REG-Halfords Group PLC Halfords Group PLC: Preliminary Results: Financial Year 2022
16/06/2022 07:15
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Halfords Group PLC (HFD)
Halfords Group PLC: Preliminary Results: Financial Year 2022
16-Jun-2022 / 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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16 June 2022
Halfords Group plc
Preliminary Results: Financial Year 2022
Strong performance vs pre-pandemic demonstrates significant transformation to the underlying business.
Ongoing focus on non-discretionary motoring services will help mitigate some macroeconomic headwinds.
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 1 April 2022 (“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 two-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.
FY22 Overview
• Strong revenue growth of +19.9% vs. FY20 (+6.0% vs FY21), growing market share in Retail Motoring and Autocentres,
with revenues +6.5% and +91.9% respectively. Cycling growth of +2.7% despite supply chain disruption during the
period.
• Strong performances in areas of strategic focus are a clear demonstration of our growing resilience: Group
Services1 grew +79%, online +77% and B2B2 +62% vs FY20.
• The Group made three further acquisitions during FY22, the largest of which being Axle Group (referred to as
“National"), making Halfords the largest Motoring Service provider in the UK with over 70% of revenues now coming
from Motoring, and almost 40% from Services.
• Underlying Profit Before Tax of £89.8m, +£32.9m (+57.8%) vs. FY20 and -£9.7m (-9.7%) vs FY21. (note: includes
business rates relief of £11m (FY22), £39.1m (FY21) and nil (FY20)).
• Period ended with cash of £46.1m but overall Net debt of £344.9m after IFRS16 lease debt.
• Proposed final dividend per share of 6p.
• Record Net Promoter Score (“NPS”) results of 68.4, +6.1 YoY, despite the disruption caused by the pandemic.
Graham Stapleton, Chief Executive Officer, commented:
“The strength and resilience of this performance is a great illustration of Halfords’ transformation over the past two
years. Our strategic shift towards motoring services has delivered higher, more predictable and more sustainable
returns, and our acquisitions of both National and Iverson Tyres during the year mean that we are now the UK’s largest
motoring service provider. Motoring now represents over 70% of Halfords’ total revenue, and the fact that our products
and services in this category tend to be needs-based rather than discretionary will help us to navigate our way through
the well-documented macroeconomic uncertainty that we are currently seeing. We are determined to do everything that we
can to help our customers during the current cost of living crisis through initiatives such as our recently launched
Motoring Loyalty Club and our second hand bike exchange.
We are continuing to play a key role in helping consumers to choose electric forms of transport and are constantly
investing in the training and upskilling of our technicians in this critically important area. Sales of e-bikes,
e-scooters and accessories were up 74% on two years ago, and servicing for electric cars in our garages was up 140%
year-on-year. We have also rolled-out free electric bike trials to encourage customers to make the switch and are the
first mainstream retailer to offer an end-to-end EV charging solution for the home.
While rising inflation and declining consumer confidence will naturally present short-term challenges for any
customer-facing business like ours, we remain confident in Halfords’ long-term growth prospects due to our service-led
strategy and the enduring strength of our brand, people, products and services.”
Group financial summary**
FY22 FY20*** Var FY21
Var FY20 Var FY21 Var FY21
FY20
% £m %
£m £m £m £m
Revenue 1,369.6 1,142.4 227.2 +19.9% 1,292.3 77.3 +6.0%
Retail 1,001.6 950.6 51.0 +5.4% 1,039.8 -38.2 -3.7%
Autocentres 368.0 191.8 176.2 +91.9% 252.5 115.5 +45.7%
Gross Margin 721.7 584.0 137.7 +23.6% 656.3 65.4 +10.0%
Retail 510.7 458.4 52.3 +11.4% 502.0 8.70 +1.7%
Autocentres 211.0 125.6 85.4 +68.0% 154.3 56.7 +36.7%
Underlying EBITDA* 207.1 188.6 18.5 +9.8% 233.0 -25.9 -11.1%
Underlying Profit Before Tax (“PBT”)* 89.8 56.9 32.9 +57.8% 99.5 -9.7 -9.7%
Profit Before Tax 96.6 22.7 73.9 +325.6% 64.5 32.1 +49.8%
Underlying Basic Earnings per Share* 35.5p 25.4p 11.8 +39.8% 41.7p -6.2 -14.9%
Group revenue summary
Total Revenue LFL Revenue Total Revenue LFL Revenue
Vs FY20 % Vs FY20 % vs FY21 % Vs FY21 %
Retail Motoring 6.5% 12.5% 22.7% 26.5%
Retail Cycling 2.7% 18.0% -27.2% -25.0%
Retail Total 5.4% 15.2% -3.7% -0.6%
Autocentres 91.9% 23.4% 45.7% 12.6%
Group 19.9% 16.7% 6.0% 2.0%
* Before non-underlying items.
** Alternative performance measures are defined and reconciled to IFRS amounts in the glossary on page 24. The LFL
change measure adjusts for the in-year site openings and closures, and acquisitions.
*** FY20 numbers are presented on a 52-week basis.
Financial highlights
• Group revenue against FY21 up +6.0% and +2.0% LFL. Our Motoring business in Retail and Autocentres has shown strong
growth. Cycling sales stepped back in the context of strong comparators and supply disruption.
• In Retail: two-year comparisons show:
◦ Retail Motoring revenue growth of +6.5% driven by +4ppts market share gains in core categories through H2,
underpinned by our investments in pricing and value.
◦ Retail Cycling revenue growth of +2.7% despite Kids and Mainstream bikes seeing a tougher H2 with disruption to
availability. Our award-winning own brand Premium and E-bikes continued to perform well.
◦ Electric mobility revenue (i.e., e-bikes, e-scooters and associated accessories) was up +74%.
• In Autocentres:
◦ Autocentres LFL growth of +23.4% driven by continued improvements in efficiency as we utilise our Avayler
software.
◦ Demand for our Halfords Mobile Expert (“HME”) vans proposition remains strong, growing +44% vs FY21 as we grew
our fleet to 253 vans, 14 hubs and over 230 technicians.
◦ Accelerating growth in demand for electric vehicle servicing, with the number of EVs being brought to our
garages increasing 140% year-on-year.
• Group gross margin improved by +157bps over two years (+191bps vs FY21), driven partly by our cycling initiatives,
and partly by an increasing mix into higher margin Autocentres trade.
• Operating costs increased +21% versus FY20 and held broadly flat as a proportion of revenue.
• Operating cashflow remains strong at £131.8m but below last year as working capital normalised.
• Non-underlying items totalled a credit of £6.8m, 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 Cycle to Work, Commercial, Fleet and product sales to businesses in both Retail and
Autocentres
FY23 Outlook
Over the last three years, we have built a larger and stronger services business, focused more heavily on motoring. As
a result, the Group has a much higher ‘needs-based’ revenue stream, improving our resilience in the current
macro-economic climate. However, this transformation journey is not complete and therefore we are not immune to the
external challenges, with reduced demand, particularly for more discretionary, higher ticket items, and significant
cost inflation impacting our financial performance.
Forecasting FY23 with any degree of certainty this early in the year is particularly challenging. Based on what we see
today, we expect FY23 underlying PBT to be within the range of £65m to £75m, but we acknowledge the uncertainty that
this year is likely to bring.
Whilst the macro-environment presents a challenging short-term outlook for many businesses, it reaffirms our
longer-term strategy. This year, we will continue to invest to improve our customer proposition, particularly in a year
where overall value will be critical, whilst simultaneously remaining agile in our operations and carefully managing
our cost base. We believe we are well-positioned, given our market leadership position in both motoring and cycling,
and our strong balance sheet, to emerge from this challenging trading environment in a relatively stronger position.
Enquiries
Investors & Analysts (Halfords)
Loraine Woodhouse, Chief Financial Officer (to 16th June 2022)
Jo Hartley, Chief Financial Officer (from 16th June 2022)
Richard Guest, 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 results presentation and 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 7 September 2022 we will report our 20-week trading update for the period ending 19 August 2022.
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 400 Halfords
stores, 3 Performance Cycling stores (trading as Tredz and Giant), 606 garages (trading as Halfords Autocentres,
McConechy’s, Universal and National Tyres) and have access to 253 mobile service vans (trading as Halfords Mobile
Expert, Tyres on the Drive and National) 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 delivered a good performance through the second half of FY22, resulting in both resilient financial results
and record levels of customer satisfaction across the full year. The performance is a clear reflection of the progress
we are making against our strategy, and the transformation in the business since FY20. Compared to FY20, Group revenues
grew +19.9% as we increased market share in our motoring business and increased our scale through acquisitions.
Underlying PBT of £89.8m, grew £32.9m ahead of FY20 and -£9.7m below FY21 as we continued to create a more profitable
business.
Our strategy continues to be centred around becoming a consumer and B2B Services-focused business, with a greater
emphasis on Motoring, generating higher and more sustainable returns. During FY22 we made two further Motoring Services
acquisitions (National and Iverson Tyres), making us the UK’s largest Motoring Service provider. Over 70% of Group
revenues are now derived from Motoring and with Services revenues now £0.5bn, and B2B revenues at £0.3bn, we have an
increasingly resilient, needs-based foundation.
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.
Revenue
Group revenues were £1,370m, with both Retail and Autocentres delivering strong growth over two years. This is despite
another year of COVID-19 disruption with the lockdowns and stay at home guidance of April and November. The scale and
increased customer awareness of our Autocentres is particularly pleasing, as is the recovery of our Retail Motoring
business, which has come back stronger than pre-pandemic. Both businesses have improved customer experience and
convenience as a result of our investment over the last two years.
Retail Motoring
Revenues grew +6.5% over two years, with the overall performance in the second half of the year broadly in line with
H1. This is a very strong result and reflects the unique and deepening super-specialism of our Retail offer. No other
retailer in our product categories in the UK has the convenience and breadth of offer and our strategic price
investments during the second half of the year will underpin future growth.
We saw strong performances across the less discretionary and specialist side of the business, with growth in many of
our core categories, as we refreshed ranges and bought new products to market. Although less seasonal, our staycation
products including cycle carriers and roof boxes continued to perform very well through H2.
Finally, we have also seen strong performance on child travel, growing well 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. The
strength of our product offer is coupled with being able to provide specific vehicle fitment advice, as well as expert
fitting at any one of our Retail stores across the country.
Retail Cycling
As we noted at our interims, Cycling had an exceptional FY21, benefitting from the unprecedented demand that COVID-19
lockdowns generated. Sales this year, whilst strong, have seen more volatility, constrained in part by wider supply
chain disruption, industry specific production bottlenecks and some signs later in the year that demand began to be
impacted as inflation and the cost of living concerns grew. After the significant volumes of FY21, availability
inevitably started the year lower than we would have liked, and with demand high for our exclusive own brand premium
ranges of mechanical bikes, the true sales potential of this category was rarely tested. These ranges were subject to
significant COVID-19 disruption, having the effect of closing both component and production factories on separate
occasions. Other ranges were also marred by disruption, with our peak period for kids bikes in December impacted by
last minute sea freight delays which affected consumer confidence over certainty of delivery, as well as customers
deterred from shopping to avoid further COVID-19 lockdowns over Christmas. Availability fared better on our E-bikes,
although again, certain bestselling own brand lines were constrained by availability. We remain confident on the
longer-term outlook for bikes as government infrastructure and climate needs necessitate greener modes of transport.
Autocentres
Our Autocentres business, operating in markets less exposed to demand and supply volatility, continues to be a key area
of strategic focus. Total revenues have almost doubled to £368m since FY20, driven by both our acquisitions, but also
our targeted initiatives to attract new customers to the underlying business and our ability to increase productivity.
With vehicle traffic remaining marginally below pre-pandemic levels across the year, the 23.4% LFL growth of our
business is clear evidence of the increasing market share we have achieved through our best-in-class customer
experience.
In our interim results, we noted that the profitability of the Autocentres business had been impacted by a shift in the
MOT season to the second half of the year, driven by the Government’s extension of MOT due-dates during COVID-19. As we
anticipated, the second half was far stronger, and therefore the full year performance saw very strong EBIT performance
of £14.4m, partly driven by revenue growth and partly by the optimisation of our business through our “Avayler”
platform.
Areas of strategic focus
The scale of change in the business during FY22 has been significant and is best evidenced through the performance in
our areas of strategic focus – namely Group Services, B2B and online.
Group Services1
Group revenue from services was £531m, growing 79% since FY20. This is the most transformational change we have made to
our business, and, despite the rapid growth, we still see a significant future opportunity in this market.
Our Halfords Mobile Expert van business, discussed in our FY22 strategic review, has been particularly successful and
resilient through the pandemic, providing customers with an integrated, convenient and unique “on the drive” or “at
work” offer.
We have also made three acquisitions in FY22 – National Tyres, Iverson Tyres, and havebike - taking our acquisitions
total to six since October 2019. Five have been centred around Motoring Services, and havebike, our latest addition in
March 2022, offers mobile Cycling Service solutions from hubs in London and Birmingham. This is an exciting addition to
our Cycling Service proposition and complements the national coverage provided by our 400 Retail stores. The scale we
have created in Motoring Services allows us to leverage our training and technology through over 1,400 fixed and mobile
locations. We offer unrivalled on-demand services, including the convenience of our mobile service as well as more
complex solutions at over 600 garages.
Our Services growth is underpinned by our technology and training. Whether this is optimising capacity through Avayler,
our “WeCheck” platform in Retail stores, or having over 2,000 service technicians trained in E-mobility and a skills
base of almost 40,000 in Retail, our position is unique and unrivalled within the UK.
B2B2
Our B2B business is an equally exciting opportunity and we are pleased with the progress we have made through FY22. B2B
revenue, at nearly £300m, grew by +60% versus FY20. We continue to focus on our market leading Cycle 2 Work (“C2W”)
scheme, underpinned by our award-winning ranges of exclusive own brand bikes. The tax relief customers can obtain by
purchasing through these schemes will, we believe, play an important role as consumers navigate through the
cost-of-living crisis.
Our Commercial Tyre business also provides an exciting opportunity for the future. This side of our business provides
service and repairs to fleets, agricultural vehicles or lorries and has grown by +180% since FY20. This has been
achieved by our strategic acquisitions of McConechy’s Tyre Services and Universal Tyres, the latter acquired in March
2021. The combination of these two businesses took us a step closer towards achieving national coverage, which allows
us to win larger contracts to support businesses seeking a single partner across the UK. Despite this growth, we still
see further areas of opportunity where we have “white spots” across the UK, and we continue to look to close these gaps
in the future. By doing so, we will take the next step to achieving full and unrivalled UK coverage in the Commercial
Tyre market.
In July 2021, we entered the Software as a Service (“SaaS”) market through our Avayler platform. Avayler brings
together the complementary motoring services platforms that Halfords has either built or acquired over recent years,
and packages them up in such a way that external clients can plug in to individual components, a collection of modules,
or the entire platform. As an operator ourselves, this has given us the ability to demonstrate tangible proof points to
prospective clients and, as a result, we are already supporting American Tire Distribution Inc. and Tirebuyer in the
US. Avayler is a particularly exciting venture for Halfords as it aligns perfectly with our strategy of building more
resilient, recurring, B2B revenue streams.
Online
Online has played a pivotal role in our success over the last two years. Our website re-platform at the end of FY20
brought together three individual websites, enabling customers to see the full breadth and scope of our offer in one
place. This has provided powerful synergies that have included increasing Halfords Retail customers’ awareness of
Autocentres and facilitating cross shop through the ability to bundle cross-Group products and services into one
basket.
The new web platform has also delivered tactical improvements to the customer shopping experience. Since launch, we
have invested in optimising the customer journey by making hundreds of developments, through a mindset of continuous
improvement. During a period of fast changing consumer behaviour and supply chain challenges, these developments have
ensured that products and service solutions are simpler to navigate for our customers. Whether this has been to support
new customers into staycation products through guided selling, or finding a bike through our dynamic stock finder, each
development has compounded to transform the customer experience.
Operational Review
Halfords won’t be alone in reporting that the operating environment remained challenging for all retailers across the
UK in FY22 and, whilst we anticipated an improvement through the last six months of trading, just as one challenge
ended, the next one emerged. It has therefore been more critical than ever that we have continued to focus on keeping
colleagues and customers safe, improving efficiency across the Group, and identifying cost reductions where possible.
Supply Chain
The global supply chain has been particularly challenging over the last two years, meaning moving anything around the
globe with any degree of certainty has been difficult. Whilst there were general signs of improvement towards the end
of H1, the reliability of freight remained poor. There have also been specific pockets of industry supply challenges
with bike componentry suffering through COVID-19 factory closures. These factors meant it was often very difficult to
accurately understand demand due to the unstable stock availability presented to customers. As noted earlier, Premium
bikes were most exposed to these problems throughout FY22, but problems extended to kids bikes during periods of
particularly high seasonal demand, for example, Christmas, where late disruption resulted in inconsistent availability
from week-to-week.
Integration of our Acquisitions
As we started FY22, we had already completed three acquisitions in 18 months (McConechy’s, Tyres on the Drive and
Universal Tyres) and as we noted during our last update, one of our biggest programmes this year was to efficiently
integrate Universal Tyres. Our acquisitions are crucial to growing our scale and convenience to customers, but it is
only when they are fully integrated and using our Avayler platform that their true potential begins to crystallise. It
was particularly pleasing therefore, that we were able to integrate Universal Tyres in less than half the time it took
to integrate McConechy’s - a truly fantastic achievement and testament to the hard work and professionalism of our
teams. With three further acquisitions in the second half of FY22 (Iverson Tyres, National Tyres and havebike), our
integration experience will ensure the valuable synergies of these deals are realised as soon as possible and help to
grow the business in the future. Our integration of National Tyres, the most significant of these acquisitions, is
discussed in more detail in the strategic highlights section later in this update.
Environmental, Social and Governance (“ESG”)
We continue to make good progress on our ESG agenda, and it remains a core part of our strategy whilst simultaneously
providing a valuable commercial opportunity. We have identified four priority areas in Electrification, Net Zero,
Diversity & Inclusion, and Product, Packaging and Waste Management. Over the course of FY22 we have made progress
against all four including:
• In Electrification:
◦ We have rolled-out free Electric Bike trials across our Retail store estate to encourage customers to switch
to clean transport solutions.
◦ We achieved our target of training over 2,000 colleagues across Retail and Autocentres, to deliver Electric
Services in Scooters, Bikes and Cars.
◦ We have created a unique partnership with BOXT to become the first mainstream retailer to offer end-to-end
charging solutions for homes, aiding the switch to electric.
• In Net Zero:
◦ During H2, our Science-based targets for carbon reduction were approved by the SBTi (“Science Based Targets
Initiative”).
◦ 75% of Halfords’ physical estate is powered by electricity from renewable sources, helping to reduce carbon
emissions in our own operations by 25% This moves 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:
◦ Our primary plastic packaging was reduced even further in H2, falling by 17% - equivalent to 279 tonnes.
• In Diversity & Inclusion:
◦ We Launched four Colleague Network Groups giving a voice to all colleagues to discuss Diversity & Inclusion
across the Group.
◦ We ran Diversity & Inclusion Masterclasses with our Senior Leadership Team.
Halfords hold an influential position in seeking to drive sustainability in both the motoring and cycling industries.
In particular we believe that the breadth of our electric products and services offer will play a critical role in
supporting the UK to adopt electric forms of personal transport.
Colleagues and the Labour Market
Our colleagues have always been our most important asset. With almost 40% of revenue now service related, this has
never been more relevant than it is today. It is their expertise that has resulted in an astonishing 8m service jobs
carried out this year, helping to keep customers moving when they need it most. Investing in our colleagues is one of
the best investments we can make, providing them with best-in-class training and technology, whilst also supporting
them financially and mentally through difficult times. We know that highly engaged colleagues result in high customer
satisfaction, and our NPS scores during FY22 are testament to this.
This year, we completed our biggest training programme to date, which involved training our Retail colleagues in the
full suite of customer services on offer. By doing this, our colleagues are now trained in twice as many skills as they
were a year ago, meaning our on-demand fitting offer is more convenient for customers, reducing wait times and getting
customers back moving quickly.
During H1 the labour market was particularly challenging, driven by high demand and short supply with self-isolation
from COVID-19 often having an adverse impact on the availability of technicians. The labour market has remained
difficult through the second half of FY22, and we believe it has suppressed our growth, with our capacity constrained
by the supply of available technicians to our Autocentres and HME businesses.
Finally, to underpin our service offering, we also implemented a new store operating model in Retail which has resulted
in more customer facing service technicians. Combined with our training investments, this means our Retail stores have
more capacity to service customers in periods of high demand.
Strategic Progress
As we noted earlier, the success of FY22 has been a result of strong progress against a clear and consistent vision and
our results clearly demonstrate the strong and accelerating transition we are making to “Evolve into a consumer and B2B
services-focused business, with a greater emphasis on motoring, generating higher and more sustainable financial
returns.”
Inspire our customers with a differentiated, super-specialist offer
Our Inspire pillar is centred around transforming the customer experience by investing in both our digital and physical
infrastructure, whilst simultaneously providing customers with access to new products and services in our core markets.
Some of the key areas of progress this year have been:
Fusion
Halfords Fusion town experience is our project to transform the customer experience, investing in both the physical and
digital estate. Fusion brings together all of our shopping and services locations across a town, leveraging all our
customer touchpoints, and creating an end-to-end experience that provides a full solution to every customer.
A Fusion town incorporates a new format destination retail store, an updated Autocentres garage and an extended
Halfords Mobile Expert offer – all operating in conjunction with an online and home delivery proposition across a
single location. This results in our stores, garages and vans truly working as one, with no perceived transition for
the customer when moving from one customer proposition to another.
Our two trial towns in Halifax and Colchester have delivered some very encouraging results. The ability for colleagues
to book customers into any Halfords service has driven a step-change in the number of customers shopping across more
than one of our propositions. Our on-demand WeCheck services, delivered by our highly skilled Retail colleagues from
the Halifax store car park, now refer c.20% of our Halifax garage’s sales per week. These referrals have driven
significant revenue to our garages, initiated from a Retail transaction, reducing the need for us to acquire customers
through traditional marketing channels. Our Halifax garage is now ranked within the top three performing garages in our
estate, having been 214th out of 300 pre-Fusion.
We have also invested in training and technology to aid colleagues in selling total solutions to customer’s needs in
Retail stores covering products, accessories, and services. When coupled with changes to the store environment, such
as the Parts desk which helps to facilitate interaction with our colleagues, we can assist customers through the more
complex shopping journeys, such as selecting the right bulbs, blades or batteries for their car or Bike purchases.
These changes have resulted in strong average transaction value uplifts, as well as increases in customer experience
scores by +9 points.
New products and services
Our super-specialism is a key differentiator as we believe that no other company can deliver the breadth of offer
across the life of a car or bike. We intend to continue to deepen this super-specialism. This year we have launched our
Electric Vehicle charging solutions partnership with BOXT, rolled out E-bike trials across our stores to give customers
the chance to try before they buy, and entered the second-hand bike market by launching Bike Xchange. Bike Xchange
creates a circular economy for bikes by offering customers the opportunity to trade in used bikes in exchange for money
off future purchases, whilst also allowing us to nationally range fully serviced and warrantied pre-owned bikes.
We have continued to focus on our own brand and exclusive ranges of products deepening our specialism in Motoring and
Cycling. We have launched exclusive brands within car cleaning including Yiannimize and Autobrite and our own brand
ranges of bikes including Carrera, Voodoo and Boardman continue to receive excellent reviews and accolades including
our Boardman SLR 8.8 winning the Road.cc award in May 2022.
Support our customers through an integrated, unique, and more convenient services offer
Our Support pillar has arguably seen the most significant transformation during FY22, in part driven by the acquisition
of National Tyres.
National Tyres
In December 2021, the Group undertook a £61.6m share placing in order to acquire National Tyres. The acquisition added
234 garages, 68 vans and 1,200 highly skilled colleagues to our Group. This has transformed our scale and will create
very significant levels of synergies across the Halfords Group - estimated at £18m EBITDA by our third year of
ownership. I am very pleased with the progress to-date, and we remain confident of delivering year 1 synergies in line
with the business case through the work done in aligning to group purchasing contracts as well as moving National’s
freight procurement onto our Group contract.
An important aspect of the National Tyres deal was the acquisition of Viking, the wholesale tyre distribution network
which, in itself, will create very important strategic and operational advantages for Halfords. This network gives us
the ability to supply tyres to our own Group businesses on a national scale, having less reliance on third-party
networks whilst simultaneously reducing costs.
Halfords Mobile Expert
Our Halfords Mobile Expert business goes from strength-to-strength and continues to deliver best-in-class customer
experience and convenience. Within two years we have grown the business from 7 to 253 vans, offering a range of 17
services to customers across over 75% of the UK. Revenues have grown +44% YoY and over 300% vs FY20.
Avayler
Avayler is our market leading digital platform which underpins our motoring services businesses. We have developed this
platform over a number of years, optimising the software which, in-turn, optimises our business. The success of our
business using Avayler has enabled us to market the solution to third party service providers and, as a result, we
successfully entered the SaaS market, supporting ATD and Tirebuyer in the US.
Enable a lifetime of motoring and cycling
Our lifetime pillar is focussed on establishing lasting relationships with customers. Whilst growing, we know that only
4% of our customers shop the breadth of our offer. This creates a significant opportunity, with relatively modest
changes to customer behaviour required. Our research shows that those who shop across the Group spend three to five
times more than those shopping from a single offer. This can increase further by forming a relationship over a 3-year
period.
Motoring Loyalty Club
To unlock these opportunities, we launched a unique Motoring Loyalty club at the end of March 2022. Our club puts the
customer and their car at the centre of our proposition, allowing us to harness data and form a relationship across the
life of the car. We can now offer customers bespoke advice, offers and savings, and alongside our strategic investment
in motoring pricing, we can give customers better value and strengthen our service proposition.
The launch of the club is an important step forward in both our lifetime pillar and overall strategy, but we see it as
only the beginning. The club has created a valuable platform from which we will build further opportunities in the
future, as we begin to support customers through the life of their car.
Underpinned by Cost and Efficiency
The success of our transformation continues to be underpinned by our focus on cost and efficiency. By creating a more
profitable and efficient business, we create the capacity to reinvest and generate long term returns for shareholders.
We have delivered strong cost reduction in FY22, with some highlights including:
• Settling 69 Retail lease renewals at an average of 26% below existing rental levels
• Delivering over £7.6m of goods not for resale savings and cost mitigation, including freight and energy.
• Saving a further £1.5m through Store efficiency programmes across 20 initiatives.
Underpinned by our Colleagues
Colleagues are the heart of a services business, and we have continued to invest in training as well as their health
and wellbeing:
• Our “Here to Help” Fund, set up during the height of the pandemic, has now delivered £0.4m of support to colleagues
that need it the most.
• “Wagestream” launched during the year, giving colleagues early access to wages when needed.
• We have trained over 100 mental health first aiders.
• We have offered free winter flu jabs to all colleagues.
FY23 Strategic Focus;
I noted earlier that as one external challenge seemingly came to an end, another was poised to take its place. We look
to be through the most severe impacts of COVID-19 in the UK, but we face a new period of uncertainty, this time created
by the worst cost of living crisis in a generation. At the time of writing this update, inflation is approaching
double-digit percentages, interest rates are increasing, and consumer confidence is at a 10-year low. With this period
of uncertainty ahead, we feel it is right to sharpen our strategic focus to deliver what matters most to customers at
this time.
Inspire
In Fusion, we will leverage the learnings from our trial towns, and roll out a capital efficient Fusion investment plan
across the estate, including;
• Training colleagues in solution selling practices.
• Car park referrals and managers in up to 100 Retail sites.
• Roll our further 3Bs and Click and Collect Hubs in Retail.
• Capacity increased in Autocentres through additional colleagues.
We will further our super-specialism by deepening our ranges within our core markets. This will include extending our
Retail offering by giving access to a broader range of car parts - a market worth over £1bn.
Support
Our B2C business:
• Integrate National Tyres to crystalise the next phase of performance synergies. This will include implementing PACE
across the estate, installing MOT equipment in sites currently without equipment and all other equipment upgraded.
• Continuing to rebrand sites.
• Increase headcount and capacity.
Our B2B business:
• Look to fill white space in our UK coverage by moving closer to our commercial van target of 500.
Avayler:
• We will continue our investment in Avayler, the platform that underpins the success of our motoring services
operation. This will optimise our own business further, but also allow us to drive further opportunities with third
party service providers, focussed on the Automotive industry.
Lifetime
In Lifetime we will accelerate and optimise our Loyalty platform:
• Focus on driving memberships and VRN data capture, targeting between 0.5 and 1.0 million customers by the end of
FY23.
• Utilise our Group Data platform and Loyalty club to engage with customers through the life of their car and drive
lifetime value
• Target 10% Premium mix to test subscription style memberships,
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 1.67 at the year-end, broadly in line with our expected
range of 1.8x to 2.3x.
With a continued strong performance from our areas of strategic focus, we will continue with our transformation plan.
Our forecast capital expenditure for the year is £45m to £50m, with additional expenditure of up to £15m to complete
the integration of National and deliver the projected synergy benefits. Our growth plan will be complemented by
acquisitions if we are able to find attractive targets with the right strategic fit for a fair price. Our capital
expenditure and acquisition strategy will be focussed on scaling our motoring services business in line with our
strategy, cementing our market leading position in aftermarket service, maintenance, and repair and growing our market
share in motoring products.
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 starting FY22 at 9p per share, intending this
to be progressive. Following the payment of an interim dividend of 3p per share on 21 January 2022, we are proposing an
FY22 final dividend of 6p per share to be paid on 16 September 2022, with the corresponding ex-dividend date of 11
August 2022 and the record date of 12 August 2022.
As we have indicated previously, Loraine Woodhouse is stepping down as CFO and will be replaced by Jo Hartley. This
Director change takes place on the 16th June 2022, when Jo Hartley will be appointed as a Director of Halfords Group
Plc and Loraine will resign from the Board.
Graham Stapleton
Chief Executive Officer, 15 June 2022
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
Halfords Autocentres, McConechy’s, Universal, National and Avayler (HSSD) trading entities. Balance Sheet comparisons
have been made on a FY22 to FY21 basis. All references to Group represent the consolidation of the Retail and
Autocentres segments.
The “FY22” accounting period represents trading for the 52 weeks to 1 April 2022 (“the financial year”). To provide a
better understanding of underlying performance, comparisons of sales and profit 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, albeit are provided within the tables below for completeness. All
numbers shown are on a post-IFRS16 basis, unless otherwise stated.
Group Financial Results
FY22 FY21 FY20
FY22 versus FY21 FY22 versus FY20
(52 weeks) (52 weeks) (52 weeks)
change change
£m £m £m
Group Revenue 1,369.6 1,292.3 1,142.4 +6.0% +19.9%
Group Gross Profit 721.7 656.3 584.0 +10.0% +23.6%
Underlying EBIT 101.1 114.5 70.5 -11.7% +43.4%
Underlying EBITDA 207.1 233.0 188.6 -11.1% +9.8%
Net Finance Costs (11.3) (15.0) (13.6) -24.7% -16.9%
Underlying Profit Before Tax 89.8 99.5 56.9 -9.7% +57.8%
Net Non-Underlying Items 6.8 (35.0) (34.2) -119.4% -119.9%
Profit Before Tax 96.6 64.5 22.7 +49.8% +325.6%
Underlying Basic Earnings per Share 35.5p 41.7p 25.4p -14.9% +39.8%
Although COVID-19 restrictions started to ease in the early part of our financial year, the reality was that FY22 was
still a heavily disrupted year for most consumer-facing businesses, including Halfords. The UK targeted a quick return
to normality after the impact of the pandemic, but supply and demand conditions remained unpredictable through much of
our financial year. Other countries, and the Far East in particular, mandated COVID-19 restrictions for longer,
contributing to ongoing supply-chain disruption. Subsequently, as we approached the end of FY22, both we and our
customers began to face into a new challenge brought about by almost two years of supply and demand disruption. Higher
inflation began to emerge in the second half of our financial year, compounded by the onset of war in Ukraine. Although
the impact on FY22 was limited, there is no doubt that the economic environment for UK companies and consumers has
become tougher than six months ago, giving rise to both challenge and opportunity as we navigate the year ahead.
Our strong financial results in FY22, with Group PBT of £96.6m, +£73.9m versus FY20, reflect good strategic progress, a
sharpened focus on improving the profitability of our underlying business and a necessarily agile approach to our
operation in a very challenging environment. Over the last two years we have mitigated many headwinds, not least a
complex and disrupted supply chain, whilst simultaneously improving the profitability of our business.
Despite the challenging external environment, we were pleased with the progress we made against our Strategy in the
year. Our acquisition of Axle Group Holdings Limited (referred to as “National”) in December 2021, comprising National
and Viking, was an important step forward and testament to our commitment to grow our Services business. The
acquisition, on 9 December 2021, for consideration of £61.5m, and the associated share placing, which raised £61.6m of
proceeds, was well supported by our shareholders, demonstrating support for our Services-focused strategy and the
compelling opportunity of the acquisition itself. As a result of this transaction, alongside smaller prior year
acquisitions, the Group is a very different business from two years ago, financially stronger and with a greater
proportion of revenues coming from the more resilient and non-discretionary areas of Motoring Services and B2B.
Group revenue in FY22, at £1,369.6m, was up 19.9% from FY20, comprised of Retail revenues of £1,001.6m and Autocentres
revenue of £368.0m. This compared to FY20 Group revenue of £1,142.4m, which saw Retail revenue of £950.6m and
Autocentres revenue of £191.8m. Retail Revenues grew +5.4% (+£51.0m) versus FY20, but declined -3.7% versus FY21,
primarily due to a normalised cycling market after strong demand during the early COVID-19 period. Both Motoring and
Cycling revenue grew versus FY20 but, against FY21, Motoring recovered significantly whereas Cycling declined versus
the strong peak seen in FY21. Autocentres revenue almost doubled across the two-year period and grew +45.7% versus
FY21, reflecting good underlying LFL growth alongside the impact of our acquisitions.
Group gross profit of £721.7m (FY20: £584.0m) was 52.7% of Group revenue (FY20: 51.1%), comprising of Retail gross
margin of 51.0%, up +277bps from FY20, partly offset by a decrease in the Autocentres gross margin of 815bps to 57.3%.
In Retail, our Cycling profitability improvements delivered in FY21 annualised, offset in part by our decision to
invest in Motoring pricing to underpin our Services business. In Autocentres, the acquired businesses (Universal Tyres
in March 2021 and National in December 2021) carry lower gross margins due to a heavy focus on tyres, but with a lower
labour cost they have an operating margin potential in line with the core Autocentres business.
Total underlying costs increased to £620.6m (FY20: £513.5m), of which Retail comprised £420.9m (FY20: £395.6m),
Autocentres £196.6m (FY20: £115.8m) and unallocated costs £3.1m (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, The
Universal Tyre Company (Deptford) Limited (“Universal”) in March 2021 and National in December 2021, which arise on
consolidation of the Group.
The overall cost increase of 20.9% (+£107.1m) was in line with revenue growth over the same period. Of the increase,
over half (+12.2%, +£62.4m) was a result of new acquisitions, or those annualising part year ownership, with the
remainder driven by volumetric sales growth alongside investment in areas of strategic importance such as customer
contact, digital, and colleague training. The Government continued to provide Business Rates Relief through much of our
first half, resulting in £11m of rates not levied versus FY20, but notably lower than the £39m of relief received in
FY21.
We continued to focus on our cost and efficiency programmes, delivering £7.6m of GNFR (goods not for resale) cost
savings, alongside cost reductions associated with our store and garage closures in FY21 that gave rise to year-on-year
benefits in the first three quarters of FY22. We achieved rental savings in our Retail estate on 69 lease renewals,
with an average decrease of approximately 26% in FY22. These underlying savings helped to mitigate cost increases
associated with the growth of the business and to fund strategic investment.
Group Underlying EBITDA increased 9.8% to £207.1m (FY20: £188.6m; FY21: £233.0m), whilst net finance costs were £11.3m
(FY20: £13.6m; FY21: £15.0m). Underlying Profit Before Tax for the year increased 57.8% to £89.8m (FY20: £56.9m; FY21:
£99.5m). Non-underlying items totalled a £6.8m credit in the year (FY20: £34.2m debit; FY21: £35.0m debit), following
two years of charges that arose from reorganisations of our physical infrastructure and organisational redesign. After
non-underlying items, Group Profit Before Tax was £96.6m (FY20: £22.7m; FY21: £64.5m).
Retail
FY22 FY21 FY20
FY22 versus FY21 FY22 versus FY20
(52 weeks) (52 weeks) (52 weeks)
change change
£m £m £m
Revenue 1,001.6 1,039.8 950.6 -3.7% +5.4%
Gross Profit 510.7 502.0 458.4 +1.7% +11.4%
Gross Margin 51.0% 48.3% 48.2% +270bps +277bps
Operating Costs (420.9) (398.3) (395.6) +5.7% +6.4%
Underlying EBIT 89.8 103.7 62.8 -13.4% +43.0%
Non-underlying items 8.9 (31.7) (30.7) -128.1% -129.0%
EBIT 98.7 72.0 32.1 +37.1% +207.5%
Underlying EBITDA 168.4 199.3 159.0 -15.5% +5.9%
Revenue of £1,001.6m reflected a 2 year like-for-like (“LFL”) sales increase of +15.2%. Total revenue in the year
increased +5.4% after adjusting for the impact of closing 64 Retail stores through FY21. Revenues declined -3.7% versus
FY21, significantly skewed by COVID-19 in both Motoring and Cycling, with the latter dipping versus a strong peak in
FY21. The volatility of the trading environment over the last two years was most evident in our Retail business, which
made forecasting particularly difficult. This is demonstrated by the sharp changes in mix witnessed across the years
FY20, FY21 and FY22. Motoring mix fell by 12ppts from FY20 to FY21 as a result of fewer journeys made during lockdowns,
but represented 59.4% of the Retail business for FY22 as traffic began to normalise. Pleasingly, our Motoring business
had a strong period, with revenues of £595m, total revenue growth of +6.5% and LFL growth of +12.5% versus FY20, with
revenue growth of +22.7% versus FY21. This is positive given the importance of our Motoring products business to the
growth of our Services proposition and demonstrates the strength and convenience of our Retail offer. Cycling sales
also performed well, growing LFL revenues +18.0% versus FY20 (+2.7% total), although declining versus FY21 by 27.2% in
total. We did not expect Cycling revenues to grow versus the peaks of lockdown cycling seen in FY21, but nevertheless
supply chain disruption and availability played its part in limiting its potential.
The Retail Operational Review in the Chief Executive Officer’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 below:
FY22 FY22 FY21 FY20
LFL 2yr (%) Total sales mix (%) Total sales mix (%) Total sales mix (%)
Motoring +12.5 59.4 46.1 58.4
Cycling +18.0 40.6 53.9 41.6
Total +15.2 100.0 100.0 100.0
Gross profit for the Retail business, at £510.7m (FY20: £458.4m) represented 51.0% of sales, an increase of +277bps on
FY20 (FY20: 48.2%). There were three key factors behind the performance; firstly, substantial improvements in the
Cycling gross margins, up over +700bps versus FY20, following the margin optimisation programme detailed in last year’s
report. The improvement annualised this year versus FY21, but the full impact can be seen versus FY20. Secondly,
Motoring margins were also stronger versus FY20, +60bps, despite our strategic investment in Motoring pricing aimed at
strengthening and underpinning the Services business. And finally, the material swing in product mix also impacted
gross margin, albeit with materially less impact versus FY20 than versus FY21. Of the +277bps improvement versus FY20,
+300bps is a result of rate changes, -60bps dilution driven by growth in commissions as a result of our growing B2B
business and foreign exchange movements, and the balance reflected product mix, which had a small positive impact vs
FY20.
Retail operating costs before non-underlying items were £420.9m (FY20: £395.6m) an increase of 6.4% on FY20. The focus
on operational efficiency and procurement continued in FY22, offsetting the impact of the inflationary headwinds that
began to build during FY22, and funding our strategic investments across a number of customer-facing initiatives. Some
of the efficiency highlights included £7.6m of GNFR costs removed from the Retail business through an ongoing review of
services and tendering processes, the lease renewals detailed earlier, and £1.5m of store payroll removed through our
‘We Operate 4 Less’ in-store savings initiatives. Of the £11m Business Rates Relief afforded to the Group, £9m was
within Retail versus £33m in FY21.
Autocentres
FY22 FY21 FY20
FY22 versus FY21 FY22 versus FY20
(52 weeks) (52 weeks) (52 weeks)
change change
£m £m £m
Revenue 368.0 252.5 191.8 +45.7% +91.9%
Gross Profit 211.0 154.3 125.6 +36.7% +68.0%
Gross Margin 57.3% 61.1% 65.5% -380bps -815bps
Operating Costs (196.6) (141.2) (115.8) +39.2% +69.7%
Underlying EBIT 14.4 13.1 9.8 +9.9% +46.9%
Non-underlying items (2.1) (3.3) (3.5) -36.4% -40.0%
EBIT 12.3 9.8 6.3 +25.5% +95.2%
Underlying EBITDA 38.7 33.7 29.6 +14.8% +30.7%
Autocentres generated total revenues of £368.0m (FY20: £191.8m), an increase of 91.9% on FY20, with a strong LFL
increase of 23.4%. Non-LFL revenues versus FY20 included either full or part year benefits from our six acquisitions:
Tyres on the Drive and McConechy’s acquired in October and November 2020 respectively, Universal Tyres in March 2021,
Iverson Tyres in December 2021, Axle Group in December 2021 and havebike in March 2022. Our acquisitions added
approximately £125m of revenue versus 2020 and c. £93m versus 2021.
In Q3 FY22, we entered the Software as a Service market through our Avayler platform and were delighted to sign our
first deal with ATD for provision of the software.
Gross profit of £211.0m (FY20: £125.6m) was 57.3% of sales, a decrease of 815 bps on FY20 but Gross Profit £ was nearly
70% ahead of FY20. The decrease in gross margin % was a result of the annualisation of our acquisitions, which are
gross margin rate dilutive given their business model focus on tyres. Most notably, Universal Tyres and McConechy’s
operate predominately within the B2B commercial tyre sector and, as such, have a different operating model of lower
gross margin but strong margin per worked hour, and more resilient revenues. National operates primarily within the B2C
sector, more aligned to our core Autocentres business, but also with a heavy tyre mix and lower gross margins. Overall
Autocentres saw underlying rate improve by +320bps with the mix into acquisitions worth almost -1,150bps overall. Going
forward we are confident that significant synergies are available to us through a combination of greater scale and
leveraging our digital operating model, which will result in stronger operating margins across the enlarged Autocentres
group.
Operating costs were £196.6m, +£80.8m above FY20, of which £62m was a result of the annualisation and growth of our
acquisitions from FY20 and FY21. The remaining cost increase was the result of investment in the underlying business
with incremental investment in colleagues driving the very strong LFL performance.
Underlying EBIT was £14.4m, (FY20: £9.8m) a strong performance that reflected good organic growth complemented by
strategically important acquisitions. Underlying EBITDA of £38.7m (FY20: £29.6m) was 30.7% higher than FY20.
Portfolio Management
In FY22 we continued to grow our Services business through the acquisitions of National , Iverson Tyres and havebike.
The total number of fixed stores or garages within the Group stood at 1,006, with a further 181 HME vans, 4 Cycling
Vans, 68 vans supporting mobile tyre fitting and 192 Commercial vans as at 1 April 2022. The portfolio comprised 400
stores (end of FY21: 404) and 606 Autocentres garages (end of FY21: 374).
The following table outlines the changes in the portfolio over the year:
Stores Garages Vans
Relocations - - –
Leases renegotiated 69 7 –
Refreshed - - –
Openings/Acquisitions - 243 72
Closed 4 11 –
In Retail, four stores closed during the year, three of them in the final quarter. When analysing the anticipated sales
transfer to other channels and neighbouring stores, it was considered more profitable to the Group to close these
stores and reduce the overall cost base.
The number of lease expiries, or breaks under option, continues at a similar rate in the next five years. Retail will
see three quarters of stores experience optionality within five years, allowing for a high degree of flexibility within
the estate.
Within Autocentres, no garages were opened organically, but 243 locations were acquired in the year and 11 were closed,
taking the total number of Autocentre garages to 606 as at 1 April 2022 (end of FY21: 374).
With the exception of nine long-leasehold and three freehold properties in Autocentres, the Group’s locations are
occupied under 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
six freehold properties, but all were sold and leased back in the first half of FY22.
Net Non-Underlying items
The following table outlines the components of the non-underlying items recognised in the 52 weeks ended 1 April 2022:
FY22 FY21
£m £m
Organisational restructure costs (a) 0.3 5.9
Impairment of right-of-use assets (b) - (0.4)
Acquisition and investment-related fees (c) 2.8 0.6
One-off claims (d) (2.2) 2.9
Closure costs (e) (8.5) 26.0
Replacement of warehouse management system (f) 0.8 -
Net non-underlying items (6.8) 35.0
a. In the current and prior period, separate and unrelated organisational restructuring activities were undertaken. A
strategic redesign of the in-store operating model was undertaken to better meet our customers’ expectations and
deliver a consistent shopping experience across our estate. Redundancy costs of £0.3m (PY: £5.9m) were incurred
during the transition to the new operating model.
b. In light of the ongoing COVID-19 pandemic, the Group revised future cash flow projections for stores and garages in
FY20, which led to the recognition of an impairment in relation to stores or garages where the current and
anticipated future performance did not support the carrying value of the right-of-use asset and associated tangible
assets. During the prior year, £0.4m of this impairment was reversed as the stores and garages returned to a
profitable position.
c. In the current and prior periods, costs were incurred in relation to the investments in National, Iverson, havebike
and Universal.
• In FY22, £2.5m relating to professional fees in respect of acquisition of National;
• £0.2m related to the acquisition of trade and assets of both Iverson and havebike;
• £0.1m (PY: £0.6m) related to the acquisition of Universal.
d. During the prior period a provision of £2.9m was held in the accounts in relation to the HMRC audit into National
Minimum Wage, based on management’s best estimate using information available at the time. During the current
period this has been fully settled and paid, which has led to a release of the provision of £2.2m.
e. 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 £8.5m (costs of £26m during FY21) of provisions and lease liabilities have been
released as the group continues to negotiate lease disposals and review provisions held in place. At the year end
property provisions carried forward included an amount of £10.2m in relation to these store and garage closures.
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.
f. An additional charge of £0.8m has been incurred during the current year for the replacement of the warehouse
management system (“WMS”). Under the new IFRIC guidance on IAS 38, this cannot be capitalised and therefore, as it
is not part of recurring business it is deemed a non-underlying expense.
Finance Expense
The net finance expense (before non-underlying items) for the 52 weeks ended 1 April 2022 was £11.3m (FY21: £15.0m)
reflecting reduced interest on lease liabilities, plus the fact the Revolving Credit Facility (RCF) was not drawn in
the current year, partially offset by additional non-utilisation fees.
Taxation
The taxation charge on profit for the 52 weeks ended 1 April 2022 was £18.9m (FY21: £11.3m), including a £1.7m charge
(FY21: £6.1m credit) in respect of non-underlying items. The effective tax rate of 19.5% (FY21: 17.5%) differs from
the UK corporation tax rate (19%) principally due to increased disallowable expenditure this year (in part relating to
the share issue and National acquisition) and prior period adjustments.
Earnings Per Share (“EPS”)
Underlying Basic EPS post IFRS 16 was 35.5 pence and after non-underlying items 37.9 pence (FY21: 41.7 pence and 27.1
pence after non-underlying items), a –14.9% and 39.9% movement on the prior year. Basic weighted-average shares in
issue during the year were 204.7m (FY21: 197.1m).
Dividend (“DPS”)
Following the payment of an interim dividend of 3.0p per share on 21 January 2022, the Board are proposing an FY22
final dividend of 6.0p per share (FY21: 5.0p per share).
IFRS 16
IFRS 16 has had the effect of increasing profit by £2.5m. 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 ageing 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 1 April 2022 totalled £49.2m (FY21: £45.3m) comprising £31.1m in Retail and
£18.1m in Autocentres. Within Retail, £11.5m (FY21: £6.0m) was invested in stores. Additional investments in Retail
infrastructure included a £17.9m investment in IT systems, including the continued development of the new Group
website.
The £18.1m (FY21: £22.0m) capital expenditure in Autocentres principally related to the replacement of garage equipment
and replacement of fixtures and fittings, and further development of PACE, our digital operating model in garages.
During the year, new IFRIC guidance was published relating to IAS38 Intangible Assets, in particular the capitalisation
of spend on SaaS solutions. It was determined by Halfords that spend on a new Warehouse Management System should be
expensed, which resulted in £0.8m being recorded in non-underlying costs due to the non-recurring nature of the costs.
Inventories
Group inventory held as at the year-end was £222.1m (FY21: £143.9m). Retail inventory increased to £194.5m (FY21:
£134.3m), reflecting normalised stock levels after a COVID-19 disrupted FY21.
Autocentres’ inventory was £27.6m (FY21: £9.6m). The increase in inventory primarily relates to the acquisition of
National and their stock holding of tyres.
Cashflow and Borrowings
Operating Cash Flow was £131.8m (FY21: £280.8m), reflecting a working capital outflow of £70.0m, which arose due to the
normalisation of inventory levels as described above. After taxation, capital expenditure, net finance costs and lease
payments, Free Cash Flow was -£14.9m (FY21: £133.2m) in the year. Group Net Debt was £344.9m (FY21: £277.3m).
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 2022 Annual Report and Accounts. These include:
• Business Strategy
−Capability and capacity to effect change
−Stakeholder support− Value proposition
−Brand appeal and market share
-Climate change & electrification
• Financial
− Sustainable business model
• Compliance
−Regulatory and compliance
−Service quality
−Cyber security
• Operational
− Colleague engagement / culture
− Skills shortage
− IT infrastructure failure
− Disruption to end to end supply chain
Specific risks associated with performance include the success, 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
15 June 2022
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 below. 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:
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.
FY22 FY21 FY20
£m £m £m
Cash & cash equivalents 46.3 67.2 115.5
Borrowings – current (74.7) (63.6) (83.4)
Borrowings – non-current (316.5) (280.9) (511.9)
Net Cash/(Debt)* (344.9) (277.3) (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 and prior period.
6.Net Debt to Underlying EBITDA ratio is the calculation of Net Debt divided by Underlying EBITDA. Each component APM
is 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.
FY22 FY21 FY20 (53 weeks)
£m £m £m
Underlying EBIT 101.1 114.5 67.2
Depreciation, amortisation & impairment 106.0 118.5 118.7
Underlying EBITDA 207.1 233.0 185.9
Non-underlying operating expenses 6.8 (35.0) (34.2)
EBITDA 213.9 198.0 151.7
Share-based payment transactions 7.8 6.4 1.0
Loss on disposal of property, plant & equipment (5.2) 1.7 2.8
Working capital movements (70.0) 49.0 52.0
Provisions movement and other (14.7) 25.7 (3.1)
Adjusted Operating Cash Flow* 131.8 280.8 204.4
* 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 and prior period.
8.Free Cash Flow is defined as Adjusted Operating Cash Flow (as defined above) less capital expenditure, net finance
costs, taxation, exchange movements, arrangement fees on loans, and lease payments; as reconciled below.
FY22 FY21 FY20
£m £m £m
Adjusted Operating Cash Flow 131.8 280.8 204.4
Capital expenditure (47.3) (27.5) (33.6)
Net finance costs (10.6) (15.5) (13.2)
Taxation (12.2) (10.8) (16.3)
Sales and Leaseback 7.5 - -
Exchange movements 0.9 2.1 (2.0)
Lease payments (85.0) (95.9) (87.7)
Free Cash Flow* (14.9) 133.2 51.6
*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 and prior period.
Halfords Group plc
Consolidated Income Statement
For the 52 weeks to 1 April 2022
For the period 52 weeks to 1 April 2022 52 weeks to 2 April 2021
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 1,369.6 - 1,369.6 1,292.3 - 1,292.3
Cost of sales (647.9) - (647.9) (636.0) - (636.0)
Gross profit 721.7 - 721.7 656.3 - 656.3
Operating 2 (620.6) 6.8 (613.8) (541.8) (35.0) (576.8)
expenses
Results from
operating 3 101.1 6.8 107.9 114.5 (35.0) 79.5
activities
Finance costs 5 (11.3) - (11.3) (15.0) - (15.0)
Profit before 89.8 6.8 96.6 99.5 (35.0) 64.5
income tax
Income tax 6 (17.2) (1.7) (18.9) (17.4) 6.1 (11.3)
expense
Profit for the
financial period
attributable to 72.6 5.1 77.7 82.1 (28.9) 53.2
equity
shareholders
Earnings per
share
Basic earnings 8 35.5p 37.9p 41.7p 27.1p
per share
Diluted earnings 8 34.0p 36.4p 40.7p 26.4p
per share
The notes on pages 31 to 38 are an integral part of these condensed consolidated financial statements.
Halfords Group plc
Consolidated Statement of Comprehensive Income
For the 52 weeks to 1 April 2022
52 weeks to 52 weeks to
1 April 2 April
2022 2021
Notes £m £m
Profit for the period 77.7 53.2
Other comprehensive income
Cash flow hedges:
Fair value changes in the period 6.5 (9.6)
Income tax on other comprehensive income 6 (1.3) 1.6
Other comprehensive income for the period, net of income tax 5.2 (8.0)
Total comprehensive income for the period attributable to equity shareholders 82.9 45.2
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 31 to 38 are an integral part of these condensed consolidated financial statements.
Halfords Group plc
Consolidated Statement of Financial Position
For the 52 weeks to 1 April 2022
1 April 2 April
2022 2021 Restated*
Notes £m £m
Assets
Non-current assets
Intangible assets 442.4 398.3
Property, plant and equipment 101.7 81.3
Right-of-use assets 350.2 282.8
Derivative financial instruments - 0.1
Deferred tax asset 14.7 12.3
Total non-current assets 909.0 774.8
Current assets
Inventories 222.1 143.9
Trade and other receivables * 92.6 74.1
Assets held for sale - 6.0
Derivative financial instruments 4.2 0.5
Current tax assets 3.9 3.1
Cash and cash equivalents 9 46.3 67.2
Total current assets 369.1 294.8
Total assets 1,278.1 1,069.6
Liabilities
Current liabilities
Borrowings (0.2) (0.2)
Derivative financial instruments (0.5) (5.9)
Lease liabilities 10 (74.5) (63.4)
Trade and other payables * (299.6) (258.2)
Current tax liabilities (4.0) -
Provisions (20.5) (24.5)
Total current liabilities (399.3) (352.2)
Net current (liabilities)/assets (30.2) (57.4)
Non-current liabilities
Borrowings - -
Derivative financial instruments - (0.4)
Lease liabilities (316.5) (280.9)
Trade and other payables (4.9) (3.3)
Provisions (6.4) (15.0)
Total non-current liabilities (327.8) (299.6)
Total liabilities (727.1) (651.8)
Net assets 551.0 417.8
Shareholders’ equity
Share capital 2.2 2.0
Share premium 212.4 151.0
Investment in own shares (11.6) (10.0)
Other reserves 2.0 (1.8)
Retained earnings 346.0 276.6
Total equity attributable to equity holders of the Company 551.0 417.8
*See note 11 for further details
The notes on pages 31 to 38 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 1 April 2022
Attributable to the equity holders of the Company
Other reserves
Share Investment Capital
Share premium in own Hedging Retained Total
redemption 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 - - - - 1.6 - 1.6
income
Total other comprehensive income - - - - (8.0) - (8.0)
for the 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 the cost of - - - - 1.3 - 1.3
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 31 to 38 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 Hedging Retained Total
redemption reserve
capital account shares reserve earnings equity
£m £m £m £m £m £m £m
Closing balance at 2 April 2021 2.0 151.0 (10.0) 0.3 (2.1) 276.6 417.8
Total comprehensive income for the
period
Profit for the period - - - - - 77.7 77.7
Other comprehensive income
Fair value changes in the period - - - - 6.4 - 6.4
Income tax on other comprehensive - - - - (1.3) - (1.3)
income
Total other comprehensive income - - - - 5.1 - 5.1
for the period net of tax
Total comprehensive income for the - - - - 5.1 77.7 82.8
period
Other - - - - - - -
Hedging gains and losses
transferred to the cost of - - - - (1.3) - (1.3)
inventory
Transactions with owners
Shares issued 0.2 61.4 - - - - 61.6
Acquisition of Treasury shares - - (3.0) - - - (3.0)
Share options exercised - - 1.4 - - - 1.4
Share-based payment transactions - - - - - 7.8 7.8
Income tax on share-based payment - - - - - 0.4 0.4
transactions
Dividends to equity holders - - - - - (16.5) (16.5)
Total transactions with owners 0.2 61.4 (1.6) - - (8.3) 51.7
Balance at 1 April 2022 2.2 212.4 (11.6) 0.3 1.7 346.0 551.0
The notes on pages 31 to 38 are an integral part of these condensed consolidated financial statements.
Halfords Group plc
Consolidated statement of cash flows
For the 52 weeks to 1 April 2022
52 weeks to 52 weeks to
1 April 1 April
2022 2021
Restated*
Notes £m £m
Cash flows from operating activities
Profit after tax for the period, before non-underlying items 72.6 82.1
Non-underlying items 5.1 (28.9)
Profit after tax for the period 77.7 53.2
Depreciation – property, plant and equipment 20.6 21.0
Impairment – property, plant and equipment (0.3) 2.8
Amortisation and impairment of right-of-use assets 69.9 81.8
Amortisation – intangible assets 15.8 12.9
Net finance costs 11.3 15.0
Loss on disposal of property, plant and equipment and intangibles 1.8 1.7
Gain on sale and leaseback of assets held for sale (0.4) -
Gain on disposal of leases (6.6) -
Equity-settled share-based payment transactions 7.8 6.4
Exchange movement 0.9 2.1
Income tax expense 18.9 11.3
(Increase)/ decrease in inventories (66.7) 35.0
(Increase)/decrease in trade and other receivables* 1.3 (22.4)
(Decrease)/increase in trade and other payables* (4.6) 36.4
(Decrease)/ increase in provisions (14.7) 25.7
Income tax paid (12.2) (10.8)
Net cash from operating activities 120.5 272.1
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired (58.5) (11.5)
Proceeds from sale of assets held for sale 7.5 -
Purchase of intangible assets (22.0) (11.8)
Purchase of property, plant and equipment (25.3) (15.7)
Net cash used in investing activities (98.3) (39.0)
Cash flows from financing activities
Proceeds from issue of share capital 61.6 -
Repurchase of treasury shares (3.0) -
Finance costs paid (1.6) (5.5)
Proceeds from share options exercised 1.4 -
Repayment of borrowings - (180.0)
Interest paid on lease liabilities* (9.0) (10.0)
Payment of capital element of leases (76.0) (85.9)
Dividends paid (16.5) -
Net cash used in financing activities (43.1) (281.4)
Net (decrease)/increase in cash and bank overdrafts 9 (20.9) (48.3)
Cash and cash equivalents at the beginning of the period 67.0 115.3
Cash and cash equivalents at the end of the period 9 46.1 67.0
* See note 11 for further details
The notes on pages 31 to 38 are an integral part of these condensed consolidated financial statements.
Halfords Group plc
Notes to the condensed consolidated financial statements
For the 52 weeks to 1 April 2022
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 1
April 2022 or 2 April 2021 but is derived from those accounts. Statutory accounts for 2021 have been delivered to the
Registrar of Companies, and those for 2022 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 1 April 2022, whilst the comparative period covered
the 52 weeks to 2 April 2021.
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 with those parts of the Companies Act 2006
applicable to companies reporting under IFRS. 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 52 weeks to
1 April 2 April
2022 2021
£m £m
Selling and distribution costs 472.6 422.9
472.6 422.9
Administrative expenses, before non-underlying items 148.0 118.9
Non-underlying administrative expenses (6.8) 35.0
141.2 153.9
613.8 576.8
3. Operating profit
For the period 52 weeks to 52 weeks to
1 April 2 April
2022 2021
£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 value 1.6 0.7
assets
Expenses relating to short term leases 6.8 5.6
Rentals receivable under operating leases (2.6) (2.7)
Landlord surrender premiums (0.8) 0.1
Loss on disposal of property, plant and equipment and intangibles 1.8 1.7
Amortisation of intangible assets 15.8 12.9
Amortisation of right-of-use assets 69.9 69.6
Depreciation of:
owned property, plant and equipment 20.6 21.0
Impairment of:
- owned property, plant and equipment (0.3) 2.8
- impairment of right-of-use assets - 12.2
Trade receivables impairment 0.1 0.1
Staff costs 314.4 299.6
Cost of inventories consumed in cost of sales 654.6 629.1
4. Non-underlying items
For the period 52 weeks to 52 weeks to
1 April 2 April
2022 2021
£m £m
Non-underlying operating expenses:
Organisational restructure costs (a) 0.3 5.9
Impairment of right-of-use assets (b) - (0.4)
Acquisition and investment related fees (c) 2.8 0.6
One-off claims (d) (2.2) 2.9
Closure costs (e) (8.5) 26.0
Replacement of warehouse management system (f) 0.8 -
Non-underlying items before tax (6.8) 35.0
Tax on non-underlying items 1.7 (6.1)
Non-underlying items after tax (5.1) 28.9
a. In the current and prior period, separate and unrelated organisational restructuring activities were undertaken. A
strategic redesign of the in-store operating model was undertaken to better meet our customers’ expectations and
deliver a consistent shopping experience across our estate. Redundancy costs of £0.3m (PY: £5.9m) were incurred
during the transition to the new operating model.
b. In light of the ongoing COVID-19 pandemic, the Group had revised future cash flow projections for stores and
garages in FY20, which led to the recognition of an impairment 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. During the prior year, £0.4m of this impairment was reversed as the stores and garages had returned to a
profitable position.
c. In the current and prior periods, costs were incurred in relation to the investments in National, Iverson, havebike
and Universal.
• In FY22, £2.5m relating to professional fees in respect of the acquisition of National;
• £0.2m related to the acquisition of trade and assets of both Iverson and havebike;
• £0.1m (PY: £0.6m) related to the acquisition of Universal.
d. During the prior period a provision of £2.9m was held in the accounts in relation to the HMRC audit on national
minimum wage, which was based on management’s best estimate using information available at the time. During the
current period this has been fully settled and paid which has led to a release of the provision of £2.2m.
e. 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 £8.5m (costs of £26m during FY21) of provisions and lease liabilities have been
released as the group continues to negotiate lease disposals and review provisions held in place. At the year end
property provisions carried forward included an amount of £10.2m in relation to these store and garage closures.
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.
f. An additional charge of £0.8m was incurred during the current period as a result of the replacement of the
Warehouse Management system. Under the new IFRIC guidance in regards to IAS 38 this cannot be capitalised and
therefore, owing to the nature of this cost (non-trading cost), this is disclosed as a non-underlying expense.
5. Finance costs
Recognised in profit or loss for the period 52 weeks to 52 weeks to
1 April 2 April
2022 2021
£m £m
Finance costs:
Bank borrowings (0.1) (2.5)
Amortisation of issue costs on loans (0.7) (1.1)
Commitment and guarantee fees (1.5) (1.1)
Other interest payable - (0.3)
Interest payable on lease liabilities (9.0) (10.0)
Net Finance costs (11.3) (15.0)
6. Taxation
For the period 52 weeks to 52 weeks to
1 April 2 April
2022 2021
£m £m
Current taxation
UK corporation tax charge for the period 15.9 16.9
Adjustment in respect of prior periods (0.4) (1.0)
15.5 15.9
Deferred taxation
Origination and reversal of temporary differences 3.4 (4.7)
Effect of changes in tax rates (1.7) -
Adjustment in respect of prior periods 1.7 0.1
3.4 (4.6)
Total tax charge for the period 18.9 11.3
The tax charge is reconciled with the standard rate of UK corporation tax as follows:
For the period 52 weeks to 52 weeks to
1 April 2 April
2022 2021
£m £m
Profit before tax 96.6 64.5
UK corporation tax at standard rate of 19% (2020: 19%) 18.4 12.3
Factors affecting the charge for the period:
Depreciation on expenditure not eligible for tax relief 0.3 0.9
Impact of super deduction capital allowances uplift (1.3) -
Employee share options 1.5 (1.3)
Other disallowable expenses 0.8 0.6
Adjustment in respect of prior periods 1.3 (0.9)
Impact of overseas tax rates (0.3) (0.3)
Impact of 130% capital allowances deduction (1.8) -
Total tax charge for the period 18.9 11.3
An increase to the main rate of corporation tax to 25% from 1 April 2023 was substantively enacted on 24 May 2021. This
will increase the Company’s future current tax charge accordingly. The closing deferred tax asset at 1 April 2022 has
been calculated at the rates expected to apply when the temporary differences unwind.
The effective tax rate of 19.5% (2021: 17.5%) is higher than the UK corporation tax rate principally due to increased
disallowable expenditure this year (in part relating to the share issue and National acquisition) and adjustments in
respect of prior periods.
The tax charge for the period was £18.9m (2021: £11.3m), including a £1.7m charge (2021: £6.1m credit) in respect of
tax on non-recurring items.
The Group engages openly and pro-actively with tax authorities both in the UK and internationally, where it trades and
sources products, and is considered low risk by HM Revenue and Customs (“HMRC”). The Company is fully committed to
complying with all of its tax payment and reporting obligations.
7. Dividends
For the period 52 weeks to 52 weeks to
1 April 2 April
2022 2021
£m £m
Equity – ordinary shares
Final for the 52 weeks to 2 April 2021 – paid 5.0p per share (53 weeks to 3 April 2020: 9.9 -
nil)
Interim for the 52 weeks to 1 April 2022 – paid 3.0p per share (52 weeks to 2 April 2021: 6.6 -
nil)
16.5 -
In addition, the Directors are proposing a final dividend of 6p per share (2021: 5.0p) in respect of the financial
period ended 1 April 2022.
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 1 April
2022.
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 52 weeks to
1 April 2 April
2022 2021
Number of shares Number of shares
m m
Weighted average number of shares in issue 205.7 199.1
Less: shares held by the Employee Benefit Trust (weighted average) (1.0) (2.0)
Weighted average number of shares for calculating basic earnings per share 204.7 197.1
Weighted average number of dilutive shares 9.0 4.9
Total number of shares for calculating diluted earnings per share 213.7 202.0
52 weeks to 52 weeks to
1 April 2 April
For the period
2022 2021
£m £m
Basic earnings attributable to equity shareholders 77.7 53.2
Non-underlying items (see note 4):
Operating expenses (6.8) 35.0
Tax on non-underlying items 1.7 (6.1)
Underlying earnings before non-underlying items 72.6 82.1
For the period
52 weeks to
52 weeks to 1 April
2 April
2022
2021
Basic earnings per ordinary share 37.9p 27.1p
Diluted earnings per ordinary share 36.4p 26.4p
Basic underlying earnings per ordinary share 35.5p 41.7p
Diluted underlying earnings per ordinary share 34.0p 40.7p
9. Analysis of movements in Group’s net debt in the period
At 2 April At 1 April
Cash flow Other non-cash changes
2021 2022
£m £m £m £m
Cash and cash equivalents at bank and in hand 67.0 (20.9) - 46.1
Debt due after one year - - - -
Total net debt excluding leases 67.0 (20.9) - 46.1
Current lease liabilities (63.4) 85.0 (96.1) (74.5)
Non-current lease liabilities (280.9) - (35.6) (316.5)
Total lease liabilities (344.3) 85.0 (131.7) (391.0)
Total net debt (277.3) 64.1 (131.7) (344.9)
Non-cash changes include 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 £46.3m (2021: £67.2m) of liquid assets and £0.2m (2021: £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 2 April 2021 279.9 2.9 282.8
Additions on acquisition of subsidiary 82.0 - 82.0
Additions to right-of-use assets 44.6 5.0 49.6
Amortisation charge for the year (66.4) (3.5) (69.9)
Effect of modification of lease 6.8 0.4 7.2
Derecognition of right-of-use assets (1.3) (0.2) (1.5)
Impairment - - -
At 1 April 2022 345.6 4.6 350.2
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
Lease Liabilities
Land and Equipment
Total
buildings £m
£m
£m
At 2 April 2021 340.6 3.7 344.3
Additions on acquisition of subsidiary 73.2 - 73.2
Additions to lease liabilities 44.6 4.9 49.5
Interest expense 8.8 0.2 9.0
Effect of modification to lease 6.8 0.4 7.2
Lease payments (81.7) (3.3) (85.0)
Disposals to lease liabilities (7.0) - (7.0)
Foreign exchange movements (0.2) - (0.2)
At 1 April 2022 385.1 5.9 391.0
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
1 April 2 April
Lease liabilities 2022 2021
£m £m
Maturity analysis – contractual undiscounted cash flows
Less than one year 81.2 71.2
Between one and two years 80.5 68.8
Between two and three years 72.7 64.4
Between three and four years 59.4 55.1
Between four and five years 39.0 43.2
Between five and six years 26.9 28.4
Between six and seven years 18.7 19.3
Between seven and eight years 12.7 12.1
Between eight and nine years 10.7 5.3
Between nine and ten years 8.2 3.5
After ten years 9.0 3.5
Total contractual cash flows 419.0 374.8
ii. Amounts recognised in the consolidated income statement
Land and Equipment
Total
buildings £m
£m
£m
52 weeks ended 1 April 2022
Amortisation charge on right-of-use assets 66.4 3.5 69.9
Interest on lease liabilities 8.8 0.2 9.0
Expenses relating to short-term leases 6.8 - 6.8
Expenses relating to leases of low-value assets, excluding short-term leases of - 1.6 1.6
low-value assets
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
iii. Amounts recognised in the consolidated statement of cash flows
The total cash outflow for leases for the period ended 1 April 2022 was £85.0m (2021: £95.9m).
11. Prior Period Adjustment
During the preparation of the financial statements, a mapping error was identified relating to the reduction in the
Cycle to Work contract liability in respect of expected breakage. This reduction in the liability had in previous years
been mapped to Prepayments and Accrued Income in the financial statements rather than being mapped to the Cycle to Work
liability in Accruals and Deferred Income.
£12.0m was incorrectly included in Prepayments and Accrued Income as at the prior period end of 2 April 2021. The error
at the period end of 3 April 2020 is £8.2m.
To correct for this error, in the Consolidated Statement of Financial Position, Trade and other receivables at 2 April
2021 have been reduced by £12.0m with a corresponding adjustment to Trade and other payables. Within net cash from
operating activities in the Consolidated Statement of Cash Flows, Increase in trade and other receivables has increased
by £3.8m with a corresponding adjustment to Increase in trade and other payables.
In correcting this error, there is no impact on the Consolidated Income Statement or Net Assets.
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ISIN: GB00B012TP20
Category Code: ACS
TIDM: HFD
LEI Code: 54930086FKBWWJIOBI79
OAM Categories: 1.1. Annual financial and audit reports
Sequence No.: 168589
EQS News ID: 1376775
End of Announcement EQS News Service
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