Halfords Group PLC (HFD) Halfords Group PLC: Interim Results:
Financial Year 2022 10-Nov-2021 / 07:00 GMT/BST Dissemination of a
Regulatory Announcement, transmitted by EQS Group. The issuer is
solely responsible for the content of this announcement.
-----------------------------------------------------------------------------------------------------------------------
10 November 2021
Halfords Group plc
Interim Results: Financial Year 2022
Strong H1 performance; confident outlook, upgrading full year
profits to GBP80m - GBP90m.
Market leading position in electric car and bike servicing and
repair; plans to double trained electric technicians next year.
Halfords Group plc ("Halfords" or the "Group"), the UK's leading
provider of Motoring and Cycling products and services, today
announces its interim results for the 26 weeks to 1 October 2021
("the period").
To provide a better understanding of underlying performance,
comparisons of sales, profit and debt will primarily be made
relative to FY20, that is, on a 2-year basis unless otherwise
stated. The disruption to last year (FY21) from COVID-19 means that
one-year comparators are more difficult to interpret but are
provided within the tables below. All numbers shown are on a
post-IFRS 16 basis and before non-underlying items, unless
otherwise stated.
Overview
H1 FY22
-- Strong revenue growth of +19.2% vs. FY20, growing market
share in Retail Motoring and Autocentres, withrevenues +7.7% and
+88.8% respectively. Cycling growth of +8.8%, despite the known
supply chain disruption.
-- Material contribution from areas of strategic focus: Group
Services growing +75%, online +81% and B2B+78%.
-- Underlying Profit Before Tax of GBP57.9m, +GBP27.7m (+91.7%)
vs. FY20 (note: FY22 includes business ratesrelief of GBP9.2m).
-- Compared to FY21, Group Revenue grew +8.7% and underlying PBT
+GBP2.1m (+3.8%).
-- Period ended with Net debt of GBP232.7m or net cash of
GBP91.6m when excluding IFRS lease debt; workingcapital abnormally
low.
-- Declared interim dividend per share of 3p.
Outlook
-- Positive start to H2, with sales momentum continuing across
the business.
-- Confident in our ability to navigate the well-publicised
inflationary and operational headwinds throughH2. Supply chain
disruption beginning to ease.
-- As previously disclosed, H2 investment in motoring pricing
and higher transformation spend to impactnear-term profitability
but drive long term growth.
-- Upgrade our FY22 full year underlying PBT forecast to GBP80m
- GBP90m, post IFRS 16; previous guidance wasabove GBP75m.
-- Longer term, our more resilient operating model - underpinned
by a larger Services, B2B and Retailmotoring business - will enable
us to continue to deliver progress, despite the inflationary
headwinds whichremain.
Graham Stapleton, Chief Executive Officer, commented:
"We are delighted to have delivered a strong H1 performance,
driven by market share gains in Motoring products, Garages and our
mobile services business, which now account for more than two
thirds of our revenue. We also continued to see a significant
contribution from areas of strategic focus, with revenue from Group
Services, Online and B2B, all growing by more than 75% on a
two-year basis. In cycling, demand levels remain good, and we are
pleased with the current availability of kids bikes and e-bikes as
we head into the Christmas trading period. We have carried good
sales momentum into H2 across our business, supported by the easing
of supply chain disruption. This has enabled us to increase our
FY22 underlying profit before tax guidance to between GBP80m and
GBP90m.
"We are seeing significant growth in the number of customers
choosing electric forms of transport, and we continue to have a
market-leading position in the servicing and repair of electric
vehicles. Sales of e-bikes, e-scooters and accessories grew by more
than 140% on two years ago, and servicing for electric cars in our
garages was up 120% year-on-year. We have already invested in the
training of more than 1,300 electric technicians and are on track
to train 2,000 by the end of FY22, equating to more than two per
store or garage. This number will double next year."
"There is good momentum in our existing business, the
strategically important area of Motoring Services continues to grow
strongly, and our recent acquisitions are all performing well. As a
result, despite the challenging trading environment, I am very
excited about our future growth prospects."
Group financial summary**
FY22 FY20 Var FY21
Var FY20 Var FY21 Var FY21
H1 H1 FY20 H1
% GBPm %
GBPm GBPm GBPm GBPm
Revenue 694.8 582.7 112.1 19.2% 638.9 55.9 8.7%
Retail 538.7 500.0 38.7 7.7% 524.2 14.5 2.8%
Autocentres 156.1 82.7 73.4 88.8% 114.7 41.4 36.1%
Gross Margin 51.7% 50.1% +167bps 49.3% +230bps
Retail 50.6% 47.0% +360bps 46.9% +370bps
Autocentres 55.6% 68.6% -1300bps 60.6% -500bps
Underlying EBITDA* 115.7 90.8 24.9 27.4% 115.5 0.2 0.2%
Underlying Profit Before Tax ("PBT")* 57.9 30.2 27.7 91.7% 55.8 2.1 3.8%
Profit Before Tax 64.3 27.5 36.8 133.8% 55.4 8.9 16.1%
Underlying Basic Earnings per Share* 24.0p 12.2p 96.7% 23.0p 4.35%
*before non-underlying items. **Alternative performance measures
are defined and reconciled to IFRS amounts in the glossary on page
21. The LFL change measure adjusts for the in-year store openings
and closures, and acquisitions.
Group revenue summary
Total Revenue LFL Revenue Total Revenue LFL Revenue
Vs FY20 % Vs FY20 % vs FY21 % Vs FY21 %
Retail Motoring 6.2% 11.9% 34.1% 41.0%
Retail Cycling 8.8% 25.3% -25.2% -20.5%
Retail Total 7.7% 17.8% 2.8% 7.0%
Autocentres 88.8% 15.5% 36.1% 19.3%
Group 19.2% 17.5% 8.7% 9.3%
Key H1 highlights
-- Group revenue growth over two years +19.2% and +17.5% LFL,
driven by market share gains in Autocentresand Retail Motoring, and
Retail Cycling growth, despite ongoing supply chain issues.
-- Group Services +75%, now representing 33% of Group revenues,
driven by good growth in our underlyingbusiness and boosted by our
acquisitions.
-- Recent sales growth rates from the first half have carried
forward to current trading and are broadly inline with first half
averages across the business.
-- In Retail two-year comparisons show:? Revenue +7.7% and
+17.8% LFL. ? Retail Motoring revenue +6.2% and LFL +11.9%, driven
by market share gains in core categories andstrong demand for
staycation products, up +45%. ? Retail Cycling +8.8% and LFL 25.3%,
with our award-winning own brand ranges of premium and
electricbikes continuing to see high levels of demand, despite
supply chain issues. ? Electric mobility revenue (i.e., e-bikes,
e-scooters and associated accessories) up +140%.
-- In Autocentres two-year comparisons show:? Autocentres
revenue +88.8% and +15.5% LFL as we expand our commercial business,
leverage ouracquisitions, and group-wide marketing initiatives
increase customer awareness. ? Strong demand for our Halfords
Mobile Expert ("HME") vans. In two years, we have grown to 172
vans,14 hubs and 250 technicians. ? Accelerating growth in demand
for electric vehicle servicing, with the number of EVs being
brought toour garages increasing 123.6% year-on-year.
-- Group sales growth against FY21, whilst lower than the
two-year comparator, remains strong at +9.3% LFLand +8.7% total
against a very strong comparative. Cycling sales stepped back as
supply challenges hit, but RetailMotoring and Autocentres growth
was very strong.
-- Group gross margin improved by +167bps over two years
(+230bps vs FY21) as our Cycling performance showsa significant
improvement against FY20 and our business mixes into higher margin
Autocentres.
-- Operating costs were managed well, +16.0% versus FY20 and
decreasing as a proportion of revenue by-1.2ppts. Operating Costs
include the benefit of GBP9.2m Business rates not levied.
-- Profit Before Tax ("PBT") of GBP57.9m, up +91.7% on FY20
(+3.8% vs FY21).
-- Cash movement of GBP25.0m, driven by strong profit
generation, but lower working capital continues toflatter the
balance sheet position.
-- Non-underlying items were a credit of GBP6.4m, primarily a
result of closed store provisions being revisedas the Group
continues to negotiate lease disposals. 1. Group Services includes
revenues across both Retail and Autocentres and includes the
revenue fromservices provided (e.g., car service, cycling repair,
dash cam fit etc) along with any associated products sold inthe
same transaction. 2. B2B includes revenues from C2W, Commercial,
Fleet and product sales to businesses in both Retail
andAutocentres
Enquiries
Investors & Analysts (Halfords)
Loraine Woodhouse, Chief Financial Officer
Neil Ferris, Corporate Finance Director
Andy Lynch, Head of Investor Relations +44 (0) 7483 457 415
Media (Powerscourt) +44 (0) 20 7250 1446
Rob Greening halfords@powerscourt-group.com
Nick Hayns
Results presentation
A webcast and conference call for analysts and investors will be
held today, starting at 08:00am UK time. Attendance is by
invitation only. A copy of the presentation and a transcript of the
call will be available at www.halfordscompany.com in due course.
For further details please contact Powerscourt on the details
above.
Next trading statement
On 13 January 2022 we will report our Q3 trading update for the
13 weeks ending 31 December 2021.
Notes to Editors
www.halfords.com www.tredz.co.uk www.halfordscompany.com
Halfords is the UK's leading provider of motoring and cycling
services and products. Customers shop at 404 Halfords stores, 3
Performance Cycling stores (trading as Tredz and Giant), 374
garages (trading as Halfords Autocentres, McConechy's and
Universal) and have access to 172 mobile service vans (trading as
Halfords Mobile Expert and Tyres on the Drive) and 192 Commercial
vans. Customers can also shop at halfords.com and tredz.co.uk for
pick up at their local store or direct home delivery, as well as
booking garage services online at halfords.com.
Cautionary statement
This report contains certain forward-looking statements with
respect to the financial condition, results of operations, and
businesses of Halfords Group plc. These statements and forecasts
involve risk, uncertainty and assumptions because they relate to
events and depend upon circumstances that will occur in the future.
There are a number of factors that could cause actual results or
developments to differ materially from those expressed or implied
by these forward-looking statements. These forward-looking
statements are made only as at the date of this announcement.
Nothing in this announcement should be construed as a profit
forecast. Except as required by law, Halfords Group plc has no
obligation to update the forward-looking statements or to correct
any inaccuracies therein.
Chief Executive's Statement
The Group has delivered another strong performance in the first
half of FY22. Strong revenue growth, increasing market share and
good profitability, with underlying PBT of GBP57.9m, almost double
that of FY20 and GBP2.1m ahead of FY21. We continue to see our
services business, the focus of our strategic investment, go from
strength to strength, resulting in a more resilient business going
forward. For the remainder of this commentary, we will draw
comparisons vs FY20 unless otherwise stated as we feel this is a
more helpful reflection of our performance due to the COVID-19
disruption seen in FY21. Stated results are on a post IFRS16 basis
and before non-underlying items, unless otherwise stated.
Revenue
Group revenues were GBP694.8m, with both Retail and Autocentres
delivering strong growth over two years. The scale and increased
customer awareness of our Autocentres business is clearly beginning
to pay dividends and our Retail business, after last year's
disruption, has also benefited from investment over the last two
years, with improved customer experience and convenience at the
centre of our efforts.
Retail Motoring
The motoring side of our Retail business has grown +6.2% over
two years, with a strong performance across many core categories.
This performance is even more remarkable given the contraction in
some markets in which we operate, e.g., the mature and more
discretionary categories of Sat Nav and Audio. In contrast, our
essential and specialist product categories have shown strong
results. Maintenance and our 3B's ("Blades, Bulbs and Batteries")
have grown over +5%, Workshop +23% and Car Cleaning +15% as we
refresh ranges and bring new products to market. Development of our
online customer journey has been key to the growth.
We have also seen longer term trends emerge. Staycations and a
more fitness and environmentally conscious customer shop our range
of touring products, from roof carrying, roof boxes and cycle
carriers, to transport everything they need to enjoy what the UK
has to offer. Staycation products grew +45%, with customers
selecting the correct equipment they need online, or by speaking to
one of our colleagues, before getting everything fitted to their
car on demand or on their chosen day.
Finally, we have also seen a strong performance on child travel,
growing +20% over two years. We stock popular brands, as well as
bringing exclusive, high quality own brand products to market,
offering choice and value to customers as well as expert advice and
fitting.
Retail Cycling
Cycling undoubtedly had a very strong FY21 and sales this year,
while strong, have been constrained by supply chain issues and
industry specific bottlenecks on production. Cycling availability
started the year lower than we would like, and while we hoped to
see availability normalise, it unquestionably deteriorated further
during the first half. Although supply challenges have now begun to
ease, we saw shortfalls in our premium ranges of own brand and
exclusive mechanical bikes through most of H1, which saw demand
outstrip an irregular and unpredictable supply. Nevertheless, we
are confident, as supply normalises in the future, that we will see
good sales in the categories hardest hit this year and we believe
we are well set for Christmas trading.
Autocentres
Our Autocentres business provides the clearest evidence of our
strategic progress over the last two years. Greater convenience and
scale, coupled with targeted initiatives to attract new customers,
has resulted in sales almost doubling over two years to GBP156m and
22% of our Group. Traffic levels through much of H1 have been
broadly in line with pre pandemic levels, signalling our growth in
market share, but with a market share estimate of only 4%, there is
a lot of room for future growth.
The profitability of the Autocentre business was impacted in the
first half by a shift in the MOT season to the second half of the
year, driven by the Government extending MOTs during COVID-19. This
seasonal shift impacts labour productivity, with the benefit
usually seen in the first quarter moving to our third quarter
trading period. We remain confident in the full year performance of
our Autocentres.
Areas of strategic focus
It has been another strong period for our areas of strategic
focus, again demonstrating the resilience and relevance of our
strategy in the face of a tough operating environment.
Group Services1
Group revenue from services was GBP232m, growing 75% since FY20,
and now accounts for 33% of total revenue. This is one of our most
notable strategic achievements and, despite the demonstrable
progress, we see significant further growth yet to come. We have
acquired three Motoring Services businesses that have given us
greater scale, convenience and ability to leverage our expertise in
technology and training. Since the acquisition of Tyres on the
Drive in 2019, we have grown from 7 vans offering tyre fitting to a
fleet of over 170 Halfords Mobile Expert vans offering 19 different
services. McConechy's Tyre Services and Universal Tyres have
provided us with geographical access to more of the UK and a
greater ability to grow our share of commercial markets.
B2B2
B2B has delivered another excellent sales performance, growing
+78% vs. FY20 and accounting for 20% of Group revenue. We continue
to see strong revenue growth across all aspects of our offer,
including Cycle 2 Work ("C2W") growing 53%, and bulk product and
gift voucher sales to businesses growing 44%. Most notable,
however, is the progress we have made in our commercial motoring
business over the last two years. Commercial sales, representing
service and repair to fleets, agricultural vehicles or lorries,
have grown 350% since FY20. This has been achieved through our
strategic acquisitions of McConechy's Tyre Services and Universal
Tyres, which have given the Group improved national coverage,
enabling us to win larger contracts to support businesses with a
single partner across the UK, rather than disparate and fragmented
coverage from multiple providers. As with many services, the
essential nature of this business strengthens our resilience and
provides growth opportunities for the future as we continue to
scale.
Online
Convenience to many customers is defined by receiving the right
product or service with the least possible effort. Clearly this
needs to be achieved throughout the purchase journey but, for many,
this begins online by showcasing the range of solutions to a
customer's needs clearly and concisely. We continue to make
significant strides in this area, proven by our revenue growth
online of +80% over two years. Whether guiding customers through
our range of specialist car cleaning products, choosing how or
where they would like a tyre fitted or, more recently, easily
identifying which bikes are in stock for immediate delivery, our
digital proposition has changed substantially since 2019.
Operational Review
The operating environment remains challenging for all retailers
across the UK, but we continue to focus on keeping colleagues and
customers safe, improving efficiency across the Group, and
identifying cost reductions where possible.
The Supply Chain
Moving anything around the globe over the last 6 months has been
particularly challenging. Even if goods are manufactured and a
container is found to ship them to the UK, the recent HGV driver
shortage has meant that this final leg of the supply chain has been
more costly and unreliable. The freight spot market has, at times,
been 10x the normal rate, with some suppliers reneging on volumes
or prices, but as the Cycling market leader in the UK, we have
worked closely with freight partners.
Integration of Our Acquisitions
One of our biggest programmes this year was to quickly integrate
our acquisition of Universal Tyres in March 2021 so that we could
utilise the additional scale from the garages and vans and grow our
commercial business. Our strong performance within B2B has been
driven in part by the speed with which we integrated the business.
Our digital operating model, PACE, was rolled out to all sites in
less than half the time it took to do the same in McConechy's. This
was a fantastic achievement and testament to the hard work and
experience of our support teams, something we can roll forward to
future acquisitions as we progress towards our target of 550
garages.
Environmental, Social and Governance ("ESG")
We continue to make good progress on our ESG Strategy, in each
of our four priority areas of Electrification, Net Zero, Diversity
& Inclusion, and Product, Packaging and Waste Management, as
well as in creating stronger foundations to drive further progress.
Here are a few examples of our ESG accomplishments in H1:
-- In Electrification, we rolled-out free Electric Bike trials
across our Retail store estate to encouragecustomers to swich to
clean transport solutions. We also trained over 1,300 colleagues to
deliver Electric Servicesin Scooters, Bikes and Cars, on target for
at least 2,000 by year-end.
-- In Net Zero, we switched our electricity requirements to 100%
renewable sources, reducing carbonemissions in our own operations
by more than 30%, taking us significantly closer to achieving our
science-basedtarget for Scope 1 and 2 emissions, which is aligned
to the ambitious 1.5 degree pathway.
-- In Product, Packaging and Waste Management we reduced primary
plastic packaging by 8% and intend to gofurther in H2.
Our progress will continue to accelerate in the second half and
beyond, as we seek to drive sustainability in the motoring and
cycling industries, and as the market leader in both, play a
critical role in supporting the UK to quickly adopt electric forms
of personal transport.
Colleagues and the Labour Market
At the end of FY21, we announced one of our biggest training
programmes to date, which would involve training all Retail
colleagues in the full suite of customer services on offer. The aim
was to increase our skills base from roughly 16,000 to over 40,000,
which we achieved by the end of Q1. This means our on-demand
fitting offer is more convenient for customers, reducing wait times
and getting customers back moving quickly. As the transition to
Electric travel gathers pace, we also announced that 2,000 of our
6,000 colleague-base in stores and garages would be trained to
service electric cars, bikes and scooters. We are progressing well
towards our year-end target, having trained over 1,300 by the end
of the first half.
The labour market has also not been without its challenges.
Self-isolation and high demand for technicians has meant that
capacity within our garages and HME vans has been constrained.
While not a significant problem, it has undoubtedly meant that we
have limited our sales potential over the first half of the year.
Excellent labour productivity has partially compensated, and we
hope to see an improvement in the labour market over the balance of
year.
Finally, to underpin our service offering, we have also
implemented a new store operating model, resulting in more customer
facing service technicians. This means customers who wish to
complete one of the 80% of online transactions fulfilled in stores,
or start their journey with a colleague, the experience is better
than ever, resulting in record NPS scores in both stores and
garages.
Strategic Progress
In 2019 we accelerated our strategy to "Evolve into a consumer
and B2B services-focused business, with a greater emphasis on
motoring, generating higher and more sustainable financial
returns." Two years on, we have made significant progress, with
both Services and B2B revenues growing significantly and
representing a greater proportion of overall Group revenues.
To achieve this, we have materially changed the shape of our
business, whilst simultaneously launching initiatives and
investments targeted at growing our market share and increasing the
capacity of our estate. Since 2018, through acquisition and organic
growth, we have more than doubled the number of fixed and mobile
locations dedicated to offering Motoring Services, from 316 to over
700. In this time frame we have added almost 80 garages through our
acquisitions, over 190 commercial vans and built our fleet of
Halfords Mobile Experts to over 170.
The physical changes to our business are clear and have
progressed well, but we have also delivered a series of initiatives
to drive awareness, improve efficiency and increase the capacity of
our existing estate. PACE, our digital operating platform, operates
across our entire garage estate. Our full range of products and
services are now offered from one website, bookable at any of our
stores, garages or vans, and we have driven demand and awareness
through cross shop initiatives, our Motoring Services marketing
campaigns and continuous digital enhancements. These changes have
resulted in record levels of customer satisfaction across the
Group, with the Autocentre NPS moving ahead by an impressive 11.9
points since FY18.
FY22 will see further strategic progress;
-- Additional initiatives to drive Cross shop, which has grown
+30% year-on-year in H1, aided by developmentof our WeCheck
App.
-- 'Project Fusion' will deliver a connected and convenient
customer offer within a town, leveraging theHalfords assets by
linking together our stores, garages and vans, supported by our
centralised customer contactteam. Our trial town, whilst in its
infancy, is delivering strong sales growth, significantly enhanced
levels ofcross shop and very high levels of customer
satisfaction.
-- Our Motoring pricing investment was launched during the
closing stages of H1 and has shown positivevolume growth against
our plan. The investment is providing customers with greater value,
underpinning thefoundations of our services business.
-- Avayler, our proprietary software to streamline service
delivery for companies that operate in multiplelocations, was
launched in July to our first customer, American Tire Distributors
Inc. and is an exciting extensionto the Halfords B2B offer.
-- The development of the Loyalty programme is progressing well,
having appointed third party support todevelop the loyalty engine
and subscription module, alongside designing the digital hub user
experience.
Capital structure and dividend
Our capital allocation priorities remain unchanged:
1. Maintaining a prudent balance sheet
2. Investment for growth
3. M&A, focused on Autocentres
4. Progressive dividend policy
5. Surplus cash returned to shareholders
Our Net Debt: EBITDA ratio, revised on an IFRS 16 basis, was
1.0x at the half-year. In the near-term we intend to operate with
more prudent debt levels as economic uncertainty continues.
With a continued strong performance from our areas of strategic
focus, we will continue with our transformation plan, which we
believe will require between GBP50m and GBP60m of capital
expenditure this year and over the medium-term. Our growth plan
will be complemented by acquisitions if we are able to find
attractive businesses, with the right strategic fit and for a fair
price. Our acquisition strategy will be focussed on scaling our
motoring services business, propelling us to market leadership in
aftermarket service, maintenance, and repair.
We understand the importance of the ordinary dividend to many of
our investors and we updated our dividend policy at our preliminary
results in June 2021, reinstating the ordinary dividend from FY22
at 9p per share, intending this to be progressive. We have declared
an FY22 interim dividend of 3p per share to be paid on 21 January
2022 with the corresponding ex-dividend date of 9 December 2021 and
the record date of 10 December 2021.
Current trading and outlook
Overall, we are very pleased with our first half performance
across the Group and how we are delivering against our strategy. We
ended the first half with improved sales growth and, so far in the
second half, sales have been in line with our expectations. We have
seen sales growth across the business and in Cycling, although
global supply chain disruption remains, supply constraints have
eased somewhat.
Inflation, labour shortages and supply disruption will continue
to impact the business. We believe demand for our products and
services will remain healthy and that we will be able to manage and
mitigate the operational challenges through H2 and into FY23. Our
strong first half performance gives us the confidence to continue
to invest in price in Retail Motoring, where early volume uplifts
are encouraging, and in our Group transformation, investing for the
longer term.
Taking the above into account, we are upgrading our FY22 full
year profit before tax range to GBP80m - GBP90m.
Looking longer term, our strategy was designed to deliver growth
and build resilience. We set out a plan to accelerate our position
in Services and B2B markets, which offer greater opportunities for
growth, to strengthen our products business, and to improve the
overall profitability of our operating model. Since 2018 we have
seen our Services and B2B revenues grow considerably, and we have
also improved the profitability of our Cycling business and
strengthened the position of our Motoring products business, which
underpins our Motoring Services offer. Finally, we have materially
changed our cost base, reducing our Retail store footprint and
improving efficiency, whilst also reducing working capital to
support the funding of future investments.
We do not expect the extreme levels of inflation seen on freight
spot markets to be sustained, and we expect supply and demand of
labour markets to stabilise, but certain inflationary aspects of
FY23 are already known, including National Insurance, National
Minimum Wage and energy costs. We are confident that our
established efficiency workstreams and hedging polices will, in
part, mitigate some of these costs. We also see some positive
aspects looking forward; foreign exchange and rental markets are
more favourable, cycling supply should stabilise, and our
initiatives from FY22 will begin to build momentum, contributing
further to revenue growth.
As a business we look forward with confidence to another period
of transformation and strength. We have developed a stronger and
more efficient business, centred around more resilient revenue
streams in markets with opportunities to significantly grow share.
That said, operational agility is also a term we have used many
times over the last 18 months and is an approach that we now
permanently adopt in our operation.
Graham Stapleton Chief Executive Officer, 9 November 2021
Halfords Group Plc
Chief Financial Officer's Report
Halfords Group plc ("the Group" or "Group")
Reportable Segments
Halfords Group operates through two reportable business
segments:
-- Retail, operating in both the UK and Republic of Ireland;
and
-- Autocentres, operating solely in the UK.
All references to Retail represent the consolidation of the
Halfords ("Halfords Retail") and Cycle Republic businesses,
Boardman Bikes Limited and Boardman International Limited
(together, "Boardman Bikes"), and Performance Cycling Limited
(together, "Tredz and Wheelies") trading entities. All references
to Autocentres represent the consolidation of the Autocentres,
McConechy's and Universal trading entities. All references to Group
represent the consolidation of the Retail and Autocentres
segments.
The "H1 FY22" accounting period represents trading for the 26
weeks to 1 October 2021 ("the period"). The comparative periods "H1
FY21" and "H1 FY20" represent trading for the 26 weeks to 2 October
2020 ("the prior period") and to 27 September 2019
respectively.
To provide a better understanding of underlying performance,
operating performance comparisons (sales, margin, profitability)
will be made relative to FY20, that is on a 2-year basis. The
disruption to last year (FY21) from COVID-19 means that one-year
comparators are, in some instances, more difficult to interpret.
All numbers shown are on a post IFRS16 basis, unless otherwise
stated. Group Financial Results
Change Change
H1 FY22 H1 FY20 H1 FY21
H1 FY 20 to H1 FY22 H1 FY21 to H1 FY22
GBPm GBPm (%) GBPm (%)
Group Revenue 694.8 582.7 19.2% 638.9 8.7%
Group Gross Profit 359.4 291.7 23.2% 315.8 13.8%
Underlying EBIT 63.7 36.8 73.1% 63.7 0.0%
Underlying EBITDA 115.7 90.8 27.4% 115.5 0.2%
Net Finance Costs (5.8) (6.6) (12.1%) (7.9) (26.6%)
Underlying Profit Before Tax 57.9 30.2 91.7% 55.8 3.8%
Net non-underlying items 6.4 (2.7) - (0.4) -
Profit Before Tax 64.3 27.5 133.8% 55.4 16.1%
Underlying Basic Earnings per Share 24.0p 12.2p 96.7% 23.0p 4.3%
Group revenue in H1 FY22, at GBP694.8m, 19.2% up on H1 FY20,
comprised Retail revenue of GBP538.7m and Autocentres revenue of
GBP156.1m. This compared to H1 FY20 Group revenue of GBP582.7m,
which comprised Retail revenue of GBP500.0m and Autocentres revenue
of GBP82.7m. Group gross profit at GBP359.4m (H1 FY20: GBP291.7m)
represented 51.7% of Group revenue (H1 FY20: 50.1%), reflecting a
stronger Retail gross margin of 50.6% offset by a decrease in the
Autocentres gross margin of 13%pts to 55.6%. The latter was driven
by previous acquisitions of McConechy's, Tyres on the Drive and
Universal, with a mix into lower margin B2B and tyre sales driving
lower levels of gross margin.
Total operating costs before non-underlying items were 16.0%
above H1 FY20 at GBP295.7m (H1 FY20: GBP254.9m) of which Retail
comprised GBP211.4m (H1 FY20: GBP201.1m), Autocentres GBP83.1m (H1
FY20: GBP52.7m) and unallocated costs GBP1.2m (H1 FY20: GBP1.1m),
whilst business rates relief totalled GBP9.2m. The significant
increase in operating costs within Autocentres primarily reflects
the costs within the acquired businesses. Unallocated costs
represent amortisation charges in respect of intangible assets
acquired through business combinations, namely the acquisition of
Autocentres in February 2010, Boardman Bikes in June 2014, Tredz
and Wheelies in May 2016, McConechy's in November 2019 and
Universal in March 2021, which arise on consolidation of the
Group.
Group Underlying EBITDA increased 27.4% from H1 FY20 to
GBP115.7m (H1 FY20: GBP90.8m), whilst net finance costs were
GBP5.8m (H1 FY20: GBP6.6m).
Underlying Profit Before Tax for the period was up 91.7% on H1
FY20 at GBP57.9m (H1 FY20: GBP30.2m). The non-underlying credit of
GBP6.4m in the period (H1 FY20: debit GBP2.7m) materially related
to the release of previous non rent onerous lease costs whereby the
properties to which they relate have since been re-assigned.
After non-underlying items, Group Profit Before Tax was GBP64.3m
(H1 FY20: GBP27.5m).
Retail
H1 FY22 H1 FY20 Change H1 FY21 Change
GBPm GBPm (%) GBPm (%)
Revenue 538.7 500.0 7.7% 524.2 2.8%
Gross Profit 272.6 235.0 16.0% 245.7 10.9%
Gross Margin 50.6% 47.0% 7.7% 46.9% 8.0%
Operating Costs (211.4) (201.1) 5.1% (185.4) 14.0%
Underlying EBIT 61.2 33.9 80.5% 60.3 1.5%
Non-underlying items 6.4 (2.5) - (0.1) -
EBIT 67.6 31.4 115.3% 60.2 12.3%
102.3
Underlying EBITDA 80.0 27.9% 101.9 0.4%
Revenue for the Retail business of GBP538.7m reflected, a
one-year like-for-like (LFL) sales increase of +7.0% and two-year
LFL growth of +17.8%.
Please refer to the Retail Operational Review in the Chief
Executive's Statement for further commentary on the trading
performance in the period. Like-for-like revenues and total sales
revenue mix for the Retail business are split by category
below:
H1 FY22-20
H1 FY22-21 H1 FY22 H1 FY20 H1 FY21
LFL (%)
LFL (%) Total sales mix (%) Total sales mix (%) Total sales mix (%)
Motoring 41.0 11.9 56.7 57.5 42.5
Cycling -20.5 25.3 43.3 42.5 57.5
Total 7.0 17.8 100.0 100.0 100.0
Gross profit for the Retail business at GBP272.6m (H1 FY20:
GBP235.0m) represented 50.6% of sales, which is an increase on
previous years (H1 FY21: 46.9%, H1 FY20: 47.0%). This reflected
several factors, including favourable buying terms, component
rationalisation, more effective promotional pricing within the
cycling category and a sales increase in higher margin motoring
categories vs cycling in FY21.
The table below shows the average exchange rate reflected in
cost of sales, along with the year-on-year movement.
H1 FY20 H1 FY21 H1 FY22
USD USD USD
Average USD: GBP rate reflected in cost of sales USD1.33 USD1.30 USD1.32
Retail operating costs before non-underlying items increased by
14.0% against H1 FY21 and 5.1% against H1 FY20 to GBP211.4m (H1
FY21: GBP185.4m and H1 FY20: GBP201.1m). The 5.1% 2-year increase
in cost is driven by higher volume-related variable costs,
necessary to deliver the 17.8% LFL% sales growth, including store
payroll, warehouse and distribution and marketing costs, and
investment in support costs as part of our transformation
programmes, including centralising the contact centre, improving IT
capability and colleague training. Offsetting this investment are
cost savings associated with the closure of a number of stores and
the implementation of strong procurement principles. The 14.0%
increase against H1 FY21 is predominantly due to last year's
government support of furlough GBP7.9m and business rates relief
GBP16.5m compared to no furlough income and GBP7.9m of business
rates relief in FY22 H1. The furlough income in H1 FY21 was
subsequently repaid in the second half of last year.
Autocentres
H1 FY22 H1 FY20 Change H1 FY21 Change
GBPm GBPm (%) GBPm (%)
Revenue 156.1 82.7 88.8% 114.7 36.1%
Gross Profit 86.8 56.7 53.1% 69.5 24.9%
Gross Margin 55.6% 68.6% (18.9%) 60.6% (8.2%)
Operating Costs (83.1) (52.7) 57.7% (64.8) 28.2%
Underlying EBIT 3.7 4.0 (7.5)% 4.7 (21.3)%
Non-underlying items - (0.2) (0.3)
EBIT 3.7 3.8 (2.6)% 4.4 (15.9)%
Underlying EBITDA 13.4 11.0 21.8% 13.0 3.1%
Autocentres generated total revenues of GBP156.1m (H1 FY20:
GBP82.7m), an increase of 88.8% on H1 FY20, with one-year LFL
increase of 19.3% and a two-year LFL growth of 15.5%.
The increase in total revenue from FY20 was primarily due to the
acquisitions of McConechy's, Tyres on the Drive and Universal, but
the underlying Autocentre business also performed strongly on a
like-for-like basis as strong labour productivity drove additional
sales.
Gross profit at GBP86.8m (H1 FY20: GBP56.7m) represented a gross
margin of 55.6%, a decrease from the 68.6% gross margin in H1 FY20,
reflecting the acquisitions made in previous years, all of which
are more heavily weighted towards lower margin tyre and B2B sales.
The underlying Autocentre gross margin was strong, reflecting the
continued focus on the operating model via technology enabled
efficiency programmes and growth in higher margin revenue
streams.
Autocentre EBIT of GBP3.7m was GBP0.7m below H1 FY21 and GBP0.1m
below H1 FY20. Last year, as in the Retail business, the profit
figure is distorted by the partial closure of some of the garages,
furlough claims and business rates and therefore the more relevant
comparator is H1 FY20. The small dip in profitability for both
years reflects the significant shift of the MOT peak season into
our second half and, accordingly, we expect profitability to move
significantly forward in H2 FY22.
Portfolio Management
The Retail store portfolio at 1 October 2021 comprised 403
stores (end of H1 FY21: 443; end of FY21: 404). One new Autocentres
was opened, and one was closed in the period, making the total
number of Autocentre locations 374 as at 1 October 2021 (end of H1
FY21: 367; end of FY21: 374). There were a total of 364 vans, 172
of which were HME, 104 McConechy's and 88 Universal. The following
table outlines the changes in the Retail and Autocentres store
portfolio over the 26-week period:
Retail Centres
Relocations 0 0
Leases re-negotiated 28 8
Rightsized 0 0
Openings 0 1
Closed 1 1
Net Non-Underlying items
The following table outlines the components of the
non-underlying items recognised in the period:
H1 FY22 H1 FY21
GBPm GBPm
Organisational restructure costs 0.3 0.9
Closure costs (6.8) (0.5)
One off claims 0.1 -
Net non-underlying items (credit)/debit (6.4) 0.4
In the current and prior period, costs relate to redundancy
associated with a strategic redesign of our instore operating
model, undertaken to better meet our customers' expectations and
deliver a consistent shopping experience across our estate.
Redundancy costs of GBP0.3m (HY21: GBP0.9m, FY21: GBP5.9m) were
incurred to transition to the new operating model.
During FY20 and FY21 the group completed a strategic review of
the profitability of the physical estate and subsequently closed a
number of stores and garages. Assets were impaired, and costs
associated with the ongoing onerous commitments under the lease
agreements and other costs associated with the property exits were
provided for accordingly. In the current period GBP6.8m of these
provisions have been released as the group continues to negotiate
lease disposals and review provisions held in place.
During the prior period Cycle Republic closure costs of GBP0.5m,
which were provided for at year-end FY20, were released. A
provision of GBP0.6m was created at year end FY20 in relation to
the HMRC audit relating to the national minimum wage. The Group has
continued to work with HMRC and external advisors and a full data
validation exercise is underway to determine the required Notice of
Underpayment. The exercise is in progress and based on information
available to date, and the Group's assessment of a range of
potential outcomes, management increased the provision to GBP3.4m
at year end FY21, which represents management's best estimate of
the value of underpayments and the associated penalty charge.
During the current period further professional fees in relation to
this investigation, amounting to GBP0.1m, have been recorded.
Finance Expense
The net finance expense for the period was lower year-on-year at
GBP5.8m (H1 FY21: GBP7.9m), the result of a decrease in the level
of IFRS 16 interest, reflecting both the ageing of the lease
portfolio and the disposal of a number of sites in the previous
year. Net finance costs pre IFRS 16 have decreased to GBP1.3m
(HY21: GBP3.0m) as we were fully drawn down on the RCF in the prior
year.
Taxation
The taxation charge on profit for the financial period was
GBP11.6m (H1 FY21: GBP10.4m). The effective tax rate before
non-underlying items of 18.09% (H1 FY21: 18.9%) differs from the UK
corporation tax rate (19%) primarily as a result of the 30%
permanent element of the 130% capital allowances super deduction on
qualifying plant and machinery additions. The rate reduction is
partially offset by the depreciation expense relating to
non-qualifying assets, and the share based payments IFRS 2
charge.
The full year FY22 effective tax rate is expected to be
c.18.45%.
Earnings Per Share ("EPS")
Underlying Basic EPS was 24.0 pence and after non-underlying
items 26.6 pence (H1 FY21: 22.8 pence after non-underlying items,
H1 FY20: 11.1 pence). Basic weighted-average shares in issue during
the period were 197.8m (H1 FY21: 197.0m).
Dividend ("DPS")
The Board have declared an interim dividend of 3p per share in
respect of the period to 1 October 2021 (H1 FY21: None). The
interim dividend will be paid on 21 January 2022 to shareholders
who are on the register of members, with an ex-dividend date of 9
December 2021 and a record date of 10 December 2021.
Capital Expenditure
Capital investment in the period totalled GBP22.8m (H1 FY21:
GBP11.2m) comprising GBP15.0m in Retail and GBP7.8m in
Autocentres.
Within Retail, GBP6m (H1 FY21: GBP1.7m) was invested in stores,
the majority of which related to on-going store improvement
projects (GBP2.0m), continued investment in LED lighting within
stores (GBP1m) and roof/reactive works. Investment has continued in
IT systems (H1 FY22: GBP7.4m), covering the ongoing development and
enhancement of the new website. The balance of GBP1.6m was invested
in other smaller support centre upgrades/projects, and a small
amount within Tredz & Wheelies.
The GBP7.8m (H1 FY21: GBP1.2m) capital expenditure in
Autocentres principally related to the purchase of Halfords Mobile
Expert vans, PACE (the underpinning system architecture within the
Autocentre business) development work and replacement of fixtures
and fittings.
During the period, six properties that were acquired as freehold
properties within Universal Tyre Company (Deptford) were sold to
third parties and then leased back to Halfords Autocentres Limited.
The transaction has been accounted for as a sale and leaseback
transaction in the Group under IFRS 16 'Leases'. The total proceeds
of the sale were GBP7.5m and a net gain of GBP0.5m has been
recognised for the transaction within the income statement.
On a cash basis, total capital expenditure in the period was
GBP27.3m (H1 FY21: GBP11.9m).
Inventories
Group inventory held as at the period end was GBP172.3m (H1
FY21: GBP146.0m). Retail inventory increased to GBP151.6m (H1 FY21:
GBP140.8m), demonstrating some recovery in Cycling stock through
the period but also reflective of the incredibly strong sales in
Cycling in the prior period. Tredz & Wheelies stock value was
GBP10.1m (H1 FY21: GBP11.1m) remaining consistent with prior year,
showing good stock management.
Autocentres' inventory was GBP10.6m (H1 FY21: GBP5.2m). The
Autocentres business model is such that only modest levels of
inventory are held within the centres, with most parts being
acquired on an as-needed basis. The increase from the prior year is
due to the addition of Universal tyres inventory.
Cashflow and Borrowings
Operating Cash Flow during the period, was GBP108.1m (H1 FY21:
GBP231.2m). After acquisitions, taxation, capital expenditure and
net finance costs, Free Cash Flow of GBP69.3m (H1 FY21: GBP210.1m)
was generated in the period. Group net debt was GBP232.7m (H1 FY21:
GBP271.6m). The Group has GBP92.1m of cash at the balance sheet
date.
Principal Risks and Uncertainties
The Board considers risk assessment, identification of
mitigating actions and internal control to be fundamental to
achieving Halfords' strategic corporate objectives. In the Annual
Report & Accounts the Board sets out what it considers to be
the principal commercial and financial risks to achieving the
Group's objectives. The main areas of potential risk and
uncertainty in the balance of the financial year are described in
the Strategic Report on page 68 of the 2021 Annual Report and
Accounts, and all are considered relevant to the H1 FY22 reporting.
These include:
-- Business Strategy ? Capability and capacity to effect change
? Building and maintaining stakeholder support for our strategy ?
Delivering an attractive customer value proposition ? Positive
brand appeal, maintaining and growing market share
-- Financial? Delivering a sustainable business model
-- Compliance? Regulatory compliance ? Service quality delivery
? Cyber security
-- Operational? Colleague engagement/culture ? Managing the
skills shortage ? IT infrastructure failure ? Critical physical
infrastructure failure (including supply chain disruption)
In its most recent review of business risk, the Board identified
a new risk, climate change and electrification, highlighting the
necessity of a strategic response to climate change and to the
opportunities that arise from the increased societal importance of
electric mobility.
Loraine Woodhouse Chief Financial Officer, 9 November 2021
Glossary of Alternative Performance Measures
In the reporting of financial information, the Directors have
adopted various Alternative Performance Measures ("APMs"). APMs
should be considered in addition to IFRS measurements, of which
some are shown on Page 1. The Directors believe that these APMs
assist in providing useful information on the underlying
performance of the Group, enhance the comparability of information
between reporting periods, and are used internally by the Directors
to measure the Group's performance, not necessarily comparable to
other entities APMs.
The key APMs that the Group focuses on are as follows: 1.
Like-for-like ("L4L") sales represent revenues from stores, centres
and websites that have been tradingfor at least a year (but
excluding prior year sales of stores and centres closed during the
year) at constantforeign exchange rates. 2. Underlying EBIT equates
to results from operating activities before non-underlying items,
as shown in theGroup Income Statement. Underlying EBITDA further
removes depreciation and amortisation. 3. Underlying Profit Before
Tax is profit before income tax and non-underlying items as shown
in the GroupIncome Statement. 4. Underlying Earnings Per Share is
profit after income tax before non-underlying items as shown in
theGroup Income Statement, divided by the number of shares in
issue. 5. Net Debt is current and non-current borrowings less cash
and cash equivalents, both in-hand and at bank,as shown in the
Consolidated statement of financial position, as reconciled
below:
H1 FY22 H1 FY21
GBPm GBPm
Cash and cash equivalents 91.6 109.6
Lease liabilities - current (55.9) (73.9)
Lease liabilities - non-current (268.4) (307.3)
Net Debt (232.7) (271.6)
6. Net Debt to Underlying EBITDA ratio is represented by the ratio of Net Debt to Underlying EBITDA (both ofwhich are defined above). 7. Adjusted Operating Cash Flow is defined as EBITDA plus share-based payment transactions and loss ondisposal of property, plant and equipment, less working capital movements and movements in provisions (excludingpost period end payment run adjustment), as reconciled below:
H1 FY22 H1 FY21
GBPm GBPm
Underlying EBIT 63.7 63.7
Depreciation and Amortisation 52.0 51.8
Underlying EBITDA 115.7 115.5
Non-underlying operating income/(expenses) 6.4 (0.4)
EBITDA 122.1 115.1
Share-based payment transactions 4.2 1.6
Loss on disposal of property, plant & equipment 2.5 0.1
Profit on disposal of assets held for sale (0.5) -
Working capital movements
(12.1) 97.3
Provisions movement (8.1) 17.1
Adjusted Operating Cash Flow 108.1 231.2
8. Free Cash Flow is defined as Adjusted Operating Cash Flow (as defined above) less capital expenditure,net finance costs, taxation and exchange movements; as reconciled below:
H1 FY22 H1 FY21
GBPm GBPm
Adjusted Operating Cash Flow 108.1 231.2
Capital expenditure (27.3) (11.9)
Net finance costs (5.5) (7.7)
Taxation (5.3) (3.0)
Exchange movements (0.7) 1.5
Free Cash Flow 69.3 210.1
Halfords Group plc
Condensed consolidated income statement
For the 26 weeks to 1 October 2021
26 weeks to 26 weeks to 52 weeks to
1 October 2 October 2 April
2021 2020 2021
Unaudited Unaudited
Notes GBPm GBPm GBPm
Revenue 7 694.8 638.9 1,292.3
Cost of sales (335.4) (323.1) (636.0)
Gross profit 359.4 315.8 656.3
Operating expenses (295.7) (252.5) (576.8)
Operating profit before non-underlying items 63.7 63.7 114.5
Non-underlying operating income/(expenditure) 8 6.4 (0.4) (35.0)
Results from operating activities 70.1 63.3 79.5
Finance costs 9 (5.8) (7.9) (15.0)
Net finance costs (5.8) (7.9) (15.0)
Profit before tax and non-underlying items 57.9 55.8 99.5
Non-underlying operating income/(expenditure) 8 6.4 (0.4) (35.0)
Profit before tax 64.3 55.4 64.5
Tax on underlying items 10 (10.4) (10.5) (17.4)
Tax on non-underlying items 8 (1.2) 0.1 6.1
Profit for the period attributable to equity shareholders 52.7 45.0 53.2
Earnings per share
Basic earnings per share 13 26.6p 22.8p 27.1p
Diluted earnings per share 13 26.0p 22.4p 26.4p
Basic underlying earnings per share 13 24.0p 23.0p 41.7p
Diluted underlying earnings per share 13 23.4p 22.6p 40.7p
A final dividend was paid for the 52 weeks to 2 April 2021 of 5
pence per share (2021: 0 pence per share). The directors have
proposed an interim dividend of 3 pence per share in respect of the
26 weeks to 1 October 2021 (2021: 0 pence per share).
The notes on pages 25 to 34 are an integral part of these
condensed consolidated interim financial statements.
Halfords Group plc
Condensed consolidated statement of comprehensive income
For the 26 weeks to 1 October 2021
26 weeks to 26 weeks to 52 weeks to
1 October 2 October 2 April
2021 2021 2021
Unaudited Unaudited
GBPm GBPm GBPm
Profit for the period 52.7 45.0 53.2
Other comprehensive income
Cash Flow hedges: fair value changes in the period 5.0 (3.8) (9.6)
Income tax on other comprehensive income (1.2) 0.8 1.6
Other comprehensive income for the period,
3.8 (3.0) (8.0)
net of tax
Total comprehensive income for the period
56.5 42.0 45.2
attributable to equity shareholders
All items within the Consolidated statement of comprehensive
income are classified as items that are or may be recycled to the
consolidated income statement
The notes on pages 25 to 34 are an integral part of these
condensed consolidated interim financial statements.
Halfords Group plc
Condensed consolidated statement of financial position
As at 1 October 2021
As at As at As at
1 October
2 October 2 April
2021 2020 2021
Unaudited Unaudited
Notes GBPm GBPm GBPm
Assets
Non-current assets
Intangible assets 14 401.9 393.4 398.3
Property, plant and equipment 14 79.4 79.1 81.3
Right-of-use assets 14 271.2 319.2 282.8
Derivative financial instruments 0.7 - 0.1
Deferred tax asset 8.2 8.0 12.3
Total non-current assets 761.4 799.7 774.8
Current assets
Inventories 172.3 146.0 143.9
Trade and other receivables 97.8 62.5 86.1
Assets held for sale 14 - - 6.0
Derivative financial instruments 3.0 2.0 0.5
Current tax assets 0.5 - 3.1
Cash and cash equivalents 15 92.1 109.6 67.2
Total current assets 365.7 320.1 306.8
Total assets 1,127.1 1,119.8 1,081.6
Liabilities
Current liabilities
Borrowings 15 (0.1) (0.2) (0.2)
Derivative financial instruments (1.5) (1.4) (5.9)
Lease liabilities (55.9) (73.7) (63.4)
Trade and other payables (293.4) (295.5) (270.2)
Current tax liabilities - (0.1) -
Provisions (19.2) (22.5) (24.5)
Total current liabilities (370.1) (393.4) (364.2)
Net current liabilities (4.4) (73.3) (57.4)
Non-current liabilities
Borrowings 15 (0.4) (2.2) -
Lease liabilities (268.4) (305.1) (280.9)
Derivative financial instruments (0.5) - (0.4)
Trade and other payables (5.1) (2.3) (3.3)
Provisions (12.2) (8.4) (15.0)
Total non-current liabilities (286.6) (318.0) (299.6)
Total liabilities (656.7) (711.4) (663.8)
Net assets 470.4 408.4 417.8
Shareholders' equity
Share capital 16 2.0 2.0 2.0
Share premium account 16 151.0 151.0 151.0
Investment in own shares (9.1) (10.0) (10.0)
Other reserves 1.7 1.6 (1.8)
Retained earnings 324.8 263.8 276.6
Total equity attributable to equity holders of the Company 470.4 408.4 417.8
The notes on pages 25 to 34 are an integral part of these
condensed consolidated interim financial statements. Halfords Group
plc
Condensed consolidated statement of changes in equity For the 26
weeks to 1 October 2021
For the period ended 1 October 2021 (Unaudited)
Attributable to the equity holders of the Company
Other reserves
Share Investment Capital
Share premium in own redemption Hedging Retained Total
reserve reserve equity
capital account shares earnings
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Closing balance at 2 April 2021 2.0 151.0 (10.0) 0.3 (2.1) 276.6 417.8
Total comprehensive income for the period
Profit for the period - - - - - 52.7 52.7
Other comprehensive income
Cash flow hedges: fair value changes in the - - - - 5.0 - 5.0
period
Income tax on other comprehensive income - - - - (1.2) - (1.2)
Total other comprehensive income for the - - - - 3.8 - 3.8
period net of tax
Total comprehensive income for the period - - - - 3.8 52.7 56.5
Hedging gains and losses transferred to the - - - - (0.3) - (0.3)
cost of inventory
Transactions with owners
Share options exercised - - 0.9 - - - 0.9
Share-based payment transactions - - - - - 4.2 4.2
Tax on share-based payment transactions - - - - - 1.2 1.2
Dividends to equity holders - - - - - (9.9) (9.9)
Total transactions with owners - - 0.9 - (4.5) (3.6)
Balance at 1 October 2021 2.0 151.0 (9.1) 0.3 1.4 324.8 470.4
The notes on pages 25 to 34 are an integral part of these
condensed consolidated interim financial statements.
Halfords Group plc
Condensed consolidated statement of changes in equity
(continued) For the 26 weeks to 1 October 2021
For the period ended 2 October 2020 (Unaudited)
Attributable to the equity holders of the
Company
Other reserves
Share Investment Capital
Share premium in own redemption Hedging Retained Total
reserve
capital account shares reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Opening balance at 3 April 2020 2.0 151.0 (10.0) 0.3 4.6 217.9 365.8
Total comprehensive income for the period
Profit for the period - - - - - 45.0 45.0
Other comprehensive income
Cash Flow hedges: fair value changes in the period - - - - (3.8) - (3.8)
Income tax on other comprehensive income - - - - 0.8 - 0.8
Total other comprehensive income for the period net of - - - - (3.0) - (3.0)
tax
Total comprehensive income for the period - - - - (3.0) 45.0 42.0
Other - - - - - (0.7) (0.7)
Hedging gains and losses transferred to the cost of - - - - (0.3) - (0.3)
inventory
Transactions with owners
Share-based payment transactions - - - - - 1.6 1.6
Dividends to equity holders - - - - - - -
Total transactions with owners - - - - - 1.6 1.6
Balance at 2 October 2020 2.0 151.0 (10.0) 0.3 1.3 263.8 408.4
The notes on pages 25 to 34 are an integral part of these
condensed consolidated interim financial statements.
Halfords Group plc
Condensed consolidated statement of cash flows For the 26 weeks
to 1 October 2021
26 weeks to 26 weeks to 52 weeks to
1 October 2 October 2 April
2021 2020 2021
Unaudited Unaudited
Notes GBPm GBPm GBPm
Cash Flows from operating activities
Profit after tax for the period before non-underlying items 47.5 45.3 82.1
Non-underlying items 8 5.2 (0.3) (28.9)
Profit after tax for the period 52.7 45.0 53.2
Depreciation - property, plant and equipment 11.5 10.7 21.0
Impairment - property, plant and equipment 0.3 - 2.8
Amortisation of right-of-use assets 33.4 34.6 81.8
Amortisation - intangible assets 6.8 6.5 12.9
Net finance costs 5.8 7.9 15.0
Loss on disposal of property, plant and equipment and intangibles 2.5 0.1 1.7
Profit on sale and lease back (0.5) - -
Equity-settled share-based payment transactions 4.2 1.6 6.4
Exchange movement (0.7) 1.5 2.1
Income tax expense 11.6 10.4 11.3
Decrease/(increase) in inventories (30.3) 27.0 35.0
(Increase)/decrease in trade and other receivables (11.7) (9.0) (26.2)
Increase in trade and other payables 29.9 79.3 40.2
Increase/(decrease) in provisions (8.1) 17.1 25.7
Corporation tax paid (5.3) (3.0) (10.8)
Net cash from operating activities 102.1 229.7 272.1
Cash Flows from investing activities
Acquisition of subsidiary, net of cash acquired - - (11.5)
Proceeds from asset held for sale 7.5 - -
Purchase of intangible assets (10.4) (4.3) (11.8)
Purchase of property, plant and equipment (16.9) (7.6) (15.7)
Net cash used in investing activities (19.8) (11.9) (39.0)
Cash Flows from financing activities
Net proceeds from share options and purchase of own shares 0.9 - -
Finance costs paid (5.5) (7.7) (5.5)
Proceeds from loans, net of transaction costs - 3.0 -
Repayment of borrowings - (180.0) (180.0)
Interest paid on lease liabilities (4.6) (5.2) (10.0)
Payment of capital element of leases (38.2) (33.8) (85.9)
Dividends paid 12 (9.9) - -
Net cash used in financing activities (57.3) (223.7) (281.4)
Net increase/(decrease) in cash and bank overdrafts 15 25.0 (5.9) (48.3)
Cash and cash equivalents at the beginning of the period 15 67.0 115.3 115.3
Cash and cash equivalents at the end of the period 15 92.0 109.4 67.0
The notes on pages 25 to 34 are an integral part of these
condensed consolidated interim financial statements.
Halfords Group plc
Notes to the condensed consolidated interim financial statements
For the 26 weeks to 1 October 2021 1. General information
The condensed consolidated interim financial statements of
Halfords Group plc (the "Company") comprise the Company together
with its subsidiary undertakings (the "Group").
The Company is a limited liability company incorporated,
domiciled and registered in England and Wales. Its registered
office is Icknield Street Drive, Washford West, Redditch,
Worcestershire, B98 0DE.
The Company is listed on the London Stock Exchange.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 10 November 2021. 2.
Statement of compliance
These condensed consolidated interim financial statements for
the 26 weeks to 1 October 2021 have been prepared in accordance
with IAS 34 'Interim financial reporting' as endorsed by the UKEB.
They do not include all the information required for full annual
financial statements and should be read in conjunction with the
2021 Annual Report and Accounts, which have been prepared in
accordance with IFRS accounting standards.
The comparative figures for the financial period ended 2 April
2021 are not the Group's statutory accounts for that financial
period. Those accounts have been reported on by the Group's
auditors and delivered to the registrar of companies. The report of
the auditor was (i) unqualified, (ii) did not include a reference
to any matters to which the auditor drew attention by way of
emphasis without qualifying their report, and (iii) did not contain
a statement under section 498 (2) or (3) of the Companies Act 2006.
3. Risks and uncertainties
The Directors consider that the principal risks and
uncertainties which could have a material impact on the Group's
performance in the remaining 26 weeks of the financial year remain
the same as those stated on pages 66 to 72 of our Annual Report and
Accounts for the 52 weeks to 2 April 2021, which are available on
our website www.halfordscompany.com with the additional of climate
change and electrification going forward. These are also detailed
in the CFO report on page 11. 4. Significant accounting
policies
Going Concern
The directors have reviewed the current financial performance
and liquidity of the business. Further details of the assessment
are provided on pages 72 to 73 of our Annual Report and Accounts
for the 52 weeks to 2 April 2021, which are available on our
website www.halfordscompany.com. The directors have further
reviewed these financial forecasts against the current performance
of the business during H1 by updating the model for actual trading,
which shows Halfords has outperformed against the original
model.
Having reviewed current performance and forecasts, the Directors
consider that the Group has adequate resources to remain in
operation for the foreseeable future and have therefore continued
to adopt the going concern basis in preparing the condensed
consolidated interim financial statements. The Group's forecasts
and projections, taking into account reasonably possible changes in
trading performance, show that the Group has adequate resources to
continue in operational existence for a period of at least 12
months from the date of approval of these financial statements.
Accounting Policies
As required by the Disclosure and Transparency Rules of the
Financial Conduct Authority, the condensed consolidated interim
financial statements have been prepared by applying the accounting
policies and presentation that were applied in the preparation of
the 2021 Annual Reports and Accounts, which are published on the
Halfords Group website, www.halfordscompany.com.
The accounting policies adopted in the preparation of the
interim financial statements are the same as those set out in the
Group's annual financial statements for the 52 weeks ended 2 April
2021. 5. Estimates and judgements
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those applied to the consolidated
financial statements as at and for the 52-week period ended 2 April
2021 and the 26 weeks ended 2 October 2020. 6. Operating
segments
The Group has two reportable segments, Retail and Car Servicing,
which are the Group's strategic business units. Car Servicing
became a reporting segment of the Group as a result of the
acquisition of Nationwide Autocentres on 17 February 2010. The
strategic business units offer different products and services, and
are managed separately because they require different operational,
technological and marketing strategies.
The operations of the Retail reporting segment comprise the
retailing of automotive, leisure and cycling products through
retail stores and online platforms. The operations of the Car
Servicing reporting segment comprise car servicing and repair
performed from Autocentres, commercial vehicles and mobile customer
vans through Halfords Mobile Expert
The Chief Operating Decision Maker is the Executive Directors.
Internal management reports for each of the segments are reviewed
by the Executive Directors on a monthly basis. Key measures used to
evaluate performance are Revenue and Operating Profit. Management
believe that these measures are the most relevant in evaluating the
performance of the segment and for making resource allocation
decisions.
The following summary describes the operations in each of the
Group's reportable segments. Performance is measured based on
segment operating profit, as included in the management reports
reviewed by the Executive Directors. These internal reports are
prepared in accordance with IFRS accounting policies consistent
with these Group Financial Statements.
All material operations of the reportable segments are carried
out in the UK and all material non-current assets are in the UK.
The Group's revenue is driven by the consolidation of individual
small value transactions and as a result Group revenue is not
reliant on a major customer or group of customers. All revenue is
from external customers.
26 weeks to
Retail 1 October 2021
Income statement Car Servicing GBPm
GBPm Total Unaudited
GBPm
Revenue 538.7 156.1 694.8
Segment result before non-underlying items 61.2 3.7 64.9
Non-underlying items 6.4 - 6.4
Segment result 67.6 3.7 71.3
Unallocated expenses1 (1.2)
Operating profit 70.1
Net financing expense (5.8)
Profit before tax 64.3
Taxation (11.6)
Profit after tax 52.7
26 weeks to 2 October 2020
Retail
Income statement Car Servicing GBPm Total Unaudited
GBPm
GBPm
Revenue 524.2 114.7 638.9
Segment result before non-underlying items 60.3 4.7 65.0
Non-underlying items (0.1) (0.3) (0.4)
Segment result 60.2 4.4 64.6
Unallocated expenses1 (1.3)
Operating profit 63.3
Net financing expense (7.9)
Profit before tax 55.4
Taxation (10.4)
Profit after tax 45.0
1 Unallocated expenses have been disclosed to reflect the format
of the internal management reports reviewed by the Chief Operating
Decision maker and include an amortisation charge of GBP1.2m in
respect of assets acquired through business combinations (2020:
GBP1.3m).
52 weeks to
2 April
Retail
Income statement Car Servicing GBPm 2021
GBPm
Total
GBPm
Revenue 1,039.8 252.5 1,292.3
Segment result before non-underlying items 103.7 13.1 116.8
Non-underlying items (31.7) (3.3) (35.0)
Segment result 72.0 9.8 81.8
Unallocated expenses1 (2.3)
Operating profit 79.5
Net financing expense (15.0)
Profit before tax 64.5
Taxation (11.3)
Profit after tax 53.2
1 Unallocated expenses have been disclosed to reflect the format
of the internal management reports reviewed by the Chief Operating
Decision maker and include an amortisation charge of GBP2.3m in
respect of assets acquired through business combinations (2020:
GBP2.1m).
26 weeks to
Retail 1 October 2021
Other segment items: Car Servicing GBPm
GBPm Total Unaudited
GBPm
Capital expenditure 16.1 6.7 22.8
Depreciation expense 8.0 3.5 11.5
Amortisation of right-of-use asset 25.9 7.5 33.4
Impairment 0.3 - 0.3
Amortisation expense 6.1 0.7 6.8
26 weeks to
Retail 2 October 2020
Other segment items: Car Servicing GBPm
GBPm Total Unaudited
GBPm
Capital expenditure 9.3 1.9 11.2
Depreciation expense 8.1 2.6 10.7
Amortisation of right-of-use asset 29.0 5.6 34.6
Impairment - - -
Amortisation expense 4.8 0.5 5.3
52 weeks to
2 April
Retail
Other segment items: Car Servicing GBPm 2021
GBPm
Total
GBPm
Capital expenditure 23.3 22.0 45.2
Depreciation and impairment expense 19.1 4.7 23.8
Impairment of right-of-use asset 11.6 0.6 12.2
Amortisation of right-of-use asset 58.2 11.4 69.6
Amortisation expense 9.6 1.2 10.8
There have been no significant transactions between segments in
the 26 weeks ended 1 October 2021 (2020: GBPnil). 7. Revenue A.
Revenue streams and location
The Group's operations and main revenue streams are those
described in the last annual financial statements. The Group's
revenue is derived from contracts with customers.
Revenue split by the Group's operating segments are shown in
Note 6.
All revenue is recognised in the United Kingdom and Republic of
Ireland. B. Seasonality of operations
In general, the Group's results are not materially seasonal with
revenue in the first half broadly similar to that of the second,
however, sales of certain products tend to fluctuate by season. For
example, sales of children's cycles peak in the Christmas season
and sales of adult cycles tend to peak in the summer. 8.
Non-underlying items
26 weeks to 26 weeks to 53 weeks to
1 October 2 April
2 October 2020
2021 2021
Unaudited Unaudited
GBPm GBPm GBPm
Non-underlying operating expenses:
Organisational restructure costs (a) 0.3 0.9 5.9
One off claims (b) 0.1 - 2.9
Closure costs (c) (6.8) (0.5) 26.0
Impairment of right-of-use asset (d) - - (0.4)
Acquisition and investment-related fees (e) - - 0.6
Non-underlying items before tax (6.4) 0.4 35.0
Tax on non-underlying items (f) 1.2 (0.1) (6.1)
Non-underlying items after tax (5.2) 0.3 28.9
Non-underlying items are those items that are unusual because of
their size, nature (one-off, non-trading costs) or incidence. The
Group's management considers that these items should be separately
identified within their relevant income statement category to
enable a full understanding of the Group's results. a. In the
current and prior period, costs related to a strategic redesign of
our instore operating modelundertaken to better meet our customers'
expectations and deliver a consistent shopping experience across
ourestate. Redundancy costs of GBP0.3m (HY21: GBP0.9m, FY21:
GBP5.9m) were incurred to transition to the new operatingmodel. b.
A provision of GBP0.6m was created at year end FY20 in relation to
an HMRC audit regarding National MinimumWage. The Group has
continued to work with HMRC, alongside external advisors, and a
full data validation exerciseis underway to determine the required
Notice of Underpayment. The exercise is in progress and based on
informationavailable to date, and the Group's assessment of a range
of potential outcomes, management increased the provisionto GBP3.4m
at year end FY21, which represents management's best estimate of
the value of underpayments and theassociated penalty charge. During
the current period, management has incurred further professional
fees in relationto this investigation, amounting to GBP0.1m. c.
During FY20 and FY21 the group completed a strategic review of the
profitability of the physical estateand subsequently closed a
number of stores and garages. Assets were impaired, and costs
associated with theongoing onerous commitments under the lease
agreements and other costs associated with the property exits
wereprovided for accordingly. In the current period GBP6.8m (costs
of GBP26m during FY21) of these provisions have beenreleased as the
group continues to negotiate lease disposals and review provisions
held in place.
During the prior period Cycle Republic closure costs of GBP0.5m,
which were provided for at year-end FY20, were released.
At the period end property provisions carried forward amounted
to GBP12.9m. These will continue to unwind as property exits are
negotiated with landlords or tenants, and could result in further
amounts being released to the income statement due to the
significant estimation uncertainty over the timing of exits and the
final negotiated settlements. d. In FY20, in light of the ongoing
COVID-19 pandemic, the Group revised future cash flow projections
forstores and garages. As a result, in FY20, GBP0.9m incremental
impairment was recognised in relation to garages wherethe current
and anticipated future performance did not support the carrying
value of the right-of-use asset andassociated tangible assets. This
charge was directly attributable to impairment due to COVID-19 and
relatedprimarily to the right-of-use asset value. During FY21,
GBP0.4m of this impairment was reversed as the stores andgarages
returned to a profitable position. e. In FY21, GBP0.6m relating to
professional fees in respect of the acquisition of Universal Tyre
Services. f. The tax charge in H1 FY22 represents a tax rate of
18.8% applied to non-underlying items (H1 FY21:Credit, 18.9%, FY21
full year: Credit, 17.4%). 9. Net Finance Costs
26 weeks to 26 weeks to 52 weeks to
2 April
1 October 2021 2 October 2020
2021
Unaudited Unaudited
GBPm GBPm GBPm
Finance costs:
Bank borrowings (0.2) (2.0) (2.5)
Amortisation of issue costs on loans (0.3) (0.2) (1.1)
Commitment and guarantee fees (0.8) (0.5) (1.1)
Other interest payable - - (0.3)
Interest payable on lease liabilities (4.5) (5.2) (10.0)
Finance costs (5.8) (7.9) (15.0) 10. Income tax expense
Income tax expense is recognised based on management's best
estimate of the weighted average annual income tax rate expected
for the full financial year, applied to the pre-tax income of the
interim period.
The effective tax rate before non-underlying items for the 26
weeks to 1 October 2021 is 18.09% (H1 2020: 18.9%). The effective
tax rate is lower than the UK corporation tax rate primarily as a
result of the 30% permanent element of the 130% capital allowances
super deduction on qualifying plant and machinery additions. The
rate reduction is partially offset by the depreciation expense
relating to non-qualifying assets, and the share based payments
IFRS 2 charge. 11. Financial Instruments and Related
Disclosures
Accounting classifications and fair values
The following table shows the carrying amounts and fair values
of financial assets and liabilities, including their levels in the
fair value hierarchy. It does not include fair value information
for financial assets and financial liabilities not measured at fair
value if the carrying amount is a reasonable approximation of fair
value.
Total
1 October 2021 Fair Value - hedging Amortised Other financial
instruments cost liabilities carrying
amount
GBPm GBPm GBPm
GBPm
Financial assets measured at fair value
Forward exchange contracts used for 3.7 - - 3.7
hedging
3.7 - - 3.7
Financial assets not measured at fair
value
Trade and other receivables* - 89.4 - 89.4
Cash and cash equivalents - 92.1 - 92.1
- 181.5 - 181.5
Financial liabilities measured at fair
value
Forward exchange contracts used for (2.0) - - (2.0)
hedging
(2.0) - - (2.0)
Financial liabilities not measured at
fair value
Borrowings - - (0.5) (0.5)
Lease liabilities - - (324.3) (324.3)
Trade and other payables** - - (171.0) (171.0)
- - (495.8) (495.8)
*Prepayments and accrued income of GBP8.4m are not included as a
financial asset.
** Other taxation and social security payables of GBP22.9m,
deferred income of GBP1.4m, accruals of GBP84.9m and other payables
of GBP18.4m are not included as a financial liability.
Amortised Other
2 October 2020 Fair Value - hedging Total carrying
instruments cost financial amount
liabilities
GBPm GBPm GBPm
GBPm
Financial assets measured at fair value
Forward exchange contracts used for 2.0 - - 2.0
hedging
2.0 - - 2.0
Financial assets not measured at fair
value
Trade and other receivables* - 41.1 - 41.1
Cash and cash equivalents - 109.6 - 109.6
- 150.7 - 150.7
Financial liabilities measured at fair
value
Forward exchange contracts used for (1.4) - - (1.4)
hedging
(1.4) - - (1.4)
Financial liabilities not measured at
fair value
Borrowings - - (2.4) (2.4)
Lease liabilities - - (378.7) (378.7)
Trade and other payables** - - (161.7) (161.7)
- - (542.8) (542.8)
*Prepayments and accrued income of GBP21.4m are not included as
a financial asset.
** Other taxation and social security payables of GBP51.4m,
deferred income of GBPnil, accruals of GBP64.5m and other payables
of GBP18.1m are not included as a financial liability.
Measurement of fair values
The fair values of each class of financial assets and
liabilities is the carrying amount, based on the following
assumptions:
Trade receivables, trade payables and The fair value approximates to the carrying amount because of the short
lease obligations, short-term maturity of these instruments
deposits and borrowings
The fair value of bank loans and other loans approximates to the carrying value
Long-term borrowings reported in the statement of financial position as the majority are floating rate
where payments are reset to market rates at intervals of less than one year.
Forward currency contracts The fair value is determined using the market forward rates at the reporting
date and the outright contract rate.
Financial instruments carried at fair value are required to be
measured by reference to the following levels:
-- Level 1: quoted prices in active markets for identical assets
or liabilities;
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset orliability, either
directly (i.e., as prices) or indirectly (i.e. derived from
prices); and
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservableinputs).
All financial instruments carried at fair value have been
measured by a Level 2 valuation method. There have been no changes
to classifications in the current or prior period.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from the Group's
receivables from customers.
The Group does not have any individually significant customers
and so no significant concentration of credit risk. The majority of
the Group's sales are paid in cash at point of sale which further
limits the Group's exposure. The Group's exposure to credit risk is
influenced mainly by the individual characteristics of each
customer. The Board of Directors has established a credit policy
under which each new customer is analysed individually for
creditworthiness before the Group's standard payment terms and
conditions are offered. The Group limits its exposure to credit
risk from trade receivables by establishing a maximum payment
period of one month for customers. All trade receivables are based
in the United Kingdom.
The Group has taken into account the historic credit losses
incurred on trade receivables and adjusted it for forward looking
estimates. The movement in the allowance for impairment in respect
of trade receivables during the period was GBP0.1m. 12.
Dividends
The Directors paid a final dividend of 5 pence per share in
respect of the financial period ended 2 April 2021 (FY20: nil).
The Directors are proposing an interim dividend for the 26 weeks
to 1 October 2021 of 3 pence per share (2021: nil). The interim
dividend will be paid on 21 January 2022 to shareholders who are on
the register of members, with an ex-dividend date of 9 December
2021 and a record date of 10 December 2021. 13. Earnings Per
Share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the period. The weighted
average number of shares excludes shares held by the Employee
Benefit Trust and has been adjusted for the issue/repurchase of
shares during the period.
For diluted earnings per share the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. These represent share options
granted to employees where the exercise price is less than the
average market price of the Company's ordinary shares during the 26
weeks to1 October 2021.
26 weeks to 26 weeks to 52 weeks
to
1 October 2 October 2 April
2021 2020
2021
Unaudited Unaudited
Number Number Number
m m m
Weighted average number of shares in issue 199.1 199.1 199.1
Less: shares held by the Employee Benefit Trust (1.3) (2.1) (2.0)
Weighted average number of shares for calculating basic earnings 197.8 197.0 197.1
per share
Weighted average number of dilutive share options 4.9 3.6 4.9
Weighted number of shares for calculating diluted earnings per 202.7 200.6 202.0
share
26 weeks to 26 weeks to 52 weeks to
2 April
1 October 2021 2 October 2020
2021
Unaudited Unaudited
GBPm GBPm GBPm
Earnings attributable to equity shareholders 52.7 45.0 53.2
Non-underlying items:
Operating expenses (6.4) 0.4 35.0
Tax charge on non-underlying items 1.2 (0.1) (6.1)
Underlying earnings before non-underlying items 47.5 45.3 82.1
Basic earnings per share 26.6p 22.8p 27.1p
Diluted earnings per share 26.0p 22.4p 26.4p
Basic underlying earnings per share 24.0p 23.0p 41.7p
Diluted underlying earnings per share 23.4p 22.6p 40.7p
The alternative measure of earnings per share is provided
because it reflects the Group's underlying performance by excluding
the effect of non-underlying items. 14. Capital Expenditure -
Tangible, Intangible, Assets held for sale & Right-of-Use
Assets
Tangible and Intangible Right-of-use assets
Assets
Unaudited
Unaudited
GBPm GBPm
Net book value at 3 April 2020 478.8 349.9
Additions 11.2 7.0
Disposals (0.2) (3.1)
Depreciation, amortisation and impairment (17.3) (34.6)
Net book value at 2 October 2020 472.5 319.2
Tangible and Intangible Assets Right-of-use assets
Unaudited Unaudited
GBPm GBPm
Net book value at 2 April 2021 479.6 282.8
Additions 22.8 23.3
Sale and leaseback adjustment - (1.4)
Disposals (2.5) (0.1)
Depreciation, amortisation and impairment (18.6) (33.4)
Net book value at 1 October 2021 481.3 271.2
During FY21 there was a balance of GBP6m held within current
assets relating to an asset held for sale. This related to seven
buildings acquired as part of the acquisition of The Universal Tyre
Services (Deptford) Limited. On 26 May 2021, six of these
properties were sold to third parties and then leased back to
Halfords Autocentres Limited. The transaction has been accounted
for as a sale and leaseback transaction in the Group under IFRS 16
'Leases'.
The total proceeds of the sale were GBP7.5m and a net gain of
GBP0.5m has been recognised for the transaction within the income
statement. 15. Analysis of Movements in the Group's Net Debt in the
Period
At
At Cash Flow Other non-cash changes
1 October 2021
2 April
2021 Unaudited Unaudited Unaudited
GBPm GBPm GBPm GBPm
Cash in hand and at bank 67.0 25.0 - 92.0
Debt due after one year - - (0.4) (0.4)
Total net debt excluding leases 67.0 25.0 (0.4) 91.6
Current lease liabilities (63.4) 42.8 (35.3) (55.9)
Non-current lease liabilities (280.8) - 12.4 (268.4)
Total lease liabilities (344.2) 42.8 (22.9) (324.3)
Total net debt (277.2) 67.8 (23.3) (232.7)
Non-cash changes comprise finance costs in relation to the
amortisation of capitalised debt issue costs of GBP0.4m (H1 FY21:
GBP0.1m), and movements in leases. Cash and cash equivalents at the
period end consist of GBP87.0m (H1 FY21: GBP104.5m) of liquid
assets, GBP5.1m (H1 FY21: GBP5.1m) of cash held in Trust and
GBP0.1m (H1 FY21: GBP0.2m) of bank overdrafts.
At
At Cash Flow Other non-cash changes
2 October 2020
3 April
2020 Unaudited Unaudited Unaudited
GBPm GBPm GBPm GBPm
Cash in hand and at bank 115.3 (5.9) - 109.4
Debt due after one year (179.1) 177.0 (0.1) (2.2)
Total net debt excluding leases (63.8) 171.1 (0.1) 107.2
Current lease liabilities (83.2) 39.0 (29.5) (73.7)
Non-current lease liabilities (332.8) - 27.7 (305.1)
Total lease liabilities (416.0) 39.0 (1.8) (378.8)
Total net debt (479.8) 210.1 (1.9) (271.6) 16. Share Capital
Share
Share
Number of shares premium
capital
m account
GBPm
GBPm
As at 3 April 2020 and 2 October 2020 199.1 2.0 151.0
Share
Share
Number of shares premium
capital
m account
GBPm
GBPm
As at 2 April 2021 and 1 October 2021 199.1 2.0 151.0
During the 26 weeks to 1 October 2021 and 2 October 2020, there
were no movements in company share capital. The shares held in
treasury are used to meet options under the Company's share options
schemes. 17. Contingent liability
The Group's banking arrangements include the facility for the
bank to provide a number of guarantees in respect of liabilities
owed by the Group during the course of its trading. In the event of
any amount being immediately payable under the guarantee, the bank
has the right to recover the sum in full from the Group. The total
amount of guarantees in place at 1 October 2021 amounted to
GBP1.5m.
Where right of set off is included within the Group's banking
arrangements, credit balances may be offset against the
indebtedness of other Group companies. 18. Related Party
Transactions
The key management personnel of the Group comprise the Executive
and Non-Executive Directors and the Halfords Limited and Halfords
Autocentres management boards. The details of the remuneration,
long-term incentive plans, shareholdings and share option
entitlements of individual Directors are included in the Directors'
Remuneration Report on pages 122 to 136 of the Group 2021 Annual
Report and Accounts.
During the period no share options (H1 FY21: none) were granted
to directors in relation to the Performance Share Plan ("PSP") and
no share options (H1 FY21: none) were granted in relation to the
Deferred Bonus Plan ("DBP"). 19. Post Balance Sheet Events
During the period, the Group has progressed the second stage
review of its legal entity structure. The primary objective of the
first stage (accounted for in the plc accounts as at 2 April 2021)
was to eradicate a dividend block that had arisen in the
intermediate holding entities in the Group.
The second stage eliminates the share capital and intercompany
balances of seven entities in the Group structure in preparation
for liquidation, with the objective to reduce the complexity and
administration burden of the surplus entities.
The required legal transactions and liquidation are due for
completion during the second half of FY22.
Responsibility statement of the Directors in respect of the
half-yearly financial report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim FinancialReporting as adopted by
the UKEB;
-- the interim management report includes a fair review of the
information required by: a. DTR 4.2.7R of the Disclosure and
Transparency Rules, being an indication of important events that
haveoccurred during the first six months of the financial year and
their impact on the condensed set of financialstatements; 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 takenplace in the first six months of the current
financial year and that have materially affected the
financialposition or performance of the entity during that period;
and any changes in the related party transactionsdescribed in the
last annual report that could do so.
By order of the Board
Loraine Woodhouse, Chief Financial Officer
9 November 2021
Halfords Group plc
Independent review report to Halfords Group plc For the 26 weeks
to 1 October 2021
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
26 weeks ended 1 October 2021 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated statement of
financial position, the condensed consolidated statement of equity,
the condensed consolidated statement of cashflows and the related
notes.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of and
has been approved by the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half -yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Financial Reporting Council for use
in the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 26 weeks ended 1
October 2021 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34,
and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting its responsibilities in
respect of half-yearly financial reporting in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
BDO LLP
Chartered Accountants
London
9 November 2021
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
-----------------------------------------------------------------------------------------------------------------------
ISIN: GB00B012TP20
Category Code: IR
TIDM: HFD
LEI Code: 54930086FKBWWJIOBI79
OAM Categories: 1.2. Half yearly financial reports and audit reports/limited reviews
Sequence No.: 126428
EQS News ID: 1247670
End of Announcement EQS News Service
=------------------------------------------------------------------------------------
Image link:
https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=show_t_gif&application_id=1247670&application_name=news
(END) Dow Jones Newswires
November 10, 2021 02:02 ET (07:02 GMT)
Halfords (LSE:HFD)
Historical Stock Chart
From Mar 2024 to Apr 2024
Halfords (LSE:HFD)
Historical Stock Chart
From Apr 2023 to Apr 2024
