Slide 1: Preliminary Results
hep = alfords Preliminary Results
Slide 2: Financial Performance
Financial Performance Andrew Findlay Finance Director Preliminary Results 2012
Slide 3: Financial Highlights
Financial Highlights • Underlying Group Revenue £863.1m - down 0.5% 1 • Retail Gross Margin 53.1% - down 140bps as expected 1 • Profit Before Tax - down 26.6% to £92.2m • Earnings Per Share - down 22.0% to 33.7p 2 • Net Debt £139.2m - after £62.3m of share buyback • Free cash flow of £70.4m • Cash r
Slide 4: UK/ROI Retail Performance
UK/ROI Retail Performance FY12 FY11 FY12 Change £m £m LFLs Revenue 752.3 769.7 -2.3% Car -4.5% Gross Profit 399.8 419.9 -4.8% Maintenance Gross Margin % 53.1% 54.5% -140bps Car -11.6% Enhancement 1 +3.6% reported Operating Costs (307.0) (296.2) +2.3% u’lying Leisure +5.0% Operating Profit 92.8 123.7
Slide 5: An Evolving Retail Revenue Split
An Evolving Retail Revenue Split Leisure Car Maintenance Car Enhancement 25.9% 30.9% 40.5% 30.8% 29.7% 25.7% 39.3% 43.3% 33.8% FY08 FY10 FY12 Two-thirds of Group sales now have a service overlay 5 Preliminary Results 2012
Slide 6: Retail Gross Margin Influences
Retail Gross Margin Influences Adverse Favourable • Increased promotional • Fitting penetration participation by our customers • Margin-accretive • A focus on stock clearance attachment • Additional sales of lower- • Sourcing strategy margin ranges • Own-brand leverage • Product-cost inflation Focus
Slide 7: UK/ROI Retail Operating Costs
UK/ROI Retail Operating Costs FY12 FY11 Change £m £m Store Staffing 80.1 78.1 +2.6% Store Occupancy 139.0 135.4 +2.7% Warehouse & Distribution 25.9 27.5 -5.8% Support Costs 62.0 55.2 +12.3% Total 307.0 296.2 +3.6% Before One-offs 307.0 300.0 +2.3% Depr/Amort/Impairment 21.8 21.6 - Notes All numbers
Slide 8: Autocentres Performance
Autocentres Performance FY12 FY11 Change £m £m +12.9% Total Revenue 110.8 98.1 +6.1% LfL1 Gross Profit 73.0 65.0 +12.3% Gross Margin % 65.9% 66.3% -40bps Operating Costs (66.0) (58.0) +13.8% before relocation costs Underlying2 Operating Profit 7.0 7.0 - Statutory Operating Profit 6.6 7.0 -5.7% Notes
Slide 9: Capital Expenditure
Capital Expenditure FY12 FY11 £m £m New stores and relocations 1.2 3.6 1 Retail Portfolio Store refreshes, rightsizes and other 10.3 4.8 Retail Infrastructure Systems 2.4 4.2 Warehouse & Distribution 1.0 3.4 Retail Other 0.3 0.6 Total Retail 15.2 16.6 Autocentres 4.5 6.2 TOTAL GROUP 19.7 22.8 Notes
Slide 10: Cashflow and Net Debt
Cashflow and Net Debt OPERATING CASHFLOW £m FREE CASHFLOW £m NET DEBT £m Operating Profit 99.1 Operating Cashflow 119.3 Opening Net Debt (103.2) Depreciation/ 26.0 Capex (19.3) Free Cashflow 70.4 Amortisation Employee Share Scheme 2.4 Net Finance Costs (4.5) Lease/Other 0.5 Working Capital (2.8) Tax
Slide 11: Total Net Debt
Total Net Debt £m Pre-Buyback Net Debt Buyback In Period 200 150 100 50 0 FY07 FY08 FY09 FY10 FY11 FY12 Net Debt : EBITDA 1.6x 1.5x 1.3x 1.0x 0.7x 1.1x Adj Net Debt : 4.0x 3.2x 3.9x 3.8x 3.6x 3.9x EBITDAR Notes Net Debt includes Head Office finance leases. The buyback programmes illustrated here inc
Slide 12: Delivering Value To Shareholders
Delivering Value To Shareholders £m Dividend In Period Buyback In Period 120 100 80 60 40 20 * * * * * * 13.9p 15.1p 15.9p 20.0p 22.0p 22.0p 0 FY07 FY08 FY09 FY10 FY11 FY12 * denotes full-year dividend per share Strong cash flows driving compelling returns Preliminary Results 2012 12
Slide 13: FY13 Retail Operating Costs
FY13 Retail Operating Costs Underlying Increases Change Incentives – Store and Head Office +1.5% Pay Review +1.0/+1.5% Inflation (utilities etc) +1.0/+1.5% Business Rates +0.5% Other +0.5% Offset By: Lease Costs & Procurement Activity -1.0% TOTAL +4.0% Preliminary Results 2012 13
Slide 14: FY13 Retail Operating Costs
FY13 Retail Operating Costs Investing For Growth Key Focus £m Fitting and Service, including specific A&P 3.5 Multichannel 1.0 Training/Capability/CRM 1.5 TOTAL 6.0 Preliminary Results 2012 14
Slide 15: FY13 Guidance
FY13 Guidance Retail Operating Costs – Underlying Increases +c.4% Retail Operating Costs – Investing For Growth +c.£6m Retail Gross Margin Broadly flat Retail Capital Expenditure c.£20m Autocentres Operating Profits Low double-digit profit growth Autocentres Capex c.£5m Net Finance Costs Marginally
Slide 16: Strategy and Growth Areas
Strategy and Growth Areas David Wild Chief Executive Preliminary Results 2012
Slide 17: Our Business Drivers
Our Business Drivers Leisure Autocentres Fitting Services DIY Car Car Maintenance Enhancement Evolving towards a contemporary solutions provider Preliminary Results 2012 17
Slide 18: Our Customers
Our Customers Detailed survey conducted in Q4 2011 Key groups – Mosaic categories Professional Rewards Suburban Mindsets Careers & Kids Key attitudes and motivations • Service and knowledge • Brands and contemporary technology • Deals and price points Preliminary Results 2012 18
Slide 19: Our Customer Priorities
Our Customer Priorities Reinforce legacy Increase Use cycling as of Halfords awareness of new introduction for relationship brand positioning young adult and experience and relevance customers Preliminary Results 2012 19
Slide 20: Our Vision
Our Vision Strategy to drive growth Preliminary Results 2012 20
Slide 21: Strategic Growth Pillars
Strategic Growth Pillars Preliminary Results 2012 21
Slide 22: Preliminary Results 2012
hep = alfords Preliminary Results 2012 22
Slide 23: Friend of the Motorist
Friend of the Motorist The car is essential for everyday life • Running a car is expensive • DIY skills are declining • Cars more sophisticated – diagnostic equipment essential • Wearing parts still need replacement • Advice and service critical Customers need a trusted brand Preliminary Results 201
Slide 24: Friend of the Motorist
Friend of the Motorist Halfords is uniquely placed to help Car Parts, Maintenance Fitting Autocentres & Enhancement Do It For Me Servicing & Repair • Wide car-parc coverage • On-demand 7 days/week • Quality service at affordable • Comprehensive accessory • Price competitive prices assortment • Low a
Slide 25: Friend of the Motorist: Bulbs, Blades and Batteries Opportunity
Friend of the Motorist The Bulbs, Blades and Batteries Opportunity Fitting Penetration Market Overview £m Split by Participants 26.2% 500 Dealer 19.0% Garage (inc fast fit) 250 Halfords Parts factors Petrol Forecourt 8.9% Grocers 0 Blades Bulbs Batteries • The Bulbs, Blades and Batteries market is w
Slide 26: Friend of the Motorist: Aftercare Market Opportunity
Friend of the Motorist The Aftercare Market Opportunity Aftercare Market split by jobs • Large needs-based market % Sales Market % Sales Autocentres £8-10 billion per annum • Very fragmented market MOT 10 11 c.24,000 outlets, split: Servicing 24 20 - Main dealers Strong in < 3-year olds Brakes 14 18
Slide 27: Best Cycle Shop in Town
hep = alfords meee Dest shop in town Preliminary Results 2012 27
Slide 28: Best Cycle Shop in Town
Best Cycle Shop in Town Cycling is in tune with the times UK Cycling Market Sales 2005-2010 / £m £m • The popularity of cycling is 1,500 +5% 85 Service +7% growing: 74 - Great Value 1,000 65 615 - Healthy 472 539 Parts, Accessories and Clothing - Environmentally-friendly +7% - Fun 500 490 Adults +5%
Slide 29: Halfords cycle proposition
Best Cycle Shop in Town Halfords cycle proposition Range Bike Build and Accessories and Repairs Web • Lead on cycle design • Advice + fitting • Customer information • Flexible global • Bike build and 6 week • Extended ranges sourcing check • Seamless in-store • Every discipline • Repairs and servici
Slide 30: Targeted groups to deliver growth
Best Cycle Shop in Town Targeted groups to deliver growth Parent Enthusiast Family Focus Social/Leisure Traveller/Commuter Sports & Fitness Annual spend Annual spend £184 per cyclist £206 per cyclist Source: Consumer survey and market data from BCG/Halfords analysis. Preliminary Results 2012 30
Slide 31: Great Getaways
hep = alfords starting point for As great 31
Slide 32: Great Getaways: Travel for leisure
Great Getaways Travel for leisure • Increase in staycation • Demand for active leisure time • Simple pleasures – camping • Car essential to journey • Extra products needed to facilitate journey We help our customers make the most of their time outdoors and help them get there Preliminary Results 201
Slide 33: Halfords getaway proposition
Great Getaways Halfords getaway proposition Range Service and Fitting Web • Roof boxes, cycle • Roof bar and box • Extended range carriers and travel fitting • Seasonal offers equipment • Advice and help • Camping Equipment • Exclusive brands: Exodus, Urban Escape Solutions for holiday trips and cam
Slide 34: Strategy to Drive Growth
Strategy to Drive Growth Vision Strategic Pillars Preliminary Results 2012 34
Slide 35: Retail Portfolio
Retail Portfolio • 467 stores - 408 superstores UK - 36 High Street UK - 23 ROI • Core catchment drive time 12 mins • Only five stores unprofitable • Most stores over-spaced Implies potential downsizing, in situ or elsewhere • c.130 leases expire in next five years - Relocations - Re-gears • Key var
Slide 36: Retail Portfolio: Laboratory Stores
Retail Portfolio Laboratory Stores • Three re-models opened last week • Department space adjusted • Slow moving ranges now offered on 24-hour supply • More comfortable browsing environment • Contemporary and clear signage • Wi-Fi driven information Form basis for future remodel plans Preliminary Res
Slide 37: Autocentres Portfolio
Autocentres Portfolio • 224 centres at acquisition • 261 centres today • Up to 30 new openings targeted p.a. • Average rentals £8-10 per ft2 Preliminary Results 2012 37
Slide 38: Retail Operations
Retail Operations • DC operating smoothly • Enhanced buying of goods not for resale • New on-shelf availability tools and processes • Recruiting and training colleagues • “Ready-to-Trade” routines • Multichannel customer experience Preliminary Results 2012 38
Slide 39: Autocentre Operations
Autocentre Operations • Technical expertise of colleagues • Tyre sales opportunity • Product development – Brakes4Life, Air Con • Sunday openings • B2B Preliminary Results 2012 39
Slide 40: Web
Web Customer • Richer site content • Targeted Marketing • Customer Database • Cross-selling customers Technical development • Websphere 7 • Mobile site • Autocentre alignment • Improved checkout • Search-engine enhancement Preliminary Results 2012 40
Slide 41: Web
Web Trading • Review of deals – price focus • Extended ranges • Bundled sales • Spend & Save Fulfilment • 24hr R+C for non-stocked items • Higher collection rates • Customer collection management • Improved direct delivery service Preliminary Results 2012 41
Slide 42: Marketing
Marketing • Changing image of Halfords products and services • Raising awareness of fitting and Autocentres • Multimedia including digital advertising • Customer Relationship Management • Social Media – f-Commerce Facebook site Preliminary Results 2012 42
Slide 43: New Brand TV Ad
New Brand TV Ad New Brand Ad Preliminary Results 2012 43
Slide 44: People
People • Customer engagement programme • Recruitment of extra staff to provide fitting • Enhanced training on fitting • Clear company-wide values Preliminary Results 2012 44
Slide 45: Strategy to Drive Growth
Strategy to Drive Growth Vision Strategic Pillars Portfolio Web Enablers Operations Marketing People Values Preliminary Results 2012 45
Slide 46: Current Trading
Current Trading A Summer to Remember Seasonal Initiative Promotional Offers Autocentres Strong programme of trading activity Preliminary Results 2012 46
Slide 47: Summary
Summary • Halfords evolving to be a contemporary solutions provider • Our growth areas provide the route to develop our business • Strategy that focuses on three pillars • Aligning organisation to deliver strategic initiatives • Strong cash flow protects dividend Preliminary Results 2012 47
Slide 48: Questions
Questions Preliminary Results 2012
Slide 49: Appendices
Appendices Preliminary Results 2012
Slide 50: Group Income Statement
Group Income Statement FY12 FY11 Change £m £m Revenue 863.1 869.7 -0.8% Gross Profit 472.8 485.0 -2.5% Operating Costs 375.6 356.9 +5.2% OPERATING PROFIT 97.2 128.1 -24.1% Operating Profit % 11.3% 14.7% -340bps Net Finance Costs (5.0) (2.5) -100.0% PROFIT BEFORE TAX 92.2 125.6 -26.6% Basic Earnings
Slide 51: Group Components
Group Components Central UK/ROI Total Retail Autocentres Amort’n Group FY12 £m Europe £m £m £m £m £m Revenue 752.3 - 752.3 110.8 - 863.1 Gross Profit 399.8 - 399.8 73.0 - 472.8 Operating Costs (307.0) - (307.0) (66.4) (2.2) 375.6 OPERATING PROFIT 92.8 - 92.8 6.6 (2.2) 97.2 Central UK/ROI Total Retai
Slide 52: UK/ROI Retail Revenue Bridge
UK/ROI Retail Revenue Bridge Revenue Change Underlying LFL Sales Growth -3.0% Easter Adjustment +0.3% REPORTED LFL SALES GROWTH -2.7% Net New Space +0.4% UK/ROI RETAIL SALES GROWTH -2.3% Notes All numbers shown are before non-recurring items Preliminary Results 2012 52
Slide 53: Group Balance Sheet
Group Balance Sheet FY12 FY11 YOY Change £m £m £m Goodwill and Intangible Assets 343.9 346.7 (2.8) -0.8% Property, Plant & Equipment 97.9 102.6 (4.7) -4.6% Derivative Financial Instruments1 (1.2) (2.0) 0.8 -40.0% Net Working Capital 54.2 47.6 6.6 +13.9% Net Debt (139.2) (103.2) (36.0) +34.9% Other C
Slide 54: FY12 Retail Store Portfolio
FY12 Retail Store Portfolio Mezzanine Flat Compact Metro Bikehut Total OPENING NUMBER OF STORES 2 243 159 31 32 1 466 (3.87m ft ) New Stores - - 3 - - 3 Relocations (2) 2 - - - 0 Rightsizes 2 (2) - - - 0 Closures - - - (1) (1) (2) CLOSING NUMBER OF STORES 2 243 159 34 31 0 467 (3.83m ft ) Mezzanine
Slide 55: Autocentre Portfolio
Autocentre Portfolio FY12 Opening number of centres 240 New centres 20 Closing number of centres 260 Preliminary Results 2012 55