Halfords Group PLC (HFD) Halfords Group PLC: Preliminary
Results: Financial Year 2023 21-Jun-2023 / 07:00 GMT/BST
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21 June 2023
Halfords Group plc
Preliminary Results: Financial Year 2023
Group revenue up +15.3% year-on-year, with 48% of revenue now
service-related and FY23 PBT within previously guided range.
Strong start to FY24 with market share increases across all
categories.
Halfords Group plc ("Halfords" or the "Group"), the UK's leading
provider of Motoring and Cycling services and products, today
announces its preliminary results for the 52 weeks to 31 March 2023
(the "Period").
To provide a better understanding of underlying performance,
financial comparisons will also be made relative to FY20, that is,
on a three-year basis. The disruption from COVID-19 to both FY21
and FY22 means that comparators against these years are more
difficult to interpret. From FY24 we will revert to one-year
comparators. All numbers shown are on a post-IFRS 16 basis and
before non-underlying items, unless otherwise stated.
FY23 overview:
-- Significant Group revenue growth of +39.5% vs FY20, and
+15.3% vs FY22. LFL growth of 13.4% vs FY20(+2.4% LFL vs FY22) with
all segments positive despite a backdrop of significant declines in
Cycling and ConsumerTyres markets - which were down 24% and 14%
respectively vs pre-covid on a volume-basis.
-- Market share increases vs FY22 across Motoring, Tyres,
Servicing and Cycling.
-- Despite an estimated GBP95m* of year-on-year cost and market
headwinds, investment in price to supportcustomers, and continued
investment in our transformation, Underlying Profit Before Tax
(PBT) of GBP51.5m, down-GBP38.3m vs FY22 and -GBP5.4m vs. FY20.
-- Launch of the UK's first, dedicated Motoring Loyalty Club
with over 1.7m members at year end, exceedingtargets and driving
record levels of cross-shop and customer satisfaction.
-- Lodge Tyre delivering business case following acquisition in
October 2022, demonstrating the resilienceof the commercial tyre
market.
-- Avayler, our third-party software as a service ("SaaS")
business won its first major European client -Mobivia, one of
Europe's leading mobility organisations.
-- Group Gross margin -290bps vs FY22 as we remain competitively
priced across Motoring and MotoringServices, supporting customers
through the cost-of-living crisis. Autocentres -500bps primarily
due to the expectedmargin dilution from acquiring tyre
businesses.
-- Over GBP20m of cost and efficiency savings realised during
the year, beating initial target of GBP15m.
-- Strong free cash flow generation, with Retail stock lower on
a volume basis vs FY22.
-- Resilient Balance Sheet, with Net Debt of -GBP1.8m pre lease
debt and Net Debt : EBITDA pre-lease debt of0.01x, (1.87x
post-lease debt), within our target range.
-- Final dividend of 7p per share proposed, to be paid in
September 2023, resulting in a full year dividendof 10p, an
increase of +11% vs FY22.
*GBP68m cost inflation, GBP16m impact from core market declines,
GBP11m of business rates reinstatement.
FY24 current trading and outlook:
Trading in FY24 year-to-date has been good, with positive Group
LFLs despite less favourable weather conditions in early spring. We
have delivered profitable sales growth and increased market share
across all major categories, whilst continuing to support customers
through the ongoing cost-of-living crisis.
We expect year-on-year profit growth in FY24 and are comfortable
with current analyst consensus of GBP53.3m underlying PBT. Our
expectations in FY24 are underpinned by the following
assumptions:
-- We forecast Consumer Tyre market volumes to grow +2.6ppts,
Retail Motoring market volumes to grow+0.5ppts, Motoring Services
market volumes to be broadly flat, and Cycling market volumes to
decline -1ppt.
-- We aim to grow volume share in each market which will be
underpinned by;? Growing share in the GBP1bn specialist car parts
market with a particular focus on the Brakes market,complementing
our existing 3B's of Blades, Bulbs and Batteries. ? Leveraging our
financial services with the launch of our industry leading, "Buy
Now Pay Later" offer. ? Driving utilisation across our garages by
targeting the lowest performing garages and dynamicpricing.
-- We expect net cost inflation of c.GBP30m primarily through
FX, energy and pay inflation, partially offsetby freight.
-- However, we aim to offset this cost inflation through our
cost and efficiency programme;? The primary component will be our
product cost reduction, which is already well underway. ?
Approximately a third of the required cost and efficiency target
will be achieved through initiativesalready delivered in FY23.
-- We anticipate H1 PBT to be down YoY, and H2 to be up YoY,
with the H1 variance impacted by the one-off FXcredit taken in H1
FY23.?
-- We expect to invest some gross margin rate year-on-year, as
we look to support customers through thecost-of-living crisis,
whilst driving profitable sales growth.
-- Capex for FY24 is expected to be at the lower end of our
GBP50-60m p.a. mid-term average presented at theCMD, as we look to
maximise ROCE.?
-- A cash outflow is envisaged in H1 FY24, with a corresponding
and offsetting cash inflow in H2, ending theyear with a small net
cash (pre-lease debt) position.
Looking beyond FY24, we expect strong profit growth in FY25 as
we take a significant step towards our mid-term expectation of
GBP90-110m underlying PBT, as outlined at our Capital Markets Day
in April 2023.
Graham Stapleton, Chief Executive Officer of Halfords,
commented:
"In a very challenging year, our focus has been on supporting
both customers and colleagues through the cost-of-living crisis.
Investment in competitive pricing and the value for money offered
by our Motoring Loyalty Club, has enabled us to help more people
with their motoring needs. This has led to an outstanding sales
performance and significant market share gains.
Over the year we have also made great progress against our
strategy, building a bigger needs-based services business, with
over three quarters of our revenue now coming from motoring, and
almost half from service-related sales. These results have been
achieved despite significant inflation and other macroeconomic
headwinds and are therefore a clear illustration of the
ever-increasing resilience of our business.
Trading since the start of the new financial year has been
strong. We have seen growth in our loyalty club, now reaching over
2m members, and we have entered the GBP1bn car parts market,
drawing on our unrivalled value and convenience.
Despite the uncertain consumer backdrop, I am confident that we
will see the current momentum continue across the year, as we
develop out an even more differentiated proposition. Last week we
launched an industry leading Buy Now Pay Later offer to help
customers cover the cost of essential vehicle maintenance and
repairs. All of this is of course delivered by our highly skilled
colleagues, across our unique and convenient combination of
garages, mobile vans and stores."
Group financial summary
FY23 FY20 FY23 vs FY22 FY23 vs
GBPm
(52 Wk) FY20 FY22
Revenue 1,593.5 1,142.4 451.1 1,382.4 211.1
Autocentres 613.9 191.8 422.1 380.8 233.1
Retail 979.6 950.6 29.0 1,001.6 -22.0
Gross Margin 49.3% 51.1% -180bps 52.2% -290bps
Autocentres 50.4% 65.5% -1510bps 55.4% -500bps
Retail 48.6% 48.2% +40bps 51.0% -240bps
Underlying EBITDA 186.0 188.6 -2.6 207.1 -21.1
Underlying Profit Before Tax ("PBT") 51.5 56.9 -5.4 89.8 -38.3
Profit Before Tax 43.5 22.7 20.8 96.6 -53.1
Underlying Basic Earnings per Share 18.8p 25.4p -6.6p 35.5p -16.7p
Group revenue summary
3-Year vs. FY20 1-Year vs. FY22
Growth Growth
Total LFL Total LFL
Halfords Group 39.5% 13.4% 15.3% 2.4%
Autocentres 220.1% 31.6% 61.2% 15.4%
Retail 3.1% 9.9% -2.2% -1.8%
Motoring 10.3% 14.5% 3.6% 4.0%
Cycling -8.3% 1.3% -11.2% -10.9%
Group Revenue
-- Group LFL growth of +2.4% vs FY22 with Autocentres +15.4% and
Retail Motoring +4.0% and Cycling -10.9%.
-- Group LFL growth of +13.4% vs FY20, with Autocentres +31.6%,
Retail Motoring +14.5% and Cycling +1.3%.
-- Service-related sales of c.GBP759m (48% of Group sales) in
FY23, driven by organic LFL growth, theannualisation of National
Tyres following the acquisition in December 2021, and the
acquisition of Lodge Tyre inOctober 2022.
-- B2B revenues of GBP384m in FY23, accounting for 24% of Group
Revenue. Strong organic LFL growth inCommercial Fleet services, as
well as the acquisition of Lodge Tyre, and strong growth of +16.7%
in Cycle2Work("C2W").
Autocentres
-- Strong LFL growth against both FY20 and FY22 despite the
consumer tyre market being -14% below FY20.
-- Market volume share growth of +0.4pts in tyres on an LFL
basis benefitting from the launch of same daytyre fitting which has
driven incremental bookings into garages.
-- Motoring Loyalty Club helping to drive performance with
customer acquisition from Retail and onlinecustomer base. Roughly a
third of MOTs booked in FY23 were as a result of Club Memberships
and Retail cross shop.
-- Acquisition of Lodge Tyre has strengthened our existing
Commercial business of Universal and McConechy's,both of which have
performed well, growing revenues and profit during the period.
-- National Tyres is most exposed to the depressed consumer tyre
market, impacting underlying businessperformance, however
acquisition synergies achieved in line with plan.
-- While the recruitment market remains challenging, a
combination of new recruits, an extensive internalupskilling
programme, retention initiatives, and a continued focus on
utilisation means that the Group's capacitycontinues to
improve.
Retail
-- Market share growth across both Motoring and Cycling helping
to offset discretionary categories, whichmaterially declined in H2
FY23.
-- Motoring:? Market volume share growth of +2.6ppts year on
year with LFL revenue growth of +14.5% vs FY20 and+4.0% vs FY22,
reflecting driven by our "Keep on Motoring for Less" campaign, the
growth of our MotoringLoyalty Club and strategic price investments.
? A strong H2 performance across motoring essentials as our in-year
campaigns and investments resonatedwith customers. ? Launch into
wider GBP1bn car parts market, offering customers access to c.130k
of car parts with freenext day delivery to home or store. Our
market share has doubled in the four months post-launch. ? Strong
growth across needs-based categories including maintenance and
parts, offset by lower sales inhigher ticket and discretionary
categories.
-- Cycling:? Revenue +1.3% LFL vs FY20 and -10.9% LFL vs FY22
with market volume share growth of +1.0pts partiallyoffsetting the
impact of the Cycling market being -24% below FY20 on a
volume-basis. ? Strong B2B sales through our C2W scheme, building
it into the online shopping journey and focussingon acquiring new
business accounts.
Gross margin
-- Group gross margin of 49.3% represents an expected -180 basis
point (bps) decline versus the 51.1% margindelivered in FY20.
-- Retail Gross margin up +40bps vs FY20 due to improved Cycling
margin and mix into the comparativelyhigher margin Motoring
category.
-- Autocentres gross margin decline of -500bps vs FY22,
primarily a result of the acquisition impact oflower gross margin
tyre businesses. This decline is expected to stabilise in H2 FY24,
following the anniversary ofthe Lodge Tyre acquisition.
Cost and efficiency:
-- Alongside the market headwinds noted, the Group has seen an
estimated GBP68m of inflation vs FY22, withincost of goods, freight
and operating costs, as well as the reinstatement of business rates
of GBP11m following theFY22 COVID-19 relief scheme.
-- GBP20m of cost and efficiency savings delivered from over 150
initiatives exceeded the initial GBP15m target.
-- 41 lease renewals completed in Retail, saving an average of
c.22% on each renewal.
-- Closure of 7 Retail stores and 19 Garages in FY23, driving
better return on fixed costs through tradetransfer.
-- Successful hedging policies in FX and Energy resulted in no
inflationary impact during FY23.
-- Competitive freight negotiations throughout FY23 at, or
below, spot rates.
-- Support Centre costs reduced through restructuring and
organisational design work.
FY23 strategic update
Since setting out our strategy in 2018, we have evolved into a
significantly bigger business with service-related sales
representing 48% of total revenue, and our B2B business more than
doubling. We have developed a unique and scaled platform, building
a market leading interconnected infrastructure of stores, garages
and vans, at the same time as creating a data and digitally-enabled
business. This platform differentiates us from our competitors and
provides significant opportunities for earnings growth. This
transformation has been a multi-year process, with some of the
major highlights in FY23 as follows:
-- Acquisition of Lodge Tyre? Halfords is now the largest
commercial tyre service provider in the UK, with the acquisition of
Lodgecomplementing the previous acquisitions of Universal and
McConechy's. ? Grows garage estate to 643 and commercial van fleet
to 479. ? Acquisition delivers strategically important Motoring,
Service and B2B revenue streams. ? Year one synergies and business
performance in line with business case, demonstrating the
resilienceof the commercial markets. ? On track to deliver
incremental synergies worth GBP3.8 million (EBITDA) by year 5.
-- Motoring Loyalty Club? Over 1.7m members in year one,
significantly exceeding target of 500k-1m members. ? 125k premium
members, exceeding our full year target of 50k - 100k. ? Delivering
excellent cross-shop results of c.15% vs 4% for non-club members,
with increased shoppingfrequency and average spend per customer. ?
NPS results +4 points higher than equivalent score for non-members.
? Over a third of MOTs driven by Club members.
-- Avayler growth? Expansion into Europe following signing of
third international customer - Mobivia, with the roll-outto start
in Germany through ATU's mobile fleet.
-- National Tyres integration? GBP6m of synergies delivered in
FY23, in line with integration business case. ? All sites
operational on our Avayler garage platform "PACE", allowing
coordinated central buying,slots bookable via Halfords.com and
increased capacity and utilisation. ? MOT lanes and equipment
rolled out helping to grow Service Maintenance and Repair sales by
+27%year-on-year.
-- Fusion? Rollout of capital efficient programme to 50 towns
including car park referral managers, newtechnology and improved
operating processes. ? "Solution selling" training completed by
nearly all Retail colleagues and Autocentres managers.
Enquiries
Investors & Analysts (Halfords)
Jo Hartley, Chief Financial Officer
Richard Guest, Corporate Finance Director
Andy Lynch, Head of Investor Relations +44 (0) 7483 457 415
Media (Powerscourt) +44 (0) 20 7250 1446
Rob Greening halfords@powerscourt-group.com
Nick Hayns
Elizabeth Kittle
Results presentation
A live webcast followed by a Q&A call for analysts and
investors will be held today, starting at 09:00am UK time.
Attendance is by invitation only. A copy of the 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 6 September 2023 we will report our 20-week Trading Update
for the period ending 18 August 2023.
Notes to Editors
www.halfords.com www.avayler.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 393 Halfords stores, 2
Performance Cycling stores (trading as Tredz and Giant), 643
garages (trading as Halfords Autocentres, McConechy's, Universal,
National Tyres and Lodge Tyre) and have access to 264 mobile
service vans (trading as Halfords Mobile Expert, Tyres on the Drive
and National), 479 commercial vans and 5 HME Cycling 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
As we laid out our plans for the year ahead in June last year,
we stated the importance of maintaining our investment in key
strategic initiatives despite the emerging economic challenges and
cost of living crisis. One year on, I am proud of the strategic
progress we have made during FY23. As detailed at our Capital
Markets Day in April 2023, we have created a more resilient,
differentiated, customer-focussed and data-centric business - one
which I believe will go on to deliver significantly higher
shareholder returns over the mid-term as we leverage our unique
platform.
Some of the key strategic highlights in the year included
acquiring Lodge Tyre in October 2022, signing our third client onto
our Avayler SaaS platform, the continued integration of National
Tyres by implementing the same Avayler software across the estate,
and the launch of our Motoring Loyalty Club to over 1.7m customers
in its first year.
Alongside a very busy year of strategic change, we have seen the
underlying strength of the Group demonstrated through a solid
financial performance, which has been delivered against a backdrop
of the most challenging operating conditions I have seen during my
career in Retail. Total Group revenue reached GBP1.6bn, growing
+39.5% vs FY20 (+15.3% vs FY22), with Service-related sales
accounting for almost half of the Group's total revenue at 48%, and
B2B revenue reaching 24%.
Underlying profit before tax was GBP51.5m, down -GBP38.3m vs
FY22 and -GBP5.4m vs. FY20, despite an estimated GBP95m of
year-on-year cost and market headwinds, investment in price to
support customers, and continued investment in our transformation.
It is this operational and financial strength that has enabled
investment for future growth, as well as allowing us to increase
our FY23 dividend by +11% to 10p for the full year - evidence of
the confidence we have in the plan.
Group revenue
Group revenues of GBP1.6bn were underpinned by LFL performance
of +13.4% vs FY20 and +2.4% vs FY22. This is a particularly strong
result considering the uncertain environment businesses and
consumers have faced, and it demonstrates the relevance and
resilience of our offer. As we have highlighted throughout this
year, two of our core markets (Consumer Tyres and Cycling) are
facing a very significant downturn, and in our Capital Markets Day
we noted that the Consumer Tyre market remains -14% below FY20 and
the cycling market -24% below the same period. To deliver sales
growth despite these headwinds clearly demonstrates the underlying
strength of the business and our ability to grow market share. As
we look forward, the recovery of these markets, coupled with
continued market share growth, will see us improve performance
further.
Autocentres revenue
Autocentres revenues continue to grow rapidly as we scale the
business. Total revenues reached GBP614m growing +31.6% LFL vs FY20
and +15.4% vs FY22, and now representing 38% of Group revenues.
Given the tyre market performance, this is a very strong result and
is driven by our growing share within the tyre market which
increased +0.4ppts year-on-year and the benefits of our Motoring
Loyalty Club, which has introduced more new customers to our
business. Indeed, the Motoring Club drove roughly a third of MOTs
booked in the period.
During the year we have also seen growth in our non-LFL
business, with National Tyres present in H1 for the first time and
the newly acquired Lodge Tyre from October 2022. Lodge Tyre, which
is centred around B2B commercial fleet tyre services, has shown a
very resilient trading performance - one of the key principles in
our strategic decision to grow our B2B business. National Tyres
revenues have inevitably been impacted by the consumer tyre market
depression. The combination of lower-than-average miles driven vs
pre-COVID and the subsequent cost of living crisis has temporarily
extended the life of tyres and forced consumers to delay replacing
until critical. Neither factor will be permanent, and as the market
recovers we anticipate continued revenue growth across the
Autocentres Group.
Retail Motoring
Retail Motoring has enjoyed a strong year, as markets normalised
post-Covid, and the less discretionary nature of the product and
service offering has been demonstrated. There have inevitably been
some more discretionary markets within the offer (e.g. Technology)
that have suffered as consumers look to lower their outgoings, but
we have worked hard to grow market share across our entire offer.
The overall result therefore masks what we consider a very strong
performance in more needs-based products. We have also improved the
value of our offer, as well as the overall customer proposition.
During H2, we entered the GBP1bn wider car parts market, providing
customers with access to thousands of car parts, with next day
delivery to home or store.
Retail Cycling
Whilst Cycling saw a fairly resilient performance during H1, the
latter part of Q3 and Q4 saw a pronounced market deterioration due
to the more discretionary nature of this category. Whilst we have
grown our share of the market, it was not enough to offset the
tough market conditions. As market leaders, Cycling continues to be
an important part of the business, giving consumers a method of
transport that is both environmentally friendly as well as
beneficial for their fitness.
Whilst the more mainstream cyclist has generally reduced their
spending, our market leading Cycle2Work scheme has enjoyed success,
growing +16.7% year-on-year. We continue to develop our platform,
making it easier for customers to gain access to exclusive and
market leading own brand bikes through this government supported
tax free cycling scheme.
Strategic progress
Acquisition of Lodge Tyre
As noted at our interim results, Lodge Tyre was acquired shortly
after the close of H1, in October 2022. Lodge is a commercial
vehicle tyre and service specialist and complements our existing
commercial fleet businesses of McConechy's and Universal Tyres. It
significantly expands our UK coverage and makes Halfords the UK's
commercial tyre services market leader. We now have a commercial
fleet of 479 vans and 90 centres operating across the UK, allowing
businesses to work with a single partner to support their
fleets.
Lodge is perfectly aligned to our areas of strategic priority,
operating wholly within the motoring services sector, and with over
90% of its revenues in B2B markets.
Whilst the integration of Lodge is not yet complete, it has
joined the Group seamlessly and performed very well, with business
performance in line with our business case expectations.
Avayler
Our Avayler platform is the software that underpins the Halfords
motoring services operating model. At our Capital Markets Day in
April, we detailed how this platform is central to the success of
our business.
The SaaS version of our Avayler platform is already helping
three of the biggest automotive businesses, (American Tire
Distributors and TireBuyer in the US, and Mobivia in Europe)
provide a truly customer centric service offering whilst
streamlining their operations, increasing efficiencies, and
reducing costs.
Motoring Loyalty Club
The launch of our Motoring Loyalty Club in March 2022 was a
significant milestone for the Group. In June 2022 we set our year
one targets for the club, which we have comfortably exceeded. This
is a clear sign of the relevance and potential of the club, even at
this early stage. With over 1.7m members against a target of 500k
to 1m, and over 125k subscription members vs a target of 50-100k,
customers are already enjoying the benefits of the club. Equally as
important for Halfords, it brings a rich dataset to the Group which
allows us to understand our customer's needs better, and form more
valuable lifetime customer relationships.
The club also offers more tangible benefits to the Group. In a
year of very high inflation and low consumer confidence, the club
has enabled the acquisition of customers to our Autocentres
business from within the Group, leveraging our multi-million Retail
and Digital customer bases. This has allowed us to reduce our
marketing acquisition costs in channels like radio, outdoor
advertising, and Google.
As a result of the club, roughly a third of Autocentres MOT's in
FY23 were members of the club, with members cross shopping more
than 4x the rate of non-members. Most importantly however, is that
NPS scores from members were +4 points higher than non-members.
National Tyres
As noted above, National Tyres is most exposed to the current
downturn in the consumer tyre market. Despite this we have seen
some excellent progress in the integration which, as the tyre
market recovers, will ensure delivery of the acquisition business
case. Synergies from the acquisition have delivered over GBP6.0m of
profit in FY23, in line with the original business case.
A key activity in the year has been the implementation of our
Avayler software across the estate, centralising and coordinating
our buying approach. This has been achieved by leveraging our
single integrated Group website, which means National garage slots
are now available to book via the Halfords Group website. This
provides the National garages with a bigger market, growing demand,
capacity and efficiency, and supported the growth of our service,
maintenance and repair business.
Fusion
Our Fusion programme is the transformation of the Halfords
customer experience within a town. During FY23 our focus was to
rollout the most capital efficient elements from the Halifax and
Colchester trials.
As a result, we have upgraded the retail car park service
provision in 50 towns alongside training nearly all our colleagues
across Retail and Autocentres in selling "solutions", empowering
more colleagues with the tools to sell the full solution to every
customer, every time.
Operating review
FY23 proved to be another challenging operating environment. The
Ukraine war acted as a catalyst to already increasing inflation,
but our trading through H1 proved relatively resilient with the
exception of the consumer tyre market which continued to suffer the
after-effects of lower mileage driven post COVID-19 and the
cost-of-living crisis. H2 trading began with a similar tone, but it
was the volatile political and economic environment in the Autumn
that brought about a rapid change in trading patterns in more
discretionary, and typically high-ticket, products.
As a business we continued through H2 as we began in H1; a focus
on cost and efficiency, delivering our most critical strategic
investments, and trading with agility against difficult market
conditions. Our cost and efficiency programme delivered over GBP20m
of savings, beating the targets set out in June 2022. Highlights
included lease negotiations in Retail, warehousing and distribution
efficiencies, and negotiations of key freight contracts to ensure
the Group rates were at or below spot rates. The Group also
successfully hedged the US dollar and energy markets to deliver an
average dollar exchange rate in cost of goods above USD1.30 and
mitigated the potential increase in energy rates in FY23.
This monumental effort was necessary to tackle the inflation in
costs across the business. Although the cost of freight was
successfully managed, it was still a significant headwind in FY23,
as was inflation in cost of goods generally. Many of our
international supply partners continued to operate below capacity
and input prices remained significantly above pre-Covid levels. A
6.6% National Living Wage increase from April 2022 also drove
inflation into labour costs, as did the significant skills shortage
across the UK - particularly noticeable in Autocentre Technician
markets.
We therefore consider the FY23 underlying profit before tax of
GBP51.5m to be a solid result against such a difficult
environment.
Capital structure and dividend
We understand the importance of the ordinary dividend to many of
our investors and we have proposed a FY23 final dividend of 7p per
share (FY22 6p) to be paid on 15 September 2023 with the
corresponding ex-dividend date of 10 August 2023 and the record
date of 11 August 2023. This represents a full year dividend of 10p
per share, an increase of +11% on FY22, in line with our
aspirations to make the dividend progressive.
At our Capital Markets Day in April 2023, we reconfirmed our
capital allocation priorities, highlighting our dividend cover
targets:
1. Maintaining a prudent balance sheet
2. Investment for growth
3. M&A, focused on Autocentres
4. Dividend covered by 1.5x - 2.5x underlying profit after
tax
5. Surplus cash returned to shareholders
During the year the Group extended its GBP180m debt facility
until December 2025.
Average capital expenditure is expected to be in the range of
GBP50-60m p.a. in the mid-term, assuming no material acquisitions,
which represents approximately 3% of revenues. We expect FY24 capex
to be at the lower end of this range.
Graham Stapleton
Chief Executive Officer, Halfords Group plc
21 June 2023
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 Performance Cycling Limited
(together, "Tredz and Wheelies") trading entities. All references
to Autocentres represent the consolidation of the Halfords
Autocentres, McConechy's, The Universal Tyre Company (Deptford)
Limited ("Universal"), Axle Group Holdings Ltd ("National Tyre"),
Avayler Trading Limited and LTC Trading Holdings ("Lodge Tyre")
trading entities. All references to Group represent the
consolidation of the Retail and Autocentres segments.
The "FY23" accounting period represents trading for the 52 weeks
to 31 March 2023 ("the financial year"). To provide a better
understanding of underlying performance, financial comparisons will
also be made relative to FY20, that is, on a three-year basis. The
disruption from COVID-19 to both FY21 and FY22 means that
comparators against these years are more difficult to interpret.
From FY24 we will revert to one-year comparators. All numbers shown
are on a post-IFRS 16 basis and before non-underlying items, unless
otherwise stated.
Group Financial Results
FY23 FY22 FY20
FY23 versus FY22 FY23 versus FY20
(52 weeks) (52 weeks) (52 weeks)
change change
GBPm GBPm GBPm
Group Revenue 1,593.5 1,382.4 1,142.4 15.3% 39.5%
Group Gross Profit 785.3 721.7 584.0 8.8% 34.5%
Underlying EBIT 63.6 101.1 70.5 (37.1%) (9.8%)
Underlying EBITDA 186.0 207.1 188.6 (10.2%) (1.4%)
Net Finance Costs (12.1) (11.3) (13.6) 7.1% (11.0%)
Underlying Profit Before Tax 51.5 89.8 56.9 (42.7%) (9.5%)
Net Non-Underlying Items (8.0) 6.8 (34.2) (217.6%) (76.6%)
Profit Before Tax 43.5 96.6 22.7 (55.0%) 91.6%
Underlying Basic Earnings per Share 18.8p 35.5p 25.4p
Full year FY23 underlying profit before tax ("PBT") was
GBP51.5m, -GBP5.4m (-9.5%) vs. FY20, and -GBP38.3m (-42.6%) vs
FY22. High levels of economic uncertainty and ongoing consumer
financial worries weakened the UK economy throughout FY23. The
Group has seen over an estimated GBP68m of year-on-year inflation
in FY23, and two of its core markets, Consumer Tyres and Cycling,
have seen significant volume decline, of -14% and -24%
respectively, vs. FY20. In the context of over GBP90m of headwinds,
a PBT of -9.5% below FY20 demonstrates the underlying strength,
cost discipline, and strategic progress the Group has made over the
intervening years. We believe the strategic progress made in FY23
will deliver strong and growing returns in the mid-term.
In June 2022 we reiterated the importance of continuing to grow
our Services-revenues, albeit focused on a few, key strategic
investments that would make a meaningful impact to the Group's
future performance. As a result, Lodge Tyre was acquired for total
consideration of GBP37.5m in October 2022 (with GBP33.5m paid on
completion after adjustments and GBP4.0m paid in FY25 subject to
performance), the integration of National Tyres was advanced with
Avayler implemented in all sites, and the SaaS version of the same
Avayler software secured its 3rd client. Lastly, the launch of the
UK's first, dedicated Motoring Loyalty club in March 2022 has been
successful, with customers engaging with the club ahead of our
expectations. As we set out at our Capital Markets Day in April
2023, the platform we have created will enable us to grow group
Revenues to GBP1.9bn and PBT to between GBP90m -GBP110m in the
mid-term.
Group revenue of GBP1,593.5m in FY23 reflected a like-for-like
("L4L") increase of +2.4% from FY22 and +13.4% from FY20. Total
revenue increased 15.3% from FY22 and 39.5% from FY20. Total
Revenue comprised Retail revenue of GBP979.6m and Autocentres
revenue of GBP613.9m. Retail revenues grew +3.1% (+GBP29.0m) versus
FY20, but declined -2.2% versus FY22, primarily due to a
significantly softer than expected Cycling market. Autocentre
revenue saw both strong LFL growth of 31.6% vs FY20 and also
benefited from acquisitions, with total revenue growth of +220.1%
vs FY20 and +61.2% vs FY22.
Group gross profit of GBP785.3m, +GBP63.6m vs FY22 (FY20:
GBP584.0m) was 49.3% of Group revenue (FY22: 52.2%, FY20: 51.1%),
comprising of Retail gross margin of 48.6%, up +40bps from FY20,
despite material increases in the cost of goods sold and freight
costs, offset by a decrease in the Autocentres gross margin of
-500bps to 50.4%. This reduction in Autocentres is driven by the
dilutive effect of our acquisitions, which are principally focussed
on the lower gross margin % tyres market. Throughout the year,
investment was made across the Group to support customers through
the cost-of-living crisis.
Total underlying costs increased to GBP721.7m (FY22: GBP620.6m,
FY20: GBP513.5m), of which Retail comprised GBP417.4m (FY22:
GBP420.9m, FY20: GBP395.6m), Autocentres GBP299.0m (FY22:
GBP196.6m, FY20: GBP115.8m) and unallocated costs GBP5.3m (FY22:
GBP3.1m, FY20: GBP2.1m). Unallocated costs represent amortisation
charges in respect of intangible assets acquired through business
combinations.
The overall cost increase of 40.5% (+GBP208.2m) vs FY20 has been
slightly ahead of revenue growth over the same period of +39.5%.
Almost two thirds of the overall Group operating cost increase has
been driven by acquisitions, either annualising a part year in FY20
or having been acquired during the period. A further increase in
operating costs has also resulted from LFL revenue growth in both
Autocentres and Retail, significant cost inflation across the
Group, and investment in areas of strategic importance such as our
Motoring Loyalty Club, our Avayler platform, digital, and colleague
training.
When compared to FY22, operating costs have increased GBP101.1m
(+16.3%), growing slightly ahead of revenue growth over the same
period of +15.3%. Acquisitions have contributed approximately half
of the cost increase, with National acquired in H2 FY22, and Lodge
from H2 FY23. Additionally, the Group has been exposed to
significant inflationary headwinds in both labour and general
operating costs year on year, and has also seen Business Rates
Relief fully normalised in FY23, with c.GBP11m of rates not levied
in FY22. To mitigate these impacts we have continued with our focus
on cost and efficiency, having saved approximately GBP20m of costs
year-on-year, ahead of our initial target of GBP15m. These savings
were delivered through initiatives including 26 store and garage
closures in FY23 where more profitable trade transfer exists, lease
renewals on 41 retail stores saving 21.7% on average, support
centre headcount rationalisation and numerous other
initiatives.
Group Underlying EBITDA decreased 10.2% vs FY22 and 1.4% vs FY20
to GBP186.0m, whilst net finance costs were GBP12.1m (FY22:
GBP11.3m, FY20: GBP13.6m). Underlying Profit Before Tax for the
year decreased 42.6% vs FY22 and 9.5% vs FY20 to GBP51.5m.
Non-underlying items totalled a GBP8.0m debit in the year,
relating to restructuring costs, acquisition costs and the costs
associated with property closures. FY22 non underlying items were a
credit, primarily reflecting the release of property provisions
taken as a result of a retail portfolio review, with the charge in
FY20 largely relating to that same review. After non-underlying
items, Group Profit Before Tax was GBP43.5m, (FY22: GBP96.6m, FY20:
GBP22.7m).
Retail
FY23 FY22 FY20
FY23 versus FY22 FY23 versus FY20
(52 weeks) (52 weeks) (52 weeks)
change change
GBPm GBPm GBPm
Revenue 979.6 1,001.6 950.6 (2.2%) 3.1%
Gross Profit 476.0 510.7 458.4 (6.8%) 3.8%
Gross Margin 48.6% 51.0% 48.2% (240bps) 40bps
Operating Costs (417.4) (420.9) (395.6) (0.8%) 5.5%
Underlying EBIT 58.6 89.8 62.8 (34.7%) (6.7%)
Non-underlying items (0.7) 8.9 (30.7) (108.0%) (97.7%)
EBIT 57.9 98.7 32.1 (41.3%) 80.4%
Underlying EBITDA 142.0 168.4 159.0 (15.7%) (10.7%)
Revenue of GBP979.6m reflected a LFL sales increase of +9.9% vs
FY20 and -1.8% vs FY22. Total revenue increased +3.1% vs FY20 after
adjusting for the 53 stores that have closed, and declined -2.2% vs
FY22. FY23 consumer confidence has been very volatile with the
impacts of increasing interest rates, energy bills and general
inflation severely impacting customers willingness to spend. This
had a notable impact on more discretionary and higher-ticket
product sales at Halfords. Whilst cycling started FY23 with some
degree of resilience, the latter part of Q3 onwards saw a marked
deterioration in performance aligned to the increased economic
uncertainty arising from the Autumn mini budget. The British
Cycling Association estimates the cycling market closed FY23 with
sales volumes 24% below pre-COVID levels however significant market
inflation partly offset the volume decline, resulting in a full
year sales performance of
-8.3% vs FY20 and -11.2% vs FY22. Motoring fared better, with
the needs-based categories performing strongly, more than
offsetting discretionary, big-ticket items such as technology and
touring. Full year Motoring sales closed FY23 +10.3% above FY20 and
+3.6% vs FY22. The above factors have resulted in Motoring
increasing its mix of the Retail business by +3.6ppts vs FY20.
The Retail Operational Review in the Chief Executive's Statement
contains further commentary on the trading performance in the year.
Like-for-like revenues and total sales revenue mix for the Retail
business are split by category below:
FY23 FY23 FY23 FY22 FY20
LFL 1yr (%) LFL 3yr (%) Total sales mix (%) Total sales mix (%) Total sales mix (%)
Motoring +4.0% +14.5% 62.0 59.4 58.4
Cycling -10.9% +1.3% 38.0 40.6 41.6
Total -1.8% +9.9% 100.0 100.0 100.0
Gross profit for the Retail business, at GBP476.0m, -GBP34.7m vs
FY22 (FY20: GBP458.4m) represented 48.6% of sales, a decrease of
-240bps on FY22 and an increase of +40bps on FY20 (FY20: 48.2%).
Versus FY20, the increase in Motoring mix has contributed +0.6ppts
of accretion with the remaining movement a result of rate movements
withing Motoring and Cycling. Whilst Cycling has seen strong
underlying profitability improvements since FY20, as noted in our
previous updates, during FY23 it has faced very significant
inflationary pressures from both cost of goods and freight.
Retail operating costs before non-underlying items were
GBP417.4m, a decrease of 0.8% on FY22 and an increase of 5.5% on
FY20 (FY22: GBP420.9m and FY20: GBP395.6m). The decrease against
FY22 has been driven by benefits associated with our cost
transformation programme as well as a reduction in bonus accruals
that were made as a result of lower overall Group performance. The
prior year benefitted from GBP7m of non-recurring Business Rates
Relief.
Underlying EBIT was GBP58.6m, -34.7% vs FY22 and -6.7% vs FY20
with cost and efficiency savings helping to mitigate a tough
trading environment, in particular, our discretionary category
sales and significant inflationary headwinds.
Autocentres
FY23 FY22 FY20
FY23 versus FY22 FY23 versus FY20
(52 weeks) (52 weeks) (52 weeks)
change change
GBPm GBPm GBPm
Revenue 613.9 380.8 191.8 61.2% 220.1%
Gross Profit 309.4 211.0 125.6 46.6% 146.3%
Gross Margin 50.4% 55.4% 65.5% (500bps) (1510bps)
Operating Costs (299.0) (196.6) (115.8) 52.1% 158.2%
Underlying EBIT 10.4 14.4 9.8 (27.8%) 6.1%
Non-underlying items (7.3) (2.1) (3.5) 247.6% 108.6%
EBIT 3.1 12.3 6.3 (74.8%) (50.8%)
Underlying EBITDA 49.5 38.8 29.6 27.6% (67.2%)
Autocentres generated total revenues of GBP613.9m, an increase
of 220.1% on FY20 (LFL increase of 31.6%) and 61.2% on FY22 (LFL
increase of 15.4%).
Non-LFL revenues versus FY20 included either full or part year
benefits from our six acquisitions: Tyres on the Drive and
McConechy's acquired in October and November FY20 respectively,
Universal in March FY21, Iverson Tyres in November FY22, National
Tyre in December FY22 and Lodge Tyre in October FY23. Our
acquisitions added over GBP250m of revenue versus FY20 and
c.GBP170m versus FY22.
Gross profit of GBP309.4m (FY22: GBP211.0m, FY20: GBP125.6m) was
50.4% of sales; a decrease of 500bps on FY22 and 1510bps on FY20.
The gross profit growth of nearly +150% was again a result of our
acquisitions, with underlying profitability in our existing garages
held despite an increase in more dilutive tyre sales. This has been
a result of our Avayler operating system, that centralises buying
and improves utilisation to deliver higher levels of sales for a
given cost base.
The decrease in gross profit % as noted previously, has been as
a result of our acquisitions, which are gross margin rate dilutive
given their business model focus on tyres. Most notably, Universal,
McConechy's and now Lodge Tyre, operate within the commercial B2B
sector and as such has a different operating model of lower gross
margin but strong margin per worked hour, and more resilient
revenues. National Tyre operates primarily within the B2C sector,
more aligned to our core Autocentres business, but also with a
heavy tyre mix and lower gross margins. As detailed at the time of
acquisition and at our CMD in April 2023, we are confident that
significant synergies will be delivered through a combination of
greater scale and leveraging our digital operating model which will
result in stronger operating margins across the enlarged
Autocentres group looking forward.
Operating costs were GBP299.0m, +GBP183.2m (+158.2%) above FY20
and +GBP102.4m (+52.1%) above FY22. As noted above, almost two
thirds of this increase has been a result of acquisitions vs FY20
and the remaining amount driven by investment to support strong LFL
sales growth in the core business and inflationary pressures,
particularly in wage costs.
Autocentres underlying EBIT was GBP10.4m (FY22: GBP14.4m, FY20:
GBP9.8m). FY22 benefited from one off COVID related rates relief,
and profit on the sale and leaseback of certain Universal sites. In
FY23 the performance of National Tyre (and to a lesser relative
extent, the other Autocentres businesses) was adversely impacted by
a weak tyre market, which has not recovered to pre-Covid levels as
drivers continue to replace their tyres with less frequency and at
lower price points, reflecting very low consumer confidence levels.
This impact, together with the material cost inflation during the
year, was partly offset by underlying trading performance and the
synergy savings from acquisitions, which were in line with business
case. Our intention had been to mitigate profit erosion driven by
cost inflation through driving more higher margin servicing,
maintenance and repair work, underpinned by growing capacity in our
garages. As we communicated in our January trading update,
recruiting skilled technicians during FY23 was more difficult that
we'd anticipated and as a result we were unable to fully offset the
cost inflation. Strong profit growth is anticipated in Autocentres
in FY24 as the tyre market begins to recover, we see the full year
benefit of Lodge ownership, a second year of synergy savings
following the National acquisition and drive better garage
utilisation.
Portfolio Management
In FY23 we continued to grow our Services business through the
acquisition of Lodge Tyre.
The total number of fixed stores or garages within the Group
stood at 1036, with a further 269 vans across HME, National and
Havebike and 479 Commercial vans as at 31 March 2023. The portfolio
comprised 393 Halfords Retail stores (end of FY22: 400) and 643
Autocentres garages (end of FY22: 611).
The following table outlines the changes in the portfolio over
the year:
Stores Garages Vans
Relocations - - -
Leases renegotiated 41 37 -
Refreshed - - -
Openings/Acquisitions - 51 265
Closed 7 19 - In Retail, seven stores closed during the year, three of them in the final quarter. When analysing the anticipated sales transfer to other channels and neighbouring stores, it was considered more profitable to the Group to close these stores and reduce the overall cost base.
The number of lease expiries, or breaks under option, increases
significantly within the next five years. Retail will see more than
three quarters of stores experience optionality within five years,
allowing for a high degree of flexibility within the estate. The
average remaining lease length in Retail is 3.3 years.
Within Autocentres, no garages were opened organically, but 51
garages and 265 vans were acquired through the acquisition of Lodge
Tyre in the year and 19 garages were closed, taking the total
number of Autocentre garages to 643 as at 31 March 2023 (end of
FY22: 611).
With the exception of nine long-leasehold and three freehold
properties in Autocentres, the Group's locations are occupied under
short-term leases, the majority of which are on standard lease
terms, typically with a five to 15-year term at inception and with
an average lease length of under six years.
Net Non-Underlying items
The following table outlines the components of the
non-underlying items before tax recognised in the 52 weeks ended 31
March 2023:
FY23 FY22
GBPm GBPm
Organisational restructure costs (a) 6.3 1.1
Acquisition and investment-related fees (b) 1.9 2.8
One-off claims (c) - (2.2)
Closure costs (d) (0.2) (8.5)
Net non-underlying items 8.0 (6.8) a. In the current and prior period, separate and unrelated organisational restructuring activities wereundertaken. In FY22, a strategic redesign of the in-store operating model was undertaken to better meet ourcustomers' expectations and deliver a consistent shopping experience across our estate. In FY23, the group haveundertaken a restructure of the support centre.
Costs in relation to the organisational restructuring activities
are made up of: redundancy costs of GBP3.1m (PY: GBP0.3m), GBP1.6m
(PY: GBP0.8m) for the replacement of the WMS system, GBP0.4m (PY:
GBPnil) relating to our master data management system and GBP1.2m
for the new system and financial dual running costs incurred in the
integration of National Tyre. These costs are not part of recurring
business and therefore, have been deemed non-underlying expenses.
b. In the current and prior periods, costs were incurred in
relation to the investments in National Tyre,Iverson, HaveBike, and
Universal.
-- GBP1.9m costs incurred in FY23 (PY: GBP2.5m) relating to
professional fees in respect of acquisition ofNational Tyre and
Lodge Tyre;
-- In FY22 GBP0.2m related to the acquisition of trade and
assets of both Iverson and HaveBike;
-- In FY22 GBP0.1m related to the acquisition of Universal. c.
During the prior period the HMRC audit into National Minimum Wage
was concluded and fully settled andpaid, this led to a final
release of the provision of GBP2.2m. d. In the current year,
GBP3.6m of closure costs were recognised representing the costs
associated with theclosure of a number of garages across
Autocentres after a review of the garage portfolio post-acquisition
ofNational Tyre. In FY22 closure costs were recognised relating to
the closure of a number of stores and garagesfollowing a strategic
review of the profitability of the physical estate. The provision
related to the impairmentof right-of-use assets and tangible assets
and property costs as well as ongoing onerous commitments under
thelease agreements and other costs associated with the property
exits. We continue to utilise the provision in thecurrent year but
have also had a release of GBP3.8m (PY: GBP8.5m) as a result of a
GBP2.3m impairment reversal and aGBP1.5m change in lease terms.
Finance Expense
The net finance expense (before non-underlying items) for the 52
weeks ended 31 March 2023 was GBP12.1m (FY22: GBP11.3m) reflecting
increase in bank interest due to being drawn down on the Revolving
Credit Facility (RCF), partially offset by a decrease in lease
liability interest due to the aging of the lease portfolio.
Taxation
The taxation charge on profit for the 52 weeks ended 31 March
2023 was GBP9.5m (FY22: GBP18.9m), including a GBP1.1m credit
(FY22: GBP1.7m charge) in respect of non-underlying items. The
effective tax rate of 21.9% (FY22: 19.5%) differs from the UK
corporation tax rate (19%) principally due to the impact of current
and deferred tax on employee share options and non-deductible
expenditure on business acquisitions.
Earnings Per Share ("EPS")
Underlying Basic EPS post IFRS 16 was 18.8 pence and after
non-underlying items 15.6 pence (FY22: 35.5 pence and 37.9 pence
after non-underlying items), a reduction of 47.0% or 58.8% after
non underlying items, on the prior year. Basic weighted-average
shares in issue during the year were 217.4m (FY22: 204.7m).
Dividend ("DPS")
Following the payment of an interim dividend of 3.0p per share
on 20 January 2023, the Board are proposing a FY23 final dividend
of 7.0p per share (FY22: 6.0p per share) which will absorb an
estimated GBP15.3m (2022: GBP13m) of shareholders' funds. It will
be paid on 15 September to shareholders who are on the register of
members on 11 August 2023. This results in a total of 10.0p per
share for the year (FY22: 9.0p per share).
Capital Expenditure
Capital investment, excluding right of use assets, in the 52
weeks ended 31 March 2023 totalled GBP48.1m (FY22: GBP49.2m)
comprising GBP26.6m in Retail and GBP21.5m in Autocentres. Within
Retail, GBP3.6m (FY22: GBP11.4m) was invested in stores and
GBP15.7m in technology systems, which included the continued
development of the Group's web platforms and further investment in
our data capability.
The capital expenditure in Autocentres principally related to
the replacement of garage equipment and further development of
Avayler (PACE), our digital garage workflow system.
Inventories
Group inventory held as at the year-end was GBP256.2m (FY22:
GBP222.1m). Retail inventory increased to GBP202.8m (FY22:
GBP194.5m), driven by the impact of FX and freight on stock
pricing. Retail stock volumes were lower year on year.
Autocentres' inventory was GBP53.4m (FY22: GBP27.6m). The
increase in inventory primarily relates to the acquisition of Lodge
Tyre, as well as increased focus on tyre sales and therefore stock
holding.
Cashflow and Borrowings
Operating Cash Flow was GBP169.8m (FY22: GBP131.8m), reflecting
a working capital outflow of GBP12.9m, as Retail inventory and
associated creditors normalised after Covid and we invested in
Tyres stock to support a growing area. After acquisitions,
taxation, capital expenditure and net finance costs, Free Cash Flow
of GBP3.1m (FY22: -GBP14.9m) was generated in the year. Group Debt
was GBP348.7m (FY22: GBP344.9m).
Principal Risks and Uncertainties
The Board considers the assessment of principal risks and the
identification of mitigating actions and internal control to be
fundamental to achieving Halfords' strategic corporate objectives.
In the Annual Report and Accounts, the Board sets out what it
considers to be the principal commercial and financial risks to
achieving the Group's objectives. The main areas of potential risk
and uncertainty in the balance of the financial year are described
in the Strategic Report of the 2023 Annual Report and Accounts.
These include:
-- Business Strategy
-- Capability and capacity to effect change
-- Stakeholder support and confidence in strategy
-- Value proposition
-- Brand appeal and market share
-- Climate Change & Electrification
-- Financial
-- Sustainable business model
-- Compliance
-- Regulatory and compliance
-- Service quality
-- Cyber security
-- Operational
-- Colleague engagement / culture
-- Skills shortage
-- IT infrastructure failure
-- Disruption to end to end supply chain
Specific risks associated with performance include the success,
or otherwise of peak trading periods (e.g., Christmas) as well as
weather-sensitive sales, particularly within the Car Maintenance
and Cycling categories in the Retail business.
Jo Hartley Chief Financial Officer
21 June 2023 Glossary of Alternative Performance Measures In the
reporting of financial information, the Directors have adopted
various Alternative Performance Measures ("APMs"), previously
termed as 'Non-GAAP measures'. APMs should be considered in
addition to IFRS measurements, of which some are shown on page 19.
The Directors believe that these APMs assist in providing useful
information on the underlying performance of the Group, enhance the
comparability of information between reporting periods, and are
used internally by the Directors to measure the Group's
performance.
The key APMs that the Group focuses on are as follows:
1.Like-for-like ("LFL") sales represent revenues from stores,
centres and websites that have been trading for at least a year
(but excluding prior year sales of stores and centres closed during
the year) at constant foreign exchange rates.
2.Underlying EBIT is results from operating activities before
non-underlying items. Underlying EBITDA further removes
Depreciation and Amortisation.
3.Underlying Profit Before Tax is Profit before income tax and
non-underlying items as shown in the Group Income Statement.
4.Underlying Earnings Per Share is Profit after income tax
before non-underlying items as shown in the Group Income Statement,
divided by the number of shares in issue.
5.Net Debt is current and non-current borrowings, including
lease debt, less cash and cash equivalents, both in-hand and at
bank, as shown in the Consolidated Statement of Financial
Position.
FY23 FY22 FY20
GBPm GBPm GBPm
Cash & cash equivalents 32.2 46.1 115.5
Borrowings - current (77.6) (74.5) (83.4)
Borrowings - non-current (303.3) (316.5) (511.9)
Net Cash/(Debt)* (348.7) (344.9) (479.8)
* The statutory 53-week period to 3 April 2020 comprises
reported results that are non-comparable to the 52-week period
reported in the current and prior period.
6.Net Debt to Underlying EBITDA ratio is represented by the
ratio of Net Debt to Underlying EBITDA (both of which are defined
above).
7.Adjusted Operating Cash Flow is defined as EBITDA plus
share-based payment transactions and loss on disposal of property,
plant and equipment, less working capital movements and movement in
provisions; as reconciled below.
FY23 FY22 FY20 (53 weeks)
GBPm GBPm GBPm
Underlying EBIT 63.6 101.1 67.2
Depreciation, amortisation & impairment 124.7 106.0 118.7
Underlying EBITDA 188.3 207.1 185.9
Non-underlying operating expenses (8.0) 6.8 (34.2)
EBITDA 180.3 213.9 151.7
Share-based payment transactions 2.4 7.8 1.0
Loss on disposal of property, plant & equipment 1.3 (5.2) 2.8
Working capital movements (12.9) (70.0) 52.0
Provisions movement and other (1.3) (14.7) (3.1)
Adjusted Operating Cash Flow* 169.8 131.8 204.4
* The statutory 53-week period to 3 April 2020 comprises
reported results that are non-comparable to the 52-week period
reported in the current and prior period.
8.Free Cash Flow is defined as Adjusted Operating Cash Flow (as
defined above) less capital expenditure, net finance costs,
taxation, exchange movement, lease payments, and arrangement fees
on loans; as reconciled below.
FY23 FY22 FY20
GBPm GBPm GBPm
Adjusted Operating Cash Flow 169.8 131.8 204.4
Capital expenditure (54.4) (47.3) (33.6)
Net finance costs (11.1) (10.6) (13.2)
Taxation (4.7) (12.2) (16.3)
Supplier Financing 0.8 - -
Sales and Leaseback - 7.5 -
Exchange movements (8.0) 0.9 (2.0)
Lease payments (89.3) (85.0) (87.7)
Free Cash Flow* 3.1 (14.9) 51.6
*The statutory 53-week period to 3 April 2020 comprises reported
results that are non-comparable to the 52-week period reported in
the current and prior period.
Halfords Group plc?
Consolidated Income Statement?
?
For the 52 weeks to 31 March 2023
?
?
?
For the period? ? 52 weeks to 31 March 2023 ? 52 weeks to 1 April 2022
* Restated
Before? Non-underlying?? Before? Non-underlying??
? ? Non-underlying?? items? Total? ? Non-underlying? items? Total?
items? (note 4)? items? (note 4)?
? Notes? GBPm? GBPm? GBPm? ? GBPm? GBPm? GBPm?
? ? ? ? ? ? ? ? ?
Revenue?* ? 1,593.5 - 1,593.5 ? 1,382.4 - 1,382.4
Cost of sales *? ? (808.2) - (808.2) ? (660.7) - (660.7)
? ? ?
Gross profit? ? 785.3 - 785.3 ? 721.7 - 721.7
? ? ?
Operating expenses? 2? (721.7) (8.0) (729.7) ? (620.6) 6.8 (613.8)
? ? ?
? ? ?
Results from
operating activities? 3? 63.6 (8.0) 55.6 ? 101.1 6.8 107.9
? ? ?
Finance costs? 5? (12.1) - (12.1) ? (11.3) - (11.3)
? ? ?
? ? ?
Profit before income ? 51.5 (8.0) 43.5 ? 89.8 6.8 96.6
tax?
Income tax expense? 6? (10.6) 1.1 (9.5) ? (17.2) (1.7) (18.9)
? ? ?
Profit for the
financial period ? 40.9 (6.9) 34.0 ? 72.6 5.1 77.7
attributable to
equity shareholders?
? ? ?
Earnings per share? ? ?
Basic?earnings per 8? 18.8p 15.6p 35.5p 37.9p
share?
Diluted?earnings per 8? 18.0p 15.0p 34.0p 36.4p
share
? ? ? ? ? ?
?
* Please refer to note 11 for further information
The notes on pages?28?to?35?are an integral part of these
condensed consolidated financial statements.?
Halfords Group plc?
?
Consolidated Statement of Comprehensive Income?
?
For the 52 weeks to 31 March 2023
? ? ? ?
? ? 52?weeks to? 52 weeks to?
1 April
? ? 31 March 2023
2022
? Notes? GBPm? GBPm?
Profit for the period? 34.0 77.7
? ?
Other comprehensive income? ?
Cash flow hedges:? ?
Fair value changes in the period? ? 2.7 6.5
Income tax on other comprehensive income? 1.1 (1.3)
Other comprehensive income for the period, net of income tax? ?3.8 5.2
? ?
Total comprehensive income for the period attributable to equity shareholders? 37.8 82.9
? ? ? ?
All items within the Consolidated Statement of Comprehensive
Income are classified as items that are or may be recycled to the
Income Statement.?
?
? The notes on pages 28 to 35 are an integral part of these
condensed consolidated financial statements.?
?
Halfords Group plc
Consolidated Statement of Financial Position
For the 52 weeks to 31 March 2023
31 March 1 April
2023 2022
Notes GBPm GBPm
Assets
Non-current assets
Intangible assets 482.0 442.4
Property, plant and equipment 97.8 101.7
Right-of-use assets 312.6 350.2
Derivative financial instruments - -
Deferred tax asset 10.9 14.7
Total non-current assets 903.3 909.0
Current assets
Inventories 256.2 222.1
Trade and other receivables 144.6 92.6
Assets held for sale 1.1 4.2
Derivative financial instruments - -
Current tax assets - 3.9
Cash and cash equivalents 9 41.9 46.3
Total current assets 443.8 369.1
Total assets 1,347.1 1,278.1
Liabilities
Current liabilities
Borrowings 9 (9.7) (0.2)
Lease liabilities (77.6) (74.5)
Derivative financial instruments 10 (3.7) (0.5)
Trade and other payables (355.0) (299.6)
Current tax liabilities (5.0) (4.0)
Provisions (11.0) (20.5)
Total current liabilities (462.2) (399.3)
Net current (liabilities)/assets (18.4) (30.2)
Non-current liabilities
Borrowings (34.0) -
Derivative financial instruments (0.4) -
Lease liabilities (269.3) (316.5)
Trade and other payables (3.5) (4.9)
Provisions (14.9) (6.4)
Total non-current liabilities (322.1) (327.8)
Total liabilities (784.3) (727.1)
Net assets 562.8 551.0
Shareholders' equity
Share capital 2.2 2.2
Share premium 212.4 212.4
Investment in own shares (12.7) (11.6)
Other reserves (1.1) 2.0
Retained earnings 362.0 346.0
Total equity attributable to equity holders of the Company 562.8 551.0
The notes on pages 28 to 35 are an integral part of these
condensed consolidated financial statements.
* Please refer to note 11 for further information
Halfords Group plc
Consolidated Statement of Changes in Shareholders' Equity
? ? 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?
Closing balance at 2 April 2021 2.0 151.0 (10.0) 0.3 (2.1) 276.6 417.8
? ? ? ? ? ? ? ?
Total comprehensive income for the period? ? ? ? ? ? ? ?
Profit for the period? - - - - -? 77.7 77.7
? ? ? ? ? ? ? ?
Other comprehensive income? ? ? ? ? ? ? ?
Fair value changes in the period? - - - - 6.4 - 6.4
Income tax on other comprehensive income? - - - - (1.3) - (1.3)
Total other comprehensive income for the - - - - 5.1 - 5.1
period net of tax?
Total comprehensive income for the period? - - - - 5.1 77.7 82.8
Other - - - - - - -
Hedging gains and losses transferred to the - - - - (1.3) - (1.3)
cost of inventory?
? ? ? ? ?
Transactions with owners?? ? ? ? ?
Shares issued 0.2 61.4 - - - - 61.6
Acquisition of Treasury shares - - (3.0) - - - (3.0)
Share options exercised - - 1.4 - - - 1.4
Share-based payment transactions? - - - - - 7.8 7.8
Income tax on share-based payment - - - - - 0.4 0.4
transactions?
Dividends to equity holders? - - - - - (16.5) (16.5)
Total transactions with owners? 0.2 61.4 (1.6) - - (8.3) 51.7
Balance at 1 April 2022 2.2 212.4 (11.6) 0.3 1.7 346.0 551.0
?
The notes on pages 28 to 35 are an integral part of these
condensed consolidated financial statements.
Halfords Group plc
Consolidated Statement of Changes in Shareholders' Equity
(continued)
Attributable to the equity holders of the Company
Other reserves
Share Investment Capital
Share premium in own redemption Hedging Retained Total
reserve
capital account shares reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Closing balance at 1 April 2022 2.2 212.4 (11.6) 0.3 1.7 346.0 551.0
Total comprehensive income for the period
Profit for the period - - - - - 34.0 34.0
Other comprehensive income
Fair value changes in the period - - - - 2.7 - 2.7
Income tax on other comprehensive income - - - - 1.1 - 1.1
Total other comprehensive income for the 3.8 3.8
period net of tax
Total comprehensive income for the period 3.8 34.0 37.8
Other
Hedging gains and losses transferred to the (6.9) (6.9)
cost of inventory
Transactions with owners
Shares issued - - - - - - -
Acquisition of Treasury shares - - (1.5) - - - (1.5)
Share options exercised - - 0.4 - - - 0.4
Share-based payment transactions - - - - - 2.4 2.4
Income tax on share-based payment - - - - - (0.9) (0.9)
transactions
Dividends to equity holders - - - - - (19.5) (19.5)
Total transactions with owners (18.0) (19.1)
Balance at 31 March 2023 2.2 212.4 (12.7) 0.3 (1.4) 362.0 562.8
The notes on pages 28 to 35 are an integral part of these
condensed consolidated financial statements.
Halfords Group plc
Consolidated statement of cash flows
For the 52 weeks to 31 March 2023
? ? 52?weeks to? 52 weeks to?
1 April
31 March 2023
? ? 2022
?
? Notes? GBPm? GBPm?
Cash flows from operating activities? ? ? ?
Profit after tax for the period, before non-underlying?items? ? 40.9 72.6
Non-underlying?items? ? (6.9) 5.1
Profit after tax for the period? ? 34.0 77.7
Depreciation - property, plant and equipment ? 28.1 20.6
Impairment/(reversal) - property, plant and equipment 1.2 (0.3)
Amortisation?of right-of-use assets? ? 77.5 69.9
Impairment?of right-of-use assets? (2.3) -
Amortisation?- intangible assets? ? 17.9 15.8
Net finance costs? ? 12.1 11.3
Loss on disposal of property, plant and equipment?and intangibles? ? 1.7 1.8
Gain on sale and leaseback of assets held for sale - (0.4)
Gain on disposal of leases (0.4) (6.6)
Equity-settled?share-based?payment transactions? ? 2.4 7.8
Exchange movement? ? (8.0) 0.9
Income tax expense? ? 9.5 18.9
(Increase)/ decrease in inventories ? (12.7) (66.7)
(Increase)/ decrease in trade and other receivables* ? (32.2) 1.3
(Decrease)/ increase in trade and other payables* ? 32.0 (4.6)
(Decrease)/ increase in provisions* ? (1.3) (14.7)
Income tax paid?? ? (4.7) (12.2)
Net cash from operating activities? ? 154.8 120.5
Cash flows from investing activities? ?
Acquisition of subsidiary, net of cash acquired? ? (32.6) (58.5)
Proceeds from sale of assets held for sale - 7.5
Purchase of intangible assets? ? (25.4) (22.0)
Purchase of property, plant and equipment? ? (29.0) (25.3)
Net cash used in investing activities? (87.0) (98.3)
?
Cash flows from financing activities? ?
Proceeds from issue of share capital - 61.6
Repurchase of treasury shares (1.5) (3.0)
Proceeds from share options exercised 0.4 1.4
Finance costs paid (2.5) (1.6)
RCF transaction costs (1.8) -
RCF drawdowns 337.0 -
RCF repayments (302.0) -
Repayment of borrowings ? (1.7) -
Interest paid on lease liabilities* (8.8) (9.0)
Payment of capital element of leases* ? (80.5) (76.0)
Payments relating to supplier financing (23.5) -
Receipts relating to supplier financing 22.7 -
Dividends paid?? ? (19.5) (16.5)
Net cash used in financing activities? ? (81.7) (43.1)
Net (decrease)/increase?in cash and bank overdrafts? 9? (13.9) (20.9)
Cash and cash equivalents at the beginning of the period? ? 46.1 67.0
Cash and cash equivalents at the end of the period 9 32.2 46.1
The notes on pages?28?to?35?are an integral part of these
condensed consolidated financial statements.?
Halfords Group plc
Notes to the condensed consolidated financial statements
For the 52 weeks to 31 March 2023
1. General information and basis of preparation
The financial information set out below does not constitute the
Group's statutory accounts for the periods ended 31 March 2023 or 1
April 2022 but is derived from those accounts. Statutory accounts
for 2022 have been delivered to the Registrar of Companies, and
those for 2023 will be delivered in due course. The auditor has
reported on those accounts; their reports were (i) unqualified,
(ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 498 (2)
or (3) of the Companies Act 2006.
The financial statements are presented in millions of UK pounds,
rounded to the nearest GBP0.1m.
The accounts of the Group are prepared for the period up to the
Friday closest to 31 March each year. Consequently, the financial
statements for the current period cover the 52 weeks to 31 March
2023, whilst the comparative period covered the 52 weeks to 1 April
2022.
The consolidated financial statements of Halfords Group plc and
its subsidiary undertakings, together "the Group", have been
prepared in accordance with International Financial Reporting
Standards ("IFRSs") and IFRS Interpretations Committee ("IFRS IC")
Interpretations as adopted by the UK Endorsement Board. The
financial statements are prepared on a going concern basis and
under the historical cost convention, except where adopted IFRSs
require an alternative treatment. The principal variations relate
to financial instruments (IFRS 9 "Financial instruments"),
share-based payments (IFRS 2 "Share-based payment" and leases (IFRS
16 "Leases").
Adoption of new and revised standards
There have been no new or amended standards effective in the
period which has had a material impact on the consolidated
financial information.
New standards and interpretations not yet adopted?
?
All other standards and related adoptions which have been
published but not yet adopted are not expected to have a? material
impact on the consolidated results or financial position of the
Group.?
2.??? Operating expenses?
For the period? ? 52?weeks to? 52 weeks to?
1 April
? ? 31 March 2023
2022
? ? GBPm? GBPm?
? ? ? ?
Selling and distribution costs? ? 590.6 472.6
Selling and distribution costs ? 590.6 472.6
Administrative expenses, before non-underlying?items? ? 131.1 148.0
Non-underlying?administrative expenses? ? 8.0 (6.8)
Administrative expenses ? 139.1 141.2
Operating expenses ? 729.7 613.8
3. Operating profit
For the period 52 weeks 52 weeks
to to
31 March 1 April
2023
2022
GBPm GBPm
Operating profit is arrived at after charging/(crediting) the following expenses/
(incomes) as categorised by nature:
Expenses relating to leases of low-value assets, excluding short-term leases of 2.0
low value assets 1.6
Expenses relating to short term leases 4.8 8.8
Rentals receivable under operating leases (2.6) (2.6)
Landlord surrender premiums (1.0) (0.8)
Loss on disposal of property, plant and equipment and intangibles 1.7 1.8
Amortisation of intangible assets 17.9 15.8
Amortisation of right-of-use assets 77.5 69.6
Depreciation and impairment of:
- owned property, plant and equipment 28.1 20.6
Impairment of:
- owned property, plant and equipment 1.2 (0.3)
- impairment of right-of-use assets (2.3) -
Trade receivables impairment (0.3) 0.1
Staff costs 359.1 319.5
Cost of inventories consumed in cost of sales 792.5 655.0
4. Non-underlying items
For the period 52 weeks to 52 weeks to
1 April
31 March 2023
2022
GBPm GBPm
Non-underlying operating expenses:
Organisational restructure costs (a) 6.3 1.1
Acquisition and investment related fees (b) 1.9 2.8
One-off claims (c) - (2.2)
Closure costs (d) (0.2) (8.5)
Non-underlying items before tax 8.0 (6.8)
Tax on non-underlying items (e) (1.1) 1.7
Non-underlying items after tax 6.9 (5.1)
a. In the current and prior period, separate and unrelated organisational restructuring activities wereundertaken.??In FY22, a strategic redesign of the in-store operating model was undertaken to better meet ourcustomers' expectations and deliver a consistent shopping experience across our estate. In FY23, the group haveundertaken a restructure of the support centre.
Costs in relation to the organisational restructuring activities
are made up of: redundancy costs of GBP3.1m (PY: GBP0.3m), GBP1.6m
(PY: GBP0.8m) for the replacement of the WMS system, GBP0.4m (PY:
GBPnil) relating to our master data management system and GBP1.2m
for the new system and financial dual running costs incurred in the
integration of National Tyre. These costs are not part of recurring
business and therefore, have been deemed non-underlying expenses.
b. In the current and prior periods, costs were incurred in
relation to the investments in Axle Group,Iverson, HaveBike, and
Universal.
-- GBP1.9m costs incurred (PY: GBP2.5m) relating to professional
fees in respect of acquisition of National andLodge;
-- In FY22 GBP0.2m related to the acquisition of trade and
assets of both Iverson and HaveBike;
-- In FY22 GBP0.1m related to the acquisition of Universal. c.
During the prior period the HMRC audit into National Minimum Wage
was concluded and fully settled andpaid, this led to a final
release of the provision of GBP2.2m. d. In the current year,
GBP3.6m of closure costs were recognised representing the costs
associated with theclosure of a number of garages across
Autocentres after a review of the garage portfolio post-acquisition
ofNational Tyre. In FY22 closure costs were recognised relating to
the closure of a number of stores and garagesfollowing a strategic
review of the profitability of the physical estate. The provision
related to the impairmentof right-of-use assets and tangible assets
and property costs as well as ongoing onerous commitments under
thelease agreements and other costs associated with the property
exits. We continue to utilise the provision in thecurrent year but
have also had a release of GBP3.8m (PY: GBP8.5m) as a result of a
GBP2.3m impairment reversal and aGBP1.5m change in lease terms. e.
The tax charge of GBP1.1m represents a tax rate of 13.8% applied to
non-underlying items. The prior periodrepresents a tax credit at
13.6% applied to non-underlying items. 5. Finance costs
Recognised in profit or loss for the period 52 weeks to 52 weeks
to
1 April
31 March 2023
2022
GBPm GBPm
Finance costs:
Bank borrowings (1.4) (0.1)
Amortisation of issue costs on loans (0.8) (0.7)
Commitment and guarantee fees (1.1) (1.5)
Other interest payable - -
Interest payable on lease liabilities (8.8) (9.0)
Net Finance costs (12.1) (11.3)
6. Taxation
For the period 52 weeks to 52 weeks to
1 April
31 March 2023
2022
GBPm GBPm
Current taxation
UK corporation tax charge for the period 8.3 15.9
Adjustment in respect of prior periods 1.0 (0.4)
9.3 15.5
Deferred taxation
Origination and reversal of temporary differences 1.2 3.4
Effect of changes in tax rates 0.3 (1.7)
Adjustment in respect of prior periods (1.3) 1.7
0.2 3.4
Total tax charge for the period 9.5 18.9
The tax charge is reconciled with the standard rate of UK
corporation tax as follows:
For the period 52 weeks to 52 weeks to
1 April
31 March 2023
2022
GBPm GBPm
Profit before tax 43.5 96.6
UK corporation tax at standard rate of 19% (2020: 19%) 8.3 18.4
Factors affecting the charge for the period:
Depreciation on expenditure not eligible for tax relief 0.6 0.3
Impact of super deduction capital allowances uplift (0.7) (1.3)
Employee share options 0.8 1.5
Other disallowable expenses 0.8 0.8
Adjustment in respect of prior periods (0.3) 1.3
Impact of overseas tax rates (0.3) (0.3)
Impact of 130% capital allowances deduction 0.3 (1.8)
Total tax charge for the period 9.5 18.9
An increase to the main rate of corporation tax to 25% from 1
April 2023 was substantively enacted on 24 May 2021. This will
increase the Company's future current tax charge accordingly. The
deferred tax asset at 31 March 2023 has been calculated based on
the rate of 25% substantively enacted at the balance sheet
date.
The effective tax rate of 21.9% (2022: 19.5%) is higher than the
UK corporation tax rate principally due to the impact of current
and deferred tax on employee share options and non-deductible
expenditure on business acquisitions.
The tax charge for the period was GBP9.5m (2022: GBP18.9m),
including a GBP1.1m credit (2022: GBP1.7m credit) in respect of tax
on non-underlying items.
The Group engages openly and proactively with tax authorities
both in the UK and internationally, where it trades and sources
products, and is considered low risk by HM Revenue & Customs
("HMRC"). The Company is fully committed to complying with all of
its tax payment and reporting obligations.
At 31 March 2023, the Group has unused tax losses of GBP57.4m
(2022: GBP62.6m) and fixed asset temporary differences of GBP36.7m
(2022: GBP36.7m) available for offset against future profits. A
deferred tax asset has been recognised in respect of GBP23.7m
(2022: GBP28.9m) of the losses and GBP36.7m (2022: GBP36.7m) of the
fixed asset temporary difference where management considers it
probable there will be future taxable profits available for offset.
The net impact of this recognition is a deferred tax asset of
GBP5.9m in relation to losses and GBP9.2m in relation to fixed
asset temporary differences. No deferred tax asset has been
recognised in respect of the remaining GBP35.3m (2022: GBP33.7m)
relating to tax losses as it is not considered probable that there
will be future taxable profits available for offset. The net impact
of this balance is an unrecognised deferred tax asset of GBP8.8m.
These losses may be carried forward indefinitely. 7. Dividends
For the period 52 weeks to 52 weeks to
1 April
31 March 2023
2022
GBPm GBPm
Equity - ordinary shares
Final for the 52 weeks to 1 April 2022 - (53 weeks to 2 April 2021: 5p) 13.0 9.9
Interim for the 52 weeks to 31 March 2023 - (52 weeks to 1 April 2022: 3p) 6.5 6.6
19.5 16.5
In addition, the Directors are proposing a final dividend of 7p
per share (2022: 6.0p) in respect of the financial period ended 31
March 2023. 8. Earnings per share
Basic earnings per share are calculated by dividing the profit
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the period. The weighted
average number of shares excludes shares held by an Employee
Benefit Trust and has been adjusted for the issue/purchase of
shares during the period.
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. These represent share options
granted to employees where the exercise price is less than the
average market price of the Company's ordinary shares during the 52
weeks to 31 March 2023.
The Group has also chosen to present an alternative earnings per
share measure, underlying earnings per share, with profit adjusted
for non-underlying items because it better reflects the Group's
underlying performance.
For the period 52 weeks to 52 weeks to
1 April
31 March 2023
2022
Number of shares Number of shares
m m
Weighted average number of shares in issue 218.9 205.7
Less: shares held by the Employee Benefit Trust (weighted average) (1.5) (1.0)
Weighted average number of shares for calculating basic earnings per share 217.4 204.7
Weighted average number of dilutive shares 10.0 9.0
Total number of shares for calculating diluted earnings per share 227.4 213.7
52 weeks to
52 weeks to
1 April
For the period 31 March 2023
2022
GBPm
GBPm
Basic earnings attributable to equity shareholders 34.0 77.7
Non-underlying items (see note 4):
Operating expenses 8.0 (6.8)
Tax on non-underlying items (1.1) 1.7
Underlying earnings before non-underlying items 40.9 72.6
52 weeks to
For the period 52 weeks to 31 March 2023 1 April
2022
Basic earnings per ordinary share 15.6p 37.9p
Diluted earnings per ordinary share 15.0p 36.4p
Basic underlying earnings per ordinary share 18.8p 35.5p
Diluted underlying earnings per ordinary share 18.0p 34.0p
9. Analysis of movements in Group's net debt in the period
At 1 April Cash flow Other non-cash At 31 March
2022 changes 2023
GBPm GBPm GBPm GBPm
Cash and cash equivalents at bank and in
hand
46.3 (4.4) - 41.9
(Consolidated Statement of Financial
Position)
Bank overdrafts (0.2) (9.5) - (9.7)
Cash and cash equivalents at bank and in
hand 46.1 (13.9) - 32.2
(Consolidated Statement of Cashflows)
Debt due in less than one year - - - -
Debt due after one year - (34.0) - (34.0)
Total net debt excluding leases 46.1 (47.9) - (1.8)
Current lease liabilities (74.5) 89.3 (92.4) (77.6)
Non-current lease liabilities (316.5) - 47.2 (269.3)
Total lease liabilities (391.0) 89.3 (45.2) (346.9)
Total net debt (344.9) 41.4 (45.2) (348.7)
Non-cash changes include additions of new leases, modifications
to leases and foreign exchange movements and changes in
classification between amounts due within and after one year.
Cash and cash equivalents at the period end consist of GBP41.9m
(2022: GBP46.3m) of liquid assets and GBP9.7m (2022: GBP0.2m) of
bank overdrafts.
The Group had the following committed borrowing facilities
available at each balance sheet date in respect of which all
conditions precedent had been met:
2023 2022
GBPm GBPm
Expiring within 1 year 0.0 20.0
Expiring between 1 and 2 years 0.0 0.0
Expiring between 2 and 5 years 180.0 160.0
The facility of GBP180.0m (2022: GBP180.0m) relates to the
Group's revolving credit facility. GBP20.0m of this balance is the
overdraft on the revolving credit facility. All these facilities
incurred commitment fees at market rates. 10. Leases
All leases where the Group is a lessee are accounted for by
recognising a right-of-use asset and a lease liability except
for:
-- Leases of low value assets; and
-- Leases with a term of 12 months or less. i. Amounts
recognised in the consolidated statement of financial position
Right-of-Use Assets
Land and Equipment
Total
buildings GBPm
GBPm
GBPm
At 1 April 2022 345.6 4.6 350.2
Additions on acquisition of subsidiary 5.8 0.5 6.3
Additions to right-of-use assets 23.6 7.4 31.0
Amortisation charge for the year (72.8) (4.7) (77.5)
Effect of modification of lease 1.0 - 1.0
Derecognition of right-of-use assets (0.7) - (0.7)
Impairment 2.3 - 2.3
At 31 March 2023 304.8 7.8 312.6
Land and Equipment
Total
buildings GBPm
GBPm
GBPm
At 2 April 2021 279.9 2.9 282.8
Additions on acquisition of subsidiary 82.0 - 82.0
Additions to right-of-use assets 44.6 5.0 49.6
Amortisation charge for the year (66.4) (3.5) (69.9)
Effect of modification of lease 6.8 0.4 7.2
Derecognition of right-of-use assets (1.3) (0.2) (1.5)
Impairment - - -
At 1 April 2022 345.6 4.6 350.2
Lease Liabilities
Land and Equipment
Total
buildings GBPm
GBPm
GBPm
At 1 April 2022 385.1 5.9 391.0
Additions on acquisition of subsidiary 5.8 0.5 6.3
Additions to lease liabilities 22.3 7.4 29.7
Interest expense 8.5 0.3 8.8
Effect of modification to lease 1.0 - 1.0
Lease payments (84.6) (4.7) (89.3)
Disposals to lease liabilities (1.1) - (1.1)
Foreign exchange movements 0.5 - 0.5
At 31 March 2023 337.5 9.4 346.9
Land and Equipment
Total
buildings GBPm
GBPm
GBPm
At 2 April 2021 340.6 3.7 344.3
Additions on acquisition of subsidiary 73.2 - 73.2
Additions to lease liabilities 44.6 4.9 49.5
Interest expense 8.8 0.2 9.0
Effect of modification to lease 6.8 0.4 7.2
Lease payments (81.7) (3.3) (85.0)
Disposals to lease liabilities (7.0) - (7.0)
Foreign exchange movements (0.2) - (0.2)
At 1 April 2022 385.1 5.9 391.0
1 April
31 March 2023
Lease liabilities 2022
GBPm
GBPm
Maturity analysis - contractual undiscounted cash flows
Less than one year 85.0 81.2
Between one and two years 80.9 80.5
Between two and three years 67.1 72.7
Between three and four years 45.2 59.4
Between four and five years 30.3 39.0
Between five and six years 20.3 26.9
Between six and seven years 14.0 18.7
Between seven and eight years 11.8 12.7
Between eight and nine years 9.3 10.7
Between nine and ten years 6.0 8.2
After ten years 3.6 9.0
Total contractual cash flows 373.5 419.0 ii. Amounts recognised in the consolidated income statement
Land and Equipment
Total
buildings GBPm
GBPm
GBPm
52 weeks ended 31 March 2023
Amortisation charge on right-of-use assets 72.8 4.7 77.5
Interest on lease liabilities 8.5 0.3 8.8
Expenses relating to short-term leases 4.8 - 4.8
Expenses relating to leases of low-value assets, excluding short-term leases of - 2.0 2.0
low-value assets
52 weeks ended 1 April 2022
Amortisation charge on right-of-use assets 66.4 3.5 69.9
Interest on lease liabilities 8.8 0.2 9.0
Expenses relating to short-term leases 6.8 - 6.8
Expenses relating to leases of low-value assets, excluding short-term leases of - 1.6 1.6
low-value assets iii. Amounts recognised in the consolidated statement of cash flows
The total cash outflow for leases for the period ended 31 March
2023 was GBP89.3m (2022: GBP85.0m). 11. Prior Period
Misstatement
Axle Group Intercompany Sales
During the preparation of the financial statements, a
consolidation error was identified relating to Axle group
intercompany transactions. In the previous year elimination of
intercompany sales had taken place in both the Axle group and
Halfords group consolidations. GBP12.8m was incorrectly eliminated
from Revenue and Cost of Sales within the Consolidated Income
Statement for the 52 week period ended 1 April 2022. To correct for
this error in the Consolidated Income Statement, Revenue for the 52
week period ended 1 April 2022 has been increased by GBP12.8m with
a corresponding adjustment to Cost of Sales. In correcting this
error there has been no impact in overall Gross Profit or Profit
for the Financial Period within the Consolidated Income Statement
and there has been no impact on Net Assets or other headline
accounts.
-----------------------------------------------------------------------------------------------------------------------
Dissemination of a Regulatory Announcement that contains inside
information in accordance with the Market Abuse Regulation (MAR),
transmitted by EQS Group. The issuer is solely responsible for the
content of this announcement.
-----------------------------------------------------------------------------------------------------------------------
ISIN: GB00B012TP20
Category Code: FR
TIDM: HFD
LEI Code: 54930086FKBWWJIOBI79
OAM Categories: 1.1. Annual financial and audit reports
2.2. Inside information
Sequence No.: 252111
EQS News ID: 1661421
End of Announcement EQS News Service
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