Halfords Group PLC (HFD)
Halfords Group PLC: Annual Financial Report
29-Jul-2021 / 07:10 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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Halfords Group plc
Annual Report and Accounts for period ended 2 April 2021
including the Notice of Annual General Meeting ("AGM") - convened for 8 September 2021
The Company announces that the Annual Report and Accounts for the period ended 2 April 2021 and Notice of Annual
General meeting of the Company, have been posted or otherwise made available to shareholders and published on its
website www.halfordscompany.com.
The Company's 2021 AGM will be held at Halfords Group plc, Support Centre, Icknield Street Drive, Washford West,
Redditch, B98 0DE on Wednesday 8 September commencing at 3:00pm.
As detailed in the Notice of AGM, in light of the ongoing coronavirus pandemic and current government guidance, it is
expected that the 2021 AGM will be held in a streamlined manner similar to last year. The health and well-being of our
colleagues, shareholders and the wider community in which the Company operates is, and will continue to be, of
paramount importance to us. As the social distancing requirements have now been lifted in England, the Board is
optimistic that shareholders will be able to attend the AGM in person. However due to the uncertainty with regards to
the coronavirus pandemic there is still a possibility that the UK Government's restrictions and/or guidance on indoor
public gatherings are reinstated prior to the AGM, because of this the Board recommends to shareholders that they cast
their votes through the use of a proxy. Details of how to do this can be found in the Notice of AGM.
The Board is committed to ensuring that shareholders can exercise their right to ask questions. Shareholders will be
able to submit questions to the Directors in advance of the AGM via email to the Company Secretary
(tim.ogorman@halfords.co.uk). Written answers to all questions received will be sent directly to shareholders by email
and answers to frequently asked questions will, to the fullest extent practicable, be published on the Company's
website ahead of the meeting or, to the extent that has not been possible, will be addressed at the meeting itself.
In accordance with Listing Rule 9.6.1, a copy of the Annual Report and Accounts and the Notice of Annual General
Meeting of the Company have been uploaded to the National Storage Mechanism and will be available for viewing shortly
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Tim O'Gorman
Company Secretary
Halfords Group plc
The Appendix to this announcement is a supplement to our preliminary statement of Financial Results made on 17 June
2021 (the "Final Results Announcement"). It contains the information required pursuant to Disclosure Guidance and
Transparency Rule 6.3.5 that is in addition to the information communicated in the Final Results Announcement and
should be read together with the Final Results Announcement. This information is not a substitute for reading the full
Annual Report and Accounts for the year ended 2 April 2021.
Appendix
The Chief Financial Officer's Report in the preliminary statement of the Final Results Announcement issued on 17 June
2021 includes a commentary on the principal commercial and financial risks and uncertainties to achieving the Group's
objectives.
Further details of other principal risks and uncertainties relating to the Halfords Group are set out on pages 66 to 72
of the 2021 Annual Report and Accounts. Specific financial risks (e.g. credit risk, foreign currency) are detailed in
note 22 to the Financial Statements on pages 181 to 185 of the 2021 Annual Report and Accounts.
The following is extracted in full and unedited form from the 2021 Annual Report and Accounts.
Our Principal Risks and Uncertainties
Capability and Capacity to Effect Change
If we do not have sufficient capacity and capability (in terms of our people, processes, and systems) to successfully
implement the changes necessary across the business, we will not realise the expected benefits of our strategy and the
business will not be sustainable.
Current Mitigation Focus in 2022
* Continue to align our Transformation
Plan with the key objectives of our
* The appointment of a Transformation Director and a strengthened team with corporate strategy
emphasis on project management enabled progress to be maintained during a
challenging period for capital investment. The successful acquisition of The
Universal Tyre Company (Deptford) Limited ("Universal") in March 2021
demonstrated our intent and ability to grow our services business. * Closely monitor progress on
individual programmes, realigning
resources where necessary.
* The continued advancement of our change programme is managed through a
Transformation Board, providing the necessary governance for delivery of the
strategy. The Transformation Board ensures there is a robust approval process * Specifically, within the technology
for each project, allocates resource and monitors progress. Project managers are and digital teams, address operating
in place within the business model shortcomings to enable faster
to whom projects can be assigned and this has been supplemented by specialist execution.
resource to boost capability. In affecting change, Halfords is requiring all
contributing colleagues to observe the principles of
Responsible, Accountable, Consulted, and Informed ("RACI"). * Complete organisational design
changes to align with the strategic
focus of the business.
Stakeholder Support
If we fail to maintain stakeholder confidence in our strategy,
they may withdraw their support.
Current Mitigation Focus in 2022
* Maintain progress on the
delivery of our strategic
* Throughout the year, we demonstrated progress in the execution of our strategy, objectives.
building confidence in external and internal stakeholders. Our share price responded
positively, Customer NPS improved, and our internal engagement scores remained high
despite the disruption caused by COVID-19
* Address colleague engagement
challenges through a regular
cycle of survey and review
* Engagement continued throughout the year with customers, investors, and colleagues,
keeping them informed of progress against our strategic plans, changing customer
propositions as well as the challenges presented by the pandemic
* Proactive investor relations
programme of events and
communication.
Value Proposition
Customers are not persuaded by our value proposition and we lose
market share to online retailers and discounters. Purely competing
on price leads to a diminution of financial returns.
Current Mitigation Focus in 2022
* To differentiate ourselves in a competitive retail market, our vision is to
consolidate Halfords as a super specialist in motoring and cycling. Our
strategy emphasises the importance of creating value for the customer by * Launch of a Halfords Motoring loyalty
delivering services alongside the sale of a product. Progress continued through programme, designed to reward loyal
the development of new services and greater accessibility through the growth of customers and inspire a greater
our Cycle-to-Work programme, financial products, and Halfords Mobile Expert proportion to shop across the Group.
business.
* Further investment in pricing of
* Optimisation of our Group website with payment online functionality was motoring products to deliver greater
further enhanced by investment in our fulfilment proposition and enablement of value for customers.
cross-shop opportunities, aligned with more targeted promotions, designed to
appeal to customers.
Brand Appeal and Market Share
If we continue to lose brand relevance, we will be unable to
maintain and grow our customer base and build market share.
Current Mitigation Focus in 2022
* Continued investment in a
Group services marketing
campaign.
* A greater focus on E-bike
* Building on a positive response to our status as an essential retailer, we have grown and E-scooter product
awareness of our HME and garage services. Customer loyalty and satisfaction has achieved sales, alongside a more
record levels for Trust Pilot and Google scores for the Group general electric vehicle
servicing strategy
* Improvement of our cycling proposition, allied with better than market availability and
support for the cycle voucher scheme, has strengthened market share. * Investment in fair pricing
for motoring products.
* Improve climate change
credentials with ESG targets
defined.
Sustainable Business Model
Changes in the UK economy (including COVID-19, consumer
confidence, tax and duty rates and the value of the Pound) could
materially impact our revenue and/or costs, and therefore the
profitability of the business. Unless we can reduce our exposure to
these economic variables (e.g. our foreign exchange exposure), and
improve our ability to take action quickly on our margins and
operating costs, we will not create a sustainable business
model.
Current Mitigation Focus in 2022
* Significant actions on cost and margin taken in FY21 have collectively built * Maintain focus on reducing underlying
financial resilience, including a successful project to reduce our fixed cost costs, e.g. rental costs through
base. A refinancing secured our funding for a three-year period. property renegotiations.
* A strategic focus on the growth of services will build more stable revenue
streams going forward, lessening the Group's exposure to product lifecycles and
trends * Continuing to focus on margin
improvement,
* The business has a hedging programme in place and is following a eliminating unnecessary cost through
working capital reduction programme, targeted at reducing stock holding targeted
and aligning trade creditor terms. efficiencies and scale benefits.
Service Quality
The service we provide to customers may fail to meet
regulatory/safety requirements resulting in harm to customer and/or
legal/ financial penalty.
Current Mitigation Focus in 2022
* Full roll-out of new store
operating model, with
* All colleagues are provided with dedicated training and adhere to established quality additional skills training
control and safety procedures, with compliance audits by management. We also have a completed for all retail
dedicated compliance team monitoring our regulated activities. colleagues.
* In Autocentres, we have introduced PACE, our digital operating platform, enabling * Introduction of in-store
increased workflow, productivity, and quality assurance. A new store operating model is specialists, focused on
also now in place with multiskilled retail colleagues operating across all departments. delivering excellence in our
different service offerings.
* Store calls are now managed through a centralised contact centre, improving response
times and convenience to customers. * Ongoing programme of
proactive store maintenance
and safety checks.
Cyber Security
If we fail to sufficiently detect, monitor, or respond to
cyber-attacks against our systems they may result in disruption of
service, compromise of sensitive data, financial loss and
reputational damage.
Current Mitigation Focus in 2022
* Our information security team working with our security partner,
TCS, provide valuable support by managing vulnerability scans and
email and website security
* Launch of a fully managed security operations
* A perpetual education and awareness campaign is provided to all centre, increasing visibility and decreasing
colleagues. Regular briefings promote an understanding of the risks to response time to incidents
our data and the benefits of good security practices.
* The Audit Committee is regularly briefed by senior IT management on
the business' IT security framework.
Colleague Engagement/Culture
Our employment model may not be sufficiently attractive to
recruit and retain the talent that we need.
Current Mitigation Focus in 2022
* Our status as an essential retailer
during the pandemic provided a strong * Regular survey activity to identify areas important to
sense of purpose and enhanced the colleagues in driving continued engagement
culture and identity of Halfords as a
services business
* Early in the year, we launched our
new colleague values and behaviours
framework and appointed a colleague
experience manager to focus on
engagement. An annual engagement survey
provides us with reports at
team level. We have an environment that * Ongoing wellbeing programme, providing ideas,
encourages colleagues to feed support and tips for a better work/life balance.
back to us about how we can make
Halfords an even better place to
work.
* Identification and development of top talent, allowing us to develop
* During the year, a hardship fund was colleagues to fulfil their potential and, in turn, strengthen our succession
founded for the benefit of our pipeline.
colleagues to provide support and
assistance where needed. Equally, a
bonus scheme was established for those
colleagues working in a front
line role during the early period of
the pandemic.
Skills Shortage
We may be unable to recruit, retain and develop enough people to
have the different mix of skills that we need at all levels across
the business, in the near and longer term.
Current Mitigation Focus in 2022
* We have a strategy that relies on attracting and retaining
colleagues who can inspire and support our customers and encourage * Material investment programme in skills training
them to build a lifetime relationship with the brand to enhance colleague capability and, in turn,
improve the customer experience across our touch
points.
* Our recruitment website highlights the importance of the
Halfords behaviours and details the skills and experience required
of our colleagues. New starters are given a full induction and all * As the restrictions associated with COVID-19 ease,
colleagues receive a performance development review. We develop develop a revised working model for our Support
colleagues via the application of a talent matrix, which supports Centre colleagues, balancing a desire for greater
them in fulfilling their potential and enabling succession flexibility with the connection and creativity that
management comes from being in the right office environment
* Training and development are a fundamental part of our business * Extend our eLearning programme for the benefit of
and a great attraction for new applicants. We apply a targeted all colleagues.
approach to further enhance skill levels for centres as we do with
stores, by mapping against the optimal skills mix
IT Infrastructure Failure
Failure in our IT system(s) may cause significant disruption to,
or prevention of, normal business-as-usual activities.
Current Mitigation Focus in 2022
* Extensive controls are in place to maintain the integrity of our * Continue progression towards a fully cloud
systems and to ensure that systems changes are implemented in a based hosting structure with a transfer of risk
controlled manner. We have resilient infrastructure in place for to cloud-based service providers who can maintain
remote working colleagues to access Halfords hosted applications, higher levels of contracted availability
such as SAP.
* Halfords' key trading systems are hosted securely within data
centres operated by a specialist company and in specialist cloud * Deep-dive analysis into targeted areas of
services operated by Microsoft. These systems are supported by infrastructure, managed through the Risk
disaster recovery arrangements, including comprehensive backup and Committee
patching strategies. IT recovery processes are tested regularly.
Critical Physical Infrastructure Failure (including supply chain
disruption)
Severe damage or failure of physical infrastructure may disrupt
our supply chain and/or business as usual activities and prevent
the fulfilment of customer orders.
Current Mitigation Focus in 2022
* The need to respond to the pandemic in FY21 has tested our business * Programme of development for warehouse and
continuity plans and given us confidence in alternative supply chain duty management systems.
solutions and resilience.
* Enhanced flexibility across the supplier
* We maintain security and protection measures at our distribution centres base, using a wider range of suppliers,
and have business continuity plans to manage any incidents that may occur. where possible, and additional providers of
Our logistics operations are overseen by a dedicated warehouse and freight and transport solutions.
logistics team with extensive experience.
* Revised programme of supplier management
* Extensive research is conducted into quality and ethics before the Group for all key suppliers.
procures products from any new country or supplier. A strong management
team in the Far East, with an understanding of local culture, market
regulations and risks, maintains close relationships with both our
suppliers and logistics partners to ensure that disruption to production * Ongoing dialogue with existing and new
and supply are managed appropriately. suppliers to build a joint programme of
environmental sustainability.
Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with international
standards in conformity with the requirements of the Companies Act
2006 and applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Group financial statements in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and, have elected
to prepare the Company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law). Under company law
the Directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of
affairs of the Group and Company and of the profit or loss for the
Group for that period. The Directors are also required to prepare
financial statements in accordance with international financial
reporting standards adopted pursuant to Regulation (EC) No.
1606/2002 as it applies in the European Union.
In preparing these financial statements, the Directors are
required to:
* select suitable accounting policies and then apply them
consistently;
* make judgements and accounting estimates that are reasonable
and prudent;
* for the Group financial statements, state whether they have
been prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006 and,
additionally for the Group, international financial reporting
standards adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union;
* for the parent Company financial statements, state whether
applicable UK Accounting Standards comprising FRS 101 have been
followed, subject to any material departures disclosed and
explained in the parent Company financial statements;
* prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business; and
* prepare a Director's Report, a Strategic Report and Director's
Remuneration Report which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities. The
Directors are responsible for ensuring that the Annual Report and
Accounts, taken as a whole, are fair, balanced and understandable,
and provides the information necessary for shareholders to assess
the Group's performance, business model and strategy.
Website Publication
The Directors are responsible for ensuring the Annual Report and
the financial statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein
Directors' Responsibilities Pursuant to DTR4
The Directors confirm to the best of their knowledge:
* the financial statements have been prepared in accordance with
the applicable set of accounting standards and Article 4 of the IAS
Regulation and give a true and fair view of the assets,
liabilities, financial position and profit and loss of the Group;
and
* the Annual Report includes a fair review of the development
and performance of the business and the financial position of the
Group and Company, together with a description of the principal
risks and uncertainties that they face.
Approved by order of the Board.
Keith Williams
Chair
16 June 2021
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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.: 118690
EQS News ID: 1222467
End of Announcement EQS News Service
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