REG-Halfords Group PLC Halfords Group PLC: Interim Results: Financial Year 2022
10/11/2021 07:05
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Halfords Group PLC (HFD)
Halfords Group PLC: Interim Results: Financial Year 2022
10-Nov-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.
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10 November 2021
Halfords Group plc
Interim Results: Financial Year 2022
Strong H1 performance; confident outlook, upgrading full year profits to
£80m - £90m.
Market leading position in electric car and bike servicing and repair;
plans to double trained electric technicians next year.
Halfords Group plc ("Halfords" or the "Group"), the UK's leading provider
of Motoring and Cycling products and services, today announces its interim
results for the 26 weeks to 1 October 2021 ("the period").
To provide a better understanding of underlying performance, comparisons of
sales, profit and debt will primarily be made relative to FY20, that is, on
a 2-year basis unless otherwise stated. The disruption to last year (FY21)
from COVID-19 means that one-year comparators are more difficult to
interpret but are provided within the tables below. All numbers shown are
on a post-IFRS 16 basis and before non-underlying items, unless otherwise
stated.
Overview
H1 FY22
• Strong revenue growth of +19.2% vs. FY20, growing market share in
Retail Motoring and Autocentres, with revenues +7.7% and +88.8%
respectively. Cycling growth of +8.8%, despite the known supply chain
disruption.
• Material contribution from areas of strategic focus: Group Services
growing +75%, online +81% and B2B +78%.
• Underlying Profit Before Tax of £57.9m, +£27.7m (+91.7%) vs. FY20
(note: FY22 includes business rates relief of £9.2m).
• Compared to FY21, Group Revenue grew +8.7% and underlying PBT +£2.1m
(+3.8%).
• Period ended with Net debt of £232.7m or net cash of £91.6m when
excluding IFRS lease debt; working capital abnormally low.
• Declared interim dividend per share of 3p.
Outlook
• Positive start to H2, with sales momentum continuing across the
business.
• Confident in our ability to navigate the well-publicised inflationary
and operational headwinds through H2. Supply chain disruption beginning
to ease.
• As previously disclosed, H2 investment in motoring pricing and higher
transformation spend to impact near-term profitability but drive long
term growth.
• Upgrade our FY22 full year underlying PBT forecast to £80m - £90m, post
IFRS 16; previous guidance was above £75m.
• Longer term, our more resilient operating model - underpinned by a
larger Services, B2B and Retail motoring business - will enable us to
continue to deliver progress, despite the inflationary headwinds which
remain.
Graham Stapleton, Chief Executive Officer, commented:
"We are delighted to have delivered a strong H1 performance, driven by
market share gains in Motoring products, Garages and our mobile services
business, which now account for more than two thirds of our revenue. We
also continued to see a significant contribution from areas of strategic
focus, with revenue from Group Services, Online and B2B, all growing by
more than 75% on a two-year basis. In cycling, demand levels remain good,
and we are pleased with the current availability of kids bikes and e-bikes
as we head into the Christmas trading period. We have carried good sales
momentum into H2 across our business, supported by the easing of supply
chain disruption. This has enabled us to increase our FY22 underlying
profit before tax guidance to between £80m and £90m.
"We are seeing significant growth in the number of customers choosing
electric forms of transport, and we continue to have a market-leading
position in the servicing and repair of electric vehicles. Sales of
e-bikes, e-scooters and accessories grew by more than 140% on two years
ago, and servicing for electric cars in our garages was up 120%
year-on-year. We have already invested in the training of more than 1,300
electric technicians and are on track to train 2,000 by the end of FY22,
equating to more than two per store or garage. This number will double next
year."
"There is good momentum in our existing business, the strategically
important area of Motoring Services continues to grow strongly, and our
recent acquisitions are all performing well. As a result, despite the
challenging trading environment, I am very excited about our future growth
prospects."
Group financial summary**
FY22 FY20 Var FY21
Var FY20 Var FY21 Var FY21
H1 H1 FY20 H1
% £m %
£m £m £m £m
Revenue 694.8 582.7 112.1 19.2% 638.9 55.9 8.7%
Retail 538.7 500.0 38.7 7.7% 524.2 14.5 2.8%
Autocentres 156.1 82.7 73.4 88.8% 114.7 41.4 36.1%
Gross Margin 51.7% 50.1% +167bps 49.3% +230bps
Retail 50.6% 47.0% +360bps 46.9% +370bps
Autocentres 55.6% 68.6% -1300bps 60.6% -500bps
Underlying EBITDA* 115.7 90.8 24.9 27.4% 115.5 0.2 0.2%
Underlying Profit 57.9 30.2 27.7 91.7% 55.8 2.1 3.8%
Before Tax ("PBT")*
Profit Before Tax 64.3 27.5 36.8 133.8% 55.4 8.9 16.1%
Underlying Basic 24.0p 12.2p 96.7% 23.0p 4.35%
Earnings per Share*
*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.
Group revenue summary
Total Revenue LFL Revenue Total Revenue LFL Revenue
Vs FY20 % Vs FY20 % vs FY21 % Vs FY21 %
Retail 6.2% 11.9% 34.1% 41.0%
Motoring
Retail Cycling 8.8% 25.3% -25.2% -20.5%
Retail Total 7.7% 17.8% 2.8% 7.0%
Autocentres 88.8% 15.5% 36.1% 19.3%
Group 19.2% 17.5% 8.7% 9.3%
Key H1 highlights
• Group revenue growth over two years +19.2% and +17.5% LFL, driven by
market share gains in Autocentres and Retail Motoring, and Retail
Cycling growth, despite ongoing supply chain issues.
• Group Services +75%, now representing 33% of Group revenues, driven by
good growth in our underlying business and boosted by our acquisitions.
• Recent sales growth rates from the first half have carried forward to
current trading and are broadly in line with first half averages across
the business.
• In Retail two-year comparisons show:
◦ Revenue +7.7% and +17.8% LFL.
◦ Retail Motoring revenue +6.2% and LFL +11.9%, driven by market
share gains in core categories and strong demand for staycation
products, up +45%.
◦ Retail Cycling +8.8% and LFL 25.3%, with our award-winning own
brand ranges of premium and electric bikes continuing to see high
levels of demand, despite supply chain issues.
◦ Electric mobility revenue (i.e., e-bikes, e-scooters and
associated accessories) up +140%.
• In Autocentres two-year comparisons show:
◦ Autocentres revenue +88.8% and +15.5% LFL as we expand our
commercial business, leverage our acquisitions, and group-wide
marketing initiatives increase customer awareness.
◦ Strong demand for our Halfords Mobile Expert ("HME") vans. In two
years, we have grown to 172 vans, 14 hubs and 250 technicians.
◦ Accelerating growth in demand for electric vehicle servicing, with
the number of EVs being brought to our garages increasing 123.6%
year-on-year.
• Group sales growth against FY21, whilst lower than the two-year
comparator, remains strong at +9.3% LFL and +8.7% total against a very
strong comparative. Cycling sales stepped back as supply challenges
hit, but Retail Motoring and Autocentres growth was very strong.
• Group gross margin improved by +167bps over two years (+230bps vs FY21)
as our Cycling performance shows a significant improvement against FY20
and our business mixes into higher margin Autocentres.
• Operating costs were managed well, +16.0% versus FY20 and decreasing as
a proportion of revenue by -1.2ppts. Operating Costs include the
benefit of £9.2m Business rates not levied.
• Profit Before Tax ("PBT") of £57.9m, up +91.7% on FY20 (+3.8% vs FY21).
• Cash movement of £25.0m, driven by strong profit generation, but lower
working capital continues to flatter the balance sheet position.
• Non-underlying items were a credit of £6.4m, primarily a result of
closed store provisions being revised as the Group continues to
negotiate lease disposals.
1. Group Services includes revenues across both Retail and Autocentres and
includes the revenue from services provided (e.g., car service, cycling
repair, dash cam fit etc) along with any associated products sold in
the same transaction.
2. B2B includes revenues from C2W, Commercial, Fleet and product sales to
businesses in both Retail and Autocentres
Enquiries
Investors & Analysts (Halfords)
Loraine Woodhouse, Chief Financial Officer
Neil Ferris, Corporate Finance Director
Andy Lynch, Head of Investor Relations +44 (0) 7483 457
415
Media (Powerscourt) +44 (0) 20 7250 1446
Rob Greening halfords@powerscourt-group.com
Nick Hayns
Results presentation
A webcast and conference call for analysts and investors will be held
today, starting at 08:00am 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 13 January 2022 we will report our Q3 trading update for the 13 weeks
ending 31 December 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 172 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
The Group has delivered another strong performance in the first half of
FY22. Strong revenue growth, increasing market share and good
profitability, with underlying PBT of £57.9m, almost double that of FY20
and £2.1m ahead of FY21. We continue to see our services business, the
focus of our strategic investment, go from strength to strength, resulting
in a more resilient business going forward. For the remainder of this
commentary, we will draw comparisons vs FY20 unless otherwise stated as we
feel this is a more helpful reflection of our performance due to the
COVID-19 disruption seen in FY21. Stated results are on a post IFRS16 basis
and before non-underlying items, unless otherwise stated.
Revenue
Group revenues were £694.8m, with both Retail and Autocentres delivering
strong growth over two years. The scale and increased customer awareness of
our Autocentres business is clearly beginning to pay dividends and our
Retail business, after last year's disruption, has also benefited from
investment over the last two years, with improved customer experience and
convenience at the centre of our efforts.
Retail Motoring
The motoring side of our Retail business has grown +6.2% over two years,
with a strong performance across many core categories. This performance is
even more remarkable given the contraction in some markets in which we
operate, e.g., the mature and more discretionary categories of Sat Nav and
Audio. In contrast, our essential and specialist product categories have
shown strong results. Maintenance and our 3B's ("Blades, Bulbs and
Batteries") have grown over +5%, Workshop +23% and Car Cleaning +15% as we
refresh ranges and bring new products to market. Development of our online
customer journey has been key to the growth.
We have also seen longer term trends emerge. Staycations and a more fitness
and environmentally conscious customer shop our range of touring products,
from roof carrying, roof boxes and cycle carriers, to transport everything
they need to enjoy what the UK has to offer. Staycation products grew +45%,
with customers selecting the correct equipment they need online, or by
speaking to one of our colleagues, before getting everything fitted to
their car on demand or on their chosen day.
Finally, we have also seen a strong performance on child travel, growing
+20% over two years. We stock popular brands, as well as bringing
exclusive, high quality own brand products to market, offering choice and
value to customers as well as expert advice and fitting.
Retail Cycling
Cycling undoubtedly had a very strong FY21 and sales this year, while
strong, have been constrained by supply chain issues and industry specific
bottlenecks on production. Cycling availability started the year lower than
we would like, and while we hoped to see availability normalise, it
unquestionably deteriorated further during the first half. Although supply
challenges have now begun to ease, we saw shortfalls in our premium ranges
of own brand and exclusive mechanical bikes through most of H1, which saw
demand outstrip an irregular and unpredictable supply. Nevertheless, we are
confident, as supply normalises in the future, that we will see good sales
in the categories hardest hit this year and we believe we are well set for
Christmas trading.
Autocentres
Our Autocentres business provides the clearest evidence of our strategic
progress over the last two years. Greater convenience and scale, coupled
with targeted initiatives to attract new customers, has resulted in sales
almost doubling over two years to £156m and 22% of our Group. Traffic
levels through much of H1 have been broadly in line with pre pandemic
levels, signalling our growth in market share, but with a market share
estimate of only 4%, there is a lot of room for future growth.
The profitability of the Autocentre business was impacted in the first half
by a shift in the MOT season to the second half of the year, driven by the
Government extending MOTs during COVID-19. This seasonal shift impacts
labour productivity, with the benefit usually seen in the first quarter
moving to our third quarter trading period. We remain confident in the full
year performance of our Autocentres.
Areas of strategic focus
It has been another strong period for our areas of strategic focus, again
demonstrating the resilience and relevance of our strategy in the face of a
tough operating environment.
Group Services1
Group revenue from services was £232m, growing 75% since FY20, and now
accounts for 33% of total revenue. This is one of our most notable
strategic achievements and, despite the demonstrable progress, we see
significant further growth yet to come. We have acquired three Motoring
Services businesses that have given us greater scale, convenience and
ability to leverage our expertise in technology and training. Since the
acquisition of Tyres on the Drive in 2019, we have grown from 7 vans
offering tyre fitting to a fleet of over 170 Halfords Mobile Expert vans
offering 19 different services. McConechy's Tyre Services and Universal
Tyres have provided us with geographical access to more of the UK and a
greater ability to grow our share of commercial markets.
B2B2
B2B has delivered another excellent sales performance, growing +78% vs.
FY20 and accounting for 20% of Group revenue. We continue to see strong
revenue growth across all aspects of our offer, including Cycle 2 Work
("C2W") growing 53%, and bulk product and gift voucher sales to businesses
growing 44%. Most notable, however, is the progress we have made in our
commercial motoring business over the last two years. Commercial sales,
representing service and repair to fleets, agricultural vehicles or
lorries, have grown 350% since FY20. This has been achieved through our
strategic acquisitions of McConechy's Tyre Services and Universal Tyres,
which have given the Group improved national coverage, enabling us to win
larger contracts to support businesses with a single partner across the UK,
rather than disparate and fragmented coverage from multiple providers. As
with many services, the essential nature of this business strengthens our
resilience and provides growth opportunities for the future as we continue
to scale.
Online
Convenience to many customers is defined by receiving the right product or
service with the least possible effort. Clearly this needs to be achieved
throughout the purchase journey but, for many, this begins online by
showcasing the range of solutions to a customer's needs clearly and
concisely. We continue to make significant strides in this area, proven by
our revenue growth online of +80% over two years. Whether guiding customers
through our range of specialist car cleaning products, choosing how or
where they would like a tyre fitted or, more recently, easily identifying
which bikes are in stock for immediate delivery, our digital proposition
has changed substantially since 2019.
Operational Review
The operating environment remains challenging for all retailers across the
UK, but we continue to focus on keeping colleagues and customers safe,
improving efficiency across the Group, and identifying cost reductions
where possible.
The Supply Chain
Moving anything around the globe over the last 6 months has been
particularly challenging. Even if goods are manufactured and a container is
found to ship them to the UK, the recent HGV driver shortage has meant that
this final leg of the supply chain has been more costly and unreliable. The
freight spot market has, at times, been 10x the normal rate, with some
suppliers reneging on volumes or prices, but as the Cycling market leader
in the UK, we have worked closely with freight partners.
Integration of Our Acquisitions
One of our biggest programmes this year was to quickly integrate our
acquisition of Universal Tyres in March 2021 so that we could utilise the
additional scale from the garages and vans and grow our commercial
business. Our strong performance within B2B has been driven in part by the
speed with which we integrated the business. Our digital operating model,
PACE, was rolled out to all sites in less than half the time it took to do
the same in McConechy's. This was a fantastic achievement and testament to
the hard work and experience of our support teams, something we can roll
forward to future acquisitions as we progress towards our target of 550
garages.
Environmental, Social and Governance ("ESG")
We continue to make good progress on our ESG Strategy, in each of our four
priority areas of Electrification, Net Zero, Diversity & Inclusion, and
Product, Packaging and Waste Management, as well as in creating stronger
foundations to drive further progress. Here are a few examples of our ESG
accomplishments in H1:
• In Electrification, we rolled-out free Electric Bike trials across our
Retail store estate to encourage customers to swich to clean transport
solutions. We also trained over 1,300 colleagues to deliver Electric
Services in Scooters, Bikes and Cars, on target for at least 2,000 by
year-end.
• In Net Zero, we switched our electricity requirements to 100% renewable
sources, reducing carbon emissions in our own operations by more than
30%, taking us significantly closer to achieving our science-based
target for Scope 1 and 2 emissions, which is aligned to the ambitious
1.5 degree pathway.
• In Product, Packaging and Waste Management we reduced primary plastic
packaging by 8% and intend to go further in H2.
Our progress will continue to accelerate in the second half and beyond, as
we seek to drive sustainability in the motoring and cycling industries, and
as the market leader in both, play a critical role in supporting the UK to
quickly adopt electric forms of personal transport.
Colleagues and the Labour Market
At the end of FY21, we announced one of our biggest training programmes to
date, which would involve training all Retail colleagues in the full suite
of customer services on offer. The aim was to increase our skills base from
roughly 16,000 to over 40,000, which we achieved by the end of Q1. This
means our on-demand fitting offer is more convenient for customers,
reducing wait times and getting customers back moving quickly. As the
transition to Electric travel gathers pace, we also announced that 2,000 of
our 6,000 colleague-base in stores and garages would be trained to service
electric cars, bikes and scooters. We are progressing well towards our
year-end target, having trained over 1,300 by the end of the first half.
The labour market has also not been without its challenges. Self-isolation
and high demand for technicians has meant that capacity within our garages
and HME vans has been constrained. While not a significant problem, it has
undoubtedly meant that we have limited our sales potential over the first
half of the year. Excellent labour productivity has partially compensated,
and we hope to see an improvement in the labour market over the balance of
year.
Finally, to underpin our service offering, we have also implemented a new
store operating model, resulting in more customer facing service
technicians. This means customers who wish to complete one of the 80% of
online transactions fulfilled in stores, or start their journey with a
colleague, the experience is better than ever, resulting in record NPS
scores in both stores and garages.
Strategic Progress
In 2019 we accelerated our strategy to "Evolve into a consumer and B2B
services-focused business, with a greater emphasis on motoring, generating
higher and more sustainable financial returns." Two years on, we have made
significant progress, with both Services and B2B revenues growing
significantly and representing a greater proportion of overall Group
revenues.
To achieve this, we have materially changed the shape of our business,
whilst simultaneously launching initiatives and investments targeted at
growing our market share and increasing the capacity of our estate. Since
2018, through acquisition and organic growth, we have more than doubled the
number of fixed and mobile locations dedicated to offering Motoring
Services, from 316 to over 700. In this time frame we have added almost 80
garages through our acquisitions, over 190 commercial vans and built our
fleet of Halfords Mobile Experts to over 170.
The physical changes to our business are clear and have progressed well,
but we have also delivered a series of initiatives to drive awareness,
improve efficiency and increase the capacity of our existing estate. PACE,
our digital operating platform, operates across our entire garage estate.
Our full range of products and services are now offered from one website,
bookable at any of our stores, garages or vans, and we have driven demand
and awareness through cross shop initiatives, our Motoring Services
marketing campaigns and continuous digital enhancements. These changes have
resulted in record levels of customer satisfaction across the Group, with
the Autocentre NPS moving ahead by an impressive 11.9 points since FY18.
FY22 will see further strategic progress;
• Additional initiatives to drive Cross shop, which has grown +30%
year-on-year in H1, aided by development of our WeCheck App.
• 'Project Fusion' will deliver a connected and convenient customer offer
within a town, leveraging the Halfords assets by linking together our
stores, garages and vans, supported by our centralised customer contact
team. Our trial town, whilst in its infancy, is delivering strong sales
growth, significantly enhanced levels of cross shop and very high
levels of customer satisfaction.
• Our Motoring pricing investment was launched during the closing stages
of H1 and has shown positive volume growth against our plan. The
investment is providing customers with greater value, underpinning the
foundations of our services business.
• Avayler, our proprietary software to streamline service delivery for
companies that operate in multiple locations, was launched in July to
our first customer, American Tire Distributors Inc. and is an exciting
extension to the Halfords B2B offer.
• The development of the Loyalty programme is progressing well, having
appointed third party support to develop the loyalty engine and
subscription module, alongside designing the digital hub user
experience.
Capital structure and dividend
Our capital allocation priorities remain unchanged:
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 Net Debt: EBITDA ratio, revised on an IFRS 16 basis, was 1.0x at the
half-year. In the near-term we intend to operate with more prudent debt
levels as economic uncertainty continues.
With a continued strong performance from our areas of strategic focus, we
will continue with our transformation plan, which we believe will require
between £50m and £60m of capital expenditure this year and over 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 and we updated our dividend policy at our preliminary results in
June 2021, reinstating the ordinary dividend from FY22 at 9p per share,
intending this to be progressive. We have declared an FY22 interim dividend
of 3p per share to be paid on 21 January 2022 with the corresponding
ex-dividend date of 9 December 2021 and the record date of 10 December
2021.
Current trading and outlook
Overall, we are very pleased with our first half performance across the
Group and how we are delivering against our strategy. We ended the first
half with improved sales growth and, so far in the second half, sales have
been in line with our expectations. We have seen sales growth across the
business and in Cycling, although global supply chain disruption remains,
supply constraints have eased somewhat.
Inflation, labour shortages and supply disruption will continue to impact
the business. We believe demand for our products and services will remain
healthy and that we will be able to manage and mitigate the operational
challenges through H2 and into FY23. Our strong first half performance
gives us the confidence to continue to invest in price in Retail Motoring,
where early volume uplifts are encouraging, and in our Group
transformation, investing for the longer term.
Taking the above into account, we are upgrading our FY22 full year profit
before tax range to £80m - £90m.
Looking longer term, our strategy was designed to deliver growth and build
resilience. We set out a plan to accelerate our position in Services and
B2B markets, which offer greater opportunities for growth, to strengthen
our products business, and to improve the overall profitability of our
operating model. Since 2018 we have seen our Services and B2B revenues grow
considerably, and we have also improved the profitability of our Cycling
business and strengthened the position of our Motoring products business,
which underpins our Motoring Services offer. Finally, we have materially
changed our cost base, reducing our Retail store footprint and improving
efficiency, whilst also reducing working capital to support the funding of
future investments.
We do not expect the extreme levels of inflation seen on freight spot
markets to be sustained, and we expect supply and demand of labour markets
to stabilise, but certain inflationary aspects of FY23 are already known,
including National Insurance, National Minimum Wage and energy costs. We
are confident that our established efficiency workstreams and hedging
polices will, in part, mitigate some of these costs. We also see some
positive aspects looking forward; foreign exchange and rental markets are
more favourable, cycling supply should stabilise, and our initiatives from
FY22 will begin to build momentum, contributing further to revenue growth.
As a business we look forward with confidence to another period of
transformation and strength. We have developed a stronger and more
efficient business, centred around more resilient revenue streams in
markets with opportunities to significantly grow share. That said,
operational agility is also a term we have used many times over the last 18
months and is an approach that we now permanently adopt in our operation.
Graham Stapleton
Chief Executive Officer, 9 November 2021
Halfords Group Plc
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 Autocentres represent the consolidation of the
Autocentres, McConechy's and Universal trading entities. All references to
Group represent the consolidation of the Retail and Autocentres segments.
The "H1 FY22" accounting period represents trading for the 26 weeks to 1
October 2021 ("the period"). The comparative periods "H1 FY21" and "H1
FY20" represent trading for the 26 weeks to 2 October 2020 ("the prior
period") and to 27 September 2019 respectively.
To provide a better understanding of underlying performance, operating
performance comparisons (sales, margin, profitability) will be made
relative to FY20, that is on a 2-year basis. The disruption to last year
(FY21) from COVID-19 means that one-year comparators are, in some
instances, more difficult to interpret. All numbers shown are on a post
IFRS16 basis, unless otherwise stated.
Group Financial Results
Change Change
H1 FY22 H1 FY20 H1 FY21
H1 FY 20 to H1 FY21 to
H1 FY22 H1 FY22
£m £m (%) £m (%)
Group Revenue 694.8 582.7 19.2% 638.9 8.7%
Group Gross Profit 359.4 291.7 23.2% 315.8 13.8%
Underlying EBIT 63.7 36.8 73.1% 63.7 0.0%
Underlying EBITDA 115.7 90.8 27.4% 115.5 0.2%
Net Finance Costs (5.8) (6.6) (12.1%) (7.9) (26.6%)
Underlying Profit Before Tax 57.9 30.2 91.7% 55.8 3.8%
Net non-underlying items 6.4 (2.7) - (0.4) -
Profit Before Tax 64.3 27.5 133.8% 55.4 16.1%
Underlying Basic Earnings 24.0p 12.2p 96.7% 23.0p 4.3%
per Share
Group revenue in H1 FY22, at £694.8m, 19.2% up on H1 FY20, comprised Retail
revenue of £538.7m and Autocentres revenue of £156.1m. This compared to H1
FY20 Group revenue of £582.7m, which comprised Retail revenue of £500.0m
and Autocentres revenue of £82.7m. Group gross profit at £359.4m (H1 FY20:
£291.7m) represented 51.7% of Group revenue (H1 FY20: 50.1%), reflecting a
stronger Retail gross margin of 50.6% offset by a decrease in the
Autocentres gross margin of 13%pts to 55.6%. The latter was driven by
previous acquisitions of McConechy's, Tyres on the Drive and Universal,
with a mix into lower margin B2B and tyre sales driving lower levels of
gross margin.
Total operating costs before non-underlying items were 16.0% above H1 FY20
at £295.7m (H1 FY20: £254.9m) of which Retail comprised £211.4m (H1 FY20:
£201.1m), Autocentres £83.1m (H1 FY20: £52.7m) and unallocated costs £1.2m
(H1 FY20: £1.1m), whilst business rates relief totalled £9.2m. The
significant increase in operating costs within Autocentres primarily
reflects the costs within the acquired businesses. 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 2019 and Universal in March 2021, which arise on
consolidation of the Group.
Group Underlying EBITDA increased 27.4% from H1 FY20 to £115.7m (H1 FY20:
£90.8m), whilst net finance costs were £5.8m (H1 FY20: £6.6m).
Underlying Profit Before Tax for the period was up 91.7% on H1 FY20 at
£57.9m (H1 FY20: £30.2m). The non-underlying credit of £6.4m in the period
(H1 FY20: debit £2.7m) materially related to the release of previous non
rent onerous lease costs whereby the properties to which they relate have
since been re-assigned.
After non-underlying items, Group Profit Before Tax was £64.3m (H1 FY20:
£27.5m).
Retail
H1 FY22 H1 FY20 Change H1 FY21 Change
£m £m (%) £m (%)
Revenue 538.7 500.0 7.7% 524.2 2.8%
Gross Profit 272.6 235.0 16.0% 245.7 10.9%
Gross Margin 50.6% 47.0% 7.7% 46.9% 8.0%
Operating Costs (211.4) (201.1) 5.1% (185.4) 14.0%
Underlying EBIT 61.2 33.9 80.5% 60.3 1.5%
Non-underlying items 6.4 (2.5) - (0.1) -
EBIT 67.6 31.4 115.3% 60.2 12.3%
102.3
Underlying EBITDA 80.0 27.9% 101.9 0.4%
Revenue for the Retail business of £538.7m reflected, a one-year
like-for-like (LFL) sales increase of +7.0% and two-year LFL growth of
+17.8%.
Please refer to the Retail Operational Review in the Chief Executive's
Statement for further commentary on the trading performance in the period.
Like-for-like revenues and total sales revenue mix for the Retail business
are split by category below:
H1 FY22-20 H1 FY22 H1 FY20 H1 FY21
H1 FY22-21
LFL (%) Total sales Total sales Total sales
LFL (%) mix (%) mix (%) mix (%)
Motoring 41.0 11.9 56.7 57.5 42.5
Cycling -20.5 25.3 43.3 42.5 57.5
Total 7.0 17.8 100.0 100.0 100.0
Gross profit for the Retail business at £272.6m (H1 FY20: £235.0m)
represented 50.6% of sales, which is an increase on previous years (H1
FY21: 46.9%, H1 FY20: 47.0%). This reflected several factors, including
favourable buying terms, component rationalisation, more effective
promotional pricing within the cycling category and a sales increase in
higher margin motoring categories vs cycling in FY21.
The table below shows the average exchange rate reflected in cost of sales,
along with the year-on-year movement.
H1 FY20 H1 FY21 H1 FY22
$ $ $
Average USD: GBP rate reflected in cost of sales $1.33 $1.30 $1.32
Retail operating costs before non-underlying items increased by 14.0%
against H1 FY21 and 5.1% against H1 FY20 to £211.4m (H1 FY21: £185.4m and
H1 FY20: £201.1m). The 5.1% 2-year increase in cost is driven by higher
volume-related variable costs, necessary to deliver the 17.8% LFL% sales
growth, including store payroll, warehouse and distribution and marketing
costs, and investment in support costs as part of our transformation
programmes, including centralising the contact centre, improving IT
capability and colleague training. Offsetting this investment are cost
savings associated with the closure of a number of stores and the
implementation of strong procurement principles. The 14.0% increase against
H1 FY21 is predominantly due to last year's government support of furlough
£7.9m and business rates relief £16.5m compared to no furlough income and
£7.9m of business rates relief in FY22 H1. The furlough income in H1 FY21
was subsequently repaid in the second half of last year.
Autocentres
H1 FY22 H1 FY20 Change H1 FY21 Change
£m £m (%) £m (%)
Revenue 156.1 82.7 88.8% 114.7 36.1%
Gross Profit 86.8 56.7 53.1% 69.5 24.9%
Gross Margin 55.6% 68.6% (18.9%) 60.6% (8.2%)
Operating Costs (83.1) (52.7) 57.7% (64.8) 28.2%
Underlying EBIT 3.7 4.0 (7.5)% 4.7 (21.3)%
Non-underlying items - (0.2) (0.3)
EBIT 3.7 3.8 (2.6)% 4.4 (15.9)%
Underlying EBITDA 13.4 11.0 21.8% 13.0 3.1%
Autocentres generated total revenues of £156.1m (H1 FY20: £82.7m), an
increase of 88.8% on H1 FY20, with one-year LFL increase of 19.3% and a
two-year LFL growth of 15.5%.
The increase in total revenue from FY20 was primarily due to the
acquisitions of McConechy's, Tyres on the Drive and Universal, but the
underlying Autocentre business also performed strongly on a like-for-like
basis as strong labour productivity drove additional sales.
Gross profit at £86.8m (H1 FY20: £56.7m) represented a gross margin of
55.6%, a decrease from the 68.6% gross margin in H1 FY20, reflecting the
acquisitions made in previous years, all of which are more heavily weighted
towards lower margin tyre and B2B sales. The underlying Autocentre gross
margin was strong, reflecting the continued focus on the operating model
via technology enabled efficiency programmes and growth in higher margin
revenue streams.
Autocentre EBIT of £3.7m was £0.7m below H1 FY21 and £0.1m below H1 FY20.
Last year, as in the Retail business, the profit figure is distorted by the
partial closure of some of the garages, furlough claims and business rates
and therefore the more relevant comparator is H1 FY20. The small dip in
profitability for both years reflects the significant shift of the MOT peak
season into our second half and, accordingly, we expect profitability to
move significantly forward in H2 FY22.
Portfolio Management
The Retail store portfolio at 1 October 2021 comprised 403 stores (end of
H1 FY21: 443; end of FY21: 404). One new Autocentres was opened, and one
was closed in the period, making the total number of Autocentre locations
374 as at 1 October 2021 (end of H1 FY21: 367; end of FY21: 374). There
were a total of 364 vans, 172 of which were HME, 104 McConechy's and 88
Universal. The following table outlines the changes in the Retail and
Autocentres store portfolio over the 26-week period:
Retail Centres
Relocations 0 0
Leases re-negotiated 28 8
Rightsized 0 0
Openings 0 1
Closed 1 1
Net Non-Underlying items
The following table outlines the components of the non-underlying items
recognised in the period:
H1 FY22 H1 FY21
£m £m
Organisational restructure costs 0.3 0.9
Closure costs (6.8) (0.5)
One off claims 0.1 -
Net non-underlying items (credit)/debit (6.4) 0.4
In the current and prior period, costs relate to redundancy associated with
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 £0.3m (HY21: £0.9m, FY21:
£5.9m) were incurred to transition to the new operating model.
During FY20 and FY21 the group completed a strategic review of the
profitability of the physical estate and subsequently closed a number of
stores and garages. Assets were impaired, and costs associated with the
ongoing onerous commitments under the lease agreements and other costs
associated with the property exits were provided for accordingly. In the
current period £6.8m of these provisions have been released as the group
continues to negotiate lease disposals and review provisions held in place.
During the prior period Cycle Republic closure costs of £0.5m, which were
provided for at year-end FY20, were released. A provision of £0.6m was
created at year end FY20 in relation to the HMRC audit relating to the
national minimum wage. The Group has continued to work with HMRC and
external advisors 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 increased the provision to £3.4m at
year end FY21, which represents management's best estimate of the value of
underpayments and the associated penalty charge. During the current period
further professional fees in relation to this investigation, amounting to
£0.1m, have been recorded.
Finance Expense
The net finance expense for the period was lower year-on-year at £5.8m (H1
FY21: £7.9m), the result of a decrease in the level of IFRS 16 interest,
reflecting both the ageing of the lease portfolio and the disposal of a
number of sites in the previous year. Net finance costs pre IFRS 16 have
decreased to £1.3m (HY21: £3.0m) as we were fully drawn down on the RCF in
the prior year.
Taxation
The taxation charge on profit for the financial period was £11.6m (H1 FY21:
£10.4m). The effective tax rate before non-underlying items of 18.09% (H1
FY21: 18.9%) differs from the UK corporation tax rate (19%) primarily as a
result of the 30% permanent element of the 130% capital allowances super
deduction on qualifying plant and machinery additions. The rate reduction
is partially offset by the depreciation expense relating to non-qualifying
assets, and the share based payments IFRS 2 charge.
The full year FY22 effective tax rate is expected to be c.18.45%.
Earnings Per Share ("EPS")
Underlying Basic EPS was 24.0 pence and after non-underlying items 26.6
pence (H1 FY21: 22.8 pence after non-underlying items, H1 FY20: 11.1
pence). Basic weighted-average shares in issue during the period were
197.8m (H1 FY21: 197.0m).
Dividend ("DPS")
The Board have declared an interim dividend of 3p per share in respect of
the period to 1 October 2021 (H1 FY21: None). The interim dividend will be
paid on 21 January 2022 to shareholders who are on the register of members,
with an ex-dividend date of 9 December 2021 and a record date of 10
December 2021.
Capital Expenditure
Capital investment in the period totalled £22.8m (H1 FY21: £11.2m)
comprising £15.0m in Retail and £7.8m in Autocentres.
Within Retail, £6m (H1 FY21: £1.7m) was invested in stores, the majority of
which related to on-going store improvement projects (£2.0m), continued
investment in LED lighting within stores (£1m) and roof/reactive works.
Investment has continued in IT systems (H1 FY22: £7.4m), covering the
ongoing development and enhancement of the new website. The balance of
£1.6m was invested in other smaller support centre upgrades/projects, and a
small amount within Tredz & Wheelies.
The £7.8m (H1 FY21: £1.2m) capital expenditure in Autocentres principally
related to the purchase of Halfords Mobile Expert vans, PACE (the
underpinning system architecture within the Autocentre business)
development work and replacement of fixtures and fittings.
During the period, six properties that were acquired as freehold properties
within Universal Tyre Company (Deptford) were sold to third parties and
then leased back to Halfords Autocentres Limited. The transaction has been
accounted for as a sale and leaseback transaction in the Group under IFRS
16 'Leases'. The total proceeds of the sale were £7.5m and a net gain of
£0.5m has been recognised for the transaction within the income statement.
On a cash basis, total capital expenditure in the period was £27.3m (H1
FY21: £11.9m).
Inventories
Group inventory held as at the period end was £172.3m (H1 FY21: £146.0m).
Retail inventory increased to £151.6m (H1 FY21: £140.8m), demonstrating
some recovery in Cycling stock through the period but also reflective of
the incredibly strong sales in Cycling in the prior period. Tredz &
Wheelies stock value was £10.1m (H1 FY21: £11.1m) remaining consistent with
prior year, showing good stock management.
Autocentres' inventory was £10.6m (H1 FY21: £5.2m). The Autocentres
business model is such that only modest levels of inventory are held within
the centres, with most parts being acquired on an as-needed basis. The
increase from the prior year is due to the addition of Universal tyres
inventory.
Cashflow and Borrowings
Operating Cash Flow during the period, was £108.1m (H1 FY21: £231.2m).
After acquisitions, taxation, capital expenditure and net finance costs,
Free Cash Flow of £69.3m (H1 FY21: £210.1m) was generated in the period.
Group net debt was £232.7m (H1 FY21: £271.6m). The Group has £92.1m of cash
at the balance sheet date.
Principal Risks and Uncertainties
The Board considers risk assessment, identification of mitigating actions
and internal control to be fundamental to achieving Halfords' strategic
corporate objectives. In the Annual Report & 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 on page 68 of the 2021 Annual Report and Accounts, and all
are considered relevant to the H1 FY22 reporting. These include:
• Business Strategy
◦ Capability and capacity to effect change
◦ Building and maintaining stakeholder support for our strategy
◦ Delivering an attractive customer value proposition
◦ Positive brand appeal, maintaining and growing market share
• Financial
◦ Delivering a sustainable business model
• Compliance
◦ Regulatory compliance
◦ Service quality delivery
◦ Cyber security
• Operational
◦ Colleague engagement/culture
◦ Managing the skills shortage
◦ IT infrastructure failure
◦ Critical physical infrastructure failure (including supply chain
disruption)
In its most recent review of business risk, the Board identified a new
risk, climate change and electrification, highlighting the necessity of a
strategic response to climate change and to the opportunities that arise
from the increased societal importance of electric mobility.
Loraine Woodhouse
Chief Financial Officer, 9 November 2021
Glossary of Alternative Performance Measures
In the reporting of financial information, the Directors have adopted
various Alternative Performance Measures ("APMs"). APMs should be
considered in addition to IFRS measurements, of which some are shown on
Page 1. 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, not
necessarily comparable to other entities APMs.
The key APMs that the Group focuses on are as follows:
1. Like-for-like ("L4L") 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 equates to results from operating activities before
non-underlying items, as shown in the Group Income Statement.
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, as reconciled below:
H1 FY22 H1 FY21
£m £m
Cash and cash equivalents 91.6 109.6
Lease liabilities - current (55.9) (73.9)
Lease liabilities - non-current (268.4) (307.3)
Net Debt (232.7) (271.6)
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 movements in provisions
(excluding post period end payment run adjustment), as reconciled
below:
H1 FY22 H1 FY21
£m £m
Underlying EBIT 63.7 63.7
Depreciation and Amortisation 52.0 51.8
Underlying EBITDA 115.7 115.5
Non-underlying operating income/(expenses) 6.4 (0.4)
EBITDA 122.1 115.1
Share-based payment transactions 4.2 1.6
Loss on disposal of property, plant & equipment 2.5 0.1
Profit on disposal of assets held for sale (0.5) -
Working capital movements
(12.1) 97.3
Provisions movement (8.1) 17.1
Adjusted Operating Cash Flow 108.1 231.2
8. Free Cash Flow is defined as Adjusted Operating Cash Flow (as defined
above) less capital expenditure, net finance costs, taxation and
exchange movements; as reconciled below:
H1 FY22 H1 FY21
£m £m
Adjusted Operating Cash Flow 108.1 231.2
Capital expenditure (27.3) (11.9)
Net finance costs (5.5) (7.7)
Taxation (5.3) (3.0)
Exchange movements (0.7) 1.5
Free Cash Flow 69.3 210.1
Halfords Group plc
Condensed consolidated income statement
For the 26 weeks to 1 October 2021
26 weeks to 26 weeks to 52 weeks to
1 October 2 October 2 April
2021 2020 2021
Unaudited Unaudited
Notes £m £m £m
Revenue 7 694.8 638.9 1,292.3
Cost of sales (335.4) (323.1) (636.0)
Gross profit 359.4 315.8 656.3
Operating expenses (295.7) (252.5) (576.8)
Operating profit before 63.7 63.7 114.5
non-underlying items
Non-underlying operating 8 6.4 (0.4) (35.0)
income/(expenditure)
Results from operating activities 70.1 63.3 79.5
Finance costs 9 (5.8) (7.9) (15.0)
Net finance costs (5.8) (7.9) (15.0)
Profit before tax and 57.9 55.8 99.5
non-underlying items
Non-underlying operating 8 6.4 (0.4) (35.0)
income/(expenditure)
Profit before tax 64.3 55.4 64.5
Tax on underlying items 10 (10.4) (10.5) (17.4)
Tax on non-underlying items 8 (1.2) 0.1 6.1
Profit for the period
attributable to equity 52.7 45.0 53.2
shareholders
Earnings per share
Basic earnings per share 13 26.6p 22.8p 27.1p
Diluted earnings per share 13 26.0p 22.4p 26.4p
Basic underlying earnings per 13 24.0p 23.0p 41.7p
share
Diluted underlying earnings per 13 23.4p 22.6p 40.7p
share
A final dividend was paid for the 52 weeks to 2 April 2021 of 5 pence per
share (2021: 0 pence per share). The directors have proposed an interim
dividend of 3 pence per share in respect of the 26 weeks to 1 October 2021
(2021: 0 pence per share).
The notes on pages 25 to 34 are an integral part of these condensed
consolidated interim financial statements.
Halfords Group plc
Condensed consolidated statement of comprehensive income
For the 26 weeks to 1 October 2021
26 weeks to 26 weeks to 52 weeks to
1 October 2 October 2 April
2021 2021 2021
Unaudited Unaudited
£m £m £m
Profit for the period 52.7 45.0 53.2
Other comprehensive income
Cash Flow hedges: fair value changes in 5.0 (3.8) (9.6)
the period
Income tax on other comprehensive (1.2) 0.8 1.6
income
Other comprehensive income for the
period, 3.8 (3.0) (8.0)
net of tax
Total comprehensive income for the
period 56.5 42.0 45.2
attributable to equity shareholders
All items within the Consolidated statement of comprehensive income are
classified as items that are or may be recycled to the consolidated income
statement
The notes on pages 25 to 34 are an integral part of these condensed
consolidated interim financial statements.
Halfords Group plc
Condensed consolidated statement of financial position
As at 1 October 2021
As at As at As at
1 October
2 October 2 April
2021 2020 2021
Unaudited Unaudited
Notes £m £m £m
Assets
Non-current assets
Intangible assets 14 401.9 393.4 398.3
Property, plant and 14 79.4 79.1 81.3
equipment
Right-of-use assets 14 271.2 319.2 282.8
Derivative financial 0.7 - 0.1
instruments
Deferred tax asset 8.2 8.0 12.3
Total non-current assets 761.4 799.7 774.8
Current assets
Inventories 172.3 146.0 143.9
Trade and other 97.8 62.5 86.1
receivables
Assets held for sale 14 - - 6.0
Derivative financial 3.0 2.0 0.5
instruments
Current tax assets 0.5 - 3.1
Cash and cash equivalents 15 92.1 109.6 67.2
Total current assets 365.7 320.1 306.8
Total assets 1,127.1 1,119.8 1,081.6
Liabilities
Current liabilities
Borrowings 15 (0.1) (0.2) (0.2)
Derivative financial (1.5) (1.4) (5.9)
instruments
Lease liabilities (55.9) (73.7) (63.4)
Trade and other payables (293.4) (295.5) (270.2)
Current tax liabilities - (0.1) -
Provisions (19.2) (22.5) (24.5)
Total current liabilities (370.1) (393.4) (364.2)
Net current liabilities (4.4) (73.3) (57.4)
Non-current liabilities
Borrowings 15 (0.4) (2.2) -
Lease liabilities (268.4) (305.1) (280.9)
Derivative financial (0.5) - (0.4)
instruments
Trade and other payables (5.1) (2.3) (3.3)
Provisions (12.2) (8.4) (15.0)
Total non-current (286.6) (318.0) (299.6)
liabilities
Total liabilities (656.7) (711.4) (663.8)
Net assets 470.4 408.4 417.8
Shareholders' equity
Share capital 16 2.0 2.0 2.0
Share premium account 16 151.0 151.0 151.0
Investment in own shares (9.1) (10.0) (10.0)
Other reserves 1.7 1.6 (1.8)
Retained earnings 324.8 263.8 276.6
Total equity attributable
to equity holders of the 470.4 408.4 417.8
Company
The notes on pages 25 to 34 are an integral part of these condensed
consolidated interim financial statements.
Halfords Group plc
Condensed consolidated statement of changes in equity
For the 26 weeks to 1 October 2021
For the period ended 1 October 2021 (Unaudited)
Attributable to the equity holders of the Company
Other reserves
Share Investment Capital
Share premium in own redemption Hedging Retained Total
reserve reserve equity
capital account shares earnings
£m £m £m £m £m £m £m
Closing balance 2.0 151.0 (10.0) 0.3 (2.1) 276.6 417.8
at 2 April 2021
Total
comprehensive
income for the
period
Profit for the - - - - - 52.7 52.7
period
Other
comprehensive
income
Cash flow hedges:
fair value - - - - 5.0 - 5.0
changes in the
period
Income tax on
other - - - - (1.2) - (1.2)
comprehensive
income
Total other
comprehensive - - - - 3.8 - 3.8
income for the
period net of tax
Total
comprehensive - - - - 3.8 52.7 56.5
income for the
period
Hedging gains and
losses
transferred to - - - - (0.3) - (0.3)
the cost of
inventory
Transactions with
owners
Share options - - 0.9 - - - 0.9
exercised
Share-based
payment - - - - - 4.2 4.2
transactions
Tax on
share-based - - - - - 1.2 1.2
payment
transactions
Dividends to - - - - - (9.9) (9.9)
equity holders
Total
transactions with - - 0.9 - (4.5) (3.6)
owners
Balance at 1 2.0 151.0 (9.1) 0.3 1.4 324.8 470.4
October 2021
The notes on pages 25 to 34 are an integral part of these condensed
consolidated interim financial statements.
Halfords Group plc
Condensed consolidated statement of changes in equity (continued)
For the 26 weeks to 1 October 2021
For the period ended 2 October 2020 (Unaudited)
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
Opening
balance at 3 2.0 151.0 (10.0) 0.3 4.6 217.9 365.8
April 2020
Total
comprehensive
income for
the period
Profit for - - - - - 45.0 45.0
the period
Other
comprehensive
income
Cash Flow
hedges: fair - - - - (3.8) - (3.8)
value changes
in the period
Income tax on
other - - - - 0.8 - 0.8
comprehensive
income
Total other
comprehensive
income for - - - - (3.0) - (3.0)
the period
net of tax
Total
comprehensive - - - - (3.0) 45.0 42.0
income for
the period
Other - - - - - (0.7) (0.7)
Hedging gains
and losses
transferred - - - - (0.3) - (0.3)
to the cost
of inventory
Transactions
with owners
Share-based
payment - - - - - 1.6 1.6
transactions
Dividends to
equity - - - - - - -
holders
Total
transactions - - - - - 1.6 1.6
with owners
Balance at 2 2.0 151.0 (10.0) 0.3 1.3 263.8 408.4
October 2020
The notes on pages 25 to 34 are an integral part of these condensed
consolidated interim financial statements.
Halfords Group plc
Condensed consolidated statement of cash flows
For the 26 weeks to 1 October 2021
26 weeks to 26 weeks to 52 weeks to
1 October 2 October 2 April
2021 2020 2021
Unaudited Unaudited
Notes £m £m £m
Cash Flows from operating
activities
Profit after tax for the period 47.5 45.3 82.1
before non-underlying items
Non-underlying items 8 5.2 (0.3) (28.9)
Profit after tax for the period 52.7 45.0 53.2
Depreciation - property, plant 11.5 10.7 21.0
and equipment
Impairment - property, plant and 0.3 - 2.8
equipment
Amortisation of right-of-use 33.4 34.6 81.8
assets
Amortisation - intangible assets 6.8 6.5 12.9
Net finance costs 5.8 7.9 15.0
Loss on disposal of property,
plant and equipment and 2.5 0.1 1.7
intangibles
Profit on sale and lease back (0.5) - -
Equity-settled share-based 4.2 1.6 6.4
payment transactions
Exchange movement (0.7) 1.5 2.1
Income tax expense 11.6 10.4 11.3
Decrease/(increase) in (30.3) 27.0 35.0
inventories
(Increase)/decrease in trade and (11.7) (9.0) (26.2)
other receivables
Increase in trade and other 29.9 79.3 40.2
payables
Increase/(decrease) in provisions (8.1) 17.1 25.7
Corporation tax paid (5.3) (3.0) (10.8)
Net cash from operating 102.1 229.7 272.1
activities
Cash Flows from investing
activities
Acquisition of subsidiary, net of - - (11.5)
cash acquired
Proceeds from asset held for sale 7.5 - -
Purchase of intangible assets (10.4) (4.3) (11.8)
Purchase of property, plant and (16.9) (7.6) (15.7)
equipment
Net cash used in investing (19.8) (11.9) (39.0)
activities
Cash Flows from financing
activities
Net proceeds from share options 0.9 - -
and purchase of own shares
Finance costs paid (5.5) (7.7) (5.5)
Proceeds from loans, net of - 3.0 -
transaction costs
Repayment of borrowings - (180.0) (180.0)
Interest paid on lease (4.6) (5.2) (10.0)
liabilities
Payment of capital element of (38.2) (33.8) (85.9)
leases
Dividends paid 12 (9.9) - -
Net cash used in financing (57.3) (223.7) (281.4)
activities
Net increase/(decrease) in cash 15 25.0 (5.9) (48.3)
and bank overdrafts
Cash and cash equivalents at the 15 67.0 115.3 115.3
beginning of the period
Cash and cash equivalents at the 15 92.0 109.4 67.0
end of the period
The notes on pages 25 to 34 are an integral part of these condensed
consolidated interim financial statements.
Halfords Group plc
Notes to the condensed consolidated interim financial statements
For the 26 weeks to 1 October 2021
1. General information
The condensed consolidated interim financial statements of Halfords Group
plc (the "Company") comprise the Company together with its subsidiary
undertakings (the "Group").
The Company is a limited liability company incorporated, domiciled and
registered in England and Wales. Its registered office is Icknield Street
Drive, Washford West, Redditch, Worcestershire, B98 0DE.
The Company is listed on the London Stock Exchange.
These condensed consolidated interim financial statements were approved by
the Board of Directors on 10 November 2021.
2. Statement of compliance
These condensed consolidated interim financial statements for the 26 weeks
to 1 October 2021 have been prepared in accordance with IAS 34 'Interim
financial reporting' as endorsed by the UKEB. They do not include all the
information required for full annual financial statements and should be
read in conjunction with the 2021 Annual Report and Accounts, which have
been prepared in accordance with IFRS accounting standards.
The comparative figures for the financial period ended 2 April 2021 are not
the Group's statutory accounts for that financial period. Those accounts
have been reported on by the Group's auditors and delivered to the
registrar of companies. The report of the auditor was (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.
3. Risks and uncertainties
The Directors consider that the principal risks and uncertainties which
could have a material impact on the Group's performance in the remaining 26
weeks of the financial year remain the same as those stated on pages 66 to
72 of our Annual Report and Accounts for the 52 weeks to 2 April 2021,
which are available on our website www.halfordscompany.com with the
additional of climate change and electrification going forward. These are
also detailed in the CFO report on page 11.
4. Significant accounting policies
Going Concern
The directors have reviewed the current financial performance and liquidity
of the business. Further details of the assessment are provided on pages
72 to 73 of our Annual Report and Accounts for the 52 weeks to 2 April
2021, which are available on our website www.halfordscompany.com. The
directors have further reviewed these financial forecasts against the
current performance of the business during H1 by updating the model for
actual trading, which shows Halfords has outperformed against the original
model.
Having reviewed current performance and forecasts, the Directors consider
that the Group has adequate resources to remain in operation for the
foreseeable future and have therefore continued to adopt the going concern
basis in preparing the condensed consolidated interim financial statements.
The Group's forecasts and projections, taking into account reasonably
possible changes in trading performance, show that the Group has adequate
resources to continue in operational existence for a period of at least 12
months from the date of approval of these financial statements.
Accounting Policies
As required by the Disclosure and Transparency Rules of the Financial
Conduct Authority, the condensed consolidated interim financial statements
have been prepared by applying the accounting policies and presentation
that were applied in the preparation of the 2021 Annual Reports and
Accounts, which are published on the Halfords Group website,
4 www.halfordscompany.com.
The accounting policies adopted in the preparation of the interim financial
statements are the same as those set out in the Group's annual financial
statements for the 52 weeks ended 2 April 2021.
5. Estimates and judgements
The significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those applied to the consolidated financial statements as at and
for the 52-week period ended 2 April 2021 and the 26 weeks ended 2 October
2020.
6. Operating segments
The Group has two reportable segments, Retail and Car Servicing, which are
the Group's strategic business units. Car Servicing became a reporting
segment of the Group as a result of the acquisition of Nationwide
Autocentres on 17 February 2010. The strategic business units offer
different products and services, and are managed separately because they
require different operational, technological and marketing strategies.
The operations of the Retail reporting segment comprise the retailing of
automotive, leisure and cycling products through retail stores and online
platforms. The operations of the Car Servicing reporting segment comprise
car servicing and repair performed from Autocentres, commercial vehicles
and mobile customer vans through Halfords Mobile Expert
The Chief Operating Decision Maker is the Executive Directors. Internal
management reports for each of the segments are reviewed by the Executive
Directors on a monthly basis. Key measures used to evaluate performance are
Revenue and Operating Profit. Management believe that these measures are
the most relevant in evaluating the performance of the segment and for
making resource allocation decisions.
The following summary describes the operations in each of the Group's
reportable segments. Performance is measured based on segment operating
profit, as included in the management reports reviewed by the Executive
Directors. These internal reports are prepared in accordance with IFRS
accounting policies consistent with these Group Financial Statements.
All material operations of the reportable segments are carried out in the
UK and all material non-current assets are in the UK. The Group's revenue
is driven by the consolidation of individual small value transactions and
as a result Group revenue is not reliant on a major customer or group of
customers. All revenue is from external customers.
26 weeks to
Retail 1 October 2021
Income statement Car Servicing £m
£m Total Unaudited
£m
Revenue 538.7 156.1 694.8
Segment result before 61.2 3.7 64.9
non-underlying items
Non-underlying items 6.4 - 6.4
Segment result 67.6 3.7 71.3
Unallocated expenses1 (1.2)
Operating profit 70.1
Net financing expense (5.8)
Profit before tax 64.3
Taxation (11.6)
Profit after tax 52.7
26 weeks to 2 October
Retail 2020
Income statement Car Servicing £m
£m Total Unaudited
£m
Revenue 524.2 114.7 638.9
Segment result before 60.3 4.7 65.0
non-underlying items
Non-underlying items (0.1) (0.3) (0.4)
Segment result 60.2 4.4 64.6
Unallocated expenses1 (1.3)
Operating profit 63.3
Net financing expense (7.9)
Profit before tax 55.4
Taxation (10.4)
Profit after tax 45.0
1 Unallocated expenses have been disclosed to reflect the format of the
internal management reports reviewed by the Chief Operating Decision maker
and include an amortisation charge of £1.2m in respect of assets acquired
through business combinations (2020: £1.3m).
52 weeks to
2 April
Retail
Income statement Car Servicing £m 2021
£m
Total
£m
Revenue 1,039.8 252.5 1,292.3
Segment result before non-underlying 103.7 13.1 116.8
items
Non-underlying items (31.7) (3.3) (35.0)
Segment result 72.0 9.8 81.8
Unallocated expenses1 (2.3)
Operating profit 79.5
Net financing expense (15.0)
Profit before tax 64.5
Taxation (11.3)
Profit after tax 53.2
1 Unallocated expenses have been disclosed to reflect the format of the
internal management reports reviewed by the Chief Operating Decision maker
and include an amortisation charge of £2.3m in respect of assets acquired
through business combinations (2020: £2.1m).
26 weeks to
Retail 1 October 2021
Other segment items: Car Servicing £m
£m Total Unaudited
£m
Capital expenditure 16.1 6.7 22.8
Depreciation expense 8.0 3.5 11.5
Amortisation of right-of-use 25.9 7.5 33.4
asset
Impairment 0.3 - 0.3
Amortisation expense 6.1 0.7 6.8
26 weeks to
Retail 2 October 2020
Other segment items: Car Servicing £m
£m Total Unaudited
£m
Capital expenditure 9.3 1.9 11.2
Depreciation expense 8.1 2.6 10.7
Amortisation of 29.0 5.6 34.6
right-of-use asset
Impairment - - -
Amortisation expense 4.8 0.5 5.3
52 weeks to
2 April
Retail
Other segment items: Car Servicing £m 2021
£m
Total
£m
Capital expenditure 23.3 22.0 45.2
Depreciation and impairment expense 19.1 4.7 23.8
Impairment of right-of-use asset 11.6 0.6 12.2
Amortisation of right-of-use asset 58.2 11.4 69.6
Amortisation expense 9.6 1.2 10.8
There have been no significant transactions between segments in the 26
weeks ended 1 October 2021 (2020: £nil).
7. Revenue
A. Revenue streams and location
The Group's operations and main revenue streams are those described in the
last annual financial statements. The Group's revenue is derived from
contracts with customers.
Revenue split by the Group's operating segments are shown in Note 6.
All revenue is recognised in the United Kingdom and Republic of Ireland.
B. Seasonality of operations
In general, the Group's results are not materially seasonal with revenue in
the first half broadly similar to that of the second, however, sales of
certain products tend to fluctuate by season. For example, sales of
children's cycles peak in the Christmas season and sales of adult cycles
tend to peak in the summer.
8. Non-underlying items
26 weeks to 26 weeks to 53 weeks to
1 October 2 April
2 October 2020
2021 2021
Unaudited Unaudited
£m £m £m
Non-underlying operating expenses:
Organisational restructure costs (a) 0.3 0.9 5.9
One off claims (b) 0.1 - 2.9
Closure costs (c) (6.8) (0.5) 26.0
Impairment of right-of-use asset (d) - - (0.4)
Acquisition and investment-related - - 0.6
fees (e)
Non-underlying items before tax (6.4) 0.4 35.0
Tax on non-underlying items (f) 1.2 (0.1) (6.1)
Non-underlying items after tax (5.2) 0.3 28.9
Non-underlying items are those items that are unusual because of their
size, nature (one-off, non-trading costs) or incidence. The Group's
management considers that these items should be separately identified
within their relevant income statement category to enable a full
understanding of the Group's results.
a. In the current and prior period, costs related 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 £0.3m (HY21: £0.9m, FY21: £5.9m) were
incurred to transition to the new operating model.
b. A provision of £0.6m was created at year end FY20 in relation to an
HMRC audit regarding National Minimum Wage. The Group has continued to
work with HMRC, alongside external advisors, 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
increased the provision to £3.4m at year end FY21, which represents
management's best estimate of the value of underpayments and the
associated penalty charge. During the current period, management has
incurred further professional fees in relation to this investigation,
amounting to £0.1m.
c. During FY20 and FY21 the group completed a strategic review of the
profitability of the physical estate and subsequently closed a number
of stores and garages. Assets were impaired, and costs associated with
the ongoing onerous commitments under the lease agreements and other
costs associated with the property exits were provided for
accordingly. In the current period £6.8m (costs of £26m during FY21)
of these provisions have been released as the group continues to
negotiate lease disposals and review provisions held in place.
During the prior period Cycle Republic closure costs of £0.5m, which were
provided for at year-end FY20, were released.
At the period end property provisions carried forward amounted to £12.9m.
These will continue to unwind as property exits are negotiated with
landlords or tenants, and could result in further amounts being released to
the income statement due to the significant estimation uncertainty over the
timing of exits and the final negotiated settlements.
d. In FY20, in light of the ongoing COVID-19 pandemic, the Group revised
future cash flow projections for stores and garages. As a result, in
FY20, £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 was directly attributable to impairment
due to COVID-19 and related primarily to the right-of-use asset value.
During FY21, £0.4m of this impairment was reversed as the stores and
garages returned to a profitable position.
e. In FY21, £0.6m relating to professional fees in respect of the
acquisition of Universal Tyre Services.
f. The tax charge in H1 FY22 represents a tax rate of 18.8% applied to
non-underlying items (H1 FY21: Credit, 18.9%, FY21 full year: Credit,
17.4%).
9. Net Finance Costs
26 weeks to 26 weeks to 52 weeks
to
1 October 2 October 2 April
2021 2020
2021
Unaudited Unaudited
£m £m £m
Finance costs:
Bank borrowings (0.2) (2.0) (2.5)
Amortisation of issue costs on (0.3) (0.2) (1.1)
loans
Commitment and guarantee fees (0.8) (0.5) (1.1)
Other interest payable - - (0.3)
Interest payable on lease (4.5) (5.2) (10.0)
liabilities
Finance costs (5.8) (7.9) (15.0)
10. Income tax expense
Income tax expense is recognised based on management's best estimate of the
weighted average annual income tax rate expected for the full financial
year, applied to the pre-tax income of the interim period.
The effective tax rate before non-underlying items for the 26 weeks to 1
October 2021 is 18.09% (H1 2020: 18.9%). The effective tax rate is lower
than the UK corporation tax rate primarily as a result of the 30% permanent
element of the 130% capital allowances super deduction on qualifying plant
and machinery additions. The rate reduction is partially offset by the
depreciation expense relating to non-qualifying assets, and the share based
payments IFRS 2 charge.
11. Financial Instruments and Related Disclosures
Accounting classifications and fair values
The following table shows the carrying amounts and fair values of financial
assets and liabilities, including their levels in the fair value hierarchy.
It does not include fair value information for financial assets and
financial liabilities not measured at fair value if the carrying amount is
a reasonable approximation of fair value.
Fair Value - Other Total
hedging Amortised financial
1 October 2021 instruments cost liabilities carrying
amount
£m £m £m
£m
Financial assets measured at
fair value
Forward exchange contracts 3.7 - - 3.7
used for hedging
3.7 - - 3.7
Financial assets not
measured at fair value
Trade and other receivables* - 89.4 - 89.4
Cash and cash equivalents - 92.1 - 92.1
- 181.5 - 181.5
Financial liabilities
measured at fair value
Forward exchange contracts (2.0) - - (2.0)
used for hedging
(2.0) - - (2.0)
Financial liabilities not
measured at fair value
Borrowings - - (0.5) (0.5)
Lease liabilities - - (324.3) (324.3)
Trade and other payables** - - (171.0) (171.0)
- - (495.8) (495.8)
*Prepayments and accrued income of £8.4m are not included as a financial
asset.
** Other taxation and social security payables of £22.9m, deferred income
of £1.4m, accruals of £84.9m and other payables of £18.4m are not included
as a financial liability.
Fair Value - Amortised Other Total
hedging carrying
2 October 2020 instruments cost financial amount
liabilities
£m £m £m
£m
Financial assets measured at
fair value
Forward exchange contracts 2.0 - - 2.0
used for hedging
2.0 - - 2.0
Financial assets not measured
at fair value
Trade and other receivables* - 41.1 - 41.1
Cash and cash equivalents - 109.6 - 109.6
- 150.7 - 150.7
Financial liabilities
measured at fair value
Forward exchange contracts (1.4) - - (1.4)
used for hedging
(1.4) - - (1.4)
Financial liabilities not
measured at fair value
Borrowings - - (2.4) (2.4)
Lease liabilities - - (378.7) (378.7)
Trade and other payables** - - (161.7) (161.7)
- - (542.8) (542.8)
*Prepayments and accrued income of £21.4m are not included as a financial
asset.
** Other taxation and social security payables of £51.4m, deferred income
of £nil, accruals of £64.5m and other payables of £18.1m are not included
as a financial liability.
Measurement of fair values
The fair values of each class of financial assets and liabilities is the
carrying amount, based on the following assumptions:
Trade receivables, trade The fair value approximates to the carrying
payables and lease amount because of the short
obligations, short-term maturity of these instruments
deposits and borrowings
The fair value of bank loans and other loans
approximates to the carrying value reported in
Long-term borrowings the statement of financial position as the
majority are floating rate where payments are
reset to market rates at intervals of less than
one year.
The fair value is determined using the market
Forward currency contracts forward rates at the reporting
date and the outright contract rate.
Financial instruments carried at fair value are required to be measured by
reference to the following levels:
• Level 1: quoted prices in active markets for identical assets or
liabilities;
• Level 2: inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (i.e., as
prices) or indirectly (i.e. derived from prices); and
• Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
All financial instruments carried at fair value have been measured by a
Level 2 valuation method. There have been no changes to classifications in
the current or prior period.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from the Group's receivables from
customers.
The Group does not have any individually significant customers and so no
significant concentration of credit risk. The majority of the Group's sales
are paid in cash at point of sale which further limits the Group's
exposure. The Group's exposure to credit risk is influenced mainly by the
individual characteristics of each customer. The Board of Directors has
established a credit policy under which each new customer is analysed
individually for creditworthiness before the Group's standard payment terms
and conditions are offered. The Group limits its exposure to credit risk
from trade receivables by establishing a maximum payment period of one
month for customers. All trade receivables are based in the United Kingdom.
The Group has taken into account the historic credit losses incurred on
trade receivables and adjusted it for forward looking estimates. The
movement in the allowance for impairment in respect of trade receivables
during the period was £0.1m.
12. Dividends
The Directors paid a final dividend of 5 pence per share in respect of the
financial period ended 2 April 2021 (FY20: nil).
The Directors are proposing an interim dividend for the 26 weeks to 1
October 2021 of 3 pence per share (2021: nil). The interim dividend will be
paid on 21 January 2022 to shareholders who are on the register of members,
with an ex-dividend date of 9 December 2021 and a record date of 10
December 2021.
13. Earnings Per Share
Basic earnings per share is calculated by dividing the earnings
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 the Employee Benefit Trust and has been
adjusted for the issue/repurchase 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 26 weeks to1 October 2021.
26 weeks to 26 weeks to 52 weeks
to
1 October 2 October 2 April
2021 2020
2021
Unaudited Unaudited
Number Number Number
m m m
Weighted average number of 199.1 199.1 199.1
shares in issue
Less: shares held by the (1.3) (2.1) (2.0)
Employee Benefit Trust
Weighted average number of
shares for calculating basic 197.8 197.0 197.1
earnings per share
Weighted average number of 4.9 3.6 4.9
dilutive share options
Weighted number of shares for
calculating diluted earnings 202.7 200.6 202.0
per share
26 weeks to 26 weeks to 52 weeks
to
1 October 2 October 2 April
2021 2020
2021
Unaudited Unaudited
£m £m £m
Earnings attributable to 52.7 45.0 53.2
equity shareholders
Non-underlying items:
Operating expenses (6.4) 0.4 35.0
Tax charge on non-underlying 1.2 (0.1) (6.1)
items
Underlying earnings before 47.5 45.3 82.1
non-underlying items
Basic earnings per share 26.6p 22.8p 27.1p
Diluted earnings per share 26.0p 22.4p 26.4p
Basic underlying earnings per 24.0p 23.0p 41.7p
share
Diluted underlying earnings 23.4p 22.6p 40.7p
per share
The alternative measure of earnings per share is provided because it
reflects the Group's underlying performance by excluding the effect of
non-underlying items.
14. Capital Expenditure - Tangible, Intangible, Assets held for
sale & Right-of-Use Assets
Tangible and Right-of-use assets
Intangible Assets
Unaudited
Unaudited
£m £m
Net book value at 3 April 478.8 349.9
2020
Additions 11.2 7.0
Disposals (0.2) (3.1)
Depreciation, amortisation (17.3) (34.6)
and impairment
Net book value at 2 October 472.5 319.2
2020
Tangible and Right-of-use assets
Intangible Assets
Unaudited
Unaudited
£m £m
Net book value at 2 April 479.6 282.8
2021
Additions 22.8 23.3
Sale and leaseback adjustment - (1.4)
Disposals (2.5) (0.1)
Depreciation, amortisation (18.6) (33.4)
and impairment
Net book value at 1 October 481.3 271.2
2021
During FY21 there was a balance of £6m held within current assets relating
to an asset held for sale. This related to seven buildings acquired as part
of the acquisition of The Universal Tyre Services (Deptford) Limited. On 26
May 2021, six of these properties were sold to third parties and then
leased back to Halfords Autocentres Limited. The transaction has been
accounted for as a sale and leaseback transaction in the Group under IFRS
16 'Leases'.
The total proceeds of the sale were £7.5m and a net gain of £0.5m has been
recognised for the transaction within the income statement.
15. Analysis of Movements in the Group's Net Debt in the Period
Other non-cash At
At Cash Flow changes
1 October 2021
2 April
2021 Unaudited Unaudited Unaudited
£m £m £m £m
Cash in hand and at bank 67.0 25.0 - 92.0
Debt due after one year - - (0.4) (0.4)
Total net debt excluding 67.0 25.0 (0.4) 91.6
leases
Current lease liabilities (63.4) 42.8 (35.3) (55.9)
Non-current lease (280.8) - 12.4 (268.4)
liabilities
Total lease liabilities (344.2) 42.8 (22.9) (324.3)
Total net debt (277.2) 67.8 (23.3) (232.7)
Non-cash changes comprise finance costs in relation to the amortisation of
capitalised debt issue costs of £0.4m (H1 FY21: £0.1m), and movements in
leases. Cash and cash equivalents at the period end consist of £87.0m (H1
FY21: £104.5m) of liquid assets, £5.1m (H1 FY21: £5.1m) of cash held in
Trust and £0.1m (H1 FY21: £0.2m) of bank overdrafts.
Other non-cash At
At Cash Flow changes
2 October 2020
3 April
2020 Unaudited Unaudited Unaudited
£m £m £m £m
Cash in hand and at bank 115.3 (5.9) - 109.4
Debt due after one year (179.1) 177.0 (0.1) (2.2)
Total net debt excluding (63.8) 171.1 (0.1) 107.2
leases
Current lease liabilities (83.2) 39.0 (29.5) (73.7)
Non-current lease (332.8) - 27.7 (305.1)
liabilities
Total lease liabilities (416.0) 39.0 (1.8) (378.8)
Total net debt (479.8) 210.1 (1.9) (271.6)
16. Share Capital
Share
Share
Number of shares premium
capital
m account
£m
£m
As at 3 April 2020 and 2 October 2020 199.1 2.0 151.0
Share
Share
Number of shares premium
capital
m account
£m
£m
As at 2 April 2021 and 1 October 2021 199.1 2.0 151.0
During the 26 weeks to 1 October 2021 and 2 October 2020, there were no
movements in company share capital. The shares held in treasury are used to
meet options under the Company's share options schemes.
17. Contingent liability
The Group's banking arrangements include the facility for the bank to
provide a number of guarantees in respect of liabilities owed by the Group
during the course of its trading. In the event of any amount being
immediately payable under the guarantee, the bank has the right to recover
the sum in full from the Group. The total amount of guarantees in place at
1 October 2021 amounted to £1.5m.
Where right of set off is included within the Group's banking arrangements,
credit balances may be offset against the indebtedness of other Group
companies.
18. Related Party Transactions
The key management personnel of the Group comprise the Executive and
Non-Executive Directors and the Halfords Limited and Halfords Autocentres
management boards. The details of the remuneration, long-term incentive
plans, shareholdings and share option entitlements of individual Directors
are included in the Directors' Remuneration Report on pages 122 to 136 of
the Group 2021 Annual Report and Accounts.
During the period no share options (H1 FY21: none) were granted to
directors in relation to the Performance Share Plan ("PSP") and no share
options (H1 FY21: none) were granted in relation to the Deferred Bonus Plan
("DBP").
19. Post Balance Sheet Events
During the period, the Group has progressed the second stage review of its
legal entity structure. The primary objective of the first stage (accounted
for in the plc accounts as at 2 April 2021) was to eradicate a dividend
block that had arisen in the intermediate holding entities in the Group.
The second stage eliminates the share capital and intercompany balances of
seven entities in the Group structure in preparation for liquidation, with
the objective to reduce the complexity and administration burden of the
surplus entities.
The required legal transactions and liquidation are due for completion
during the second half of FY22.
Responsibility statement of the Directors in respect of the half-yearly
financial report
We confirm that to the best of our knowledge:
• the condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the
UKEB;
• the interim management report includes a fair review of the
information required by:
a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first six
months of the financial year and their impact on the condensed set of
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b. DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the entity during that period; and any
changes in the related party transactions described in the last annual
report that could do so.
By order of the Board
Loraine Woodhouse, Chief Financial Officer
9 November 2021
Halfords Group plc
Independent review report to Halfords Group plc
For the 26 weeks to 1 October 2021
Introduction
We have been engaged by the Company to review the condensed set of
financial statements in the half-yearly financial report for the 26 weeks
ended 1 October 2021 which comprises the condensed consolidated income
statement, the condensed consolidated statement of comprehensive income,
the condensed consolidated statement of financial position, the condensed
consolidated statement of equity, the condensed consolidated statement of
cashflows and the related notes.
We have read the other information contained in the half-yearly financial
report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of
financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of and has been
approved by the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards.
The condensed set of financial statements included in this half -yearly
financial report has been prepared in accordance with UK adopted
International Accounting Standard 34, "Interim Financial Reporting".
Our responsibility
Our responsibility is to express to the Company a conclusion on the
condensed set of financial statements in the half-yearly financial report
based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, ''Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'', issued by
the Financial Reporting Council for use in the United Kingdom. A review of
interim financial information consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less in
scope than an audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be identified
in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the 26 weeks ended 1 October 2021 is not prepared, in
all material respects, in accordance with UK adopted International
Accounting Standard 34, and the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
Use of our report
Our report has been prepared in accordance with the terms of our engagement
to assist the Company in meeting its responsibilities in respect of
half-yearly financial reporting in accordance with the Disclosure Guidance
and Transparency Rules of the United Kingdom's Financial Conduct Authority
and for no other purpose. No person is entitled to rely on this report
unless such a person is a person entitled to rely upon this report by
virtue of and for the purpose of our terms of engagement or has been
expressly authorised to do so by our prior written consent. Save as above,
we do not accept responsibility for this report to any other person or for
any other purpose and we hereby expressly disclaim any and all such
liability.
BDO LLP
Chartered Accountants
London
9 November 2021
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
═══════════════════════════════════════════════════════════════════════════
ISIN: GB00B012TP20
Category Code: IR
TIDM: HFD
LEI Code: 54930086FKBWWJIOBI79
OAM Categories: 1.2. Half yearly financial reports and audit
reports/limited reviews
Sequence No.: 126428
EQS News ID: 1247670
End of Announcement EQS News Service
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