26
November 2024
Halfords Group
plc
Interim
Results for the 26 weeks to 27 September 2024 (“H1
FY25”)
Strong
first half delivers £21m underlying PBT; accelerating Fusion garage
services rollout to c.40 locations.
£m
|
H1
FY25
|
H1
FY24**
|
Change
|
LfL %
Change
|
Headline Measures**
(Total Ops):
|
|
|
|
|
Revenue
|
864.8
|
873.5
|
(1.0%)
|
(0.1%)
|
|
348.7
|
356.9
|
(2.3)%
|
0.8%
|
|
516.1
|
516.6
|
(0.1%)
|
(0.7%)
|
Gross Margin
|
49.4%
|
47.8%
|
+160bps
|
|
Underlying Profit Before
Tax*
|
21.0
|
21.3
|
(1.4%)
|
|
Underlying Basic Earnings
per Share*
|
7.6p
|
7.6p
|
-
|
|
Dividend per
Share
|
3.0p
|
3.0p
|
-
|
|
Net Cash / (Debt)
(ex-Leases)*
|
1.3
|
(47.0)
|
£48.3m
|
|
Statutory Measures
(Cont. Ops):
|
|
|
|
|
Group Revenue
|
864.8
|
865.3
|
(0.1%)
|
(0.1%)
|
Autocentres
Revenue
|
348.7
|
348.7
|
0.0%
|
0.8%
|
Gross Margin
|
49.4%
|
48.1%
|
+130bps
|
|
Reported Profit Before
Tax
|
17.8
|
23.2
|
(23.3%)
|
|
*Alternative Performance
Measures (“APMs”) are defined on page 16. **H1 FY24 headline
measures include the discontinued Viking and BDL tyre and wholesale
operations as reported in previous interim accounts; statutory
measures have been restated to exclude these as shown in these
condensed consolidated financial statements. The narrative below is
based on headline measures with total operations as the comparative
as they include the ongoing cost of running the discontinued tyre
supply chain which is now outsourced.
Strong
performance
-
Group like-for-like
(“LfL”) sales -0.1% (H1 FY24: +8.3%) with Autocentres LfL +0.8%
(c.40% of sales) and Retail LfL -0.7% (c.60% of sales). Motoring
category across both Autocentres and Retail represents c.80% of
sales.
-
Gross margin +160bps
year-on-year (“YoY”) to 49.4% due to price optimisation and Better
Buying programme.
-
Emphasis on margin
optimisation reflected in market share performance broadly in-line
with forecasts.
-
£14.6m of savings
delivered, on-track for FY25 target of £30m and mitigating £14.8m
of inflation.
-
Retail generated
underlying EBIT of £21.2m (H1 FY24: £19.6m) with 200bps improvement
in gross margin in part reflecting pricing discipline in a
better-than-expected Motoring Products market, while the underlying
Cycling market remains c.33% below FY19 volumes.
-
Autocentres (ex-Avayler)
delivered underlying EBIT of £9.1m (H1 FY24: £11.4m) as challenges
in the underlying Tyres market (c.13% below FY19 market volumes)
resulted in lower sales growth vs. a very strong comparative period
(H1 FY24 LfL: +18.0%) and the business was impacted by high labour
cost inflation.
-
Underlying profit before
tax (“PBT”) of £21.0m, broadly flat YoY.
Resilient balance
sheet
-
Strong cash generation
with a free cash inflow of +£28.1m (H1 FY24: £(19.2)m
outflow).
-
Disciplined working
capital management, including inventory down £18.8m
YoY.
-
Net cash (pre-IFRS16) of
£1.3m, an improvement of £48.3m YoY.
-
Interim dividend of 3.0p
declared.
Significant
strategic progress
-
Accelerating rollout of
Fusion Motoring Services strategy (which creates a closer
relationship between Retail and Autocentres within a town) to c.40
sites in FY25, following strong returns from the first wave of new
locations.
-
Halfords Motoring Club
(“HMC”) passed 4m members with high value Premium sign-ups in-line
with 8-10% target.
Outlook
-
Comfortable with FY25
consensus with strong performance in H1 underpinning full-year
expectations. Whilst the trading outlook is uncertain following the
recent UK Budget, H2 is also impacted by short-term costs including
incremental freight at the lower end of the previously guided £4-7m
range and temporary garage closures to facilitate accelerated
Fusion rollout.
-
As a business employing
more than 12,000 colleagues, measures announced in the UK Budget
add c.£23m of direct labour cost, of which c.£9m was already
included in FY26 planning assumptions and fully
mitigated.
-
The effect of the UK
Budget on consumer behaviour and hence the trajectory of our
end-markets is unclear. We have a greater ability to mitigate
headwinds in the more needs-based Autocentres servicing business,
where pricing power is greater. Additional tactical and structural
options to support mitigation are under review.
Graham
Stapleton, Chief Executive Officer of Halfords,
commented:
“I am
really pleased with the progress we have delivered in the first
half. Against ongoing headwinds, we have continued to focus on
controlling the controllables, with a disciplined approach to cost
and margin optimisation.
We are
particularly excited by the outstanding results we are seeing from
our Fusion Motoring Services programme, which creates a stronger
connection between our Retail stores and Autocentres in a town to
fulfil all our customers’ motoring needs. Now live across 22
locations, these motoring services locations are delivering
phenomenal returns with a significant uplift in both sales and
profit. Given
the strength of these results, we are now targeting 40 Fusion sites
this year.
“Critical to our
success, and what really stands us apart from the competition, are
more than 12,000 fantastic colleagues. We
continually prioritise investment in their training – with skills
and capability our number one focus.
The
cost implications from the recent UK Budget are particularly acute
for a specialist retailer that provides expert advice and
assistance to customers, face to face. While
we will work hard to mitigate these costs, we urge the government
to consider alternative ways of supporting businesses like ours,
including the acceleration of Apprenticeship Levy reform, which
would help us to upskill existing colleagues and offset some of the
new headwinds.
“Looking ahead,
while the short-term outlook remains challenging, we will continue
to build on our unique omnichannel platform and focus on what we
can control to deliver on our strategy this year and
beyond.”
Investor and
analyst meeting:
A webcast
presentation for analysts will be broadcast at 9am followed by a
live Q&A. To join the webcast please follow this
link:
Halfords Group plc FY25 Interim Results Webcast. A recording will
subsequently be uploaded to
www.halfordscompany.com.
For
further information:
Investors:
Holly
Cassell, Director of Investor Relations &
ESG
investor.relations@halfords.co.uk
Media:
Rob
Greening / Steve Marinker / Jane Glover, Sodali &
Co. halfords@sodali.com
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 377 Halfords stores, 2 Performance Cycling stores
(trading as Tredz), 636 consumer and commercial garages (trading as
Halfords Autocentres, McConechy’s, Universal, National Tyres and
Lodge Tyre) and have access to 268 mobile service vans (trading as
Halfords Mobile Expert and National) and 502 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. Through its subsidiary
Avayler, Halfords also sells the Group’s bespoke, internally
developed software as a service (“SaaS”) solution to major clients
in the US, Europe and Australia.
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.
CEO
Review
Business
Update
In the face of previously
flagged short-term headwinds as well as more structural changes to
our cost base that have emerged from the recent UK Budget, we
continue to prioritise optimisation of our existing platform,
positioning Halfords for growth in the years ahead. We have taken
some important steps forward in H1, optimising
our platform to
generate improved returns, mitigating headwinds through
cost and
efficiency savings, and prioritising
existing strategic initiatives where we have a proven ability to
deliver. A particular highlight has been the rollout of our Fusion
Motoring Services concept, which is designed to create a closer
relationship between our retail and garage infrastructure within a
town. The excellent returns we have seen in the first wave of
Fusion locations delivered in H1 have given us confidence to
accelerate the programme in the remainder of this year to drive
substantial incremental profit in converted sites in FY26 and
beyond.
-
Optimising our platform to generate improved
returns
Halfords occupies a
unique market position: we benefit from a trusted, super-specialist
brand; a national, omnichannel footprint; leadership positions in
both the motoring and cycling markets; and a strong, resilient
balance sheet. We also have millions of loyal customers, including
more than 4m Halfords Motoring Club members, and more than 12,000
highly engaged and committed colleagues who are the linchpin of our
business. In the context of a challenging macroeconomic backdrop,
we have focused on maximising the value of these differentiating
attributes for all our stakeholders, including both our customers
and our colleagues.
The steps we have taken
in H1 are very clearly manifested in our gross margin performance,
which increased by 160bps YoY to enable us to hold PBT flat vs.
last year despite significant wage inflation across the
business.
Central to this
improvement has been our Better Buying programme, which is built on
stronger partnerships with key suppliers which drive not only
improved economics but also allow us to have more influence over
ESG practices throughout our supply chain. Now in the second year
of this programme, we are seeing the benefits accelerate,
contributing £5.7m of incremental gross profit in H1
FY25.
Pricing has also been an
important lever, with a high degree of pricing discipline combined
with efficient promotional activity enabling us to pass on some of
the headwinds in our cost base. Our ability to do this varies by end
market, depending on both structural factors and short-term
competitive dynamics which are visible in the ‘Market Volume and
Share’ table below. Pricing in Cycling and Tyres is particularly
challenging, as volumes in the underlying Cycling market continue
to decline (now c.33% below FY19 levels) while the underlying Tyres
market remains depressed by historical standards (c.13% below FY19
levels). This market is also characterised by lower margins and a
high degree of transparency on pricing.
Market
Volume and Share
|
Autocentres
|
Retail
|
|
Consumer
Tyres
|
Motoring
Servicing
|
Retail
Motoring
|
Cycling
|
Market
Volume
|
|
|
|
|
Growth forecast in
FY25
|
-2.0%
|
Broadly flat
|
Broadly flat
|
-2.0%
|
Actual market growth in
H1 FY25
|
+0.8%
|
+3.7%
|
+2.5%
|
-4.2%
|
|
|
|
|
|
Market
Share (volume-based)
|
|
|
|
|
Share movement forecast
in FY25
|
+0.5 ppts to
flat
|
+0.25ppts to
flat
|
Flat to -1.5
ppts
|
+1.5 ppts to +0.5
ppts
|
Actual share movement in
H1 FY25
|
-0.2
ppts
|
+0.2
ppts
|
-1.6
ppts
|
+0.2
ppts
|
Sources: Consumer Tyres
per GfK, Motoring Servicing per DVSA, Retail Motoring per GfK,
Cycling per Bicycling Association, all for six months to end
September 2024.
Notes: Following the
purchase of Wiggle by Frasers Group in Feb 24, Wiggle data, which
was previously included in Bicycling Association Cycling data, was
removed retrospectively and fully from that point forward. The data
service also excludes Evans Cycles. GfK Tyres market reporting
includes sales data from Tyre Specialists, Autocentres and Online
Pure Players. From May 2024, Kwik Fit discontinued data supply to
GfK and its data has been modelled using GfK's advanced research
methodology and modelling techniques. Use of these data sources in
future reporting is under review given reduced market
coverage.
The Cycling market is
highly fragmented with a large number of independent retailers. As
such, weak demand for bikes has resulted in significant industry
consolidation in recent years. We continue to take small amounts of
share in a declining market due to our trusted brand and
market-leading value proposition in predominantly own-brand cycling
ranges. We have continued to innovate in our product ranges
including launching more than 25 new premium mechanical and
electric bikes in the £850+ price bracket across the Boardman,
Voodoo and Carrera brands, exclusive to Halfords and a clear point
of difference vs. our competition.
In contrast, and despite
remaining much lower than in FY19, Tyre market volumes returned to
growth in the period, up 0.8%. However, we have seen clear evidence
of customers trading down into ‘budget’ tyre categories with an
average selling price around half of that for the premium, branded
equivalent which has suppressed sales growth while technician wages
have increased significantly. This tendency to trade down has
resulted in aggressive competitor promotional activity at the
premium end of the market, where it is particularly easy for
customers to benchmark product pricing online. Given our focus on
margin optimisation, we have not always matched this promotional
activity, preferring to focus on our differentiated customer
proposition.
While it is encouraging
to see volume growth return to the market, we continue to see
customers responding to pressures on household budgets by deferring
tyre replacement for longer. Data from within our own business
indicates that the proportion of vehicles booked in for a tyre
replacement that are subsequently found to have at least one tyre
rated ‘red’ (i.e. in need of immediate replacement) has increased
from c.9% in FY21 to c.15% today.
More positively, sales of
Motoring Products and Motoring Services were strong. In Motoring
Products, where a higher proportion of spend is needs-based, the
market has grown more quickly than we expected. Our share in this
market declined in-line with our expectations for the year given
our price and margin optimisation strategy. Meanwhile we have
commenced a programme of Motoring space relays which will
re-balance our stores towards the categories where the highest
growth opportunity exists, such as car cleaning and security,
touring and child travel. This will also provide an opportunity to
further develop our own-brand ranges and better support strategic
supplier relationships with greater range breadth and depth. We
plan to complete c.50 store relays in FY25 and these will be
accompanied by training for our people across product categories
and ranges, enabling colleagues to provide specialist advice to our
customers in a way that is unique to the physical store
environment.
Meanwhile, Motoring
Services performance was a highlight for the Group, taking share in
a growing market where we are better able to price to reflect
increases in our cost base. We have continued to take action to
increase the volume of higher margin Service, Maintenance and
Repair (“SMR”) work in our garages, particularly in the sites
acquired from National which historically focused on Tyres. We have
seen a c.3% increase in the proportion of sales derived from SMR
across the garage estate. In part this is due to an investment in
the leadership capability in our Autocentres driving more rigorous
processes for identifying and recording additional service needs
when vehicles come into our garages. The increase in SMR mix in
acquired National sites is even more significant as we have enabled
booking via Halfords.com and increased the number of trained
colleagues in those sites.
Despite steady gains, our
share of the fragmented Motoring Services market remains low, and
hence the opportunity to drive profitable growth is significant.
The Autocentres business more broadly will benefit from the
investments into garage leadership capability delivered in the
first half of the year. Looking further ahead and as covered in the
‘Strategic Transformation’ section, the acceleration of the Fusion
Motoring Services rollout will help to unlock the substantial
potential for profitable growth across our garage estate in the
coming years, particularly in sites acquired from National which
are currently skewed to Tyres rather than SMR.
Perhaps the biggest asset
we have across the business is our people. As such, we are
investing in colleagues at all levels of their career, including
reinstating performance-related variable financial awards. We have
significantly increased the number of garage apprentices in our
Autocentres, expanded our Retail management development programme,
and are piloting a new management apprenticeship bringing together
colleagues from across the Halfords business to help them progress
to the next stage in their career. However, our primary focus has
been on developing leadership capability throughout the garages
business, including through improved recruitment and onboarding
processes as well as more comprehensive training for our existing
garage leaders. Quality of leadership in an individual garage is a
significant factor in its success and can unlock huge performance
improvements particularly when combined with Fusion, which is
covered in further detail below.
Finally, and importantly
for all our stakeholders, we have taken further steps forward to
deliver on our ESG priorities. We have increased engagement with
our partners to drive improved sustainability and working practices
throughout the supply chain. We are also pleased to have introduced
initiatives such as inner tube recycling across our store network
as well as piloting high-capacity lithium batteries to power
onboard tyre-fitting equipment, thereby reducing direct emissions
from our mobile business. We continue to search for opportunities
to grow and improve our business while delivering on our
sustainability objectives.
-
Mitigating headwinds by driving cost and efficiency
savings
Halfords has absorbed
some very significant inflationary pressures in recent years and
the additional c.£15m of cost increases experienced in H1 take the
cumulative total since the start of FY23 to c.£120m. While there
are signs that some of these pressures are abating, most notably in
relation to energy costs and FX, labour inflation continues to be a
significant headwind with a c.10% increase in the National Living
Wage coming into effect at the start of FY25 (not to mention
further increases resulting from the recent UK Budget anticipated
in FY26 – more on which below). However, we have continued to be
disciplined on cost, realising £14.6m of savings in the first half
of the year, which have enabled us to deliver a very similar level
of profit to last year despite the substantial headwinds we have
faced. In addition to £5.7m of benefit from the Better Buying
programme as outlined above, a relentless focus on cost and
efficiency has also helped us to mitigate the inflation we
experienced in H1, two examples of which are detailed
below.
At our FY24 results, we
announced the restructuring of our tyre supply chain, closing the
existing operation and entering into an agreement with specialist
tyre distributor Bond International. This arrangement was expected
to give rise to a number of benefits for both Halfords and our
customers, including a £5m per annum cost benefit, improved tyre
availability including same-day tyre services, and more efficient
processes and controls. Our agreement with Bond has started well,
and all of these benefits are being realised across our garage
network. The arrangement has resulted in H1 cost savings of £2.1m
and we have experienced a meaningful improvement in tyre
availability in our garages over the six-month period.
We have also taken steps
to improve our stock management analytics and processes throughout
the business, resulting in an £18.8m reduction in stock YoY at a
seasonal peak as we build product ahead of Christmas and Black
Friday in the Retail business. Retail has seen the benefits of more
successful planning and effective clearance of unsold stock at the
end of the season. Meanwhile in Autocentres we have reduced our
stock of tyres with no detrimental impact on availability as a
result of the supply chain restructuring described above.
Disciplined stock control has been an important contributor to
delivery of a £28.1m free cash inflow, reflected in a
higher average cash balance YoY across the period. This strong cash
management has resulted in £0.9m of incremental profit generation
through lower finance costs in the half.
-
Selectively prioritising key strategic transformation
initiatives
Our priority in FY25 is
optimising our existing platform, as detailed above. However, we
have continued to prioritise a limited number of strategic
initiatives which have been identified as a priority for future
growth, including Halfords Motoring Club (“HMC”) and, most
importantly, the Fusion Motoring Services rollout.
HMC cuts across both our
Retail and Autocentres businesses and continues to resonate
strongly in both its free and paid-for forms. HMC now has more than
4 million members having only launched at the end of FY22, with
Premium membership signups in H1 tracking in-line with our 8 to 10%
mid-term target. HMC members continue to shop more frequently,
spend more when they visit, and are more likely than non-members to
experience the full range of Halfords products and services (what
we term “cross-shop”). What is even more exciting is that with
almost three years of data on the behaviour of our earliest HMC
members, we can now see that the value of members (and especially
Premium members) over non-members grows as membership cohorts age.
Despite these compelling results, we believe there to be
substantial untapped value in the HMC model in the mid to long-term
as we develop our data capability and further build out the HMC
proposition.
However, our top priority
strategic programme in FY25 is the rollout of our Fusion Motoring
Services model, which is designed to take the highest returning
elements of our flagship Colchester and Halifax Fusion towns,
providing an improved customer experience in many more locations
across our network. At its core, the programme is about connecting
the Motoring Services offer across the infrastructure within a
town, driving referrals from the store to the garage, increasing
SMR mix in Autocentres and delivering improved returns from an
existing fixed cost in our estate.
The Fusion Motoring
Services rollout includes:
-
Refurbishing the garage
including installing more ramps to support SMR work;
-
Adding a fixed canopy for
servicing activity in the retail car park;
-
Introduction of an
Automotive Services Manager based in-store to drive garage
referrals, supported by improved technology;
-
Additional colleagues in
the garage, including in customer service, sales and managerial
roles, as well as more technicians; and,
-
Enhancements to garage
leadership including additional training.
The Halifax and
Colchester Fusion test sites required significant up-front
investment but resulted in a doubling of sales and EBITDA at
maturity. The Fusion Motoring Services model being rolled out in
the current financial year takes our experience from these tests
and aims to replicate their financial outcomes but at a much lower
initial cost, thereby delivering improved returns with a faster
payback of just over 2 years.
The original plan was to
open c.25 new Fusion Motoring Services locations in FY25 at a cost
of approximately £5m, i.e. £200k per site. 22 sites have been
delivered so far this year, with the 10 sites delivered over the
Summer as the first wave now having 3 to 4 months of trading behind
them. These sites are performing significantly ahead of business
case and have given us the confidence to go further, accelerating
the programme to deliver c.40 sites in total in the current
financial year (i.e. an increase of c.15 from the initial plan).
The impact in H2 FY25 of these 15 garages being closed for up to 8
weeks each while staff are retained and trained will be c.£1m;
however, we are confident in a substantial site-level uplift in
profitability in FY26 and beyond
The benefits of Fusion
are particularly apparent in many of the garages acquired from
National, which represent 13 of the 22 Fusion locations delivered
so far this year and tend to be larger and more Tyres-focused than
Halfords Autocentres locations. As such, they present a significant
opportunity to increase capacity and expand into higher margin SMR
work and hence we see Fusion as the key to unlocking the full
potential of the National business in the coming years.
We plan to continue the
Fusion Motoring Services rollout in FY26, and within the next two
years we anticipate our physical Autocentres business operating
under a single Halfords Garage Services brand. This will allow us
to leverage our market-leading reputation in higher margin SMR
across the whole garage estate. Combined with existing Tyres
infrastructure, including the ability to service large, commercial
contracts and the distressed consumer tyres market through an
expanded same-day service, Halfords will operate a truly
differentiated, SMR-led national garage network.
Outlook
Current Year (H2
FY25)
We remain comfortable
with consensus estimates for FY25 which imply a significant profit
weighting towards H1. The second half of the year will be impacted
by incremental freight at the lower end of the previously indicated
£4-7m range, and acceleration of our Fusion rollout will have a
c.£1m impact due to temporary garage closures.
Recent trading has become
more volatile with consumer confidence impacted by the uncertainty
ahead of the Autumn UK Budget, and we are yet to see how the
measures announced affect customer behaviour in H2.
FY26 and
Mid-term
In our FY23 Capital
Markets Day (“CMD”), we set out a route to the Halfords business
generating a mid-term underlying PBT of £90m to £110m. £17m of the
increase in profit was forecast to come from market recovery.
However, as noted above, two of our four underlying markets remain
substantially depressed compared to FY19. This, alongside more than
£50m of inflation in the last 18 months (vs. our expectation of a
£46m headwind across the whole mid-term period), has slowed our
progress towards our target range.
To test our thinking on
the recovery prospects for Cycling and Tyres in particular, earlier
this year we commissioned strategy consultants OC&C to
undertake detailed market analysis. Underpinning our CMD targets
was an assumption that the Cycling market would recover to 10%
below FY19 levels in the mid-term, with Tyres reaching 3% below
FY19 levels over the same timeframe. Using consumer and other
qualitative research, a range of third-party data sources and their
own modelling, OC&C has concluded that the Cycling market
should recover to 14% below FY19 with the Tyres market 2% ahead of
FY19 by FY28/29. These market projections are consistent with the
profit outcome presented at the CMD, albeit two years later than
originally envisaged. However, the analysis was conducted prior to
the recent UK Budget, and it is unclear how macroeconomic
indicators including inflation, interest rates and unemployment
levels will respond to the changes announced, and hence impact
these forecasts.
The second factor
impacting progress towards our mid-term targets is inflation, which
we had expected to start to ease in the years following the CMD.
Announcements made at the recent UK Budget in relation to
Employers’ National Insurance and moves to align the National
Minimum Wage rate for under-21s with the National Living Wage have
materially impacted our cost assumptions for FY26, adding c.£23m to
our direct labour costs, of which c.£9m was already included in our
planning assumptions and hence fully mitigated. We may also see
inflation passed through on managed services and the impact on
consumer confidence (and therefore our end-markets) is
unclear.
It will inevitably be
challenging to fully mitigate a single-year cost increase of this
magnitude, particularly in the Retail business where many of our
product categories are discretionary and/or big ticket and
substantial cost has already been removed in recent years. We
anticipate being able to pass through wage inflation more easily in
the Autocentres business where a greater proportion of revenue
relates to services. We are assessing a broad range of other
tactical and structural levers at our disposal. In the longer term,
we remain confident in the strength of the Halfords brand and its
ability to stretch into adjacent markets.
Next
update
Our next update will be
the FY25 trading statement, which is expected in April
2025.
Graham
Stapleton
Chief Executive Officer,
Halfords Group plc
25 November
2024
CFO
Report
Group
Financial Results
All
numbers are stated on a post-IFRS 16 basis unless otherwise
indicated.
Result
from Continuing Operations
|
H1
FY25
|
H1
FY24
|
Change
|
|
£m
|
£m
|
25 vs
24
|
Revenue
|
864.8
|
865.3
|
(0.1)%
|
Gross Profit
|
427.5
|
415.8
|
2.8%
|
Gross Margin
|
49.4%
|
48.1%
|
+130bps
|
Underlying
EBIT
|
26.4
|
31.5
|
(16.2)%
|
Underlying
EBITDA
|
89.4
|
94.2
|
(5.1)%
|
Net Finance
expense
|
(5.4)
|
(6.3)
|
(14.3)%
|
Underlying Profit
Before Tax
|
21.0
|
25.2
|
(16.7)%
|
Net Non-underlying
items
|
(3.2)
|
(2.0)
|
60.0%
|
Profit
Before Tax
|
17.8
|
23.2
|
(23.3)%
|
Underlying Basic
Earnings per Share
|
7.6p
|
8.9p
|
(14.6)%
|
In H2 FY24, the Group
entered into an agreement with specialist tyre distributor Bond
International (“Bond”), which now manages the tyre distribution and
warehousing operations for the Autocentres business. This
restructuring resulted in the closure of the tyre wholesale and
distribution operations that formed part of the Axle Group
acquisition in December 2021.
A reconciliation of
Underlying PBT from Continuing Operations to the total result is
provided in the table below.
|
H1
FY25
|
H1
FY24
|
Change
|
|
£m
|
£m
|
25 vs
24
|
Underlying Profit Before
Tax from Continuing Operations
|
21.0
|
25.2
|
(16.7)%
|
Underlying Loss Before
Tax from Discontinued Operations
|
-
|
(3.9)
|
|
Underlying Profit
Before Tax – Total Operations
|
21.0
|
21.3
|
(1.4)%
|
The following table shows
the same information but with total operations as the comparative
(i.e. the H1 FY24 headline measures shown on page 1, which include
the discontinued Viking and BDL tyre and wholesale operations as
reported in previous interim accounts). As previously discussed,
the decision to outsource our tyre and warehousing operations to
Bond delivers significant P&L benefit to the Group. However, it
also results in some costs previously incurred in the discontinued
Viking operation now being reflected in the continuing consumer
garage business by way of a tyre distribution fee paid to Bond. As
such, a comparison to the results of total operations last year
better reflects relative performance and is the basis of the
narrative which follows.
Result
from Total Operations
|
H1
FY25
|
H1
FY24
|
Change
|
|
£m
|
£m
|
25 vs
24
|
Revenue
|
864.8
|
873.5
|
(1.0)%
|
Gross Profit
|
427.5
|
417.3
|
2.4%
|
Gross Margin
|
49.4%
|
47.8%
|
+160bps
|
Underlying
EBIT
|
26.4
|
27.6
|
(4.3)%
|
Underlying
EBITDA
|
89.4
|
90.9
|
(1.7)%
|
Net Finance
expense
|
(5.4)
|
(6.3)
|
(14.3)%
|
Underlying Profit
Before Tax
|
21.0
|
21.3
|
(1.4)%
|
Net Non-underlying
items
|
(3.2)
|
(2.0)
|
60.0%
|
Profit
Before Tax
|
17.8
|
19.3
|
(7.8)%
|
Underlying Basic
Earnings per Share
|
7.6p
|
7.6p
|
-
|
During the 26 weeks
ending 27 September 2024 (“H1 FY25”), the Group delivered an
underlying profit before tax (“PBT”) of £21.0m (H1 FY24: £21.3m) on
revenue which fell by 1.0% year-on-year (“YoY”) to £864.8m.
Like-for-like (“LfL”) sales declined by -0.1% against a very strong
comparative in the previous period (H1 FY24: +8.3%) as consumer
confidence continued to be weak and the Cycling and Tyre markets
remained depressed by historical standards.
Strong progress on our
Better Buying programme and other initiatives have contributed to a
total of 160bps of gross margin expansion in the half. Group gross
profit of £427.5m (H1 FY24: £417.3m) represents a gross margin of
49.4% (H1 FY24: 47.8%).
£14.6m of cost savings
delivered in H1 have largely mitigated the impact of a c.10%
increase in the National Living Wage through the P&L, enabling
us to deliver broadly flat PBT in challenging circumstances. These
market and inflationary headwinds will continue to impact the
business in H2, compounded by elevated freight costs resulting from
disruption to ocean freight routes. At the start of the year we
highlighted a freight impact of £4-7m which we now expect to
materialise around the bottom end of the range. H2 will also be
impacted by short-term costs associated with the acceleration of
our Fusion Motoring Services rollout to an additional c.15
locations, as highlighted in the CEO Report.
Looking ahead to FY26,
changes announced in the Autumn UK Budget will add c.£23m of direct
labour cost inflation to the business, of which c.£9m was already
included in our planning assumptions. As highlighted in the CEO
Report we may also see inflation in managed services while the
impact on our end-markets is unclear. We are considering all
mitigation options.
Detailed analysis of our
sales performance, gross margin and operating costs are covered in
further detail under ‘Reporting Segments’ below. Unallocated costs
of £2.6m (H1 FY24: £2.9m) represent amortisation charges in respect
of intangible assets acquired through business combinations, which
arise on consolidation of the Group. Group underlying EBIT was
£26.4m (H1 FY24: £27.6m), a reduction of £1.2m YoY following a very
strong Autocentres performance in the comparative period, while
Group underlying EBITDA was £89.4m (H1 FY24: £90.9m).
Net
Non-Underlying items
The following table
outlines the components of the non-underlying items recognised in
the period:
|
H1
FY25
£m
|
H1
FY24
£m
|
Organisational
restructure costs
|
0.2
|
1.9
|
Closure costs
|
1.2
|
(1.2)
|
Acquisition and
investment related fees
|
-
|
0.3
|
Replacement of Warehouse
Management System
|
0.6
|
0.7
|
Garage Transformation
Programme
|
0.3
|
-
|
Cloud migration
costs
|
0.9
|
-
|
Other
|
-
|
0.3
|
Net
non-underlying items charge
|
3.2
|
2.0
|
Organisational
restructure costs of £0.2m in the period related to redundancy
costs incurred as part of a change in the Group’s operating
model.
Closure costs are costs
associated with the closure of stores and garages following an
earlier strategic review of the Group's physical estate, alongside
closure of the Group's Tyre Wholesale operations in FY24. In the
current period, costs predominantly relate to ongoing property
expenses that cannot be provided for in advance under IFRS, whilst
the prior period credit represents a release of provisions no
longer required following a review.
Acquisition costs relate
to fees incurred in relation to the acquisition of Lodge Tyre
Company.
Costs relating to the
replacement of the Warehouse Management System were incurred during
the current period and in FY24. The project and associated costs
are expected to conclude in H1 FY26.
Garage Transformation
Programme costs relate to professional fees incurred in reviewing
and implementing improvements to operational processes and systems
in the Group's garages, the benefits of which will be realised in
future periods.
Cloud migration costs
relate to the migration of servers from co-located datacentres to
the cloud, including expenses associated with managing this
transition and the temporary dual running of existing co-located
servers and the new Cloud-based solution.
Reporting
Segments
Retail
|
|
|
|
|
|
H1
FY25
|
H1
FY24
|
Change
|
Sales
mix
|
|
£m
|
£m
|
25 vs
24
|
%
|
Revenue
|
516.1
|
516.6
|
(0.7)%*
|
|
|
324.2
|
323.9
|
(0.2)%*
|
62.9
|
|
191.1
|
192.3
|
(1.6)%*
|
37.1
|
Gross Profit
|
246.5
|
236.8
|
4.1%
|
|
Gross Margin
|
47.8%
|
45.8%
|
200bps
|
|
Operating
Costs
|
(225.3)
|
(217.3)
|
+3.7%
|
|
Underlying
EBIT
|
21.2
|
19.6
|
+8.1%
|
|
Non-underlying
items
|
(1.8)
|
(1.1)
|
+63.6%
|
|
EBIT
|
19.4
|
18.5
|
+4.9%
|
|
Underlying
EBITDA
|
59.5
|
59.8
|
(0.5)%
|
|
*Change in revenue is on
a LfL basis. ** Sales breakdown excludes miscellaneous sales of
£0.8m (H1 FY24: £0.4m).
Retail sales saw a small
LfL reduction of 0.7% in the period, to £516.1m. Reflective of the
broader consumer environment and consistent with recent history,
Motoring has performed more strongly than Cycling due to its higher
mix of needs-based rather than discretionary products. In Motoring,
we successfully optimised margin via effective pricing and
promotion resulting in LfL Motoring sales down 0.2% (total sales up
0.1%) against strong comparatives (H1 FY24 Motoring: +8.2% LfL).
With continued decline in the Cycling market, LfL Cycling sales
declined by 1.6% in the period (total sales down 0.7%).
Retail operating costs
before non-underlying items increased by 3.7%, reflecting tight
cost control against the backdrop of a c.10% increase in the
National Living Wage. As such, the Retail business delivered an
8.1% increase in segmental EBIT before non-underlying items to
£21.2m in the period (H1 FY24: £19.6m).
Autocentres
As in the Group-level
disclosure above, the table below shows Autocentres segment
performance with the prior year comparative restated to reflect
only Continuing Operations.
Continuing
Operations
|
H1
FY25
|
H1
FY24
|
Change
|
|
£m
|
£m
|
25 vs
24
|
Revenue
|
348.7
|
348.7
|
0.8%*
|
Gross Profit
|
181.0
|
179.0
|
1.1%
|
Gross Margin
|
51.9%
|
51.3%
|
+60bps
|
Operating
Costs
|
(173.2)
|
(164.2)
|
5.5%
|
Underlying
EBIT
|
7.8
|
14.8
|
(47.3)%
|
Non-underlying
items
|
(1.4)
|
(0.9)
|
55.6%
|
EBIT
|
6.4
|
13.9
|
(54.0)%
|
Underlying
EBITDA
|
29.9
|
34.9
|
(14.3)%
|
*Change in revenue
figures is on a LfL basis
A reconciliation of
Autocentres underlying EBIT, from continuing operations to the
total result, is provided in the table below.
|
H1
FY25
|
H1
FY24
|
Change
|
|
£m
|
£m
|
25 vs
24
|
Underlying EBIT from
Continuing Operations
|
7.8
|
14.8
|
(47.4)%
|
Underlying EBIT from
Discontinued Operations
|
-
|
(3.9)
|
|
Underlying EBIT –
Total Operations
|
7.8
|
10.9
|
(28.4)%
|
The following table
summarises Autocentres performance but with total operations as the
comparative (i.e. including the discontinued Viking and BDL tyre
and wholesale operations as reported in previous interim accounts).
As above, the narrative which follows uses the results of total
operations as the prior year comparative as they include the
ongoing cost of running the discontinued tyre supply chain which is
now outsourced to Bond.
Total
Operations
|
H1
FY25
|
H1
FY24
|
Change
|
|
£m
|
£m
|
25 vs
24
|
Revenue
|
348.7
|
356.9
|
0.8%*
|
Gross Profit
|
181.0
|
180.5
|
0.3%
|
Gross Margin
|
51.9%
|
50.6%
|
+130bps
|
Operating
Costs
|
(173.2)
|
(169.5)
|
2.2%
|
Underlying
EBIT
|
7.8
|
10.9
|
(28.4)%
|
Non-underlying
items
|
(1.4)
|
(0.9)
|
55.6%
|
EBIT
|
6.4
|
10.0
|
(36.0)%
|
Underlying
EBITDA
|
29.9
|
31.1
|
(3.9)%
|
*Change in revenue is on
a LfL basis
The Autocentres segment
reported revenue of £348.7m, flat vs. the previous year. Excluding
the Avayler SaaS business, Autocentres generated revenue of £347.1m
in H1 FY25, a LfL increase of 0.8% against a very strong prior year
comparative (H1 FY24 LfL: +18.0%). This performance is based on
divergent trends in the two core autocentres markets of Tyres and
Service, Maintenance and Repair (“SMR”).
SMR revenue grew strongly
in H1, and we continued to take share while optimising gross margin
through pricing and our better buying program. In contrast, the
Tyres market has been more challenging, characterised by consumers
trading down into budget ranges with much lower average selling
prices than their premium, branded equivalents.
Segmental gross margin
has proved resilient at 51.9%, benefiting from the mix shift into
SMR as well as initiatives such as Better Buying. However, lower
revenue growth vs. last year meant that we were unable to mitigate
the extent of the increase in labour costs triggered by a 10%
increase in the National Living Wage as we sought to maintain an
appropriate skills differential. As such, underlying EBIT for the
Autocentres business declined by 28.8% YoY to £7.8m (H1 FY24:
£10.9m).
The Avayler business
continues to be reported within the Autocentres segment but now
operates as a standalone business within the Group. It generated
revenue of £1.6m (H1 FY24: £1.2m) in the half but incurred a loss
before interest and tax of £1.3m as investment in growth
continued.
Underlying Autocentres
EBIT excluding Avayler was therefore £9.1m, down 20.6% YoY (H1
FY24: £11.4m).
Portfolio
Management
The Retail store
portfolio as at 27 September 2024 comprised 377 stores (H1 FY24:
392; FY24: 387).
The Autocentres portfolio
as at 27 September 2024 comprised 636 locations (547 consumer
garages and 89 commercial locations) (H1 FY24: 593, FY24: 639).
As at 27 September 2024
there were a total of 770 vans in operation, 197 of which were
Halfords Mobile Expert, 502 commercial vans and 71 vans supporting
mobile tyre fitting in National (H1 FY24: 742, FY24:
768).
Net
Finance Expense
The reduced net finance
expense YoY of £5.4m (H1 FY24: £6.3m) is primarily due to interest
accruing on a higher average cash balance through the period, which
was the result of disciplined working capital management including
lower stock. Finance costs pre IFRS 16 also decreased compared to
the prior year to £1.0m (H1 FY24: £2.0m).
Taxation
The taxation charge on
profit for the financial period was £3.7m (H1 FY24: £5.7m),
including a £0.7m credit (H1 FY24: £0.1m credit) in respect of
non-underlying items. The effective tax rate of 20.6% (H1
FY24: 24.6%) differs from the UK corporation tax rate (25%)
principally due to prior year adjustments partially offset by the
impact of non-deductible expenditure.
The full year FY25
effective tax rate is expected to be around 23.3% which is below
the statutory rate due to the impact of the prior period
adjustments.
Earnings Per Share
(“EPS”)
Underlying Basic EPS was
7.6 pence (H1 FY24: 7.6 pence) and after non-underlying items was
6.5 pence (H1 FY24: 6.7 pence). Basic weighted-average shares in
issue during the period were 218.1m (H1 FY24: 217.5m). The increase
in the basic weighted-average shares in issue during the period
from H1 FY24 is due to the reduction in the weighted-average number
of shares held by the Employee Benefit Trust.
Dividend
The Board have declared
an interim dividend of 3 pence per share in respect of the period
to 27 September 2024 (H1 FY24: 3 pence). The interim dividend will
be paid on 17 January 2025 to shareholders who are on the register
of members, with an ex-dividend date of 12 December 2024 and a
record date of 13 December 2024.
Capital
Expenditure
Capital expenditure in
the period totalled £23.6m (H1 FY24: £18.7m), against a full-year
expectation of £50-60m.
Retail capital
expenditure was £12.2m (H1 FY24: £7.6m), of which £6.8m (H1 FY24:
£5.0m) related to IT infrastructure and e-commerce, mainly
focused on the
development of the loyalty offer in Halfords Motoring Club and the
Group’s websites. £4.8m (H1 FY24: £1.9m) was invested in stores,
including on relaying Motoring space in the first wave of stores
earmarked for this initiative, with the majority of
the remaining balance
related to software investment in Tredz.
Autocentres capital
expenditure was £11.4m (H1 FY24: £11.1m) of which £3.5m (H1 FY24:
£5.0m) related to IT software expenditure on the development of
Avayler and PACE, the Garage Workflow System. Expenditure on
property and garage equipment in the period was £7.9m (H1 FY24:
£5.8m), with c.£3.6m incurred to support the rollout of the Fusion
Motoring Services model across our estate.
Inventories
Group inventory held at
the period end was £244.1m (H1 FY24: £262.9m, FY24: £237.5m).
The £18.8m reduction in stock holding YoY reflects the Group’s
continued improvement of its stock management, and the full-year
impact of actions undertaken in H2 FY24.
Retail inventory was
£193.3m (H1 FY24: £202.0m, FY24: £178.8m) down £8.7m YoY as a
result of successful planning and effective end-of-season
clearance. The increase from FY24 year end was driven by the
typical seasonal stock build ahead of the peak Christmas trading
period.
Autocentres’ inventory
was £50.8m (H1 FY24: £60.9m, FY24: £58.7m). The decrease of £10.1m
YoY and £7.9m since FY24 year-end reflects the closure of the
Group’s Wholesale Tyre operations in H2 FY24, with improved
structures, processes and analytics supporting improved stock
control.
Cashflow and
Borrowings
Adjusted operating
cashflow during the period, was £95.3m (H1 FY24: £64.0m). After
acquisitions, taxation, capital expenditure, net finance costs, and
lease payments, a free cash inflow of £28.1m (H1 FY24: £(19.2m)
outflow) was generated in the period. The increase in free cashflow
of £47.3m from H1 FY24 is due to strong working capital management
in the period.
Group net debt, including
IFRS 16 lease debt, was £276.5m at the balance sheet date
(H1 FY24: £372.3m, FY24
£315.3m) consisting of £78.6m of cash (H1 FY24: £16.2m), £(43.5)m
bank overdrafts (H1 FY24: £(10.9)m), £(33.7)m in relation to the
Group’s revolving credit facility (H1 FY24: £(49.4)m), £(0.1m) of
other borrowings (H1 FY24: £(2.9)m) and £(277.8)m of lease
liabilities (H1 FY24: £(325.3)m). The decrease in the Group’s net
debt from FY24 year-end of £(38.8)m relates to a decrease of £29.4m
in lease liabilities, £21.8m cash inflow, £0.5m of other non-cash
movements, and net repayment of the Group’s revolving credit
facility and other borrowings of £11.9m. Excluding lease debt,
Group net cash was £1.3m at the balance sheet date (H1 FY24: net
debt of £(47.0)m).
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 financial year are described in the Strategic Report
on pages 82 to 89 of the Halfords Group plc Annual Report and
Accounts for the period ending 29 March 2024 and all are considered
relevant to the H1 FY25 reporting. 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
Jo
Hartley
Chief
Financial Officer
25 November
2024
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 management to measure the
Group’s performance.
The key APMs that the
Group uses are as follows:
-
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.
-
Underlying EBIT is operating profit before non-underlying
items, as shown in the Condensed Consolidated Income Statement.
Underlying EBITDA further removes depreciation and
amortisation.
|
|
H1
FY25
£m
|
H1
FY24
£m
|
Underlying
EBIT
|
|
26.4
|
31.5
|
Depreciation &
Amortisation
|
|
63.0
|
62.7
|
Underlying
EBITDA
|
|
89.4
|
94.2
|
|
|
|
|
|
-
Underlying Profit Before Tax is profit before income tax and
non-underlying items as shown in the Condensed Consolidated Income
Statement.
-
Underlying Earnings Per Share is profit after income tax
before non-underlying items as shown in the Condensed Consolidated
Income Statement, divided 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.
-
Net Debt is current and non-current borrowings less cash and
cash equivalents, both in-hand and at bank, as shown in the
Condensed Consolidated statement of financial position, as
reconciled below:
|
|
H1
FY25
£m
|
H1
FY24
£m
|
Cash and cash
equivalents
|
|
78.6
|
16.2
|
Borrowings –
current
|
|
(43.6)
|
(13.8)
|
Borrowings –
non-current
|
|
(33.7)
|
(49.4)
|
Net
Debt
|
|
1.3
|
(47.0)
|
|
|
|
|
|
-
Net Debt to Underlying EBITDA ratio is represented by the
ratio of Net Debt to Underlying EBITDA (both of which are defined
above).
-
Adjusted Operating Cash Flow is defined as Net cash from
operating activities excluding the impact of foreign exchange
movements and income tax paid; as reconciled below:
|
H1
FY25
£m
|
H1
FY24
£m
|
Net cash from operating
activities
|
97.0
|
47.7
|
Add back:
|
|
|
Foreign exchange
movement
|
(4.3)
|
1.8
|
Income tax
paid
|
2.6
|
14.5
|
Adjusted Operating
Cash Flow
|
95.3
|
64.0
|
|
|
|
|
-
Free Cash Flow is defined as Net increase/(decrease) in cash
and cash equivalents excluding the impact of Deferred consideration
paid, Purchase of own shares, Proceeds from share options
exercised, net movement in borrowings, and Dividends paid, as
reconciled below:
|
H1
FY25
£m
|
H1
FY24
£m
|
Net increase/(decrease)
in cash and cash equivalents
|
21.8
|
(26.9)
|
Add back:
|
|
|
Deferred consideration
paid
|
4.0
|
-
|
Purchase of own
shares
|
3.6
|
10.3
|
Proceeds from share
options exercised
|
(0.7)
|
(0.1)
|
Net movement in
borrowings
|
(11.5)
|
(17.7)
|
Dividends paid
|
10.9
|
15.2
|
Free
Cash Flow
|
28.1
|
(19.2)
|
Halfords Group
plc
Condensed consolidated income statement
For the
26 weeks to 27 September 2024
|
|
26
weeks to
|
26 weeks to
|
52 weeks to
|
|
|
|
27
September
|
29 September
|
29 March
|
|
|
|
2024
|
2023
*
|
2024
|
|
|
|
Unaudited
|
Unaudited
|
|
|
|
Notes
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
Revenue
|
6, 7
|
864.8
|
865.3
|
1,696.5
|
Cost of sales
|
|
(437.3)
|
(449.5)
|
(873.9)
|
Gross
profit
|
|
427.5
|
415.8
|
822.6
|
Operating
expenses
|
|
(401.1)
|
(384.3)
|
(766.4)
|
|
|
|
|
|
Operating profit before
non-underlying items
|
|
26.4
|
31.5
|
56.2
|
Non-underlying
items
|
8
|
(3.2)
|
(2.0)
|
(4.3)
|
|
|
|
|
|
Results
from operating activities
|
|
23.2
|
29.5
|
51.9
|
|
|
|
|
|
Net Finance
Expense
|
9
|
(5.4)
|
(6.3)
|
(13.1)
|
|
|
|
|
|
Profit before tax and
non-underlying items
|
|
21.0
|
25.2
|
43.1
|
Non-underlying
items
|
8
|
(3.2)
|
(2.0)
|
(4.3)
|
|
|
|
|
|
Profit
before tax
|
|
17.8
|
23.2
|
38.8
|
|
|
|
|
|
Tax on underlying
items
|
10
|
(4.4)
|
(5.8)
|
(10.3)
|
Tax on non-underlying
items
|
8
|
0.7
|
0.1
|
0.5
|
|
|
|
|
|
Profit
after tax from continuing operations
|
|
14.1
|
17.5
|
29.0
|
(Loss) after tax from
discontinued operations
|
13
|
-
|
(2.9)
|
(12.1)
|
Total
profit for the period (continued and discontinued)
|
|
14.1
|
14.6
|
16.9
|
Attributable
to:
|
|
|
|
|
Equity
shareholders
|
|
14.2
|
14.6
|
16.9
|
Non-controlling
interest
|
|
(0.1)
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
Basic
(continuing)
|
12
|
6.5p
|
8.1p
|
13.3p
|
Diluted
(continuing)
|
12
|
6.3p
|
7.7p
|
12.7p
|
Basic (continuing and
discontinued)
|
12
|
6.5p
|
6.7p
|
7.8p
|
Diluted (continuing and
discontinued)
|
12
|
6.3p
|
6.4p
|
7.4p
|
|
|
|
|
|
|
|
|
|
*H1 FY24 has been
restated for discontinued operations see note 13 for further
information.
Condensed consolidated statement of comprehensive income
For the
26 weeks to 27 September 2024
|
26
weeks to
|
26 weeks to
|
52 weeks to
|
|
27
September
2024
|
29 September
2023
|
29 March
2024
|
|
Unaudited
|
Unaudited
|
|
|
£m
|
£m
|
£m
|
|
|
|
|
Profit
for the period from continuing operations
|
14.1
|
17.5
|
29.0
|
|
|
|
|
Other
comprehensive income
|
|
|
|
Cash flow
hedges:
|
|
|
|
Fair value changes in the
period
|
(4.8)
|
1.2
|
(1.3)
|
Income tax on other
comprehensive income
|
0.8
|
(0.7)
|
(0.4)
|
Other
comprehensive (loss) / income for the period,
net of
income tax
|
(4.0)
|
0.5
|
(1.7)
|
|
|
|
|
Total
comprehensive income from continuing operations
|
10.1
|
18.0
|
27.3
|
|
|
|
|
(Loss)
for the period from discontinued operations
|
-
|
(2.9)
|
(12.1)
|
|
|
|
|
Total
comprehensive income for the period
|
10.1
|
15.1
|
15.2
|
Attributable
to:
|
|
|
|
Equity
shareholders
|
10.2
|
15.1
|
15.2
|
Non-controlling
interest
|
(0.1)
|
-
|
-
|
All items within the
Condensed consolidated statement of comprehensive income are
classified as items that are or may be recycled to the consolidated
income statement.
The notes on pages 23 to
34 are an integral part of these condensed consolidated interim
financial statements.
Condensed consolidated statement of financial position
As at 27 September
2024
|
|
As
at
27
September 2024
|
As at
29 September
2023
Restated*
|
As at
29 March
2024
|
Unaudited
|
Unaudited
|
|
|
Notes
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
|
Non-current
assets
|
|
|
|
|
Intangible
assets
|
14
|
482.8
|
481.6
|
483.9
|
Property, plant and
equipment
|
14
|
89.2
|
92.8
|
89.5
|
Right-of-use
assets
|
14
|
253.3
|
294.5
|
278.3
|
Derivative financial
instruments
|
|
-
|
0.3
|
-
|
Trade and other
receivables
|
|
2.2
|
-
|
2.3
|
Deferred tax
asset
|
|
5.0
|
9.0
|
5.1
|
Total
non-current assets
|
|
832.5
|
878.2
|
859.1
|
Current
assets
|
|
|
|
|
Inventories
|
|
244.1
|
262.9
|
237.5
|
Trade and other
receivables
|
|
158.5
|
162.5
|
161.0
|
Derivative financial
instruments
|
|
0.1
|
1.4
|
0.2
|
Current tax
assets
|
|
8.3
|
7.5
|
8.4
|
Cash and cash
equivalents
|
15
|
78.6
|
16.2
|
13.3
|
Total
current assets
|
|
489.6
|
450.5
|
420.4
|
Total
assets
|
|
1,322.1
|
1,328.7
|
1,279.5
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Borrowings
|
15
|
(43.6)
|
(13.8)
|
(1.8)
|
Lease
liabilities
|
|
(68.7)
|
(71.9)
|
(79.1)
|
Derivative financial
instruments
|
|
(4.9)
|
(1.3)
|
(1.5)
|
Trade and other
payables
|
|
(382.4)
|
(360.0)
|
(368.4)
|
Provisions
|
|
(11.7)
|
(13.4)
|
(12.4)
|
Total
current liabilities
|
|
(511.3)
|
(460.4)
|
(463.2)
|
Net
current liabilities
|
|
(21.7)
|
(9.9)
|
(42.8)
|
Non-current
liabilities
|
|
|
|
|
Borrowings
|
15
|
(33.7)
|
(49.4)
|
(19.6)
|
Lease
liabilities
|
|
(209.1)
|
(253.4)
|
(228.1)
|
Derivative financial
instruments
|
|
(1.3)
|
-
|
(0.1)
|
Trade and other
payables
|
|
(3.7)
|
(3.9)
|
(3.6)
|
Provisions
|
|
(9.5)
|
(11.0)
|
(11.1)
|
Total
non-current liabilities
|
|
(257.3)
|
(317.7)
|
(262.5)
|
Total
liabilities
|
|
(768.6)
|
(778.1)
|
(725.7)
|
Net
assets
|
|
553.5
|
550.6
|
553.8
|
Shareholders’
equity
|
|
|
|
|
Share capital
|
17
|
2.2
|
2.2
|
2.2
|
Share premium
|
17
|
212.4
|
212.4
|
212.4
|
Investment in own
shares*
|
|
(2.2)
|
(10.7)
|
(1.0)
|
Other reserves
|
|
(2.9)
|
0.9
|
-
|
Retained
earnings*
|
|
344.1
|
345.8
|
340.2
|
Total
equity attributable to equity holders of the Company
|
|
553.6
|
550.6
|
553.8
|
|
Non-controlling
interest
|
|
(0.1)
|
-
|
-
|
|
Total
equity
|
|
553.5
|
550.6
|
553.8
|
|
|
|
|
|
|
|
*See Note 20 for further
details
Condensed consolidated statement of changes in equity
For
the 26 weeks to 27 September 2024 (Unaudited)
Attributable to
the equity holders of the Company
|
Other
reserves
|
|
Share capital
|
Share premium account
|
Investment in own shares
|
Capital redemption
reserve
|
Hedging reserve
|
Retained earnings
|
Total
Shareholders’
equity
|
Non-controlling
interests
|
Total
Equity
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Balance at 29
March 2024
|
2.2
|
212.4
|
(1.0)
|
0.3
|
(0.3)
|
340.2
|
553.8
|
-
|
553.8
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the period
|
|
|
|
|
|
|
|
|
|
Profit for the period
|
-
|
-
|
-
|
-
|
-
|
14.2
|
14.2
|
(0.1)
|
14.1
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
Fair value changes in
the
period
|
-
|
-
|
-
|
-
|
(4.8)
|
-
|
(4.8)
|
-
|
(4.8)
|
Income tax on other comprehensive
income
|
-
|
-
|
-
|
-
|
0.8
|
-
|
0.8
|
-
|
0.8
|
Total other
comprehensive income for the period net of tax
|
-
|
-
|
-
|
-
|
(4.0)
|
-
|
(4.0)
|
-
|
(4.0)
|
Total
comprehensive income for the period
|
-
|
-
|
-
|
-
|
(4.0)
|
14.2
|
10.2
|
(0.1)
|
10.1
|
Hedging gains and
losses and costs of hedging transferred to the cost of
inventory
|
-
|
-
|
-
|
-
|
1.1
|
-
|
1.1
|
-
|
1.1
|
|
|
|
|
|
|
|
|
|
|
Transactions with
owners
|
|
|
|
|
|
|
|
|
|
Acquisition of Treasury
shares
|
-
|
-
|
(3.6)
|
-
|
-
|
-
|
(3.6)
|
-
|
(3.6)
|
Share options exercised
|
-
|
-
|
2.4
|
-
|
-
|
(1.7)
|
0.7
|
-
|
0.7
|
Share-based payment
transactions
|
-
|
-
|
-
|
-
|
-
|
2.3
|
2.3
|
-
|
2.3
|
Income tax on share-based payment
transactions
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Dividends to equity
holders
|
-
|
-
|
-
|
-
|
-
|
(10.9)
|
(10.9)
|
-
|
(10.9)
|
Total
transactions with owners
|
-
|
-
|
(1.2)
|
-
|
-
|
(10.3)
|
(11.5)
|
-
|
(11.5)
|
Balance at 27
Sept 2024
|
2.2
|
212.4
|
(2.2)
|
0.3
|
(3.2)
|
344.1
|
553.6
|
(0.1)
|
553.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed consolidated statement of changes in equity
(continued)
For the
26 weeks to 29 September 2023 (Unaudited)
Attributable to
the equity holders of the Company
|
|
Other
reserves
|
|
|
Share capital
|
Share premium account
|
Investment in own
shares*
|
Capital redemption
reserve
|
Hedging reserve
|
Retained earnings*
|
Total
Shareholders’
equity
|
Non-controlling
interests
|
Total
Equity
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Balance at
31 March 2023
|
2.2
|
212.4
|
(12.7)
|
0.3
|
(1.4)
|
356.1
|
556.9
|
-
|
556.9
|
Restatement*
|
|
|
10.8
|
|
|
(10.8)
|
-
|
-
|
-
|
Balance at 31 March 2023
restated
|
2.2
|
212.4
|
(1.9)
|
0.3
|
(1.4)
|
345.3
|
556.9
|
-
|
556.9
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income for the period
|
|
|
|
|
|
|
|
|
|
Profit for the period
|
-
|
-
|
-
|
-
|
-
|
14.6
|
14.6
|
-
|
14.6
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
Fair value changes in
the
period
|
-
|
-
|
-
|
-
|
1.2
|
-
|
1.2
|
-
|
1.2
|
Income tax on other comprehensive
income
|
-
|
-
|
-
|
-
|
(0.7)
|
-
|
(0.7)
|
-
|
(0.7)
|
Total other
comprehensive income for the period net of tax
|
-
|
-
|
-
|
-
|
0.5
|
-
|
0.5
|
-
|
0.5
|
Total
comprehensive income for the period
|
-
|
-
|
-
|
-
|
0.5
|
14.6
|
15.1
|
-
|
15.1
|
Hedging gains and
losses and costs of hedging transferred to the cost of
inventory
|
-
|
-
|
-
|
-
|
1.5
|
-
|
1.5
|
-
|
1.5
|
|
|
|
|
|
|
|
|
|
|
Transactions with
owners
|
|
|
|
|
|
|
|
|
|
Acquisition of Treasury
shares
|
-
|
-
|
(10.3)
|
-
|
-
|
-
|
(10.3)
|
-
|
(10.3)
|
Share options exercised
|
-
|
-
|
1.5
|
-
|
-
|
(1.4)
|
0.1
|
-
|
0.1
|
Share-based payment
transactions
|
-
|
-
|
-
|
-
|
-
|
2.5
|
2.5
|
-
|
2.5
|
Income tax on share-based payment
transactions
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Dividends to equity
holders
|
-
|
-
|
-
|
-
|
-
|
(15.2)
|
(15.2)
|
-
|
(15.2)
|
Total
transactions with owners
|
-
|
-
|
(8.8)
|
-
|
-
|
(14.1)
|
(22.9)
|
-
|
(22.9)
|
Balance
at
29 Sept
2023
|
2.2
|
212.4
|
(10.7)
|
0.3
|
0.6
|
345.8
|
550.6
|
-
|
550.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*See Note 20 for further
details
Condensed consolidated statement of cash flows
For the
26 weeks to 27 September 2024
|
|
26
weeks to
|
26 weeks to
|
52 weeks to
|
|
|
27
September 2024
|
29 September
2023
|
29 March
2024
|
|
|
Unaudited
|
Unaudited
|
|
|
Notes
|
£m
|
£m
|
£m
|
Cash
Flows from operating activities
|
|
|
|
|
Profit after tax for the
period from continuing operations, before non-underlying
items
|
|
16.6
|
19.4
|
32.8
|
Non-underlying
items
|
8
|
(2.5)
|
(1.9)
|
(3.8)
|
Profit
after tax for the period from continuing operations
|
|
14.1
|
17.5
|
29.0
|
Depreciation – property,
plant and equipment
|
|
12.6
|
13.5
|
27.1
|
Impairment – property,
plant and equipment
|
|
-
|
-
|
-
|
Amortisation and
impairment of right-of-use assets
|
|
38.6
|
39.0
|
81.7
|
Amortisation – intangible
assets
|
|
11.8
|
10.2
|
21.2
|
Net finance
expense
|
|
5.6
|
6.3
|
13.1
|
Loss on disposal of
property, plant and equipment and intangibles
|
|
0.2
|
0.2
|
0.8
|
Gain on disposal of
leases
|
|
(0.2)
|
(0.8)
|
(2.2)
|
Equity-settled
share-based payment transactions
|
|
2.3
|
2.5
|
3.8
|
Exchange
movement
|
|
4.3
|
(1.8)
|
1.2
|
Income tax
expense
|
|
3.7
|
5.7
|
9.8
|
(Increase) / decrease in
inventories
|
|
(8.0)
|
(9.5)
|
12.7
|
Decrease / (increase) in
trade and other receivables
|
|
2.6
|
(20.1)
|
(9.0)
|
Increase in trade and
other payables
|
|
14.3
|
2.3
|
10.7
|
Decrease in
provisions
|
|
(2.3)
|
(2.8)
|
(10.3)
|
Income tax
paid
|
|
(2.6)
|
(14.5)
|
(11.7)
|
Net
cash from operating activities – continuing operations
|
|
97.0
|
47.7
|
177.9
|
Net
cash from operating activities – discontinued operations
|
|
-
|
0.3
|
(10.5)
|
Cash
Flows from investing activities
|
|
|
|
|
Acquisition of
subsidiary, net of cash acquired
|
|
-
|
-
|
(0.6)
|
Deferred consideration
paid
|
|
(4.0)
|
-
|
-
|
Purchase of intangible
assets
|
|
(11.7)
|
(8.4)
|
(23.7)
|
Purchase of property,
plant and equipment
|
|
(10.3)
|
(13.2)
|
(21.9)
|
Net
cash used in investing activities – continuing
operations
|
|
(26.0)
|
(21.6)
|
(46.2)
|
Net
cash used in investing activities – discontinued
operations
|
|
-
|
(0.8)
|
(0.3)
|
Cash
Flows from financing activities
|
|
|
|
|
Purchase of own
shares
|
|
(3.6)
|
(10.3)
|
(10.2)
|
Proceeds from share
options exercised
|
|
0.7
|
0.1
|
4.2
|
Net Finance costs
paid
|
|
(0.1)
|
(1.5)
|
(2.1)
|
RCF drawdowns
|
|
255.8
|
373.0
|
1,348.0
|
RCF repayments
|
|
(240.8)
|
(358.0)
|
(1,363.0)
|
Net proceeds/(repayment)
of other borrowings
|
|
(1.4)
|
2.7
|
1.5
|
Transaction costs from
borrowings
|
|
(2.1)
|
-
|
(1.1)
|
Interest paid on lease
liabilities
|
|
(4.6)
|
(4.3)
|
(9.0)
|
Payment of capital
element of leases
|
|
(42.2)
|
(40.7)
|
(83.8)
|
Payments relating to
supplier financing
|
|
(39.5)
|
(25.0)
|
(70.0)
|
Receipts relating to
supplier financing
|
|
39.5
|
27.2
|
65.9
|
Proceeds from sale of
share in subsidiary to non-controlling interest
|
|
-
|
-
|
2.4
|
Dividends paid
|
11
|
(10.9)
|
(15.2)
|
(21.7)
|
Net
cash used in financing activities – continuing
operations
|
|
(49.2)
|
(52.0)
|
(138.9)
|
Net
cash used in financing activities – discontinued
operations
|
|
-
|
(0.5)
|
(0.9)
|
Net increase/(decrease)
in cash and bank overdrafts
|
15
|
21.8
|
(26.9)
|
(18.9)
|
Cash and cash equivalents
at the beginning of the period
|
15
|
13.3
|
32.2
|
32.2
|
Cash
and cash equivalents at the end of the period
|
15
|
35.1
|
5.3
|
13.3
|
|
|
|
|
|
|
Bank overdrafts are
included within Cash and cash equivalents above, see note 15 for
further details.
The notes on pages 23 to
34 are an integral part of these condensed consolidated interim
financial statements.
Notes to the condensed consolidated interim financial
statements
For the
26 weeks to 27 September 2024
-
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 public
limited 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 25 November 2024.
-
Statement of compliance
These condensed
consolidated interim financial statements for the 26 weeks to 27
September 2024 have been prepared in accordance with IAS 34
‘Interim financial reporting’ as adopted for use in the UK. They do
not include all the information required for full annual financial
statements and should be read in conjunction with the Annual Report
and Accounts for the period ended 29 March 2024, which have been
prepared in accordance with UK adopted international accounting
standards.
The comparative figures
for the financial period ended 29 March 2024 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.
-
Principal 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 82 to 89 of our Annual Report and Accounts for the period
ended 29 March 2024, which are available on our website
www.halfordscompany.com.
-
Material accounting policies
Going
Concern
In determining the
appropriate basis of preparation of the Condensed Consolidated
Interim Financial Statements for the period ended 27 September
2024, the Directors are required to consider whether the Group and
Company can continue in operational existence for the foreseeable
future. The Board has concluded that it is appropriate to adopt the
going concern basis, having undertaken a rigorous assessment of
financial forecasts for the 12 month period to November 2025, which
included consideration of the current economic climate, and with
specific consideration to the trading position of the Group. The
Directors have also considered the measures announced by the
Government in the UK Budget on 30th October regarding increases in
Employer National Insurance contributions and National Minimum Wage
effective from 6th April 2025. The financial forecasts have been
stress tested and management believe the level to which sales would
need to drop to trigger any concern with cash flow or banking
covenants is highly unlikely.
The Group has a committed
£180.0m revolving credit facility, of which £20.0m is designated as
an overdraft facility, at the date of approval of these financial
statements, expiring on 16 April 2028.
The Board has a
reasonable expectation the Group and the Company will be able to
continue in operation and meet its liabilities as they fall due and
will retain sufficient available cash and not breach any covenants
under any drawn facilities over the going concern
period. The Board does not consider there to
be a material uncertainty around the Group’s or the Company’s
ability to continue as a going concern. The Directors therefore
consider it appropriate for the Group to adopt the going concern
basis in preparing its interim 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 Annual
Reports and Accounts for the period ended 29 March 2024, which are
published on the Halfords Group website,
www.halfordscompany.com..
The accounting policies
adopted in the preparation of the Condensed Consolidated Interim
Financial Statements are the same as those set out in the Group’s
Annual Report and Accounts for the period ended 29 March 2024.
There has also been no change in the accounting policies requiring
disclosure within the Group’s financial statements upon application
of the amendments to IAS 1 in the current period.
-
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 29 March 2024 and the 26 weeks
ended 29 September 2023.
-
Operating segments
The Group
has two reportable segments, Retail and Autocentres, which are the
Group’s strategic business units. 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 and services through
retail stores and online platforms. The operations of the
Autocentres reporting segment comprise car servicing and repair
performed from Autocentres, commercial vehicles, mobile customer
vans through Halfords Mobile Expert and software as a service
provision.
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.
The
segmental reporting disclosures are prepared in accordance with
IFRS accounting policies.
All
material operations of the reportable segments are carried out in
the UK and Republic of Ireland 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.
Income
statement
|
Retail
£m
|
Autocentres
£m
|
26
weeks to
27
September 2024
Total
Unaudited
£m
|
|
|
|
|
Revenue
|
516.1
|
348.7
|
864.8
|
|
|
|
|
Segment result before
non-underlying items
|
21.2
|
7.8
|
29.0
|
Non-underlying
items
|
(1.8)
|
(1.4)
|
(3.2)
|
Segment
result
|
19.4
|
6.4
|
25.8
|
Unallocated
expenses1
|
|
|
(2.6)
|
Operating
profit
|
|
|
23.2
|
Net financing
expense
|
|
|
(5.4)
|
Profit
before tax
|
|
|
17.8
|
Taxation
|
|
|
(3.7)
|
Profit
after tax
|
|
|
14.1
|
Income
statement
|
Retail
£m
|
Autocentres
£m
|
26 weeks to
29 September
2023
Total
Restated
Unaudited
£m
|
|
|
|
|
Revenue
|
516.6
|
348.7
|
864.8
|
|
|
|
|
Segment result before
non-underlying items
|
19.6
|
14.8
|
34.4
|
Non-underlying
items
|
(1.1)
|
(0.9)
|
(2.0)
|
Segment
result
|
18.5
|
13.9
|
32.4
|
Unallocated
expenses1
|
|
|
(2.9)
|
Operating
profit
|
|
|
29.5
|
Net financing
expense
|
|
|
(6.3)
|
Profit
before tax
|
|
|
23.2
|
Taxation
|
|
|
(5.7)
|
Profit
after tax
|
|
|
17.5
|
Income
statement
|
Retail
£m
|
Autocentres
£m
|
52 weeks to
29 March 2024
Total
£m
|
|
|
|
|
Revenue
|
997.1
|
699.4
|
1,696.5
|
|
|
|
|
Segment result before
non-underlying items
|
41.1
|
20.8
|
61.9
|
Non-underlying
items
|
(1.5)
|
(2.8)
|
(4.3)
|
Segment
result
|
39.6
|
18.0
|
57.6
|
Unallocated
expenses1
|
|
|
(5.7)
|
Operating
profit
|
|
|
51.9
|
Net financing
expense
|
|
|
(13.1)
|
Profit
before tax
|
|
|
38.8
|
Taxation
|
|
|
(9.8)
|
Profit
after tax
|
|
|
29.0
|
|
|
|
|
|
|
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 £2.6m in respect of assets
acquired through
business combinations (H1 FY24:
£2.9m, FY24: £5.7m).
Other
segment items:
|
Retail
£m
|
Autocentres
£m
|
26
weeks to
27
September 2024
Total
Unaudited
£m
|
|
|
|
|
Capital
expenditure
|
12.2
|
11.4
|
23.6
|
Depreciation and
impairment expense
|
6.3
|
6.0
|
12.3
|
Impairment of
right-of-use asset
|
-
|
0.2
|
0.2
|
Amortisation of
right-of-use asset
|
25.1
|
12.8
|
37.9
|
Amortisation
expense
|
6.9
|
3.1
|
10.0
|
|
|
|
|
Other
segment items:
|
Retail
£m
|
Autocentres
£m
|
26 weeks to
29 September
2023
Total
Unaudited
£m
|
|
|
|
|
Capital
expenditure
|
18.9
|
18.8
|
37.7
|
Depreciation
expense
|
7.4
|
5.9
|
13.3
|
Impairment of
right-of-use asset
|
-
|
-
|
-
|
Amortisation of
right-of-use asset
|
26.4
|
12.5
|
38.9
|
Amortisation
expense
|
6.4
|
1.8
|
8.2
|
|
|
|
|
Other
segment items:
|
Retail
£m
|
Autocentres
£m
|
52 weeks to
29 March 2024
Total
£m
|
|
|
|
|
Capital
expenditure
|
22.8
|
20.9
|
43.7
|
Depreciation and
impairment expense
|
14.4
|
12.0
|
26.4
|
Impairment of
right-of-use asset
|
(0.6)
|
3.4
|
2.8
|
Amortisation of
right-of-use asset
|
54.1
|
23.6
|
77.7
|
Amortisation
expense
|
13.6
|
3.8
|
17.4
|
|
|
|
|
|
|
|
|
There have been no
significant transactions between segments in the 26 weeks ended 27
September 2024 (H1 FY24: £nil).
-
Revenue
-
Revenue streams and location
The Group’s operations
and main revenue streams are those described in the Annual Reports
and Accounts for the period ended 29 March 2024. The Group’s
revenue is derived from transactions with customers.
The Revenue split by the
Group’s operating segments is shown in Note 6.
All significant revenue
is recognised in the United Kingdom and Republic of
Ireland.
-
Seasonality of operations
At the Group level,
revenue is not materially seasonal, however, there is some
underlying seasonality in certain categories. For example, sales of
adult cycles tend to peak in the spring and summer months whilst
sales of children’s cycles peak in the festive season. Conversely,
MOT activity is weighted towards the second half of the year whilst
motoring products also tend to exhibit stronger demand in the
winter months.
-
Non-underlying items
|
26
weeks to
|
26 weeks to
|
52 weeks to
|
|
27
September
2024
|
29 September
2023
|
29 March
2024
|
|
Unaudited
|
Unaudited
|
|
|
£m
|
£m
|
£m
|
Non-underlying
operating expenses relating to continuing operations:
|
|
|
|
Organisational
restructure costs (a)
|
0.2
|
1.9
|
5.7
|
Closure costs
(b)
|
1.2
|
(1.2)
|
(4.4)
|
Acquisition costs
(c)
|
-
|
0.3
|
1.0
|
Replacement of warehouse
management system (d)
|
0.6
|
0.7
|
2.0
|
Garage transformation
programme (e)
|
0.3
|
-
|
-
|
Cloud migration costs
(f)
|
0.9
|
-
|
-
|
Other
|
-
|
0.3
|
-
|
Non-underlying
items before tax
|
3.2
|
2.0
|
4.3
|
Tax on non-underlying
items (g)
|
(0.7)
|
(0.1)
|
(0.5)
|
Non-underlying
items after tax relating to continuing operations
|
2.5
|
1.9
|
3.8
|
Non-underlying
items after tax relating discontinued operations
|
-
|
-
|
6.9
|
Total
non-underlying items
|
2.5
|
1.9
|
10.7
|
|
|
|
|
|
Non-underlying items are
those items that are unusual because of their size, nature
(one-off, non-trading costs) or incidence. 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.
-
Organisational restructure costs in the current period relate
to redundancy costs incurred as part of a change in the Group's
operating model. In the prior period, organisational restructure
costs related to the continuation of the restructure of the support
centre including the integration of support roles (H1 FY24: £1.0m
FY24: £1.9m) and financial systems relating to the National Tyres
business (H1 FY24: £0.2m FY24: £0.5m), professional fees incurred
in relation to restructuring the Avayler operation (H1 FY24: £0.3m
FY24: £1.1m), and costs relating to a revision to procurement
processes (H1 FY24: £0.4m FY24: £1.9m).
-
Closure costs represent costs associated with the closure of
a number of stores and garages following a strategic review of the
profitability of the Group's physical estate in previous periods,
and the closure of the Group's Tyre Wholesale operations. In the
current period, costs predominantly relate to ongoing property
expense that cannot be provided for, whilst the prior period credit
represents a release of provisions no longer required following a
review.
-
Acquisition costs in the prior period relate to fees incurred
in relation to the acquisition of Lodge Tyre Company.
-
During the current and prior period, management incurred
costs of £0.6m (H1 FY24: £0.7m FY24: £2.0m) as a result of the
replacement of the Warehouse Management System. This project and
associated costs are expected to conclude in H1 FY26.
-
The Garage Transformation Programme relates to professional
fees incurred in reviewing and implementing improvements to
operational processes and systems in the Group's
garages.
-
Cloud migration costs relate to the migration of servers from
co-located datacentres to the cloud. Costs of £0.9m (H1 FY24: £nil
FY24: £nil) include expenses associated with managing this
transition and the dual running of the existing co-located servers
and new Cloud-based solution.
-
The tax credit in H1 FY25 represents a tax rate of 24.0%
applied to non-underlying items (H1 FY24: Credit, 6.0%, FY24:
Charge, 15.8%). The effective tax rate differs from the UK
corporation tax rate (25%) principally due to non-deductible
expenditure in relation to the disposal of the tyre supply chain
business during FY24.
-
Net Finance Expense
|
26
weeks to
|
26 weeks to
|
52 weeks to
|
|
27
September
2024
|
29
September
2023
|
29 March
2024
|
|
Unaudited
|
Unaudited
|
|
|
£m
|
£m
|
£m
|
Finance
Income:
|
|
|
|
Bank Interest
|
0.6
|
-
|
-
|
Finance
costs:
|
|
|
|
Bank
borrowings
|
(0.6)
|
(0.8)
|
(2.2)
|
Amortisation of issue
costs on loans
|
(0.3)
|
(0.6)
|
(0.8)
|
Commitment and guarantee
fees
|
(0.7)
|
(0.6)
|
(1.1)
|
Interest payable on lease
liabilities
|
(4.4)
|
(4.3)
|
(9.0)
|
Finance
costs before non-underlying items
|
(6.0)
|
(6.3)
|
(13.1)
|
Net finance expense
before non-underlying items
|
(5.4)
|
(6.3)
|
(13.1)
|
Finance costs in
non-underlying items
|
(0.2)
|
-
|
-
|
Net
finance expense
|
(5.6)
|
(6.3)
|
(13.1)
|
-
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 taxation charge on
profit for the financial period was £3.7m (H1 FY24: £5.7m),
including a £0.7m credit (H1 FY24: £0.1m credit) in respect of
non-underlying items. The effective tax rate of 20.6% (H1
FY24: 24.6%) differs from the UK corporation tax rate (25%)
principally due to prior year adjustments partially offset by the
impact of non-deductible expenditure.
The corporation tax rate
remained at 25%, effective from 1 April 2023. The deferred tax
asset in the period has been calculated based on the headline rate
of 25%.
Pillar Two legislation,
which introduced a global minimum effective tax rate of 15%, has
been enacted or substantively enacted in certain jurisdictions in
which the Group operates. The legislation is effective for the
Group’s financial year beginning 30 March 2024. The Group is in
scope of the enacted or substantively enacted legislation and has
performed an assessment of the Group’s potential exposure to Pillar
Two income taxes.
The assessment of the
potential exposure to Pillar Two income taxes is based on the most
recent tax filings, country-by-country reporting and financial
statements for the constituent entities in the Group. Based on the
assessment, the Pillar Two effective tax rates in most of the
jurisdictions in which the Group operates are above 15%. However,
there are a limited number of jurisdictions where the transitional
safe harbour relief may not apply and the Pillar Two effective tax
rate is close to 15%. The Group does not expect a material exposure
to Pillar Two income taxes in those jurisdictions.
-
Dividends
The Directors paid a
final dividend of 5 pence per share on 13 September 2024 in respect
of the financial period ended 29 March 2024 (FY23: 7p per
share).
The Directors have
declared an interim dividend for the 26 weeks to 27 September 2024
of 3 pence per share (H1 FY24: 3p per share). The interim dividend
will be paid on 17 January 2025 to shareholders who are on the
register of members, with an ex-dividend date of 12 December 2024
and a record date of 13 December 2024.
-
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 potentially dilutive ordinary
shares. These represent share options granted
to employees where the exercise price is less than the average
market price of the Company’s ordinary shares during the 26 weeks
to 27 September 2024.
|
26
weeks to
|
26 weeks to
|
52 weeks to
|
|
27
September
2024
|
29
September
2023
|
29 March
2024
|
|
Unaudited
|
Unaudited
|
|
|
Number
|
Number
|
Number
|
|
m
|
m
|
m
|
Weighted average number
of shares in issue
|
218.9
|
218.9
|
218.9
|
Less: shares held by the
Employee Benefit Trust
|
(0.8)
|
(1.4)
|
(1.5)
|
Weighted average
number of shares for calculating basic earnings per
share
|
218.1
|
217.5
|
217.4
|
Weighted average number
of dilutive share options
|
6.0
|
9.4
|
8.5
|
Weighted number of
shares for calculating diluted earnings per share
|
224.1
|
226.9
|
225.9
|
|
26
weeks to
|
26 weeks to
|
52 weeks to
|
|
27
September
2024
|
29
September
2023
Restated
|
29 March
2024
|
|
Unaudited
|
Unaudited
|
|
|
£m
|
£m
|
£m
|
Earnings from continuing
operations
|
14.1
|
17.5
|
29.0
|
Non-underlying items
after tax relating to continuing operations
|
2.5
|
1.9
|
3.8
|
Earnings from
continuing operations before non-underlying items
|
16.6
|
19.4
|
32.8
|
Loss from discontinued
operations
|
-
|
2.9
|
(12.1)
|
Non-underlying items
after tax relating to discontinued operations
|
-
|
-
|
6.9
|
Loss
from discontinued operations before non-underlying items
|
-
|
2.9
|
(5.2)
|
Total
earnings
|
14.1
|
14.6
|
16.9
|
Total non-underlying
items after tax
|
2.5
|
1.9
|
10.7
|
Total
earnings before non-underlying items
|
16.6
|
16.5
|
27.6
|
|
|
|
|
|
26
weeks to
|
26 weeks to
|
52 weeks to
|
|
27
September
2024
|
29
September
2023
Restated
|
29 March
2024
|
|
Unaudited
|
Unaudited
|
|
Basic earnings per share
from continuing operations
|
6.5p
|
8.1p
|
13.3p
|
Diluted earnings per
share from continuing operations
|
6.3p
|
7.7p
|
12.7p
|
Basic underlying earnings
per share from continuing operations before non-underlying
items
|
7.6p
|
8.9p
|
15.1p
|
Diluted underlying
earnings per share from continuing operations before non-underlying
items
|
7.4p
|
8.6p
|
14.5p
|
Basic earnings per
share
|
6.5p
|
6.7p
|
7.8p
|
Diluted earnings per
share
|
6.3p
|
6.4p
|
7.4p
|
Basic earnings per
ordinary share before non-underlying items
|
7.6p
|
7.6p
|
12.7p
|
Diluted earnings per
ordinary share before non-underlying items
|
7.4p
|
7.3p
|
12.2p
|
|
|
|
|
|
|
|
|
|
|
The alternative measure
of underlying earnings per share is provided as it reflects the
Group’s underlying performance by excluding
the effect of
non-underlying items.
-
Discontinued Operations
On 25th January 2024 the
Group announced its intention to enter into a strategic partnership
with specialist tyre distributor Bond International and to close
its existing tyre operation. As a consequence, on 22 February 2024,
the Group sold Birkenshaw Distributors Limited (“BDL”) and the
wholesale customers of Stepgrades Motor Accessories Ltd (“Viking”)
to R & R C Bond (Holdings) Limited ("Bond”). On 22 March 2024,
the remaining principal operations of Viking ceased.
The events noted above
resulted in Viking and BDL being treated as a discontinued
operation in the period ended 29 March 2024. The results of the
business for the period ended 29 September 2023 have therefore been
restated to comparatively show the discontinued operation
separately from continuing operations in the prior period. This is
presented on the face of the income statement and reflected in the
condensed consolidated statement of comprehensive income. Earnings
per share (EPS) has been split between continuing and discontinued
operations. The cash flows of the discontinued operation have also
been disclosed in the condensed consolidated statement of cash
flows.
The
summary income statement for the businesses treated as a
discontinued operation for the periods 27 September 2024, 29
September 2023 (restated) and 29 March 2024 are as
follows:
|
26
Weeks to 27 September 2024
|
26
weeks to 29 September 2023
|
52
Weeks to 29 March 2024
|
Discontinued
Operations
|
Before
Non-underlying
items
|
Non-underlying
items
|
Total
|
Before
Non-underlying items
|
Non-underlying
items
|
Total
|
Before
Non-underlying items
|
Non-underlying
items
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Revenue
|
-
|
-
|
-
|
8.2
|
-
|
8.2
|
16.3
|
|
16.3
|
Cost of
sales
|
-
|
-
|
-
|
(6.7)
|
-
|
(6.7)
|
(13.6)
|
|
(13.6)
|
Gross
profit
|
-
|
-
|
-
|
1.5
|
-
|
1.5
|
2.7
|
-
|
2.7
|
Operating
expenses
|
-
|
-
|
-
|
(5.4)
|
-
|
(5.4)
|
(9.7)
|
(11.9)
|
(21.6)
|
Loss
from operating activities
|
-
|
-
|
-
|
(3.9)
|
-
|
(3.9)
|
(7.0)
|
(11.9)
|
(18.9)
|
Net
finance expense
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
Loss
before income tax
|
-
|
-
|
-
|
(3.9)
|
-
|
(3.9)
|
(7.0)
|
(11.9)
|
(18.9)
|
Income tax
expense
|
-
|
-
|
-
|
1.0
|
-
|
1.0
|
1.8
|
2.5
|
4.3
|
Loss
after tax
|
-
|
-
|
-
|
(2.9)
|
-
|
(2.9)
|
(5.2)
|
(9.4)
|
(14.6)
|
Gain on
disposal
|
-
|
-
|
-
|
-
|
-
|
-
|
|
2.5
|
2.5
|
Loss
after tax from discontinued operations
|
-
|
-
|
-
|
(2.9)
|
-
|
(2.9)
|
(5.2)
|
(6.9)
|
(12.1)
|
|
|
|
|
|
|
|
|
|
|
|
The events noted for
Viking and BDL are a major re-organisation of a key line of
business. The costs and gains on disposal of various Viking and BDL
assets associated with these events meet the definition of
non-underlying items as per group accounting policy. The breakdown
of these are as follows:
For the period
|
26
weeks to
|
26
weeks to
|
52
weeks to
|
|
27
September
|
29
September
|
29
March
|
2024
|
2023
|
2024
|
|
£m
|
£m
|
£m
|
Non-underlying
operating expenses:
|
|
|
|
Organisational
Restructure Costs (a)
|
-
|
-
|
11.9
|
Gain on disposal of
assets (b)
|
-
|
-
|
(2.5)
|
Non-underlying
items before tax
|
-
|
-
|
9.4
|
Tax on non-underlying
items (c)
|
-
|
-
|
(2.5)
|
Non-underlying
items after tax
|
-
|
-
|
6.9
|
-
In the period ended 29 March 2024, organisational
restructuring costs of £11.9m were incurred relating to the
disposals of the share capital of BDL and the wholesale customers
of Viking, and the subsequent closure of the remaining Viking
operation. Costs in relation to these activities comprised:
redundancy costs £2.6m, property related restructuring provisions
£3.9m, right-of-use and other asset impairment £4.1m, Viking dual
running costs £0.5m and legal fees to support the transaction of
£0.8m. In the prior period, £0.2m relates to financial dual running
costs incurred in the integration of National Tyre.
-
In the period ended 29 March 2024, deferred consideration of
£2.9m was recognised on the contract date for the disposal of £0.4m
of assets, giving rise to a £2.5m gain on disposal.
There are no other items
of comprehensive income relating to discontinued operation for the
period ending 27 September 2024 (H1 FY24: Nil, FY24:
Nil).
-
Capital Expenditure – Tangible, Intangible & Right-of-Use
Assets
|
|
Tangible and
Intangible Assets
Unaudited
|
Right-of-use
assets
Unaudited
|
|
|
£m
|
£m
|
Net book value at 29
March 2024
|
|
573.4
|
278.3
|
Additions
|
|
23.2
|
13.6
|
Disposals
|
|
(0.2)
|
(0.2)
|
Effect of modification of
lease
|
|
-
|
0.2
|
Depreciation,
amortisation and impairment
|
|
(24.4)
|
(38.6)
|
Net
book value at 27 September 2024
|
|
572.0
|
253.3
|
|
|
Tangible and Intangible
Assets
Unaudited
|
Right-of-use
assets
Unaudited
|
|
|
£m
|
£m
|
Net book value at 31
March 2023
|
|
579.8
|
312.6
|
Additions
|
|
18.6
|
19.0
|
Disposals
|
|
(0.2)
|
(1.2)
|
Effect of modification of
lease
|
|
-
|
3.6
|
Depreciation,
amortisation and impairment
|
|
(23.8)
|
(39.5)
|
Net
book value at 29 September 2023
|
|
574.4
|
294.5
|
-
Analysis of Movements in the Group’s Net Debt in the
Period
|
At
29 March
|
Cash Flow
|
Other non-cash
changes
|
At
27
September 2024
|
|
2024
|
Unaudited
|
Unaudited
|
Unaudited
|
|
£m
|
£m
|
£m
|
£m
|
Cash and cash
equivalents
|
13.3
|
21.8
|
43.5
|
78.6
|
Bank
Overdrafts
|
-
|
|
(43.5)
|
(43.5)
|
Cash
and cash equivalents (condensed consolidated statement of cash
flows)
|
13.3
|
21.8
|
-
|
35.1
|
Debt due in less than one
year
|
(1.8)
|
1.7
|
-
|
(0.1)
|
Debt due after one
year
|
(19.6)
|
(13.6)
|
(0.5)
|
(33.7)
|
Total
net debt excluding leases
|
(8.1)
|
9.9
|
(0.5)
|
1.3
|
Current lease
liabilities
|
(79.1)
|
46.8
|
(36.4)
|
(68.7)
|
Non-current lease
liabilities
|
(228.1)
|
-
|
19.0
|
(209.1)
|
Total
lease liabilities
|
(307.2)
|
46.8
|
(17.4)
|
(277.8)
|
Total
net debt
|
(315.3)
|
56.7
|
(17.9)
|
(276.5)
|
Non-cash changes comprise
finance costs in relation to the amortisation of capitalised debt
issue costs of £0.3m (H1 FY24: £0.6m), and new leases in the
period.
Cash and cash equivalents
at the period end consist of £77.9m (H1 FY24: £15.0m) of liquid
assets, £0.7m (H1 FY24: £1.2m) of cash held in Trust and £43.5m (H1
FY24: £10.9m) of bank overdrafts. The Group recognises BACS
payments on the day that the payments are processed with the
respective banks. This has resulted in a large bank
overdraft balance at 27th September 2024 as the funds used to clear
these payments were transferred after the period end from deposit
accounts outside of the Group’s cash pooling arrangements and
therefore did not meet the requirements for offsetting under IAS
1.
Cashflow movements in
debt relate to the drawdown of funds from the Groups’ revolving
credit facility and payments in relation to lease
liabilities.
|
At
31 March
|
Cash Flow
|
Other non-cash
changes
|
At
29 September
2023
|
|
2023
|
Unaudited
|
Unaudited
|
Unaudited
|
|
£m
|
£m
|
£m
|
£m
|
Cash and cash
equivalents
|
41.9
|
(25.7)
|
-
|
16.2
|
Bank
Overdrafts
|
(9.7)
|
(1.2)
|
-
|
(10.9)
|
Cash and cash equivalents
(condensed consolidated statement of cash flows)
|
32.2
|
(26.9)
|
-
|
5.3
|
Debt due in less than one
year
|
-
|
(2.7)
|
(0.2)
|
(2.9)
|
Debt due after one
year
|
(34.0)
|
(15.0)
|
(0.4)
|
(49.4)
|
Total net debt excluding
leases
|
(1.8)
|
(44.6)
|
(0.6)
|
(47.0)
|
Current lease
liabilities
|
(77.6)
|
45.5
|
(39.8)
|
(71.9)
|
Non-current lease
liabilities
|
(269.3)
|
-
|
15.9
|
(253.4)
|
Total lease
liabilities
|
(346.9)
|
45.5
|
(23.9)
|
(325.3)
|
Total
net debt
|
(348.7)
|
0.9
|
(24.5)
|
(372.3)
|
Non-cash changes comprise
finance costs in relation to the amortisation of capitalised debt
issue costs of £0.6m (H1 FY23: £0.8m), and new leases in the period.
Cash and cash equivalents
at the period end consist of £15.0m (H1 FY23: £75.1m) of liquid
assets, £1.2m (H1 FY23: £2.9m) of cash held in Trust and £10.9m (H1
FY23: £11.5m) of bank overdrafts.
Cashflow movements in
debt relate to the drawdown of funds from the Groups’ revolving
credit facility to fund the acquisition of LTC Trading Holdings
Limited.
The above tables exclude
amounts relating to a supplier financing arrangement which
commenced during the period ended 31 March 2023.
At 31 March 2023 £0.7m
was receivable from the third party, and at 29 September 2023 £2.2m
was receivable from the third party.
At 29 March 2024 £5.2m
was receivable from the third party, and at 27 September 2024 £5.3m
was receivable from the third party.
There were no non-cash
changes in relation to these amounts.
-
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.
27
September 2024 Unaudited
|
|
|
|
|
Fair
Value – hedging instruments
£m
|
Amortised
cost
£m
|
Other
financial liabilities
£m
|
Total
carrying
amount
£m
|
Financial assets
measured at fair value
|
|
|
|
|
Derivative financial
instruments used for hedging
|
0.1
|
-
|
-
|
0.1
|
|
0.1
|
-
|
-
|
0.1
|
Financial assets
not measured at fair value
|
|
|
|
|
Trade and other
receivables*
|
-
|
104.0
|
-
|
104.0
|
Cash and cash
equivalents
|
-
|
78.6
|
-
|
78.6
|
|
-
|
182.6
|
-
|
182.6
|
Financial
liabilities measured at fair value
|
|
|
|
|
Derivative financial
instruments used for hedging
|
(6.2)
|
-
|
-
|
(6.2)
|
|
(6.2)
|
-
|
-
|
(6.2)
|
Financial
liabilities not measured at fair value
|
|
|
|
|
Borrowings
|
-
|
-
|
(77.3)
|
(77.3)
|
Lease
liabilities
|
-
|
-
|
(277.8)
|
(277.8)
|
Trade and other
payables**
|
-
|
-
|
(320.6)
|
(320.6)
|
|
-
|
-
|
(675.7)
|
(675.7)
|
|
|
|
|
|
*Prepayments
of £12.5m and accrued income of £44.2m are not included as a
financial asset.
** Other taxation and
social security payables of £37.8m, deferred income of £12.5m and
other payables of £15.2m are
not included as a financial
liability.
29
September 2023 Unaudited
|
|
|
|
|
Fair
Value – hedging instruments
£m
|
Amortised
cost
£m
|
Other
financial liabilities
£m
|
Total
carrying
amount
£m
|
Financial assets measured
at fair value
|
|
|
|
|
Derivative financial
instruments used for hedging
|
1.6
|
-
|
-
|
1.6
|
|
1.6
|
-
|
-
|
1.6
|
Financial assets not
measured at fair value
|
|
|
|
|
Trade and other
receivables*
|
-
|
102.8
|
-
|
102.8
|
Cash and cash
equivalents
|
-
|
16.2
|
-
|
16.2
|
|
-
|
119.0
|
-
|
119.0
|
Financial liabilities
measured at fair value
|
|
|
|
|
Derivative financial
instruments used for hedging
|
(1.4)
|
-
|
-
|
(1.4)
|
|
(1.4)
|
-
|
-
|
(1.4)
|
Financial liabilities not
measured at fair value
|
|
|
|
|
Borrowings
|
-
|
-
|
(63.2)
|
(63.2)
|
Lease
liabilities
|
-
|
-
|
(325.3)
|
(325.3)
|
Trade and other
payables**
|
-
|
-
|
(316.5)
|
(316.5)
|
|
-
|
-
|
(705.0)
|
(705.0)
|
|
|
|
|
|
* Prepayments of £12.1m and accrued
income of £47.6m are not deducted as a financial asset.
** Other taxation and
social security payables of £20.8m, deferred income £10.3m and
other payables of £16.3m are
not included as a financial
liability.
29 March
2024
|
|
|
|
|
Fair
Value – hedging instruments
£m
|
Amortised
cost
£m
|
Other
financial liabilities
£m
|
Total
carrying amount
£m
|
Financial assets measured
at fair value
|
|
|
|
|
Derivative financial
instruments used for hedging
|
0.2
|
-
|
-
|
0.2
|
|
0.2
|
-
|
-
|
0.2
|
Financial assets not
measured at fair value
|
|
|
|
|
Trade and other
receivables*
|
-
|
103.5
|
-
|
103.5
|
Cash and cash
equivalents
|
-
|
13.3
|
-
|
13.3
|
|
-
|
116.8
|
-
|
116.8
|
Financial liabilities
measured at fair value
|
|
|
|
|
Derivative financial
instruments used for hedging
|
(1.6)
|
-
|
-
|
(1.6)
|
|
(1.6)
|
-
|
-
|
(1.6)
|
Financial liabilities not
measured at fair value
|
|
|
|
|
Borrowings
|
-
|
-
|
(21.4)
|
(21.4)
|
Lease
liabilities
|
-
|
-
|
(307.2)
|
(307.2)
|
Trade and other
payables**
|
-
|
-
|
(242.8)
|
(242.8)
|
|
-
|
-
|
(571.4)
|
(571.4)
|
|
|
|
|
|
* Prepayments of £8.5m
and accrued income of £51.3m are not included as a financial
asset.
** Other taxation and
social security payables of £38.0m, deferred income and accruals of
£86.7m and other payables of
£0.9m 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 lease obligations, short-term deposits and
borrowings
|
The fair
value approximates to the carrying amount because of the
short
maturity
of these instruments.
|
Long-term
borrowings
|
The fair value of bank
loans and other loans approximates to the carrying value 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 or liability, 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
(unobservable inputs).
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 for customers. There are no
material trade receivable balances with customers based outside of
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 £0.5m (H1 FY24: £0.4m).
-
Share Capital
|
Number of
shares
m
|
Share
capital
£m
|
Share premium
account
£m
|
As at 29 March 2024 and
27 September 2024
|
218.9
|
2.2
|
212.4
|
During the 26 weeks to 27
September 2024 and 29 September 2023, there were no movements in
company share capital.
-
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 27 September 2024 amounted to nil (H1 FY24:
nil).
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.
-
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 132 to 149 of the Group Annual Report and Accounts
for the period ended 29 March 2024.
During the period no
share options (H1 FY24: none) were granted to directors in relation
to the Performance Share Plan and no share options (H1 FY24: none)
were granted in relation to the Deferred Bonus Plan.
-
Prior Period Adjustment
Investment
in own shares
As disclosed in the
Group's 2024 Annual Report and Accounts, during the preparation of
the financial statements for the 52 week period ended 29 March 2024
the Group identified an error relating to the transfer of the cost
of shares in excess of their exercise price on the exercise of
share options by employees under the Group’s share based payment
arrangements.
To correct for this error
in these financial statements the following adjustments have been
made:
-
The cumulative impact on
periods ending on or before 31 March 2023 has been recognised
within the opening balances in the condensed consolidated statement
of changes in equity as at 31 March 2023, resulting in a decrease
in Investment in own shares of £10.8m with a corresponding decrease
in Retained earnings.
-
Share options exercised
within the condensed consolidated statement of changes in equity
for the 26 week period ending 29 September 2023 have been restated
resulting in a £1.4m decrease in the amount attributable to
investment in own shares and a corresponding decrease in Retained
earnings.
As a result of the above
adjustments the closing balances as at 29 September 2023 in the
condensed consolidated statement of changes in equity and condensed
consolidated statement of financial position have been restated
resulting in a £12.2m decrease in Investment in own shares and a
corresponding decrease in Retained earnings.
-
Post Balance Sheet Events
On 30th October 2024 as
part of the UK Budget, the UK government announced increases in
Employer National Insurance contributions and the National Minimum
Wage effective from 6th April 2025. These changes do not impact the
Condensed Consolidated Financial Statements for the period ended 27
September 2024. Unmitigated, the changes announced by
the Government will increase direct labour costs by c.£23m
in FY26, of which £9m had already been
included in the planning assumptions for that year. There may be
further inflation in the cost of managed services as a result of
the measures announced in the UK Budget which increase labour costs
of our third party service providers. Furthermore, the impact of
the UK Budget on consumer spending is unclear. Tactical and
structural mitigation options are under review. The resultant
revised financial forecasts could impact the carrying value of
assets, which will be assessed in line with our year end
timetable.
Responsibility
statement of the Directors in respect of the half-yearly financial
report
We confirm that to the
best of our knowledge:
-
the
interim condensed consolidated financial statements has been
prepared in accordance with IAS 34 Interim
Financial Reporting as adopted for use
in the UK;
-
the
interim management report includes a fair review of the information
required by:
-
DTR 4.2.7R of the Disclosure and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
-
DTR 4.2.8R of the Disclosure and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
By order of the
Board
Jo
Hartley, Chief Financial Officer
|
25
November 2024
Halfords Group
plc
Independent review report to Halfords Group plc
For
the 26 weeks to 27 September 2024
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 six months ended 27 September 2024 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.
We have been engaged by
the company to review the condensed set of financial statements in
the half-yearly financial report for the six months ended 27
September 2024 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 changes in equity, the
condensed consolidated statement of cashflows and the related
notes.
Basis
for conclusion
We conducted our review
in accordance with Revised International Standard on Review
Engagements (UK) 2410, “Review of Interim Financial Information
Performed by the Independent Auditor of the Entity” (“ISRE (UK)
2410 (Revised)”). 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.
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.
Conclusions
relating to going concern
Based on our review
procedures, which are less extensive than those performed in an
audit as described in the Basis for conclusion section of this
report, nothing has come to our attention to suggest that the
directors have inappropriately adopted the going concern basis of
accounting or that the directors have identified material
uncertainties relating to going concern that are not appropriately
disclosed.
This conclusion is based
on the review procedures performed in accordance with ISRE (UK)
2410 (Revised), however future events or conditions may cause the
group to cease to continue as a going concern.
Responsibilities of
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.
In preparing the
half-yearly financial report, the directors are responsible for
assessing the company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s
responsibilities for the review of the financial
information
In reviewing the
half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in
the half-yearly financial report. Our conclusion, including our
Conclusions Relating to Going Concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for Conclusion paragraph of this report.
Use of
our report
Our report has been
prepared in accordance with the terms of our engagement to assist
the Company in meeting the requirements of 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, UK
25 November
2024
BDO LLP is a limited
liability partnership registered in England and Wales (with
registered number OC305127).