
market and offset the lost motoring revenue. Offsetting the significant mix impact, we saw a particularly strong
margin rate improvement, reflecting almost 18 months of work to improve the profitability of our cycling business.
The overall improvement in cycling gross margin was particularly pleasing, up almost 680bps on FY20 and, alongside a
smaller, but favourable, improvement in motoring this completely mitigated the adverse mix effect within Retail.
The final margin impact was seen within our Autocentre Business. The overall performance was -440bps vs FY20 but was
expected as we reported the first full year of Tyres on the Drive and McConechy's Tyre Service Limited
("McConechy's"). As we highlighted last year, these businesses generate a lower gross margin due to a higher
participation of tyre sales. The operating model is different, but we see an opportunity in the medium term as we
increase the participation of higher-margin services, maintenance, and repair within the product mix. Encouragingly,
all three Autocentre businesses saw their gross margins improve vs FY20 as we continue to optimise and take the
first steps on this journey.
Total underlying costs, pre-IFRS 16, increased to £554.5m (FY20: £525.3m) of which Retail comprised £410.6m (FY20:
£404.3m), Autocentres £141.6m (FY20: £118.9m) and unallocated costs £2.3m (FY20: £2.1m). Unallocated costs represent
amortisation charges in respect of intangible assets acquired through business combinations, namely the acquisition
of Autocentres in February 2010, Boardman Bikes in June 2014, Tredz and Wheelies in May 2016, McConechy's in
November 2020 and The Universal Tyre Company (Deptford) Limited ("Universal") in March 2021, which arise on
consolidation of the Group. Group Underlying EBITDA pre-IFRS 16 increased 46.7% to £139.8m (FY20: £95.3m), whilst
net finance costs pre-IFRS 16 were £5.5m (FY20: £2.8m).
Group operating costs before non-underlying items and pre-IFRS 16 saw an increase of 5.6% but decreased as a
proportion of sales by -3.1ppts to 42.9%, demonstrating our increased efficiency. As with revenue and gross margin,
there are several movements within this result that give context to the performance. The Group saw over £33m of
costs as a result of operating under COVID-19 restrictions, driven by additional payroll to manage colleague and
customer safety, personal protective equipment ('PPE') and safety equipment, and higher fulfilment cost as customers
temporarily changed shopping behaviour. During Q1, whilst the Groups stores and centres were partially closed, over
50% of colleagues were furloughed. At this point we utilised government furlough schemes, receiving £10.5m of
support, which was later paid back in full during Q4. We also recognised the difficult environment through which our
colleagues have worked and, as a result, invested in supporting them financially through a series of initiatives,
including the Front-Line Bonus Scheme and a Hardship Fund, totalling £4m, whilst also adjusting holiday rules to
allow colleagues to take more time off during FY22. These costs were offset by the business rates relief of £39m
across the Group, of which the majority arose within the Retail business.
We continued to drive our ongoing efficiency programmes, delivering £7m of GNFR (goods not for resale) cost savings,
alongside those associated with the closure of Cycle Republic, worth a further £9m. We also achieved rental savings
within our Retail estate on 19 lease renewals of circa -30% worth £0.6m in FY21 and continued to convert more of our
stores and garages to LED lighting, saving a further £0.4m. These underlying savings were offset by the inevitable
cost increases associated with the growth of our business. The annualisation of our acquisitions, Tyres on the Drive
and McConechy's, added £18m, strategic investments totalled £8m and the significantly skewed mix into bikes, and
their increased volumes sold during FY21 added a further £22m of additional cost.
Underlying Profit Before Tax pre-IFRS 16 for the year increased 72.3% at £96.3m (FY20: £55.9m). Non-underlying items
of £37.3m in the year (FY20: £32.1m) related predominantly to the closure of a number of stores and garages
following a strategic review, as well as costs relating to organisational restructuring. After non-underlying items,
Group Profit Before Tax was £59.0m (FY20: £23.8m).
After non-underlying items and including IFRS 16, Group Profit Before Tax was £64.5m (FY20: £22.7m). The impact on
the Group of IFRS 16 in the period was a £5.5m net increase to Group Profit Before Tax. Further details on the
impact of IFRS 16 is shown later in this report.
Retail
FY21 FY20 FY20
52-week
(52 weeks) (53 weeks) (52 weeks)
change
£m £m £m
Revenue 1,039.8 961.0 950.6 +9.4%
Gross Profit 502.0 462.8 458.4 +9.5%
Gross Margin 48.3% 48.2% 48.2% +10bps
Operating Costs (410.6) (410.8) (404.3) +1.6%
Underlying EBIT pre-IFRS 16* 91.4 52.0 54.1 +68.9%
Non-underlying items (33.6) (29.5) (29.5) +13.9%
Impact of IFRS 16 14.2 (1.2) (1.2) -
EBIT post-IFRS 16 72.0 21.3 23.4 +207.7%
Underlying EBITDA pre-IFRS 16* 120.5 81.1 82.7 +45.7%
* This report includes Alternative Performance Measures (APMs) which we believe provide readers with important
additional information on the Group. A glossary of terms and reconciliation to IFRS amounts is shown on page 21.
Revenue for the Retail business of £1,039.8m reflected, on a constant-currency basis, a like-for-like ("LFL") sales
increase of +14.6%. Total revenue in the year increased 9.4% after adjusting for the impact of closed stores. The
volatility of the trading environment discussed earlier was most evident in our Retail business, which made
forecasting particularly difficult. Demand for our motoring products suffered from a supressed market throughout
FY21 as lockdowns markedly reduced the number of journeys, with customers opting to work from the safety of their
homes. Motoring like-for-like declined 12.1%, better than transport data would suggest, but still saw weekly LFLs
ranging from -75% to +20%. There were a number of positive performances within motoring, such as our touring
products and car cleaning, but many product areas saw LFL declines through much of the year.
Our cycling performance was much stronger, with like-for-like growth of 54.1%, as we worked hard to source stock
from new and existing suppliers and serve the increased demand within the market. Cycling was equally hard to
predict, and although performed very well across H1, with LFL peaks of over +100%, H2 saw more volatility from week
to week with LFL declines late in Q3 and early Q4.
The differing category fortunes resulted in the mix of motoring within Retail decline by almost -12ppts vs. Cycling
against last year. The Retail Operational Review in the Chief Executive's Statement contains further commentary on
the trading performance in the year. Like-for-like revenues and total sales revenue mix for the Retail business are
split by category:
FY21 FY21 FY20
LFL (%) Total sales mix (%) Total sales mix (%)
Motoring -12.1 46.1 58.4
Cycling +54.1 53.9 41.6
Total +14.6 100.0 100.0
Gross profit for the Retail business, at £502.0m (FY20: £458.4m) represented 48.3% of sales, an increase of +10bps
on the prior year (FY20: 48.2%). Underlying gross margins of cycling and motoring improved more significantly than
the headline number, which was diluted by product mix into lower margin cycling and a currency impact within the
broader gross margin due to fluctuations in the year end spot rate. The gross margin improvement within the
categories reflected the significant work carried out over the last 18 months on our sourcing strategy for both
bikes and motoring products, as well as our work to optimise promotional activity throughout the year. Over the
year, Cycling gross margins improved by +680bps and Motoring by +40bps vs FY20.
Retail operating costs before non-underlying items and IFRS 16 were £410.6m (FY20: £404.3m) an increase of 1.6% on
FY20. The focus on operational efficiency and procurement continued in FY21, offsetting the impact of volume and
mix, whilst simultaneously allowing the business to invest, albeit at a reduced level, in our strategic initiatives.
Some of the highlights included centralising all customer contact and further development of our digital platform to
enhance our customer experience including bookable bike slots and our WeCheck App. We saw almost £7m of GNFR costs
removed from the Retail business through continued review of services and tendering processes. We saw 19 lease
renewals, saving on average -30% on annual rents, and we continued to convert more stores to LED lighting and
building management systems, saving over 40% on annual converted stores utilities consumption.
Naturally, due to the size of the Retail business, a greater proportion of the costs associated with COVID-19 were
within its costs. Of the £33m mentioned above, £25m arose in Retail, offset by £33m of business rates relief.
Autocentres
FY21 FY20 FY20
52-week
(52 weeks) (53 weeks) (52 weeks)
change
£m £m £m
Revenue 252.5 194.1 191.8 +31.6%
Gross Profit 154.3 126.9 125.6 +22.9%
Gross Margin 61.1% 65.4% 65.5% -440bps
Operating Costs (141.6) (121.4) (118.9) +19.1%
Underlying EBIT pre-IFRS 16* 12.7 5.5 6.7 +89.6%
Non-underlying items (3.7) (2.6) (2.6) +42.3%
Impact of IFRS 16 0.8 0.1 0.1 -
EBIT post-IFRS 16 9.8 3.0 4.2 +133.3%
Underlying EBITDA pre-IFRS 16* 19.3 11.5 12.6 +53.2%
* This report includes Alternative Performance Measures (APMs) which we believe provide readers with important
additional information on the Group. A glossary of terms and reconciliation to IFRS amounts is shown on page 21.
Autocentres generated total revenues of £252.5m (FY20: £191.8m), an increase of 31.6% on the prior year with a LFL
increase of 9.8%. Non-LFL revenue in the year included benefits from the acquisitions of both Tyres on the Drive
and McConechy's in November 2020, alongside existing Autocentres that had been open less than 12 months.
Gross profit, at £154.3m (FY20: £125.6m), represented a gross margin of 61.1%; a decrease of 440 bps on the prior
year. As stated earlier, the decrease in gross margin % was solely a result of annualisation of the FY20
acquisitions, which have a dilutive effect as the operating model is quite different. These businesses tend to be
lower gross margin but also lower cost. There is an opportunity for us to grow margin, over time, through a greater
mix into service and repair, but the gross margin will remain lower than that of a core garage.
All businesses saw their respective gross margins improve during FY21, with the continued development of our PACE
Digital Operating Platform supporting buying efficiency across garages, boosted further by a slightly lower mix into
tyres, which tend to be lower margin.
Operating costs were £141.6m, +£22.7m above last year, of which £18m was a result of the annualisation and growth of
our acquisitions from FY20. COVID-19 costs within Autocentres totalled £5.3m, offset by £6.0m of relief through the
Retail, Hospitality and Leisure Grant Fund. The remaining cost increase was the result of growth in the underlying
business.
Autocentres' Underlying EBIT was £12.7m before IFRS 16 (FY20: £6.7m) a strong performance, reflecting the continued
growth and optimisation of our LFL business, alongside the annualisation and expansion of FY20 acquisitions.
Underlying EBITDA before IFRS 16 of £19.3m (FY20: £12.6m) was 53.2% higher than FY20.
Portfolio Management
The last 12-18 months have seen some of the most significant changes in the Group's portfolio since the acquisition
of Autocentres over a decade ago. Within Q3 FY20 we saw the acquisition of McConechy's Garages and Tyres on the
Drive, followed shortly by the closure of our Cycle Republic business, including 22 stores, at the close FY20.
Within FY21 we have continued to grow our services business, increasing the number of HME vans and acquiring
Universal at the end if the financial year. We also, however, took steps to further improve the profitability and
efficiency of our business through the closure of 59 lower return stores and garages.
The total number of fixed stores or centres within the Group stood at 781, with a further 143 HME vans and a further
192 commercial vans supporting mobile tyre fitting within McConechy's and Universal as at 2 April 2021. The
portfolio comprised 404 stores (end of FY20: 472) and 374 Autocentres (end of FY20: 371). Mobile locations grew by
156 vans, increasing coverage of the most in-demand regions within the UK.
The following table outlines the changes in the portfolio over the year:
Retail Centres Vans
Relocations - - -
Leases renegotiated 19 7 -
Refreshed - - -
Openings/Acquisitions - 20 159
Closed 42 17 -
Within Retail, 42 low return stores closed during the year, largely in the final quarter. It was considered more
profitable to the Group, on analysing the anticipated sales transfer to other channels and neighbouring stores, to
close these stores and reduce the overall cost base. Where there was term remaining on any leases at the point of
closure, provision has been made in the balance sheet to cover occupancy costs to the point of lease expiry. A
further 22 Cycle Republic stores, along with the Boardman Performance Centre, are also no longer part of the trading
portfolio.
The number of lease expiries, or breaks under option, increases significantly within the next five years. Retail
will see almost half of stores experience optionality within five years, allowing for a high degree of flexibility
within the estate.
Within Autocentres, no centres were opened, but 20 locations acquired in the year. 17 were closed, taking the total
number of Autocentre locations to 374 as at 2 April 2021 (end of FY20: 371). No Autocentres were refreshed in the
year (FY20: 14).
With the exception of eight long leasehold, and two freehold properties within Autocentres, the Group's operating
sites are occupied under operating leases, the majority of which are on standard lease terms, typically with a five
to 15-year term at inception and with an average lease length of under six years. The acquisition of Universal
resulted in the purchase of 6 freehold properties but all have been sold and leased back within the first two
periods of FY22.
Net Non-Underlying items
The following table outlines the components of the non-underlying items recognised in the 52 weeks ended 2 April
2021:
FY21 FY20
£m £m
Organisational restructure costs (a) 5.9 2.8
Group-wide strategic review (b) - 1.0
Acquisition and investment-related fees (c) 0.6 1.9
One-off claims (d) 2.9 0.8
Closure costs (e) 27.9 25.6
Net non-underlying items pre-IFRS 16 37.3 32.1
Closure costs (e) (1.9) 1.2
Impairment of right-of-use assets (f) (0.4) 0.9
Net non-underlying items post-IFRS 16 35.0 34.2
a. In the current and prior period, separate and unrelated organisational restructuring activities were
undertaken.
Current period costs comprised:
• During the year a strategic redesign of the in-store operating model undertaken to better meet our customers'
expectations and deliver a consistent shopping experience across our estate. Redundancy costs of £5.9m were
incurred to transition to the new operating model. These costs have materially been spent during the year.
Prior period costs comprised:
• Redundancy and transition costs relating to roles which have been outsourced or otherwise will not be replaced
(FY20: £1.4m); and
• Asset write-offs, principally resulting from the strategic decision to re-platform the Retail and Autocentres
websites (FY20: £1.4m)
b. In the prior period, costs were incurred in preparing and implementing the new Group strategy. This included
£0.4m of external consultant cost and £0.6m of store labour costs, point-of-sale equipment and other associated
costs in completing the cycling space re-lay across the store estate.
c. In the current and prior periods, costs were incurred in relation to the investments in Universal, McConechy's
and Tyres on the Drive.
• In FY21, £0.6m relating to professional fees in respect of the acquisition of Universal;
• Tyres on the Drive acquisition costs comprised £1.0m (FY20) principally relating to the costs of dual running
Halfords Mobile Expert and Tyres on the Drive, as well as the write-off of the receivables balance due from
Tyres on the Drive related to Halfords Mobile Expert prior to acquisition; and
• £0.9m (FY20) relating to professional fees in respect of the acquisition of McConechy's.
d. During the prior year, the Group incurred £0.2m in settling as court case. In addition, a provision of £0.6m was
recognised in relation to the HMRC audit relating to the national minimum wage. The Group has continued to work
with HMRC and external advisors during FY21 and a full data validation exercise is underway to determine the
required Notice of Underpayment. The exercise is in progress and based on information available to date and the
Group's assessment of a range of potential outcomes, management has increased the provision to £3.4m which
represents management's best estimate of the value of underpayments and the associated penalty charge.
e. Of the closure costs £28.5m represents costs associated with the closure of a number of stores and garages
following a strategic review of the profitability of the physical estate. The costs mostly relate to the
impairment of right-of-use assets (£12.2m) and tangible assets and property costs as well as ongoing onerous
commitments under the lease agreements and other costs associated with the property exits.
In the prior period they related to costs associated with the closure of the operations of Cycle Republic and the
Boardman Performance Centre ("Cycle Republic") following a strategic review of the Group's cycling businesses. The
costs mostly relate to the impairment of right-of-use assets, as well as the impairment of intangible and tangible
assets and inventories as well as ongoing onerous commitments under the lease agreements and other costs associated
with the property exits. £2.5m of these costs have been reversed during the year as the Group continues to negotiate
lease disposals and was able to release stock provisions previously in place (£1.8m).
f. In light of the ongoing COVID-19 pandemic, the Group has revised future cash flow projections for stores and
garages. As a result, in the prior period, £0.9m incremental impairment was recognised in relation to garages
where the current and anticipated future performance did not support the carrying value of the right-of-use
asset and associated tangible assets. This charge is directly attributable to impairment due to COVID-19 and
relates primarily to the right-of-use asset value. During the year, £0.4m of this impairment has been reversed
as the stores and garages have returned to a profitable position.
Finance Expense
The net finance expense (before non-underlying items and IFRS 16) for the 52 weeks ended 2 April 2021 was £5.5m
(FY20: £2.8m) reflecting the drawdown of the Rolling Credit Facility (RCF) early in the pandemic, alongside
increased amortisation and commitment fees relating to the new RCF, which was re-negotiated in the period.
Taxation
The taxation charge on profit for the 52 weeks ended 2 April 2021 (before IFRS 16) was £10.3m (FY20: £2.8m),
including a £5.8m credit (FY20: £4.7m credit) in respect of non-underlying items. The effective tax rate of 17.5%
(FY20: 13.9%) differs from the UK corporation tax rate (19%) principally due to the impact of deferred tax on
accounting for share options and adjustments in respect of provisions held in respect of prior periods.
Earnings Per Share ("EPS")
Underlying Basic EPS before IFRS 16 was 40.7 pence and after non-underlying items 24.7 pence (FY20: 22.9 pence and
8.9 pence after non-underlying items), a 77.7% and 177.5% increase on the prior year. Basic weighted-average shares
in issue during the year were 197.1m (FY20: 197.0m).
Dividend ("DPS")
In light of the COVID-19 pandemic and the impact on short-term profitability, the Board has taken a series of
measures to preserve cash, one of which was a suspension of the dividend. After the strong close in the final
quarter of FY21, the Board has recommended to shareholders that final dividend of 5.0p per share should be paid
(FY20: Nil per share).
IFRS 16
FY21 FY21
(52 weeks) (52 weeks) Movement
Pre-IFRS 16 Post-IFRS 16 £m
£m £m
Underlying EBIT 101.8 114.5 12.7
Net Finance Costs (5.5) (15.0) (9.5)
Underlying Profit Before Tax 96.3 99.5 3.2
Net Non-Underlying Items (37.3) (35.0) 2.3
Profit Before Tax 59.0 64.5 5.5
Underlying Basic Earnings per Share 40.7p 41.7p
IFRS 16 has had the effect of increasing profit by £5.5m. The two main drivers for this being the increase in held
over leases which have decreased the depreciation charge in comparison to the rental payments, and the increased
aging of the lease portfolio which has led to a lower interest charge in comparison to the rental payments.
Capital Expenditure
Capital investment in the 52 weeks ended 2 April 2021 totalled £32.5m (FY20: £35.8m) comprising £23.2m in Retail and
£9.3m in Autocentres. Within Retail, £6.0m (FY20: £15.9m) was invested in stores. Additional investments in Retail
infrastructure included a £13.1m investment in IT systems, including the continued development of the new Group
website.
The £9.3m (FY20: £4.8m) capital expenditure in Autocentres principally related to the replacement of garage
equipment and replacement of fixtures and fittings, rebranding of McConechy's garages and further development of
PACE, our Garage Workflow System.
Inventories
Group inventory held as at the year-end was £143.9m (FY20: £173.0m). Retail inventory decreased to £134.3m (FY20:
£168.0m), reflecting reduced stock levels and working capital efficiencies. The stock levels within our cycling
business were, however, sub-optimal for much of the year and as such the inventory reduction is flattered. Inventory
levels are likely to revert to more normal levels in FY22.
Autocentres' inventory was £9.6m (FY20: £5.0m). The existing Autocentres business model is such that only modest
levels of inventory are held, with most parts acquired on an as-needed basis. The increase in inventory related to
the acquisition of tyre stock within Universal.
Cashflow and Borrowings
Adjusted Operating Cash Flow was £186.6m (FY20: £109.9m). After acquisitions, taxation, capital expenditure and net
finance costs, Free Cash Flow of £145.3m (FY20: £54.6m) was generated in the year. Group Net Cash/(Debt) was £58.1m
(FY20: (£73.2m)). All of these numbers are pre-IFRS 16.
Within the cash flow is a working capital inflow of approximately £42m. Within this was approximately £20m of
planned and sustainable inventory reductions in Retail and £36m which we anticipate will reverse in FY22. The £36m
is a result of Retail inventories at year end which were £14m lower than optimal due to the high cycling demand, and
year end creditors worth £22m which saw our normal timing differences alongside a VAT creditor that was deferred
from earlier in the year and paid early in FY22.
Group net debt after IFRS 16 was £277.3m (FY20: £479.8m)
Principal Risks and Uncertainties
The Board considers the assessment of risk assessment and the identification of mitigating actions and internal
control to be fundamental to achieving Halfords' strategic corporate objectives. In the Annual Report and Accounts,
the Board sets out what it considers to be the principal commercial and financial risks to achieving the Group's
objectives. The main areas of potential risk and uncertainty in the balance of the financial year are described in
the Strategic Report of the 2021 Annual Report and Accounts. These include:
• Business Strategy
-Capability and capacity to effect change
-Stakeholder support
- Value proposition
-Brand appeal and market share
• Financial
-Short, sharp interruptions in cashflows
- Sustainable business model
• Compliance
-Regulatory and compliance
-Service quality
-Cyber security
• Operational
- Colleague engagement / culture
- Skills shortage
- IT infrastructure failure
- Critical physical infrastructure failure (including supply chain disruption)
Specific risks associated with performance include the success, or otherwise of peak trading periods (e.g.,
Christmas) as well as weather-sensitive sales, particularly within the Car Maintenance and Cycling categories in the
Retail business.
Loraine Woodhouse
Chief Financial Officer
16 June 2021
Glossary of Alternative Performance Measures
In the reporting of financial information, the Directors have adopted various Alternative Performance Measures
("APMs"), previously termed as 'Non-GAAP measures'. APMs should be considered in addition to IFRS measurements, of
which some are shown on page 22. The Directors believe that these APMs assist in providing useful information on the
underlying performance of the Group, enhance the comparability of information between reporting periods, and are
used internally by the Directors to measure the Group's performance.
The key APMs that the Group focuses on are as follows. All numbers are shown pre-IFRS 16 (on an IAS 17 basis) to
enable comparability with the prior period performance:
1.Like-for-like ("LFL") sales represent revenues from stores, centres and websites that have been trading for at
least a year (but excluding prior year sales of stores and centres closed during the year) at constant foreign
exchange rates.
2.Underlying EBIT is results from operating activities before non-underlying items. Underlying EBITDA further
removes Depreciation and Amortisation.
3.Underlying Profit Before Tax is Profit before income tax and non-underlying items as shown in the Group Income
Statement.
4.Underlying Earnings Per Share is Profit after income tax before non-underlying items as shown in the Group Income
Statement, divided by the number of shares in issue.
5.Net Debt is current and non-current borrowings less cash and cash equivalents, both in-hand and at bank, as shown
in the Consolidated Statement of Financial Position.
FY21 FY21 FY20 FY20
Pre-IFRS 16 Post-IFRS 16 Pre-IFRS 16 Post-IFRS 16
£m £m £m £m
Cash & cash equivalents** 67.2 67.2 115.5 115.5
Borrowings - current (2.2) (63.6) (1.8) (83.4)
Borrowings - non-current (6.9) (280.9) (186.9) (511.9)
Net Debt* 58.1 (277.3) (73.2) (479.8)
*The statutory 53-week period to 3 April 2020 comprises reported results that are non-comparable to the 52-week
period reported in the current period.
**Included within cash and cash equivalents is an amount of £6.3m which is restricted and is not available to
circulate within the Group on demand.
6.Net Debt to Underlying EBITDA ratio is represented by the ratio of Net Debt to Underlying EBITDA (both of which
are defined above).
7.Adjusted Operating Cash Flow is defined as EBITDA plus share-based payment transactions and loss on disposal of
property, plant and equipment, less working capital movements and movement in provisions; as reconciled below.
FY21 FY21 FY20 FY20
Pre-IFRS 16 Post-IFRS 16 Pre-IFRS 16 Post-IFRS 16**
£m £m £m £m
Underlying EBIT 101.8 114.5 55.4 67.2
Depreciation, amortisation & impairment 38.0 118.5 37.2 118.7
Underlying EBITDA 139.8 233.0 92.6 185.9
Non-underlying operating expenses (37.3) (35.0) (32.1) (34.2)
EBITDA 102.5 198.0 60.5 151.7
Share-based payment transactions 6.4 6.4 1.0 1.0
Loss on disposal of property, plant & equipment 1.7 1.7 2.8 2.8
Working capital movements** 43.4 49.0 48.7 38.3
Provisions movement and other** 32.6 25.7 (3.1) (0.7)
Adjusted Operating Cash Flow* 186.6 280.8 109.9 193.1
*The statutory 53-week period to 3 April 2020 comprises reported results that are non-comparable to the 52-week
period reported in the current period.
**As restated see note 11
8.Free Cash Flow is defined as Adjusted Operating Cash Flow (as defined above) less capital expenditure, net finance
costs, taxation, exchange movement and arrangement fees on loans; as reconciled below.
FY21 FY21 FY20 FY20
Pre-IFRS 16 Post-IFRS 16 Pre-IFRS 16 Post-IFRS 16**
£m £m £m £m
Adjusted Operating Cash Flow** 186.6 280.8 109.9 193.1
Capital expenditure (28.0) (27.5) (34.1) (33.6)
Net finance costs (5.5) (15.5) (2.4) (13.2)
Taxation (10.8) (10.8) (16.3) (16.3)
Exchange movements 3.0 2.1 (2.5) (2.0)
Free Cash Flow* 145.3 229.1 54.6 128.0
*The statutory 53-week period to 3 April 2020 comprises reported results that are non-comparable to the 52-week
period reported in the current period.
** As restated see note 11
Halfords Group plc
Consolidated Income Statement
For the 52 weeks to 2 April 2021
For the period 52 weeks to 2 April 2021 53 weeks to 3 April 2020
Before Non-underlying Before Non-underlying
Non-underlying items Total Non-underlying items Total
items (note 4) items (note 4)
Notes £m £m £m £m £m £m
Revenue 1,292.3 - 1,292.3 1,155.1 - 1,155.1
Cost of sales (636.0) - (636.0) (565.4) - (565.4)
Gross profit 656.3 - 656.3 589.7 - 589.7
Operating 2 (541.8) (35.0) (576.8) (522.5) (34.2) (556.7)
expenses
Results from
operating 3 114.5 (35.0) 79.5 67.2 (34.2) 33.0
activities
Finance costs 5 (15.0) - (15.0) (13.9) - (13.9)
Finance income 5 - - - 0.3 - 0.3
Net finance (15.0) - (15.0) (13.6) - (13.6)
expense
Profit before 99.5 (35.0) 64.5 53.6 (34.2) 19.4
income tax
Income tax 6 (17.4) 6.1 (11.3) (6.9) 5.0 (1.9)
expense
Profit for the
financial period
attributable to 82.1 (28.9) 53.2 46.7 (29.2) 17.5
equity
shareholders
Earnings per
share
Basic earnings 8 41.7p 27.1p 23.7p 8.9p
per share
Diluted earnings 8 40.7p 26.4p 23.3p 8.7p
per share
The notes on pages 28 to 35 are an integral part of these condensed consolidated financial statements.
Halfords Group plc
Consolidated Statement of Comprehensive Income
For the 52 weeks to 2 April 2021
52 weeks to 53 weeks to
2 April 3 April
2021 2020
Notes £m £m
Profit for the period 53.2 17.5
Other comprehensive income
Cash flow hedges:
Fair value changes in the period (9.6) 7.9
Income tax on other comprehensive income 6 1.6 (0.7)
Other comprehensive income for the period, net of income tax (8.0) 7.2
Total comprehensive income for the period attributable to equity shareholders 45.2 24.7
All items within the Consolidated Statement of Comprehensive Income are classified as items that are or may be
recycled to the Income Statement.
The notes on pages 28 to 35 are an integral part of these condensed consolidated financial statements.
Halfords Group plc
Consolidated Statement of Financial Position
For the 52 weeks to 2 April 2021
2 April 3 April
2021 2020
£m £m
Assets
Non-current assets
Intangible assets 398.3 395.7
Property, plant and equipment 81.3 83.1
Right-of-use assets 282.8 349.9
Derivative financial instruments 0.1 -
Deferred tax asset 12.3 7.3
Total non-current assets 774.8 836.0
Current assets
Inventories 143.9 173.0
Trade and other receivables 86.1 53.5
Assets held for sale 6.0 -
Derivative financial instruments 0.5 8.7
Current tax assets 3.1 8.2
Cash and cash equivalents 67.2 115.5
Total current assets 306.8 358.9
Total assets 1,081.6 1,194.9
Liabilities
Current liabilities
Borrowings (0.2) (0.2)
Derivative financial instruments (5.9) (1.1)
Lease liabilities (63.4) (83.2)
Trade and other payables (270.2) (217.0)
Provisions (24.5) (9.7)
Total current liabilities (364.2) (311.2)
Net current (liabilities)/assets (57.4) 47.7
Non-current liabilities
Borrowings - (179.1)
Derivative financial instruments (0.4) -
Lease liabilities (280.9) (332.8)
Trade and other payables (3.3) (1.9)
Provisions (15.0) (4.1)
Total non-current liabilities (299.6) (517.9)
Total liabilities (663.8) (829.1)
Net assets 417.8 365.8
Shareholders' equity
Share capital 2.0 2.0
Share premium 151.0 151.0
Investment in own shares (10.0) (10.0)
Other reserves (1.8) 4.9
Retained earnings 276.6 217.9
Total equity attributable to equity holders of the Company 417.8 365.8
The notes on pages 28 to 35 are an integral part of these condensed consolidated financial statements.
Halfords Group plc
Consolidated Statement of Changes in Shareholders' Equity
For the 52 weeks to 2 April 2021
Attributable to the equity holders of the Company
Other reserves
Share Investment Capital
Share premium in own redemption Hedging Retained Total
reserve
capital account shares reserve Earnings* equity
£m £m £m £m £m £m £m
Balance at 29 March 2019 2.0 151.0 (10.0) 0.3 1.6 264.4 409.3
Impact of adoption of IFRS 16* - - - - - (25.1) (25.1)
Balance at 30 March 2019 2.0 151.0 (10.0) 0.3 1.6 239.4 384.2
Total comprehensive income for the
period
Profit for the period - - - - - 17.5 17.5
Other comprehensive income
Cash flow hedges:
Fair value changes in the period - - - - 7.9 (2.3) 5.6
Income tax on other comprehensive - - - - (0.7) (0.8) (1.5)
income
Total other comprehensive income for the - - - - 7.2 (3.1) 4.1
period net of tax
Total comprehensive income for the - - - - 7.2 14.4 21.6
period
Hedging gain and losses transferred to - - - - (4.2) - (4.2)
the cost of inventory
Transactions with owners
Share-based payment transactions - - - - - 1.0 1.0
Income tax on share-based payment - - - - - (0.2) (0.2)
transactions
Dividends to equity holders - - - - - (36.6) (36.6)
Total transactions with owners - - - - - (35.8) (35.8)
Balance at 3 April 2020 2.0 151.0 (10.0) 0.3 4.6 217.9 365.8
*The Group initially applied IFRS 16 at 30 March 2019, using the modified retrospective approach. Under this
approach, comparative information is not restated and the cumulative effect of applying IFRS 16 is recognised in
Retained earnings at the date of initial application.
The notes on pages 28 to 35 are an integral part of these condensed consolidated financial statements.
Halfords Group plc
Consolidated Statement of Changes in Shareholders' Equity (continued)
Attributable to the equity holders of the Company
Other reserves
Share Investment Capital
Share premium in own redemption Hedging Retained Total
reserve
capital account shares reserve earnings equity
£m £m £m £m £m £m £m
Closing balance at 3 April 2020 2.0 151.0 (10.0) 0.3 4.6 217.9 365.8
Total comprehensive income for the
period
Profit for the period - - - - - 53.2 53.2
Other comprehensive income
Fair value changes in the period - - - - (9.6) - (9.6)
Income tax on other comprehensive income - - - - 1.6 - 1.6
Total other comprehensive income for the - - - - (8.0) - (8.0)
period net of tax
Total comprehensive income for the - - - - (8.0) 53.2 45.2
period
Other - - - - - (1.3) (1.3)
Hedging gains and losses transferred to - - - - 1.3 - 1.3
the cost of inventory
Transactions with owners
Share options exercised - - - - - - -
Share-based payment transactions - - - - - 6.4 6.4
Income tax on share-based payment - - - - - 0.4 0.4
transactions
Dividends to equity holders - - - - - - -
Total transactions with owners - - - - - 6.8 6.8
Balance at 2 April 2021 2.0 151.0 (10.0) 0.3 (2.1) 276.6 417.8
The notes on pages 28 to 35 are an integral part of these condensed consolidated financial statements.
Halfords Group plc
Consolidated statement of cash flows
For the 52 weeks to 2 April 2021
52 weeks to 53 weeks to
2 April 3 April
2021 2020
(Restated)*
Notes £m £m
Cash flows from operating activities
Profit after tax for the period, before non-underlying items 82.1 46.7
Non-underlying items (28.9) (29.2)
Profit after tax for the period 53.2 17.5
Depreciation - property, plant and equipment 21.0 24.3
Impairment - property, plant and equipment 2.8 5.4
Amortisation and impairment of right-of-use assets 81.8 83.0
Amortisation - intangible assets 12.9 11.4
Net finance costs 15.0 13.6
Loss on disposal of property, plant and equipment and intangibles 1.7 2.8
Equity-settled share-based payment transactions 6.4 1.0
Exchange movement 2.1 (2.0)
Income tax expense 11.3 1.9
Decrease in inventories 35.0 3.9
Increase in trade and other receivables* (26.2) (1.0)
Increase in trade and other payables* 40.2 35.4
Increase/(decrease) in provisions* 25.7 (0.7)
Income tax paid (10.8) (16.3)
Net cash from operating activities 272.1 180.2
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired (11.5) (10.9)
Purchase of intangible assets (11.8) (12.5)
Purchase of property, plant and equipment (15.7) (21.1)
Net cash used in investing activities (39.0) (44.5)
Cash flows from financing activities
Finance income received - 0.3
Finance costs paid (5.5) (2.2)
Repayment of loan following acquisition - (1.8)
Proceeds from loans, net of transaction costs - 1,377.0
Repayment of borrowings (180.0) (1,262.0)
Interest paid on lease liabilities* (10.0) (11.3)
Payment of capital element of leases* (85.9) (76.4)
Dividends paid - (36.6)
Net cash used in financing activities (281.4) (13.0)
Net (decrease)/increase in cash and bank overdrafts 9 (48.3) 122.7
Cash and cash equivalents at the beginning of the period 115.3 (7.4)
Cash and cash equivalents at the end of the period 9 67.0 115.3
The notes on pages 28 to 35 are an integral part of these condensed consolidated financial statements.
*Adjustment to reported 3 April 2020 results. See note 11.
Halfords Group plc
Notes to the condensed consolidated financial statements
For the 52 weeks to 2 April 2021
1. General information and basis of preparation
The financial information set out below does not constitute the Group's statutory accounts for the periods ended 2
April 2021 or 3 April 2020 but is derived from those accounts. Statutory accounts for 2020 have been delivered to
the Registrar of Companies, and those for 2021 will be delivered in due course. The auditor has reported on those
accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor
drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
The financial statements are presented in millions of UK pounds, rounded to the nearest £0.1m.
The accounts of the Group are prepared for the period up to the Friday closest to 31 March each year. Consequently,
the financial statements for the current period cover the 52 weeks to 2 April 2021, whilst the comparative period
covered the 53 weeks to 3 April 2020.
The consolidated financial statements of Halfords Group plc and its subsidiary undertakings, together "the
Group", have been prepared in accordance with International Financial Reporting Standards ("IFRSs") and IFRS
Interpretations Committee ("IFRS IC") Interpretations as adopted by the European Union and on a basis consistent
with those policies set out in our audited financial statements for the period ended 3 April 2020 other than for the
adoption of the COVID-19 Related Rent Concessions (Amendments to IFRS 16) which did not have a material effect. The
financial statements are prepared on a going concern basis and under the historical cost convention, except where
adopted IFRSs require an alternative treatment. The principal variations relate to financial instruments (IFRS 9
"Financial instruments"), share-based payments (IFRS 2 "Share-based payment" and leases (IFRS 16 "Leases").
Adoption of new and revised standards
There have been no new or amended standards effective in the period which has had a material impact on the
consolidated financial information.
New standards and interpretations not yet adopted
All other standards and related adoptions which have been published but not yet adopted are not expected to have
a material impact on the consolidated results or financial position of the Group. A full listing will be provided in
the statutory accounts.
2. Operating expenses
For the period 52 weeks to 53 weeks to
2 April 3 April
2021 2020
£m £m
Selling and distribution costs 422.9 436.0
422.9 436.0
Administrative expenses, before non-underlying items 118.9 86.5
Non-underlying administrative expenses 35.0 34.2
153.9 120.7
576.8 556.7
3. Operating profit
For the period 52 weeks to 53 weeks to
2 April 3 April
2021 2020
£m £m
Operating profit is arrived at after charging/(crediting) the following
expenses/(incomes) as categorised by nature:
Expenses relating to leases of low-value assets, excluding short-term leases of low 0.7 0.6
value assets
Expenses relating to short term leases 5.6 2.5
Rentals receivable under operating leases (2.7) (3.0)
Landlord surrender premiums 0.1 (0.6)
Loss on disposal of property, plant and equipment and intangibles 1.7 2.8
Amortisation of intangible assets 12.9 11.4
Amortisation of right-of-use assets 69.6 73.6
Depreciation and impairment of:
- owned property, plant and equipment 21.0 24.3
Impairment of:
- owned property, plant and equipment 2.8 5.4
- impairment of right-of-use assets 12.2 9.4
Trade receivables impairment 0.1 0.2
Staff costs 299.6 256.2
Cost of inventories consumed in cost of sales 629.1 563.8
4. Non-underlying items
For the period 52 weeks to 53 weeks to
2 April 3 April
2021 2020
£m £m
Non-underlying operating expenses:
Organisational restructure costs (a) 5.9 2.8
Group-wide strategic review (b) - 1.0
Closure costs (c) 26.0 26.8
Acquisition and investment related fees (d) 0.6 1.9
One-off claims (e) 2.9 0.8
Impairment of right-of-use assets (f) (0.4) 0.9
Non-underlying items before tax 35.0 34.2
Tax on non-underlying items (g) (6.1) (5.0)
Non-underlying items after tax 28.9 29.2
a. In the current and prior period separate and unrelated organisational restructuring activities were undertaken.
Current period costs comprised:
• Costs relating to a strategic redesign of our instore operating model undertaken to better meet our customers'
expectations and deliver a consistent shopping experience across our estate. Redundancy costs of £5.9m were
incurred to transition to the new operating model. These costs have materially been spent during the year.
Prior period costs comprised:
• Redundancy and transition costs of £1.4m relating to roles which have been outsourced or otherwise will not be
replaced; and
• £1.4m of asset write-offs, principally resulting from the strategic decision to re-platform the Retail and
Autocentres websites.
(b) In the prior periods costs were incurred in preparing and implementing the new Group strategy.
• £0.4m of external consultant costs; and £0.6m of store labour costs, point of sale equipment and other
associated costs in completing the cycling space relay across the store estate.
(c) Of the closure costs £28.5m represents costs associated with the closure of a number of stores and garages
following a strategic review of the profitability of the physical estate. The costs mostly relate to the impairment
of right-of-use assets (£12.2m), tangible assets and property costs as well as ongoing onerous commitments under the
lease agreements and other costs associated with the property exits.
Closure costs in the prior period represented costs associated with the closure of the operations of Cycle Republic
and the Boardman Performance Centre ("Cycle Republic") following a strategic review of the Group's cycling
businesses. The costs mostly relate to the impairment of right-of-use assets, intangible assets, tangible assets and
inventories. £2.5m of these costs have been reversed during the year as the Group continues to negotiate lease
disposals and was able to release stock provisions previously in place (£1.8m).
(d) In the current and prior period costs were incurred in relation to the investments in Universal Tyre Services,
McConechy's Tyre Services and Tyres on the Drive.
• In FY21, £0.6m relating to professional fees in respect of the acquisition of Universal Tyre Services;
• Tyres on the Drive acquisition costs comprised of £1m principally relating to the costs of dual running Halfords
Mobile Expert and Tyres on the Drive, as well as the write off of the receivables balance due from Tyres on the
Drive related to Halfords Mobile Expert prior to acquisition; and
• £0.9m relating to professional fees in respect of the acquisition of McConechy's Tyre Services.
(e) During the prior year, the Group incurred £0.2m in settling a court case. In addition, a provision of £0.6m was
created in relation to the HMRC audit relating to the national minimum wage. The audit has progressed during FY21
and as a result the provision has been increased by £2.9m. This represents management's best estimate of the
repayment and fine payable as a result of national minimum wage breaches.
(f) In light of the ongoing COVID-19 pandemic, the Group has revised future cash flow projections for stores and
garages. As a result, £0.9m incremental impairment has been recognised in relation to garages where the current and
anticipated future performance did not support the carrying value of the right-of-use asset and associated tangible
assets. This charge is directly attributable to impairment due to COVID-19 and relates primarily to the right-of-use
asset value. During the year, £0.4m of this impairment has been reversed as the stores and garages have returned to
a profitable position.
(g) The tax credit of £6.1m represents a tax rate of 17.4% applied to non-underlying items. The prior period
represents a tax credit at 14.6% applied to non-underlying items.
5. Finance income and costs
Recognised in profit or loss for the period 52 weeks to 53 weeks to
2 April 3 April
2021 2020
£m £m
Finance costs:
Bank borrowings (2.5) (1.6)
Amortisation of issue costs on loans (1.1) (0.4)
Commitment and guarantee fees (1.1) (0.6)
Other interest payable (0.3) -
Interest payable on lease liabilities (10.0) (11.3)
Finance costs (15.0) (13.9)
Finance income:
Bank and similar interest - 0.3
Finance income - 0.3
Net finance costs (15.0) (13.6)
6. Taxation
For the period 52 weeks to 53 weeks to
2 April 3 April
2021 2020
£m £m
Current taxation
UK corporation tax charge for the period 16.9 5.4
Adjustment in respect of prior periods (1.0) (0.5)
15.9 4.9
Deferred taxation
Origination and reversal of temporary differences (4.7) (1.5)
Adjustment in respect of prior periods 0.1 (1.5)
(4.6) (3.0)
Total tax charge for the period 11.3 1.9
The tax charge is reconciled with the standard rate of UK corporation tax as follows:
For the period 52 weeks to 53 weeks to
2 April 3 April
2021 2020
£m £m
Profit before tax 64.5 19.4
UK corporation tax at standard rate of 19% (2020: 19%) 12.3 3.7
Factors affecting the charge for the period:
Depreciation on expenditure not eligible for tax relief 0.9 0.5
Employee share options (1.3) -
Other disallowable expenses 0.6 0.8
Adjustment in respect of prior periods (0.9) (1.9)
Impact of overseas tax rates (0.3) (0.3)
Impact of change in tax rate on deferred tax balance - (0.9)
Total tax charge for the period 11.3 1.9
The March 2021 Budget announced a further increase to the main rate of corporation tax to 25% from 1 April 2023.
This rate has not been substantively enacted at the balance sheet date, as result deferred tax balances as at 2
April 2021 continue to be measured at 19%. If all of the deferred tax was to reverse at the amended rate the impact
to the closing deferred tax position would be to increase the deferred tax asset by £3.9m.
The effective tax rate of 17.5% (2020: 9.7%) is lower than the UK corporation tax rate principally due to the impact
of deferred tax on accounting for share options and adjustments in respect of provisions held in respect of prior
periods.
The tax charge for the period was £11.3m (2020: £1.9m), including a £6.1m credit (2020: £5.0m credit) in respect of
tax on non-underlying items.
The Group engages openly and proactively with tax authorities both in the UK and internationally, where it trades
and sources products, and is considered low risk by HM Revenue & Customs ("HMRC"). The Company is fully committed
to complying with all of its tax payment and reporting obligations.
In this period, the Group's contribution from both taxes paid and collected exceeded £170m (2020: £208.0m) with the
main taxes including corporation tax of £10.8m (2020: £16.3m), net VAT of £97.4m (2020: £101.4m), employment taxes
of £61.2m (2020: £54.3m) and business rates of £0.9m (2020: £36.3m).
7. Dividends
For the period 52 weeks to 53 weeks to
2 April 3 April
2021 2020
£m £m
Equity - ordinary shares
Final for the 53 weeks to 3 April 2020 - (52 weeks to 29 March 2019: 12.39p) - 24.4
Interim for the 52 weeks to 2 April 2021 - (53 weeks to 3 April 2020: 6.18p) - 12.2
- 36.6
In addition, the Directors are proposing a final dividend of 5.0p per share (2020: £nil) in respect of the financial
period ended 2 April 2021.
8. Earnings per share
Basic earnings per share are calculated by dividing the profit attributable to ordinary shareholders by the weighted
average number of ordinary shares in issue during the period. The weighted average number of shares excludes shares
held by an Employee Benefit Trust and has been adjusted for the issue/purchase of shares during the period.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume
conversion of all dilutive potential ordinary shares. These represent share options granted to employees where the
exercise price is less than the average market price of the Company's ordinary shares during the 52 weeks to 2 April
2021.
The Group has also chosen to present an alternative earnings per share measure, underlying earnings per share, with
profit adjusted for non-underlying items because it better reflects the Group's underlying performance.
For the period 52 weeks to 53 weeks to
2 April 3 April
2021 2020
Number of shares Number of shares
m m
Weighted average number of shares in issue 199.1 199.1
Less: shares held by the Employee Benefit Trust (weighted average) (2.0) (2.1)
Weighted average number of shares for calculating basic earnings per share 197.1 197.0
Weighted average number of dilutive shares 4.9 3.3
Total number of shares for calculating diluted earnings per share 202.0 200.3
52 weeks to 53 weeks to
2 April 3 April
For the period
2021 2020
£m £m
Basic earnings attributable to equity shareholders 53.2 17.5
Non-underlying items (see note 4):
Operating expenses 35.0 34.2
Tax on non-underlying items (6.1) (5.0)
Underlying earnings before non-underlying items 82.1 46.7
For the period
52 weeks to 53 weeks to
2 April 3 April
2021 2020
Basic earnings per ordinary share 27.1p 8.9p
Diluted earnings per ordinary share 26.4p 8.7p
Basic underlying earnings per ordinary share 41.7p 23.7p
Diluted underlying earnings per ordinary share 40.7p 23.3p
9. Analysis of movements in Group's net debt in the period
At 3 April At 2 April
Cash flow Other non-cash changes
2020 2021
£m £m £m £m
Cash and cash equivalents at bank and in hand 115.3 (48.3) - 67.0
Debt due after one year (179.1) 180.0 (0.9) -
Total net debt excluding leases (63.8) 131.7 (0.9) 67.0
Current lease liabilities (83.2) 95.9 (76.1) (63.4)
Non-current lease liabilities (332.8) - 51.9 (280.9)
Total lease liabilities (416.0) 95.9 (24.2) (344.3)
Total net debt (479.8) 227.6 (25.1) (277.3)
Non-cash changes include finance costs in relation to the amortisation of capitalised debt issue costs of £1.1m
(2020: £0.4m), additions of new leases, modifications to leases and foreign exchange movements and changes in
classification between amounts due within and after one year.
Cash and cash equivalents at the period end consist of £67.2m (2020: £115.5m) of liquid assets and
£0.2m (2020: £0.2m) of bank overdrafts.
10. Leases
All leases where the Group is a lessee are accounted for by recognising a right-of-use asset and a lease liability
except for:
• Leases of low value assets; and
• Leases with a term of 12 months or less.
i. Amounts recognised in the consolidated statement of financial position
Right-of-Use Assets
Land and Equipment
Total
buildings £m
£m
£m
At 3 April 2020 344.0 5.9 349.9
Additions on acquisition of subsidiary 2.7 - 2.7
Additions to right-of-use assets 12.5 0.6 13.1
Amortisation charge for the year (66.1) (3.5) (69.6)
Effect of modification of lease 5.8 - 5.8
Derecognition of right-of-use assets (6.8) (0.1) (6.9)
Impairment (12.2) - (12.2)
At 2 April 2021 279.9 2.9 282.8
Land and Equipment
Total
buildings £m
£m
£m
At 30 March 2019 388.5 7.8 396.3
Reclassification from intangibles 2.4 - 2.4
Additions on acquisition of subsidiary 11.1 0.3 11.4
Additions to right-of-use assets 10.0 1.9 11.9
Amortisation charge for the year (70.2) (3.4) (73.6)
Effect of modification of lease 11.6 - 11.6
Derecognition of right-of-use assets - (0.7) (0.7)
Impairment (9.4) - (9.4)
At 3 April 2020 344.0 5.9 349.9
Lease Liabilities
Land and Equipment
Total
buildings £m
£m
£m
At 3 April 2020 409.8 6.2 416.0
Additions on acquisition of subsidiary 2.7 - 2.7
Additions to lease liabilities 12.6 0.5 13.1
Interest expense 9.8 0.2 10.0
Effect of modification to lease 5.9 - 5.9
Lease payments (92.7) (3.2) (95.9)
Disposals to lease liabilities (6.8) - (6.8)
Foreign exchange movements (0.7) - (0.7)
At 2 April 2021 340.6 3.7 344.3
Land and Equipment
Total
buildings £m
£m
£m
At 30 March 2019 448.6 8.2 456.8
Additions on acquisition of subsidiary 11.0 0.2 11.2
Additions to lease liabilities 10.5 1.8 12.3
Interest expense 11.1 0.2 11.3
Effect of modification to lease 11.7 - 11.7
Lease payments (83.8) (4.2) (88.0)
Foreign exchange movements 0.7 - 0.7
At 3 April 2020 409.8 6.2 416.0
52 weeks to 53 weeks to
2 April 3 April
Lease liabilities
2021 2020
£m £m
Maturity analysis - contractual undiscounted cash flows
Less than one year 71.2 92.9
Between one and two years 68.8 76.5
Between two and three years 64.4 65.1
Between three and four years 55.1 60.4
Between four and five years 43.2 51.5
Between five and six years 28.4 41.9
Between six and seven years 19.3 27.3
Between seven and eight years 12.1 18.2
Between eight and nine years 5.3 11.1
Between nine and ten years 3.5 4.3
After ten years 3.5 5.9
Total contractual cash flows 374.8 455.2
ii. Amounts recognised in the consolidated income statement
Land and Equipment
Total
buildings £m
£m
£m
52 weeks ended 2 April 2021
Amortisation charge on right-of-use assets 66.1 3.5 69.6
Interest on lease liabilities 9.8 0.2 10.0
Expenses relating to short-term leases 5.6 - 5.6
Expenses relating to leases of low-value assets, excluding short-term leases of - 0.7 0.7
low-value assets
53 weeks ended 3 April 2020
Amortisation charge on right-of-use assets 70.2 3.4 73.6
Interest on lease liabilities 11.1 0.2 11.3
Expenses relating to short-term leases 2.5 - 2.5
Expenses relating to leases of low-value assets, excluding short-term leases of - 0.6 0.6
low-value assets
iii. Amounts recognised in the consolidated statement of cash flows
The total cash outflow for leases for the period ended 2 April 2021 was £95.9m (2020: £87.7m).
11. Prior period adjustment
Following refinements to Halfords IFRS 16 reporting process, the consolidated statement of cash flows for the 53
weeks to 3 April 2020 was adjusted to reduce the cash outflow for capital payments on leases (in financing
activities) by £11.3m and to reduce the working capital movements across other payables, receivables and provisions
(in operating activities) by the same amount to exclude from these line items amounts that had been eliminated from
the balance sheet for IFRS 16 reporting purposes and should have similarly been eliminated in the operating cash
flow reconciliation. These adjustments have had no impact on the reported profit or net assets of the Group.
════════════════════════════════════════════════════════════════════════════════════════════════════════════════════
ISIN: GB00B012TP20
Category Code: FR
TIDM: HFD
LEI Code: 54930086FKBWWJIOBI79
Sequence No.: 111760
EQS News ID: 1208888
End of Announcement EQS News Service
══════════════════════════════════════════════════════════════════════════
4 fncls.ssp?fn=show_t_gif&application_id=1208888&application_name=news&site_id=reuters8
References
Visible links
1. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=dc934a09a1192ec0a1dd5bc4c5b4e7f2&application_id=1208888&site_id=reuters8&application_name=news
2. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=8d9c0d9b41eb2335e0a4ce386dba87e7&application_id=1208888&site_id=reuters8&application_name=news
3. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=dc934a09a1192ec0a1dd5bc4c5b4e7f2&application_id=1208888&site_id=reuters8&application_name=news
============Recent news on Halfords
See all newsREG-Halfords Group PLC Halfords Group PLC: Directorate change
AnnouncementREG-Halfords Group PLC Halfords Group PLC: Trading update for the 52 weeks to 28 March 2025
AnnouncementREG-Halfords Group PLC Halfords Group PLC: Total Voting Rights
AnnouncementREG-Halfords Group PLC Halfords Group PLC: Total Voting Rights
AnnouncementREG-Halfords Group PLC Halfords Group PLC: Total Voting Rights
Announcement