TIDMHFD
RNS Number : 9897V
Halfords Group PLC
09 November 2017
9 November 2017
Halfords Group plc
Interim Results: Financial Year 2018
Strategic progress continues; full-year outlook unchanged
Halfords Group plc, the UK's leading retailer of motoring,
cycling and leisure products and services, as well as a leading
independent operator in garage servicing and auto repair, today
announces its interim results for the 26 weeks to 29 September 2017
("the period"). All numbers shown are before non-recurring items,
unless otherwise stated.
Group Financial Summary
H1 FY18 H1 FY17 change Like-for-Like
GBPm GBPm Revenue
("LFL")
Revenue 588.7 567.3 +3.8% +1.5%
---------------------------- -------- -------- -------- --------------
Retail 511.0 489.1 +4.5% +1.9%
---------------------------- -------- -------- -------- --------------
Autocentres 77.7 78.2 -0.6% -1.3%
---------------------------- -------- -------- -------- --------------
Gross Margin
---------------------------- -------- -------- --------
-182
Retail 45.7% 47.6% bps
---------------------------- -------- -------- --------
+270
Autocentres 67.7% 65.0% bps
---------------------------- -------- -------- --------
Underlying EBITDA* 54.9 57.1 -3.9%
---------------------------- -------- -------- --------
Underlying Profit Before
Tax* 36.8 40.8 -9.8%
---------------------------- -------- -------- --------
Underlying Basic Earnings
Per Share* 14.8p 16.6p -10.8%
---------------------------- -------- -------- --------
Profit Before Tax after
non-recurring items 36.6 39.1 -6.4%
---------------------------- -------- -------- --------
Basic Earnings Per Share
after non-recurring items 14.7p 15.9p -7.5%
---------------------------- -------- -------- --------
Interim Dividend Per Share 6.0p 5.83p +3.0%
---------------------------- -------- -------- --------
* Alternative performance measures are defined in the glossary
on page 15.
Steady revenue growth in challenging conditions
-- Total Group Revenue +3.8% and +1.5% LFL
-- Motoring +1.9% and Cycling +2.0% on a LFL basis, with total Cycling sales up 7.0%
-- Retail gross margin decline as expected, primarily due to the
adverse impact of FX year-on-year
-- Autocentres sales -1.3% LFL, lower as planned and previously
guided, with higher gross margin and EBIT
-- Service-related Retail sales up 19.3%, with c.2 million
in-store fitting and repair jobs performed
-- Group online sales +10.8% and +4.8% LFL
Good cash generation and profit in line with market
expectations
-- c.GBP15m additional cost of sales in the first half from the
weaker pound, representing the peak FX impact
-- FX mitigation plans implemented and working
-- Underlying Profit Before Tax of GBP36.8m, down GBP4.0m year-on-year
-- Free Cash Flow of GBP31.1m, up GBP6.9m on H1 last year
-- Net debt at GBP84.8m representing 0.8 times Underlying EBITDA
-- Interim dividend per share of 6.0p, up 3.0%
Strategic progress continues
-- Customer-to-transaction match rate of 54% in Retail (3% two years ago) and 67% across Group
-- New in-store motoring and cycling services launched in the period
-- Improved websites supporting good online sales growth, with
85% of Halfords.com orders collected in store
-- Colleague training in e-bikes, dash cams and electric vehicle maintenance
-- 40 stores refreshed in the latest format by the end of November
-- Colleague headsets introduced across the estate bringing customer and colleague benefits
-- Growing premium cycling credentials supported by strong
growth in Tredz, Cycle Republic and e-bikes
Full-year outlook unchanged
We continue to anticipate FY18 Group profit before tax to be in
line with current market expectations. All financial guidance for
the current financial year remains unchanged. As previously guided,
the depreciation of Sterling brings a c.GBP25m cost of goods
increase in FY18 of which c.GBP15m was in the first half. Our
mitigation plans are on track and we continue to anticipate that we
will recover the full impact over time. The FX impact reduces going
forward, and if Sterling remains at the current levels, we do not
anticipate further adverse year-on-year impact in FY19.
Jonny Mason, Chief Financial Officer & Interim Chief
Executive Officer, commented:
"We have delivered more improvements for our customers in this
first half, with new services for motorists and cyclists, provided
by trained, friendly, expert colleagues, and new ranges of great
products. It is pleasing to report positive sales growth for this
period, despite the poorer summer weather and the uncertainty in
the UK economy. We are also pleased with our profit performance in
the half, as we offset a large part of the c.GBP15m increase in
costs that resulted from the impact of the weaker pound. Looking
ahead, we have strong plans both in-store and online for the Cyber,
Christmas and winter peaks."
Enquiries
+44 (0) 1527
Investors & Analysts (Halfords) 513 113
Jonny Mason, Chief Financial Officer
& Interim Chief Executive Officer
Adam Phillips, Corporate Finance Director
+44 (0) 207
Teneo Blue Rubicon 420 3198
Ben Foster, Haya Herbert-Burns, Shona Buchanan
Financial Guidance reference
For ease of navigation, the following lists the references to
financial guidance contained in this statement:
Description Page reference
----------------------------------------- ---------------
FY18 Group outlook Page 8
----------------------------------------- ---------------
Medium-term financial targets Page 8
----------------------------------------- ---------------
FY18 Group capital expenditure Page 13
----------------------------------------- ---------------
FY18 Group depreciation and amortisation Page 13
----------------------------------------- ---------------
FY18 Group tax rate Page 13
----------------------------------------- ---------------
Results Presentation
A presentation for analysts and investors will be held today
starting at 9.00am at Investec, 2 Gresham Street, London, EC2V 7QP.
Attendance is by invitation only. A live webcast of the
presentation will be available at www.halfordscompany.com.
Forthcoming Newsflow
On 18 January 2018 we will report on trading for the 15 weeks to
12 January 2018, which includes the peak Christmas trading
period.
Notes to Editors
www.halfords.com www.halfordscompany.com www.halfordsautocentres.com
www.cyclerepublic.com www.boardmanbikes.com www.tredz.co.uk
Halfords is the UK's leading retailer of motoring, cycling and
leisure products and services, as well as one of the UK's leading
independent operators in vehicle servicing, maintenance and
repairs. Customers shop at 460 Halfords stores and 18 Cycle
Republic shops in the UK and Republic of Ireland and at
halfords.com or cyclerepublic.com for pick-up at their local store
or direct home delivery. Customers can also shop at three Tredz
stores and a Giant store in South Wales as well as online at
tredz.co.uk and wheelies.co.uk for cycling products and direct home
delivery. Halfords Autocentres operates from 315 sites nationally
and offers motorists high-quality MOTs, repairs and car servicing
at affordable prices.
Halfords employs approximately 10,000 colleagues. The Retail
offering encompasses significant ranges in car parts, cycling
products, in-car technology, child seats, roof boxes and camping
equipment. Halfords' key own cycling brands in-stores include
Apollo, Carrera, Boardman, Pendleton and Wiggins, augmented by a
range of other brands of cycles and accessories, including Voodoo
and Raleigh and, through Tredz, a wide range of premium brands
including Giant, Specialized, Cannondale, Cube and Scott. In
Motoring, the Halfords Essentials and Halfords Advanced ranges are
sold alongside brands such as General Electric, Bosch, Garmin,
TomTom, Karcher, Thule and Autoglym. Halfords offers more than 70
in-store services including a fitting service called 'wefit' for
car parts, child seats, satellite navigation and in-car
entertainment systems, and a 'werepair' service for cycles.
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
Summary of Group Results
Group sales of GBP588.7m were up 3.8%, with Group gross profit
up by 1.0% and gross margin of 48.6% (H1 FY17: 50.0%). Total
operating costs rose by 2.6% reflecting continued investments in
people and our infrastructure, in line with the Moving Up A Gear
strategy. Group earnings before finance costs, tax and
non-recurring items ("Underlying EBIT") were GBP38.3m, which
compares with GBP41.8m in the prior period.
Earnings before non-recurring items, finance costs, depreciation
and amortisation ("Underlying EBITDA") were down 3.9% to GBP54.9m.
The increase in cost of goods associated with the depreciation in
Sterling was c.GBP15m pre-mitgation, which was significantly more
than the year on year reduction in profit. Underlying Profit before
tax and non-recurring items was GBP36.8m and underlying earnings
per share were 14.8p, down 9.8% and 10.8% respectively.
Cash generation was strong, with Free Cash Flow of GBP31.1m up
GBP6.9m on H1 last year. Net debt of GBP84.8m at the end of the
period was broadly flat against the prior year end, despite the
payments of c.GBP7m of deferred consideration in respect of last
year's M&A transactions and the GBP23.0m final dividend in
August. Net debt:Underlying EBITDA at the period end was 0.8:1 on a
rolling 12 month basis.
The Board has approved an interim ordinary dividend of 6.0 pence
per share, an increase of 3.0% (FY17 interim ordinary dividend:
5.83 pence, FY17 full-year ordinary dividend: 17.51 pence). This
will be paid on 19 January 2018 to shareholders on the register at
the close of business on 8 December 2017.
Market Update
Halfords principally operates in two broad markets: motoring and
cycling. In the first half, c.65% of Group revenues were generated
from motoring and c.35% of Group revenues generated from cycling.
Both markets are growing, over time, and are fragmented; evidenced
by the large proportion of both markets that are serviced by
independents. We are well placed to increase our share in these
markets given our strong service proposition, technical expertise
and geographic footprint.
In Motoring, the average age of cars has increased from 6.7
years in 2006 to 8.0 years in 2016. The recent significant decline
in new car registrations, evidenced by SMMT data showing a decline
of -4.6% for the year to the end of October and -9.3% in the key
September period, is likely to lead to used cars being held onto
for even longer. This is a positive trend for Halfords given that
we predominantly support cars that are over three years old, what
we call the "second life of the car". Cars are also becoming more
complex and customers increasingly need support for small as well
as large maintenance jobs. The fast growth, albeit from a very low
base, of electric and hybrid vehicles accelerates the on-going
trend from 'do it yourself' to 'do it for me'. We continue to
invest in equipment and in our colleagues to remain at the
forefront of technological changes, to give us a competitive
advantage in a fragmented market of independent operators.
In Cycling, the majority of the bikes and components for the UK
market are sourced from US dollar denominated markets. This year
bike prices in the market have risen significantly as a result of
the depreciation in Sterling. We anticipate that this will lead,
temporarily, to lower bike volumes, but that volumes will recover
in line with their longer term growth trends. This trend was
observed over the last significant depreciation of Sterling, in
2008-9, and is also evidenced by a fall in the number of bikes
imported into the UK; a double-digit percentage decline in 2016 and
a further anticipated decline in 2017 to date. Halfords is well
placed to benefit from this short term volatility, with a secure
supply of largely own brand products, good logistics facilities and
a strong balance sheet. We believe that we continue to gain share
in a fragmented market, evidenced by our strong sales growth whilst
competitors are closing stores.
We continue to see good medium-term growth prospects for the
cycling market in both volume and value. Health, wellbeing and
environmental considerations have helped to drive interest in
cycling and will continue to do so, supported by public authority
investment in infrastructure. Participation levels in cycling in
the UK are still lower than in many other European countries.
Furthermore, e-bikes are in their infancy in the UK and represent
only a small proportion of bike sales, whereas in other European
countries they are more established.
In line with our previous expectations, we anticipate the
Motoring and Cycling markets in which we operate to continue to
grow at an average rate of 2-3% and 3-5% per annum respectively
over the medium-term and we continue to aim to better those growth
rates.
Retail Operational Review
In Retail, sales were GBP511.0m, up 4.5% on the previous year
and +1.9% on an LFL basis. Motoring LFL sales grew by 1.9% in the
first half. Sales of Car Maintenance products and services grew by
2.2% LFL, driven by good growth in sales of car parts and
associated fitting services. 37% of the bulbs, blades and batteries
("3B's") that we sold were fitted to customers' cars by our
colleagues, up over 200 basis points, reflecting the increasing
relevance of our services proposition to the growing proportion of
'do-it-for-me' customers. We also saw good growth in our hand tools
sales, supported by the credentials of our 'Halfords Advanced'
ranges.
Car Enhancement LFL revenues decreased by -2.0%, reflecting the
continued overall market decline in Sat Navs. Despite this, we have
gained share year-on-year and remain well placed to continue to do
so. Sat Nav sales now only represent around 3% of Retail sales,
having been circa 20% at their peak a number of years ago. Dash cam
sales grew strongly in the period, as we continued to invest in
colleague training to support our dash cam fitting service across
the Retail estate; helping us to remain the market leader in this
growing category.
Travel Solutions LFL revenues increased 7.1% on a LFL basis, as
our plans to support customers for their 'staycation' journeys
performed well. Sales of roof bars, boxes and cycle carriers were
strong and we achieved our highest ever camping sales for a half
year. Child car seat sales were slightly down year-on-year, as we
annualised the legislative changes last year.
Cycling revenues increased by 2.0% on a LFL basis, with good
weather in April offset by poor weather in the August peak period
and in September. We did not repeat the deep promotion of last
year, which drove strong volume growth in 2016, but the volume
decline for the first half of this year was more than offset by the
increase in average selling prices.
Sales of electric bikes (or 'e-bikes') were particularly strong,
reflecting the popularity of our new own-brand ranges launched at
the beginning of the year. E-bikes are now available across almost
the entire Retail estate, and relevant colleague training
rolled-out in the half means that our trusted, expert colleagues
are able to advise on the features and benefits for the customer.
Parts, Accessories and Clothing ("PACs") sales continued to grow on
a LFL basis.
Tredz, which was acquired in May 2016, continued to perform
strongly under Group ownership, delivering double-digit LFL growth.
Cycle Republic also delivered double-digit LFL growth and we opened
two new stores, in Cheltenham and Reading, growing our presence
whilst other competitors are closing stores. Total cycling sales
increased by 7.0% in the period.
Service-related Retail sales, which consist of the revenue
generated from paid in-store fitting and repair services plus the
associated product attached to the transaction, grew by 19.3%, with
particularly strong performances from 3Bs fitting, dash cam fitting
and cycle repair services. This is a reflection of our continued
investment and focus in both growing awareness and improving our
service proposition by enhancing our suite of services.
Retail online sales were up 8.9% in the period. The importance
of our store network and service overlay continued to be
highlighted by the strength of click & collect, with around 85%
of Halfords Retail online orders picked up in store. This high
proportion of click and collect continues to differentiate us from
other retailers; our online business, instead of cannibalising our
bricks and mortar operation, has driven footfall into our stores,
with over 80% of customers wanting advice or fitting service with
their purchase.
The Retail gross margin declined by 182bps in the half as a
result of the depreciation in Sterling. This is explained more
fully in the CFO report. Importantly, our plans to mitigate this FX
impact have been implemented and are on track, with significant
positive benefit achieved in the first half.
Retail Strategic Progress
Our goal is to be customers' first choice for their "Life on the
Move" which we aim to achieve through a strategy based on the
following five pillars, for which we highlight progress on
below:
1. Putting Customers in the Driving Seat: investing in customer
data and insight capabilities to maximise the lifetime customer
value.
We have been rapidly improving our customer data knowledge and
capability, gathering c.6.5m email addresses within our Retail
stores over the last 24 months. Through a combination of eReceipts,
tokenisation and improved data matching across 21 different data
sources in the Group, we can now match 54% of transactions to
customers in Retail. This is up from 3% as of November 2015. Across
the Group, we can now match 67% of transactions to customers.
We are combining this data with over 10,000 responses every
week, directly from customers via our "Give us a steer survey", as
well as detailed brand research, to give us a more complete view of
our customers, so that we can become more relevant in their lives.
We are also testing personalised web experiences, such that when a
customer clicks through to our website from an email, they will see
different products according to their browse and purchase
preferences.
Communicating in a more relevant and targeted way with the right
product and at the right time is driving increased frequency of
interaction between us and our customers. As a result of our work
in this area, in the last six months we have seen an incremental
1.5m visits to the website, driving additional revenue.
We now send over 25 different automated trigger emails to our
opted-in customer base. These are personal to each customer and are
based both on past online and offline behaviour, as well as
predicted future actions. We are able to infer, through behaviour
and purchasing data, a number of milestones in a customer's
lifetime journey with us. Good examples are child car seats or
bikes. We are still early in our journey, but we will continue to
focus on this area going forward.
2. Service in our DNA: embedding the focus on customer service
We now have a menu of over 70 in-store services across motoring
and cycling, which are key to our uniqueness as a service-led,
specialist retailer. We introduced three new motoring services in
the half: 'ad-blue top up', 'car key fob battery repair' and 'fuse
fitting', which have been well received by customers alongside our
established 3B's offering. We also introduced new cycling services
in the half, such as the 'electric bike care plan', to complement
our extensive, existing cycle service and repair proposition.
We remained focused on growing the important metric of
service-related Retail sales, which we aim to grow faster than
overall sales. In the first half we achieved growth of 19.3% in
this metric. To put the performance into context, we completed
nearly 2 million in-store fitting and repair jobs in the half.
This included almost 1.4 million motoring-related jobs, (up 6%
on last year), representing approximately 260,000 fitting hours in
the car park. In Cycling, we performed almost 0.6 million service
and repair jobs, replacing over 140,000 inner tubes (up 6% on last
year), over 21,000 chains (up 21% on last year) and selling over
3,500 electric bike care plans.
Based on our definition of the product sale and associated
fitting income, our service-related Retail sales represent
approximately 10% of total Retail sales, but a greater proportion
of Retail gross profit (c.15%). If we consider a wider definition
to include other forms of service, whether that be the building and
subsequent comprehensive selling process of a Boardman bike, or the
sale of a child car seat after a free fitting demonstration, over
50% of Group sales have a clearly identifiable element of service,
above and beyond simple interaction with a customer.
This is also further evidenced by the fact that we know around
80% of our customers require some form of service or advice with
their purchase.
3. Building on our Uniqueness: exclusive products, relevant innovation and unique partnerships
Exclusive products, relevant innovation and unique partnerships
all strengthen our clear differentiation as a retailer. A few
examples of new initiatives, services and products include:
-- Commenced a trial of a headlight restoration service in a number of our Retail stores;
-- Following the investment in Tyresonthedrive.com, we launched
a trial of 'Halfords Mobile Expert' to deliver mobile motoring
services;
-- Awarded a recommendation from 'Cycling UK' for our service
and repair offering, supporting the investment that we have made in
our colleague training;
-- Launched a number of new electric bikes under the Carrera and Pendleton own-brands;
-- Supported customers with their summer 'staycations' through our own-brand camping products;
-- Introduced a new wireless digital reversing dash cam; and
-- Launched a new brand campaign 'ready for anything' in
preparation for the upcoming peak winter trading season.
4. Better Shopping Experience: a seamless customer experience, online as well as in store
An improvement in service delivered in-shop has been enabled by
equipping all of our colleagues with headsets. The headsets enable
any colleague in the shop to be as knowledgeable as the most
experienced colleague in the shop by virtue of a short, immediate
conversation by head-set. There are also significant improvements
in efficiency, less looking around for people with keys, or for
parts or tools for fits or services.
By the end of November, we will have refreshed 40 stores in the
latest format. Early signs continue to be encouraging, both in
terms of customer response and sales uplifts; the latter running at
higher levels than achieved in the early days of the previous store
refresh iteration. We have also now developed and launched both a
"light" and "High Street" version, which we are testing as a
potential blueprint for those stores that financially do not
justify a full refresh.
We have opened three new Cycle Republic stores this year and now
have 18 fully operational. We are encouraged by the continued
double-digit LFL sales growth and also the success of the
transactional website since launch in August last year (which
contributed c.15% of total Cycle Republic sales in the first half).
We have an exciting pipeline of potential locations, as we look to
roll out more of these stores. Tredz also continued to perform
well.
We made upgrades to our websites in the half, focusing on making
the customer journey more seamless on mobile devices. These
improvements contributed to a 22% increase in the total value of
orders made through mobile devices, year-on-year.
5. Fit for the Future Infrastructure: moving from fixing the
basics to improving efficiency and fulfillment
Our distribution infrastructure is stable and well-embedded,
after a period of disruption in previous years as we transitioned
to the current model. The third distribution centre, based in
Daventry, is also now fully operational and is delivering benefits
from a storage perspective.
During the period we have focused on improving the delivery
process from our distribution centres into stores, to make these
increasingly 'store friendly' for colleagues. For example, by
optimising the way in which products are packed within roll-cages,
prior to being delivered to store. We have also implemented
improvements to our customer fulfilment capabilities, through the
launch of next day delivery to home and to store for orders placed
before 8pm.
The i-Serve project to replace our till hardware and software
progressed well in the period. As set-out previously, this is a
major piece of IT change. We have successfully piloted elements of
the project in two stores and are on target for rollout to all
stores next year.
Autocentres
Total Autocentres revenues were down 0.6% and, on a LFL basis,
down 1.3%. As previously guided, the decline in LFL sales was
driven by the decision to exit low-margin affiliate tyre business,
and instead to focus on direct tyre sales and service, maintenance
and repair work. As a result of this decision, gross margin and
EBIT has increased year-on-year.
We opened two Autocentres in the period and refreshed four
centres within the existing estate. Online-booking revenues grew
16.1% in the half, contributing c.37% of total Autocentre sales.
Following on from the new technician pay grading system implemented
in FY17, colleague turnover has reduced by approximately 11
percentage points.
We also continued to train our technicians to be proficient in
electric and hybrid servicing and repair; over two-thirds of our
garages now have this capability. This is a significant development
and represents a competitive advantage over the largely fragmented
competition.
As part of our review of Autocentres, which was announced
previously, we have identified and are beginning to implement some
clear measures of best practice within the garages that are
underperforming across the estate. Results from the review and
these new measures will be disclosed in May 2018 in our financial
results for the full year.
Financial targets and capital allocation priorities
We reaffirm our four key financial targets:
1. Grow sales faster than the markets in which we operate. We
continue to anticipate that the motoring market will grow at an
average rate of 2-3% per annum and the cycling market at an average
rate of 3-5% per annum over the medium term. We will aim to beat
those growth rates.
2. Group EBITDA % margin roughly flat on FY16, once the impact
of adverse FX movements has been fully mitigated.
3. Grow the dividend per share every year, with coverage of
around 2 times on average over time. Cover is reduced until the
impact of adverse FX movements has been fully mitigated.
4. A debt target of 1.0x Underlying EBITDA with a range of up to
1.5x to allow for appropriate M&A.
We will maintain a strong and prudent balance sheet, and we will
use our debt target as a guide for that. Thereafter our priorities
for use of cash will be firstly capital investment to grow the
business in line with previous guidance, secondly to pay and grow
the ordinary dividend every year, thirdly for any appropriate
M&A opportunities which may arise and thereafter any excess
cash would be available for additional distribution to
shareholders.
Summary and outlook
The first half trading performance was good with steady sales
growth in Retail across both Motoring and Cycling. Our focus on and
investment in services was reflected in the strong growth of
service-related Retail sales.
We continue to make good progress in delivering the Moving Up A
Gear strategy and momentum has been maintained as we transition
from Jill McDonald, who left in September, to Graham Stapleton, the
incoming CEO joining in January.
As we have previously explained, the weaker pound increases our
cost of sales; the impact was circa GBP15m in the first half. Our
mitigation plans have been implemented and are on track and taking
effect, helping to reduce the overall year-on-year decrease in
Underlying Profit Before Tax to GBP4.0m. Furthermore, the FX impact
begins to recede from here on, assuming no further depreciation in
the value of the pound. We continue to anticipate that we will
fully recover the FX impact over time.
The underlying business performance was good and we remain
confident in the long-term prospects for the Group. We continue to
anticipate FY18 Profit Before Tax to be in line with current market
expectations.
On behalf of the Board, I would like to thank all colleagues for
their fantastic contribution, support and commitment.
Jonny Mason
Chief Financial Officer & Interim Chief Executive Officer,
November 2017
Halfords Group plc's LEI code is 54930086FKBWWJIOB179
Chief Financial Officer's Report
Halfords Group plc ("the Group" or "Group")
Reportable Segments
Halfords Group operates through two reportable business
segments:
-- Retail, operating in both the UK and Republic of Ireland; and
-- Autocentres, operating solely in the UK.
All references to Retail represent the consolidation of the
Halfords ("Halfords Retail") and Cycle Republic businesses,
Boardman Bikes Limited and Boardman International Limited
(together, "Boardman Bikes"), and Performance Cycling Limited
(together, "Tredz and Wheelies") trading entities. All references
to Group represent the consolidation of the Retail and Autocentres
segments.
The "H1 FY18" accounting period represents trading for the 26
weeks to 29 September 2017 ("the period"). The comparative period
"H1 FY17" represents trading for the 26 weeks to 30 September 2016
("the prior period").
Group Financial Results
H1 FY18 H1 FY17
GBPm GBPm Change
Group Revenue 588.7 567.3 +3.8%
Group Gross Profit 286.3 283.4 +1.0%
Underlying EBIT* 38.3 41.8 -8.4%
Underlying EBITDA* 54.9 57.1 -3.9%
Net Finance Costs before non-recurring items (1.5) (1.0) +50.0%
Underlying Profit Before Tax* 36.8 40.8 -9.8%
----------------------------------------------- -------- -------- -------
Profit Before Tax, after non-recurring items 36.6 39.1 -6.4%
Underlying Basic Earnings per Share* 14.8p 16.6p -10.8%
* Alternative performance measures are defined in the glossary
on page 15.
Group revenue in H1 FY18, at GBP588.7m, was up 3.8% and
comprised Retail revenue of GBP511.0m and Autocentres revenue of
GBP77.7m. This compared to H1 FY17 Group revenue of GBP567.3m,
which comprised Retail revenue of GBP489.1m and Autocentres revenue
of GBP78.2m. Group gross profit at GBP286.3 (H1 FY17: GBP283.4m)
represented 48.6% of Group revenue (H1 FY17: 50.0%), reflecting a
decrease in the Retail gross margin of 182 basis points ("bps") to
45.7% and increase in the Autocentres gross margin of 270 bps to
67.7%.
Total operating costs before non-recurring items increased to
GBP248.0m (H1 FY17: GBP241.6m) of which Retail comprised GBP195.8m
(H1 FY17: GBP190.8m), Autocentres GBP51.1m (H1 FY17: GBP49.9m) and
unallocated costs GBP1.1m (H1 FY17: GBP0.9m). 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, and
Tredz and Wheelies in May 2016, which arise on consolidation of the
Group.
Group Underlying EBITDA decreased 3.9% to GBP54.9m (H1 FY17:
GBP57.1m), whilst net finance costs were GBP1.5m (H1 FY17:
GBP1.0m).
Underlying Profit Before Tax for the year was down 9.8% at
GBP36.8m (H1 FY17: GBP40.8m). Net non-recurring items of GBP0.2m in
the period (H1 FY17: GBP1.7m) comprised GBP0.5m cost from the
review of the operational model of Autocentres and a GBP0.3m credit
from the release of the remaining portion of interest charge due on
the contingent consideration for Tredz. Prior year costs related
primarily to the acquisition of Tredz and Wheelies in May 2016.
After non-recurring items, Group Profit Before Tax was GBP36.6m (H1
FY17: GBP39.1m).
Retail
H1 FY18 H1 FY17
GBPm GBPm Change
Revenue 511.0 489.1 +4.5%
Gross Profit 233.7 232.6 +0.5%
-182
Gross Margin 45.7% 47.6% bps
Operating Costs (195.8) (190.8) +2.6%
Underlying EBIT* 37.9 41.8 -9.3%
Non-recurring items (0.5) (1.5) -
--------------------------- -------- -------- -------
EBIT after non-recurring
items 37.4 40.3 -7.2%
--------------------------- -------- -------- -------
Underlying EBITDA* 50.9 53.7 -5.2%
--------------------------- -------- -------- -------
* Alternative performance measures are defined in the glossary
on page 15.
Revenue for the Retail business of GBP511.0m reflected, on a
constant-currency basis, a like-for-like sales increase of 1.9%.
Non LFL revenue in the period included sales from the Tredz and
Wheelies businesses prior to the annualisation of the acquisition
date, alongside the contribution from Cycle Republic stores that
have been open for less than 12 months.
Motoring LFL sales grew by 1.9% in the first half. LFL sales of
Car Maintenance products and services grew by 2.2%, driven by good
growth in sales of car parts and associated fitting services, as
well as hand tools. Travel Solutions revenues increased 7.1% on a
LFL basis, supported by strong sales of 'staycation' products and
services. Car Enhancement LFL revenues decreased by 2.0%,
reflecting the continued overall market decline in Sat Navs.
Partially offsetting this trend, Dash cam product sales and fitting
grew strongly over the period.
Cycling sales increased by 2.0% on a LFL basis and by 7.0% in
total. We did not repeat the deep promotion of last year, which
drove strong volume growth in 2016, but the volume decline for the
first half of this year was more than offset by the increase in
average selling prices. Cycle Republic and Tredz continued to
deliver strong LFL growth.
Like-for-like revenues and total sales revenue mix for the
Retail business are split by category below:
H1 FY18 H1 FY18 H1 FY17
LFL (%) Total sales mix (%) Total sales mix (%)
Motoring +1.9 58.3 59.6
Car Maintenance +2.2 26.3 26.7
Car Enhancement -2.0 18.2 19.1
Travel Solutions +7.1 13.8 13.8
Cycling +2.0 41.7 40.4
Total +1.9 100.0 100.0
Gross profit for the Retail business at GBP233.7m (H1 FY17:
GBP232.6m) represented 45.7% of sales, 182bps down on the prior
year (H1 FY17: 47.6%). This movement is explained as follows:
Gross impact of the weaker pound (pre-mitigation) -300 bps
---------------------------------------------------------------------------------------------------- ---------
First time inclusion of Tredz and Wheelies for the period prior to annualisation of the acquisition -35 bps
in May 2016
---------------------------------------------------------------------------------------------------- ---------
The mix effect of the margin-dilutive impact of faster cycling sales growth, partially offset -20 bps
by the margin-accretive impact of Sat Nav sales decline and service sales growth
---------------------------------------------------------------------------------------------------- ---------
Mitigation of FX impact and other +173 bps
---------------------------------------------------------------------------------------------------- ---------
Total Retail gross margin movement -182 bps
---------------------------------------------------------------------------------------------------- ---------
In the period, the impact of the depreciation of the pound
against the US dollar, pre-mitigation, reached its highest level of
any half year period since the EU referendum and will recede in the
second half, as demonstrated by the table below.
If exchange rates remain at around current levels, we do not
anticipate further adverse impact in FY19.
FY17 full year H1 FY18 H2 FY18
(estimate*)
$ $ $
------------------------------------------------- --------------- -------- -------------
Average USD:GBP rate reflected in cost of sales $1.47 $1.30 $1.28
------------------------------------------------- --------------- -------- -------------
Year-on-year movement in rate (0.12) (0.21) (0.14)
------------------------------------------------- --------------- -------- -------------
* The estimated rate for H2 is based on having hedged over 90%
of requirements as at end of October 2017.
Operating Costs before non-recurring items were GBP195.8m (H1
FY17: GBP190.8m). The breakdown is set out below:
H1 FY18 H1 FY17* Change
GBPm GBPm
Store Colleagues 58.7 56.4 +4.1%
Store Occupancy 71.4 69.4 +2.9%
Warehouse & Distribution 25.3 24.3 +4.1%
Support Costs 40.4 40.7 -0.7%
-------------------------- -------- --------- -------
Total Operating
Costs
before non-recurring
items 195.8 190.8 +2.6%
-------------------------- -------- --------- -------
* The prior year costs have been restated from those disclosed
in the prior year, in order to allocate the costs of the Tredz
& Wheelies business to the respective cost categories.
Store Colleague costs increased by 4.1% to GBP58.7m and
reflected the inflation in the living and minimum wage rates, the
inclusion of Tredz & Wheelies' costs and the additional Cycle
Republic stores.
Store Occupancy costs increased by 2.9%, primarily as a result
of reduced levels of exit premiums received in the period and the
additional rent and rates costs associated with new Cycle Republic
stores. The combined rent and rates cost of like-for-like stores
was broadly flat year-on-year.
Warehouse & Distribution costs increased by 4.1%, driven by
a combination of wage inflation, the inclusion of Tredz and
Wheelies' costs and an increase in the mix of bulky items (such as
roof boxes and tents) flowing through our supply chain as we met
the increased demand for 'staycation' products and services.
Support Costs decreased by 0.7%, reflecting lower overall
marketing spend, higher advertising contributions from suppliers,
and lower share option charges.
Autocentres
H1 FY18 H1 FY17 Change
GBPm GBPm
Revenue 77.7 78.2 -0.6%
Gross Profit 52.6 50.8 +3.5%
Gross Margin 67.7% 65.0% +270bps
Operating
Costs (51.1) (49.9) +2.4%
--------------- -------- -------- --------
Underlying
EBIT* 1.5 0.9 +66.7%
--------------- -------- -------- --------
Underlying
EBITDA* 4.0 3.4 +17.6%
--------------- -------- -------- --------
* Alternative performance measures are defined in the glossary
on page 15.
There were no non-recurring items related to the Autocentres
business in either period presented.
Autocentres generated total revenues of GBP77.7m (H1 FY17:
GBP78.2m), a decrease of -0.6% on the prior period with a LFL
decrease of -1.3%.
This sales performance reflected the successful transition away
from low-margin third party affiliate tyre sales, towards direct
tyre sales, and service, maintenance and repair work, which
resulted in an improvement in gross margin.
Gross profit at GBP52.6m (H1 FY17: GBP50.8m) represented a gross
margin of 67.7%; an increase of 270 bps on the prior period.
Autocentres' EBITDA of GBP4.0m (H1 FY17: GBP3.4m), was 17.6%
higher than H1 FY17, and EBIT was GBP0.6m higher than H1 FY17 at
GBP1.5m (H1 FY17: GBP0.9m); both reflecting the change in the sales
mix explained above.
Portfolio Management
The Retail store portfolio at 29 September 2017 comprised 481
stores (end of H1 FY17: 472; end of FY17: 479).
The following table outlines the changes in the Retail store
portfolio over the 26 week period:
Number Stores
--------------------- ------- --------------------------------------------------------------------------------------
Relocations 3 Gateshead, Leamington Spa, Hertford
--------------------- ------- --------------------------------------------------------------------------------------
Leases re-negotiated 14 Arnold, Andover, Bangor, Bath, Berwick, Beverley, Chester (South), Grimsby, Kendal,
Livingstone,
Poole, Reading, Sittingbourne, Tallaght
--------------------- ------- --------------------------------------------------------------------------------------
Rightsized 1 Castle Bromwich
--------------------- ------- --------------------------------------------------------------------------------------
Openings 2 Reading, Cheltenham (both Cycle Republic)
--------------------- ------- --------------------------------------------------------------------------------------
Closed 0 -
--------------------- ------- --------------------------------------------------------------------------------------
Two Autocentres were opened in the period, taking the total
number of Autocentre locations to 315 as at 29 September 2017 (end
of H1 FY17: 311; end of FY17: 313).
With the exception of eight long leasehold and two freehold
properties within Autocentres, the Group's operating sites are
occupied under operating leases, the majority of which are on
standard lease terms, typically with a 5 to 15-year term at
inception and with an average lease length of c.7 years.
Management continues to anticipate opening a total of around 5
Cycle Republic stores over the full year.
Net Non-Recurring items
The following table outlines the components of the non-recurring
items recognised in the period:
H1 FY18 H1 FY17
GBPm GBPm
Operational review 0.5 -
Acquisition related fees - 1.2
Operating lease obligation - 0.3
---------------------------------------------- -------- --------
Net non-recurring operating costs 0.5 1.5
---------------------------------------------- -------- --------
Acquisition related interest (credit)/charge (0.3) 0.2
Net non-recurring items 0.2 1.7
---------------------------------------------- -------- --------
Non-recurring items in H1 FY18 related to the review of the
operating model of the Autocentres business. In addition there was
a GBP0.3m credit from the release of the remaining portion of
interest charge due on the contingent consideration for Tredz,
which was paid in May 2017.
Finance Expense
The net finance expense (before non-recurring items) for the
year was GBP1.5m (H1 FY17: GBP1.0m), with the increase reflecting
the higher average net debt as we purposefully move towards our
previously guided debt target.
Taxation
The taxation charge on profit for the financial period was
GBP7.4m (H1 FY17: GBP8.0m including a GBP0.3m credit in respect of
tax on non-recurring items). The effective tax rate of 20.3% (H1
FY17: 20.5%) differs from the UK corporation tax rate (19%)
principally due to non-deductible depreciation charged on capital
expenditure, overseas tax rates and the impact of share options
accounting.
Management's anticipation of an FY18 effective tax rate of c.20%
remains unchanged.
Earnings Per Share ("EPS")
Underlying Basic EPS was 14.8 pence and after non-recurring
items 14.7 pence (H1 FY17: 16.6 pence, 15.9 pence after
non-recurring items), a 10.8% and 7.5% decrease on the prior
period. Basic weighted-average shares in issue during the period
were 197.0m (H1 FY17: 195.3m).
Dividend ("DPS")
The Board has approved an interim dividend of 6.0 pence per
share (H1 FY17: 5.83 pence), an increase of 3.0% on the prior
period. This will be paid on 19 January 2018 to shareholders on the
register at the close of business on 8 December 2017.
We continue to target coverage of around 2 times on average over
time. However, the impact of adverse FX movements will reduce cover
initially until fully mitigated, which will take some time.
Capital Expenditure
Capital investment in the period totalled GBP16.8m (H1 FY17:
GBP15.3m) comprising GBP14.4m in Retail and GBP2.4m in
Autocentres.
Within Retail, GBP5.3m (H1 FY17: GBP6.7m) was invested in
stores, including store relocations and refreshes, and the opening
of two Cycle Republic stores. Additional investments in Retail
infrastructure included a GBP6.9m investment in IT systems,
including development of the i-Serve till hardware and software
upgrade. The balance of GBP2.2m was invested in warehousing and
logistics upgrades, alongside Tredz & Wheelies infrastructure
improvements.
The GBP2.4m (H1 FY17: GBP1.6m) capital expenditure in
Autocentres principally related to the replacement of garage
equipment and replacement of fixtures and fittings.
On a cash basis, total capital expenditure in the period was
GBP14.8m (H1 FY17: GBP15.8m). Management continues to anticipate
total Group capital expenditure of c.GBP40m in FY18 and a Group
depreciation and amortisation charge of c.GBP33m (prior to the
c.GBP2m in respect of amortisation of intangible assets arising
upon consolidation).
Inventories
Group inventory held as at the period end was GBP206.0m (H1
FY17: GBP176.6m). Retail inventory increased to GBP204.3m (H1 FY17:
GBP175.4m) and includes GBP7.1m (H1 FY17: GBP5.7m) held by Tredz
and Wheelies. The principal reasons for the increase are the
depreciation of Sterling, which has increased the cost of imported
products, the timing of stock in transit, and the comparison
against a lower cycling stock position last half year, following
the promotion during the summer of that year.
Autocentres' inventory was GBP1.7m (H1 FY17: GBP1.4m). The
Autocentres business model is such that only modest levels of
inventory are held within the centres, with most parts being
acquired on an as-needed basis.
Cashflow and Borrowings
Cash generated from operating activities during the period was
GBP57.7m (H1 FY17: GBP48.0m). After acquisitions, taxation, capital
expenditure and net finance costs, free cashflow of GBP31.1m (H1
FY17: GBP24.2m) was generated in the period. Group net debt was
GBP84.8m (H1 FY17: GBP64.8m), with the Underlying EBITDA ratio at
0.8:1.
Brexit
As we have previously explained, the decision of the UK to leave
the European Union ("Brexit") presents significant uncertainties to
the Group as a result of the impact on the wider UK economy. We
have previously set out the main areas in which we considered
Brexit was likely to impact the Group. We reaffirm and update our
assessment of these below:
1) Impact on exchange rates. The Group buys a significant
proportion of its goods in US dollars; between $250m and $300m a
year. At current exchange rates the total FX headwind pre
mitigation is around GBP40m of annual cost inflation compared to
the FY16 average rate flowing through cost of sales of $1.60. Our
hedging programme means that this phases into our P&L roughly
as follows: circa GBP14m in FY17 and a further circa GBP25m in
FY18. At current exchange rates we do not anticipate any further FX
headwind in FY19. Good progress is being made on FX mitigation,
through supplier negotiations, operational efficiencies and
pricing. The majority of our US dollar sourcing is for cycling
products and bike prices have risen across the cycling market, both
from suppliers into retailers and then onto customers. We have also
increased some of our bike prices, but we continue to look to
maintain good value against the competition. Our bike volumes have
declined, but this has been more than offset by the increase in
average selling prices. We continue to anticipate that we will
fully recover the FX impact over time.
2) Prolonged uncertainty over exit terms and continued weakness
in Sterling could lead to a slowdown in the UK economy, and
consequent loss of consumer confidence, impacting trading
conditions for the Group. However, Halfords has strong positions in
fragmented Motoring and Cycling markets, and a service-led offer
that differentiates us from our competitors, physical and online.
Much of our sales are in needs-based categories that are more
resilient to macro-economic cycles and our discretionary
categories, such as cycling, camping and travel solutions, could
benefit from an increase in the number of people choosing to stay
at home rather than holidaying abroad; a trend that we observed in
2009.
Principal Risks and Uncertainties
The Board considers risk assessment, identification of
mitigating actions and internal control to be fundamental to
achieving Halfords' strategic corporate objectives. In the Annual
Report & Accounts the Board sets out what it considers to be
the principal commercial and financial risks to achieving the
Group's objectives. The main areas of potential risk and
uncertainty in the balance of the financial year are described in
the Strategic Report on page 42 of the 2017 Annual Report and
Accounts. These include:
-- Economic risks; including market risks
-- Business strategy risks
-- Competitive risks
-- Compliance
-- Supply chain disruption
-- Product and service quality
-- Information technology systems and infrastructure
-- Dependence on key management personnel
Specific risks associated with performance include Christmas
trading as well as weather-sensitive sales, particularly within the
Car Maintenance and Cycling categories in the Retail business.
Jonny Mason
Chief Financial Officer & Interim Chief Executive Officer,
November 2017
Halfords Group plc's LEI code is 54930086FKBWWJIOB179
Glossary of Alternative Performance Measures
In the reporting of financial information, the Directors have
adopted various Alternative Performance Measures ("APMs"),
previously termed as 'Non GAAP measures'. APMs should be considered
in addition to IFRS measurements, of which some are shown on Page
1. The Directors believe that these APMs assist in providing useful
information on the underlying performance of the Group, enhance the
comparability of information between reporting periods, and are
used internally by the Directors to measure the Group's
performance.
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-recurring items. Underlying EBITDA further removes Depreciation
and Amortisation.
3. Underlying Profit Before Tax is Profit before income tax and
non-recurring items as shown in the Group Income Statement.
4. Underlying Earnings Per Share is Profit after income tax
before non-recurring 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.
6. Net Debt to Underlying EBITDA ratio is represented by the
ratio of Net Debt to Underlying EBITDA (both of which are defined
above).
7. 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.
8. Free Cash Flow is defined as Operating Cash Flow (as defined
above) less capital expenditure, net finance costs, taxation and
fair value gain on derivatives.
Condensed consolidated income statement
For the 26 weeks to 29 September 2017
26 weeks 26 weeks 52 weeks
to to to
29 September 30 September 31 March
2017 2016 2017
Unaudited Unaudited
Notes GBPm GBPm GBPm
Revenue 6 588.7 567.3 1,095.0
Cost of sales (302.4) (283.9) (536.4)
Gross profit 286.3 283.4 558.6
Operating expenses (248.0) (241.6) (481.5)
Operating profit before
non-recurring items 38.3 41.8 77.1
Non-recurring operating
expenditure 7 (0.5) (1.5) (3.4)
---------------------------- ----- ------------ ------------ ------------
Results from operating
activities 37.8 40.3 73.7
Finance costs 8 (1.3) (1.5) (3.8)
Finance income 8 0.1 0.5 1.5
---------------------------- ----- ------------ ------------ ------------
Net finance costs (1.2) (1.0) (2.3)
Profit before tax and
non-recurring items 36.8 40.8 75.4
Non-recurring operating
expenditure 7 (0.5) (1.5) (3.4)
Non-recurring finance
cost 7 0.3 (0.2) (0.6)
Profit before tax 36.6 39.1 71.4
Tax on recurring items 9 (7.4) (8.3) (15.9)
Tax on non-recurring
items 7 - 0.3 0.9
Profit for the period
attributable to equity
shareholders 29.2 31.1 56.4
Earnings per share
Basic earnings per share 12 14.7p 15.9p 28.7p
Diluted earnings per
share 12 14.6p 15.9p 28.6p
Basic underlying earnings
per share 12 14.8p 16.6p 30.3p
Diluted underlying earnings
per share 12 14.7p 16.6p 30.2p
---------------------------- ----- ------------ ------------ ------------
A final dividend of 11.68 pence per share for the 52 weeks to 31
March 2017 (2016: 11.34 pence per share) was paid on 25 August
2017. The directors have approved an interim dividend of 6.0 pence
per share in respect of the 26 weeks to 29 September 2017 (2016:
5.83 pence per share).
The notes on pages 22 to 30 are an integral part of these
consolidated financial statements.
Condensed consolidated statement of comprehensive income
For the 26 weeks to 29 September 2017
26 weeks 26 weeks 52 weeks
to to to
29 September 30 September 31 March
2017 2016 2017
Unaudited Unaudited
GBPm GBPm GBPm
Profit for the period 29.2 31.1 56.4
Other comprehensive income
Cash flow hedges:
Fair value changes in
the period (7.6) 10.4 14.8
Transfers to inventory (1.0) (8.9) (12.8)
Transfers to net profit:
Cost of sales 2.3 - (5.1)
Tax on other comprehensive
income (1.4) (1.6) 0.5
------------------------------- ------------ ------------ ------------
Other comprehensive income
for the period,
net of tax (7.7) (0.1) (2.6)
------------------------------- ------------ ------------ ------------
Total comprehensive income
for the period
attributable to equity
shareholders 21.5 31.0 53.8
------------------------------- ------------ ------------ ------------
The notes on pages 22 to 30 are an integral part of these
consolidated financial statements.
Condensed consolidated statement of financial position
For the 26 weeks to 29 September 2017
As at As at As at
29 September 30 September 31 March
2017 2016 2017
Notes Unaudited Unaudited
Assets GBPm GBPm GBPm
Non-current assets
Intangible assets 13 394.5 391.8 394.1
Property, plant and
equipment 13 102.5 101.6 102.8
Investments 14 8.1 - 8.1
Total non-current assets 505.1 493.4 505.0
------------------------------ ----- ------------ ------------ ----------
Current assets
Inventories 206.0 176.6 191.1
Trade and other receivables 57.2 66.4 58.4
Derivative financial
instruments 1.0 8.4 5.2
Cash and cash equivalents 15 11.4 20.3 16.5
------------------------------ ----- ------------ ------------ --------
Total current assets 275.6 271.7 271.2
------------------------------ ----- ------------ ------------ ----------
Total assets 780.7 765.1 776.2
------------------------------ ----- ------------ ------------ --------
Liabilities
Current liabilities
Borrowings 15 (14.8) (23.5) (19.8)
Derivative financial
instruments (5.9) (0.1) (1.5)
Trade and other payables (214.2) (202.5) (206.2)
Current tax liabilities (8.9) (9.0) (8.7)
Provisions (12.2) (9.5) (11.0)
------------------------------ ----- ------------ ------------ --------
Total current liabilities (256.0) (244.6) (247.2)
------------------------------ ----- ------------ ------------ ----------
Net current assets 19.6 27.1 24.0
------------------------------ ----- ------------ ------------ --------
Non-current liabilities
Borrowings 15 (81.4) (61.6) (82.6)
Accruals and deferred
income - lease incentives (31.3) (32.2) (31.9)
Deferred tax liability (1.5) (3.8) (0.8)
Provisions (4.8) (7.5) (6.2)
Total non-current liabilities (119.0) (105.1) (121.5)
------------------------------ ----- ------------ ------------ ----------
Total liabilities (375.0) (349.7) (368.7)
------------------------------ ----- ------------ ------------ --------
Net assets 405.7 415.4 407.5
------------------------------ ----- ------------ ------------ --------
Shareholders' equity
Share capital 16 2.0 2.0 2.0
Share premium account 16 151.0 151.0 151.0
Investment in own shares (9.4) (10.7) (9.5)
Other reserves (7.1) 3.1 0.6
Retained earnings 269.2 270.0 263.4
------------ ------------ --------
Total equity attributable
to equity holders of
the Company 405.7 415.4 407.5
------------------------------ ----- ------------ ------------ --------
The notes on pages 22 to 30 are an integral part of these
consolidated financial statements.
Condensed consolidated statement of changes in equity
For the 26 weeks to 29 September 2017
For the period ended 29 September 2017 (Unaudited)
Attributable to the equity
holders of the Company
--------- ----------------------------------------------------------------------
Other reserves
----------------------
Share Investment Capital
Share premium in own redemption Hedging Retained Total
capital account shares reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 April
2017 2.0 151.0 (9.5) 0.3 0.3 263.4 407.5
Total comprehensive
income for the
period
Profit for the
period - - - - - 29.2 29.2
Other comprehensive
income
Cash flow hedges:
Fair value changes
in the period - - - - (7.6) - (7.6)
Transfers to inventory - - - - (1.0) - (1.0)
Transfers to net
profit:
Cost of sales - - - - 2.3 - 2.3
Income tax on
other comprehensive
income - - - - (1.4) - (1.4)
--------------------------------- --------- --------- ------------- ----------- --------- ---------- --------
Total other comprehensive
income for the
period net of
tax - - - - (7.7) - (7.7)
--------------------------------- --------- --------- ------------- ----------- --------- ---------- --------
Total comprehensive
income for the
period - - - - (7.7) 29.2 21.5
Transactions with
owners
Share options
exercised - - 0.1 - - - 0.1
Share-based payment
transactions - - - - - (0.4) (0.4)
Income tax on - - - - - - -
share-based payment
transactions
Dividends to equity
holders - - - - - (23.0) (23.0)
Total transactions
with owners - - 0.1 - - (23.4) (23.3)
--------------------------------- --------- --------- ------------- ----------- --------- ---------- --------
Balance at 29
September 2017 2.0 151.0 (9.4) 0.3 (7.4) 269.2 405.7
--------------------------------- --------- --------- ------------- ----------- --------- ---------- --------
The notes on pages 22 to 30 are an integral part of these
consolidated financial statements.
For the period ended 30 September 2016 (Unaudited)
Attributable to the equity holders
of the Company
--------- ----------------------------------------------------------------------
Other reserves
----------------------
Share Investment Capital
Share premium in own redemption Hedging Retained Total
capital account shares reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1
April 2016 2.0 151.0 (10.9) 0.3 2.9 260.1 405.4
Total comprehensive
income for the
period
Profit for the
period - - - - - 31.1 31.1
Other comprehensive
income
Cash flow hedges:
Fair value changes
in the period - - - - 10.4 - 10.4
Transfers to
inventory - - - - (8.9) - (8.9)
Transfers to
net profit:
Cost of sales - - - - - - -
Income tax on
other comprehensive
income - - - - (1.6) - (1.6)
--------------------------------- --------- --------- ------------- ----------- --------- ---------- --------
Total other comprehensive
income for the
period net of
tax - - - - (0.1) - (0.1)
--------------------------------- --------- --------- ------------- ----------- --------- ---------- --------
Total comprehensive
income for the
period - - - - (0.1) 31.1 31.0
Transactions
with owners
Share options
exercised - - 0.2 - - - 0.2
Share-based payment
transactions - - - - - 1.1 1.1
Income tax on - - - - - - -
share-based payment
transactions
Dividends to
equity holders - - - - - (22.3) (22.3)
Total transactions
with owners - - 0.2 - - (21.2) (21.0)
--------------------------------- --------- --------- ------------- ----------- --------- ---------- --------
Balance at 30
September 2016 2.0 151.0 (10.7) 0.3 2.8 270.0 415.4
--------------------------------- --------- --------- ------------- ----------- --------- ---------- --------
The notes on pages 22 to 30 are an integral part of these
consolidated financial statements.
Condensed consolidated statement of cash flows
For the 26 weeks to 29 September 2017
26 weeks 26 weeks 52 weeks
to to to
29 September 30 September 31 March
2017 2016 2017
Unaudited Unaudited
Notes GBPm GBPm GBPm
Cash flows from operating
activities
Profit after tax for the
period before non-recurring
items 29.4 32.5 59.5
Non-recurring items 7 (0.2) (1.4)) (3.1)
------------------------------- ----- ------------ ------------ --------
Profit after tax for the
period 29.2 31.1 56.4
Depreciation - property,
plant and equipment 10.5 10.9 21.6
Amortisation - intangible
assets 6.1 4.4 10.0
Net finance costs 1.2 1.3 2.3
Loss on disposal of property,
plant and equipment 0.1 0.4 0.2
Equity settled share based
payment transactions (0.4) 1.1 1.0
Fair value (gain)/loss
on derivative financial
instruments (2.3) (2.5)) (1.8)
Corporation tax expense 7.4 8.0 15.0
Increase in inventories (14.9) (18.7)) (33.2)
Increase/(decrease) in
trade and other receivables 1.2 (5.7)) 2.3
Increase in trade and
other payables 17.3 17.1 14.6
Decrease in provisions (0.2) (0.4)) (0.2)
Finance income received 0.1 0.1 1.5
Finance costs paid (0.9) (0.8)) (2.3)
Corporation tax paid (7.9) (7.6)) (15.3)
------------------------------- ----- ------------ ------------ --------
Net cash from operating
activities 46.5 38.7 72.1
------------------------------- ----- ------------ ------------ --------
Cash flows from investing
activities
Acquisition of subsidiary,
net of cash acquired (5.1) (18.0)) (18.0)
Purchase of investment (2.0) -- (4.1)
Purchase of intangible
assets (10.9) (9.7)) (18.4)
Purchase of property,
plant and equipment (3.9) (5.8)) (16.0)
------------------------------- ----- ------------ ------------ --------
Net cash used in investing
activities (21.9) (33.5)) (56.5)
------------------------------- ----- ------------ ------------ --------
Cash flows from financing
activities
Net proceeds from issue
of ordinary shares 0.1 0.7 1.4
Proceeds from loans, net
of transaction costs 196.2 163.0 297.0
Repayment of borrowings (198.0) (138.0)) (251.0)
Payment of finance lease
liabilities (0.4) (0.3)) (0.6)
Dividends paid to shareholders 11 (23.0) (22.3)) (53.5)
------------------------------- ----- ------------ ------------ --------
Net cash used in financing
activities (25.1) 3.1 (6.7)
------------------------------- ----- ------------ ------------ --------
Net (decrease)/increase
in cash and bank overdrafts 15 (0.5) 8.3 8.9
Cash and cash equivalents
at beginning of the period 15 (1.9) (10.8)) (10.8)
Cash and cash equivalents
at the end of the period 15 (2.4) (2.5)) (1.9)
------------------------------- ----- ------------ ------------ --------
The notes on pages 22 to 30 are an integral part of these
consolidated financial statements.
Notes to the condensed consolidated interim financial
statements
For the 26 weeks to 29 September 2017
1. General information
The condensed consolidated interim financial statements of
Halfords Group plc (the "Company") comprise the Company together
with its subsidiary undertakings (the "Group").
The Company is a limited liability company incorporated,
domiciled and registered in England and Wales. Its registered
office is Icknield Street Drive, Washford West, Redditch,
Worcestershire, B98 0DE.
The Company is listed on the London Stock Exchange.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 8 November 2017.
2. Statement of compliance
These condensed consolidated interim financial statements for
the 26 weeks to 29 September 2017 have been prepared in accordance
with IAS 34 'Interim financial reporting' as endorsed by the
European Union. They do not include all of the information required
for full annual financial statements, and should be read in
conjunction with the 2017 Annual Report and Accounts, which have
been prepared in accordance with IFRSs as adopted by the European
Union.
The comparative figures for the financial period ended 31 March
2017 are not the Group's statutory accounts for that financial
period. Those accounts have been reported on by the Group's
auditors and delivered to the registrar of companies. The report of
the auditor was (i) unqualified, (ii) did not include a reference
to any matters to which the auditor drew attention by way of
emphasis without qualifying their report, and (iii) did not contain
a statement under section 498 (2) or (3) of the Companies Act
2006.
3. Risks and uncertainties
The Directors consider that the majority of the principal risks
and uncertainties which could have a material impact on the Group's
performance in the remaining 26 weeks of the financial year remain
the same as those stated on pages 42 to 47 of our Annual Report and
Accounts for the 52 weeks to 31 March 2017, which are available on
our website www.halfordscompany.com.
4. Significant accounting policies
As required by the Disclosure and Transparency Rules of the
Financial Conduct Authority, the condensed consolidated interim
financial statements have been prepared by applying the accounting
policies and presentation that were applied in the preparation of
the 2017 Annual Reports and Accounts, which are published on the
Halfords Group website, www.halfordscompany.com.
The Directors consider that the Group has adequate resources to
remain in operation for the foreseeable future and have therefore
continued to adopt the going concern basis in preparing the
condensed consolidated interim financial statements. The Group's
forecasts and projections, taking into account reasonably possible
changes in trading performance, show that the Group has adequate
resources to continue in operational existence for the foreseeable
future.
There are no new or amended standards effective in the period
which have had a material impact on the interim consolidated
financial information.
5. Estimates
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from those estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those applied to the
consolidated financial statements as at and for the 52 week period
ended 31 March 2017 and the 26 weeks ended 30 September 2016.
6. Operating segments
The Group has two reportable segments, Retail and Car Servicing,
which are the Group's strategic business units. Car Servicing
became a reporting segment of the Group as a result of the
acquisition of Nationwide Autocentres on 17 February 2010. The
strategic business units offer different products and services, and
are managed separately because they require different operational,
technological and marketing strategies.
The operations of the Retail reporting segment comprise the
retailing of automotive, leisure and cycling products through
retail stores, Tredz and Wheelies and Boardman Bikes, and their
associated online platforms. The operations of the Car Servicing
reporting segment comprise car servicing and repair performed from
Autocentres.
The Chief Operating Decision Maker is the Executive Directors.
Internal management reports for each of the segments are reviewed
by the Executive Directors on a monthly basis. Key measures used to
evaluate performance are Revenue and Operating Profit. Management
believe that these measures are the most relevant in evaluating the
performance of the segment and for making resource allocation
decisions.
The following summary describes the operations in each of the
Group's reportable segments. Performance is measured based on
segment operating profit, as included in the management reports
that are reviewed by the Executive Directors. These internal
reports are prepared in accordance with IFRS accounting policies
consistent with these Group Financial Statements.
All material operations of the reportable segments are carried
out in the UK and all material non-current assets are located in
the UK. The Group's revenue is driven by the consolidation of
individual small value transactions and as a result Group revenue
is not reliant on a major customer or group of customers. All
revenue is from external customers.
26 weeks 26 weeks
to 29 to 30
September September
Car 2017 2016
Retail Servicing Total Total
Unaudited Unaudited Unaudited Unaudited
Income statement GBPm GBPm GBPm GBPm
----------------------- ----------- ---------- ---------- ----------
Revenue 511.0 77.7 588.7 567.3
Segment result before
non-recurring items 37.9 1.5 39.4 42.7
Non-recurring items (0.5) - (0.5) (1.5)
----------------------- ----------- ---------- ---------- ----------
Segment result 37.4 1.5 38.9 41.2
Unallocated expenses
(1) (1.1) (0.9)
----------------------- ----------- ---------- ---------- ----------
Operating profit 37.8 40.3
Net financing expense (1.2) (1.2)
----------------------- ----------- ---------- ---------- ----------
Profit before tax 36.6 39.1
Tax (7.4) (8.0)
----------------------- ----------- ---------- ---------- ----------
Profit after tax 29.2 31.1
----------------------- ----------- ---------- ---------- ----------
(1) Unallocated expenses have been disclosed to reflect the
format of the internal management reports reviewed by the Chief
Operating Decision maker and include an amortisation charge of
GBP1.1m in respect of assets acquired through business combinations
(2016: GBP0.9m).
52 weeks
to
31 March
Car 2017
Retail Servicing Total
Income statement GBPm GBPm GBPm
------------------------------------- ------ ---------- ---------
Revenue 938.4 156.6 1,095.0
Segment result before non-recurring
items 76.8 2.2 79.0
Non-recurring items (3.1) (0.3) (3.4)
------------------------------------- ------ ---------- ---------
Segment result 73.7 1.9 75.6
Unallocated expenses(1) (1.9)
------------------------------------- ------ ---------- ---------
Operating profit 73.7
Net financing expense (2.3)
Profit before tax 71.4
Taxation (15.0)
------------------------------------- ------ ---------- ---------
Profit after tax 56.4
------------------------------------- ------ ---------- ---------
(1) Unallocated expenses have been disclosed to reflect the
format of the internal management reports reviewed by the Chief
Operating Decision maker and include an amortisation charge of
GBP1.9m in respect of assets acquired through business combinations
(2016: GBP1.1m).
26 weeks 26 weeks
to 29 to
September 30 September
2017 2016
Retail Car Servicing Total Total
Unaudited Unaudited Unaudited Unaudited
Other segment items: GBPm GBPm GBPm GBPm
---------------------- ---------- ------------- ---------- -------------
Capital expenditure 14.4 2.4 16.8 15.3
Depreciation expense 8.3 2.2 10.5 10.9
Amortisation expense 4.7 0.3 5.0 3.5
---------------------- ---------- ------------- ---------- -------------
52 weeks
to
31 March
2017
Retail Car Servicing Total
Other segment items: GBPm GBPm GBPm
---------------------- ------ ------------- ---------
Capital expenditure 29.5 6.6 36.1
Depreciation expense 16.5 5.1 21.6
Amortisation expense 7.9 0.2 8.1
----------------------- ------ ------------- ---------
There have been no significant transactions between segments in
the 26 weeks ended 29 September 2017 (2016: GBPnil).
7. Non-recurring items
26 weeks 26 weeks 52 weeks
to to to
29 September 30 September 31 March
2017 2016 2017
Unaudited Unaudited
GBPm GBPm GBPm
Non-recurring operating
expenses:
Acquisition and investment
related fees (a) - 1.2 1.7
Organisational restructure
costs (b) - - 0.6
Operating lease obligation
(c) - 0.3 0.3
Costs in relation to
a historic legal case
(d) - - 0.8
Autocentres operational 0.5 -
review (e) -
----------------------------- ------------ ------------ --------
Non-recurring operating
expense 0.5 1.5 3.4
Acquisition related
interest charge (f) (0.3) 0.2 0.6
Non-recurring items
before tax 0.2 1.7 4.0
Tax on non-recurring
items - (0.3) (0.9)
----------------------------- ------------ ------------ --------
Non-recurring expense
after tax 0.2 1.4 3.1
----------------------------- ------------ ------------ --------
(a) Acquisition costs in the prior year relate to the costs
associated with purchase of the share capital of Tredz Limited and
Wheelies Direct Limited during the period, and an investment in
Tyres on the Drive Limited.
(b) In the prior year, organisational restructuring was
undertaken across Autocentres and Retail, to better align resource
to the requirements of the business.
(c) The operating lease obligation relates to rectification work
to one of the Group's retail stores, which was required to make
good an area of land upon which the store is located. The
rectification work required was unique to the specific site and
similar expense is not expected in the future.
(d) The Group settled a court case in FY17 which related to
activities during FY12. The size and historic nature of the
settlement was outside the normal experience of the Group.
(e) Autocentres operational review costs relate to the review of
the operating model of the Autocentres business.
(f) The acquisition related interest charge in FY17 reflects the
unwinding of the discounting applied to the contingent
consideration due on the acquisition of Tredz Limited. The
remaining portion was released in FY18 upon payment of the
contingent consideration due.
8. Net Finance Costs
26 weeks 52 weeks
26 weeks to to to
29 September 30 September 31 March
2017 2016 2017
Unaudited Unaudited
GBPm GBPm GBPm
Finance costs:
Bank borrowings (0.6) (0.4) (1.1)
Amortisation of issue costs on loans (0.3) (0.3) (0.7)
Commitment and guarantee fees (0.3) (0.4) (0.6)
Interest payable on finance leases (0.4) (0.4) (0.8)
Other interest payable (non-recurring) 0.3 (0.2) (0.6)
Finance costs (1.3) (1.7) (3.8)
Finance income:
Bank and similar income 0.1 0.1 0.1
Income from forward foreign exchange contracts - 0.4 1.4
Finance income 0.1 0.5 1.5
Net finance costs (1.2) (1.2)) (2.3)
----------------------------------------------- ------------ ------------ --------
9. Income tax expense
Income tax expense is recognised based on management's best
estimate of the weighted average annual income tax rate expected
for the full financial year applied to the pre-tax income of the
interim period.
The effective tax rate before non-recurring items for the 26
weeks to 29 September 2017 is 20.3% (2016: 20.5%). The effective
tax rate is higher than the UK corporation tax rate principally due
to the non-deductibility of depreciation charged on capital
expenditure.
10. Financial Instruments and Related Disclosures
Other financial assets and other financial liabilities include
the fair value of derivative contracts which the Group uses to
manage its foreign currency and interest rate risks. All
derivatives are categorised as Level 2 under the requirements of
IFRS 13, as they are valued using techniques based significantly on
observed market data.
11. Dividends
During the period the Group paid a final dividend of 11.68 pence
per share in respect of the 52 weeks to 31 March 2017 (2016: 11.34
pence per share), which absorbed GBP23.0m of shareholders' funds
(2016: GBP22.3m).
The directors have approved an interim dividend of 6.0 pence per
share for the 26 weeks to 29 September 2017 (2016: 5.83 pence per
share), which is expected to be GBP11.8m (2016: GBP11.3m) and will
be paid on 19 January 2018 to those shareholders on the share
register at the close of business on 8 December 2017.
12. Earnings Per Share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the period. The weighted
average number of shares excludes shares held by the Employee
Benefit Trust and has been adjusted for the issue/repurchase of
shares during the period.
For diluted earnings per share the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. These represent share options
granted to employees where the exercise price is less than the
average market price of the Company's ordinary shares during the 26
weeks to 29 September 2017.
26 weeks 26 weeks 52 weeks
to to to
29 September 30 September 31 March
2017 2016 2017
Unaudited Unaudited
Number Number Number
m m m
Weighted average number
of shares in issue 199.1 199.1 199.1
Less: shares held by the
Employee Benefit Trust (2.0) (3.8)) (2.5)
--------------------------- ------------ ------------ --------
Weighted average number
of shares for calculating
basic earnings per share 197.1 195.3 196.6
Weighted average number
of dilutive share options 1.7 0.6 0.5
Total number of shares
for calculating diluted
earnings per share 198.8 195.9 197.1
--------------------------- ------------ ------------ --------
26 weeks 26 weeks 52 weeks
to to to
29 September 30 September 1 March
2017 2016 2017
Unaudited Unaudited
GBPm GBPm GBPm
Basic earnings attributable
to equity shareholders 29.2 31.1 56.4
Non-recurring items:
Operating expenses 0.5 1.5 3.4
Finance costs (0.3) 0.2 0.6
Tax charge on non-recurring
items - (0.3)) (0.9)
---------------------------- ------------ ------------ --------
Underlying earnings before
non-recurring items 29.4 32.5 59.5
---------------------------- ------------ ------------ --------
Basic earnings per share 14.7 15.9p 28.7p
Diluted earnings per share 14.6 15.9p 28.6p
Basic underlying earnings
per share 14.8 16.6p 30.3p
Diluted underlying earnings
per share 14.7 16.6p 30.2p
---------------------------- ------------ ------------ --------
The alternative measure of earnings per share is provided
because it reflects the Group's underlying performance by excluding
the effect of non-recurring items.
13. Capital Expenditure - Tangible and Intangible Assets
Unaudited
GBPm
Net book value at 1 April 2016 470.2
Additions 37.7
Non-current assets acquired
as part of business combination 1.2
Disposals (0.4)
Depreciation, amortisation,
impairments and other movements (15.3)
---------------------------------- ---------
Net book value at 30 September
2016 493.4
---------------------------------- ---------
Unaudited
GBPm
Net book value at 31 March 2017 496.9
Additions 16.8
Disposals (1.4)
Depreciation, amortisation,
impairments and other movements (15.3)
---------------------------------- ---------
Net book value at 29 September
2017 497.0
---------------------------------- ---------
14. Investments
Unaudited
GBPm
Investments at 31 March 2017
and 29 September 2017 8.1
------------------------------ ---------
During the second half of FY17 the Group acquired a minority
stake in an automotive business, Tyres On The Drive.
15. Analysis of Movements in the Group's Net Debt in the Period
At Other At
1 April non-cash 30 September
2016 Cash flow changes 2016
Unaudited Unaudited Unaudited
GBPm GBPm GBPm GBPm
Cash in hand and
at bank (10.8) 8.3 - (2.5)
Debt due after one
year (25.4) (25.0) (0.3) (50.7)
------------------------- -------- --------- --------- -------------
Total net debt excluding
finance leases (36.2) (16.7) (0.3) (53.2)
------------------------- -------- --------- --------- -------------
Finance leases due
within one year (0.7) 0.3 (0.3) (0.7)
Finance leases due
after one year (11.0) - 0.1 (10.9)
------------------------- -------- --------- --------- -------------
Total finance leases (11.7) 0.3 (0.2) (11.6)
------------------------- -------- --------- --------- -------------
Total net debt (47.9) (16.4) (0.5) (64.8)
------------------------- -------- --------- --------- -------------
Other At
At non-cash 29 September
31 March Cash flow changes 2017
2017 Unaudited Unaudited Unaudited
GBPm GBPm GBPm GBPm
Cash in hand and
at bank (1.9) (0.5) - (2.4)
Debt due after one
year (72.0) 1.8 (0.3) (70.5)
------------------------- --------- --------- --------- -------------
Total net debt excluding
finance leases (73.9) 1.3 (0.3) (72.9)
------------------------- --------- --------- --------- -------------
Finance leases due
within one year (1.4) 0.4 (0.1) (1.1)
Finance leases due
after one year (10.6) - (0.2) (10.8)
------------------------- --------- --------- --------- -------------
Total finance leases (12.0) 0.4 (0.3) (11.9)
------------------------- --------- --------- --------- -------------
Total net debt (85.9) 1.7 (0.6) (84.8)
------------------------- --------- --------- --------- -------------
Non-cash changes comprise finance costs in relation to the
amortisation of capitalised debt issue costs of GBP0.3m, and
movements in finance leases of GBP0.3m. Cash and cash equivalents
at the period end consist of GBP4.8m of liquid assets, GBP6.6m of
cash held in Trust and GBP13.8m of bank overdrafts.
16. Share Capital
Share
Number Share premium
of shares capital account
m GBPm GBPm
As at 1 April 2016
and 30 September 2016 199.1 2.0 151.0
----------------------- ---------- -------- --------
Share
Number Share premium
of shares capital account
m GBPm GBPm
As at 31 March 2017
and 29 September 2017 199.1 2.0 151.0
----------------------- ---------- -------- --------
During the 26 weeks to 29 September 2017 and 30 September 2016,
there were no movements in company share capital. The shares held
in treasury are used to meet options under the Company's share
options schemes.
17. Contingent liability
The Group's banking arrangements include the facility for the
bank to provide a number of guarantees in respect of liabilities
owed by the Group during the course of its trading. In the event of
any amount being immediately payable under the guarantee, the bank
has the right to recover the sum in full from the Group. The total
amount of guarantees in place at 29 September 2017 amounted to
GBP3.7m.
Where right of set off is included within the Group's banking
arrangements, credit balances may be offset against the
indebtedness of other Group companies.
18. Seasonality
In general, the Group's results are not seasonal with revenue in
the first half broadly similar to that of the second, however sales
of certain products tend to fluctuate by season. For example, sales
of children's cycles peak in the Christmas season and sales of
adult cycles tend to peak in the summer.
19. Related Party Transactions
There were no (2016: nil) related party transactions during the
26 weeks to 29 September 2017.
Responsibility statement of the Directors in respect of the
half-yearly financial report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU;
-- the interim management report includes a fair review of the information required by:
a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
b. DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
By order of the Board
Jonny Mason, Interim Chief Executive
Officer and Chief Financial Officer
8 November 2017
Independent review report to Halfords Group plc
For the 26 weeks to 29 September 2017
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
26 weeks ended 29 September 2017 which comprises the Condensed
Consolidated Income Statement, Condensed Consolidated Statement of
Comprehensive Income, Condensed Consolidated Statement of Financial
Position, Condensed Consolidated Statement of Changes in Equity,
Condensed Consolidated Statement of Cash Flows and the related
explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 29
September 2017 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU and the Disclosure Guidance and Transparency Rules ("the
DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Peter Meehan
for and on behalf of KPMG LLP
Chartered Accountants
One Snowhill
Snow Hill Queensway
Birmingham, B4 6GH
8 November 2017
This information is provided by RNS
The company news service from the London Stock Exchange
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