Slide 1: Acquisition expands Halfords into car servicing and repair
Acquisition expands Halfords into car servicing and repair 1
Slide 2: David Wild, Chief Executive, Halfords Group plc
David Wild Chief Executive Halfords Group plc 2
Slide 3: Agenda
Agenda Halfords expands into car servicing and repair z Nationwide Autocentres: David Wild Acquisition Summary & Rationale CEO, Halfords z Nationwide Business Overview Duncan Wilkes CEO, Nationwide Autocentres z Financials and Growth Opportunity Nick Wharton Finance Director, Halfords z Summary Davi
Slide 4: Acquisition Summary
Acquisition Summary Acquisition builds on Halfords position in car maintenance z £73.2m acquisition of Nationwide funded from existing resources 3Bs Penetration (24 Months) 35.0 z Nationwide Autocentres 30.0 Battery Blades Bulbs Market leader 25.0 % Penetration 20.0 Clear cost advantage 15.0 S
Slide 5: Nationwide Autocentres
Nationwide Autocentres Unique UK Position: Quality independent with national presence z Leading UK provider of MOT and car servicing z Significant presence in highly fragmented market z Operates 224 centres nationally z Customer centric operation z Established internet capability z Major provider to
Slide 6: Acquisition Rationale
Acquisition Rationale z Complementary business meeting acquisition criteria Quality Domestic Brand/capability adjacency z Proven business model. Advantaged cost to serve Property costs Labour utilisation Purchasing quantities z Logical extension for Halfords Car maintenance is core cat
Slide 7: UK Service Market Overview
UK Service Market Overview Substantial £9bn market with positive market drivers z Expanding market with fastest growth in older vehicles 5-year Car Parc Evolution z Core market drivers 35 9 Size / growth / age of car parc 9 Average servicing / parts costs 30 13+ years 9 Innovation (brake fluid repla
Slide 8: UK Service Market Overview
UK Service Market Overview A substantial and fragmented market that is now consolidating Market Segment Market Structure and Drivers Independent Aftermarket Services Revenue z Replacement of consumable products e.g, Cooling Clutches Bulbs, Blades, Batteries Batteries 1. Basic z More complex car tech
Slide 9: Duncan Wilkes, Chief Executive, Nationwide Autocentres
Duncan Wilkes Chief Executive Nationwide Autocentres 9
Slide 10: Operational Overview
Operational Overview Unique UK position: Quality, independent scale operator Top 5 Fleet Customers z Differentiation Strategy Arval Dealer quality service at more affordable prices Carillion Highly trained staff and latest diagnostic technology Hitachi National coverage provides further fleet
Slide 11: Operational Overview
Operational Overview Service differentiation provides key competitive advantage z Unique customer proposition z Sector leading customer service drives core operational KPI’s All centres audited quarterly Staff trained and assessed on customer satisfaction Best in class service level Continuo
Slide 12: Halfords Opportunity
Halfords Opportunity Nationwide National z Capital availability accelerates centre roll-out Footprint (2009) z Halfords’ brand resonates with relevant core values z Complementary customer base Customer recruitment & retention Marketing activity Database sharing z Buying and operational scale 1
Slide 13: Nick Wharton, Finance Director, Halfords Group plc
Nick Wharton Finance Director Halfords Group plc 13
Slide 14: Transaction Summary
Transaction Summary Nationwide: exciting growth opportunity delivering attractive return z Halfords acquires the entire Nationwide issued share capital: Cash free, debt free basis Nationwide ROCE Cash consideration £73.2m, 7.2x FY10 EBITDA 20.0% 20.0% 18.0% 16.0% 15.0% 14.0% Funded from existi
Slide 15: Nationwide Financials
Nationwide Financials z Four year revenue growth 6% CAGR Nationwide EBITDA Performance z Gross profit consistent at 67% 12,000 12.0% 9.8% 10.0% 10.4% 10,000 9.0% 10.0% 8,000 7.5% 8.0% £000 z Productivity improvements increased operating 6,000 6.0% 4,000 4.0% 2,000 2.0% returns by c.300 bps 0 0.0% FY
Slide 16: Growth Opportunities
Growth Opportunities Value opportunity focused on growth centric benefits z Brand Increased sales through leverage of resonant Halfords brand Cross marketing between Group companies using extensive customer database z Portfolio Expansion Use of Halfords capability and financial resource to acc
Slide 17: Service Centre Metrics
Service Centre Metrics Capex light growth model, delivers Group average return on investment Investment Typical Nationwide Centre P&L at Sales Maturity z New centre capital investment £135k, including initial £000 fit out and equipment costs Revenue 420.0 z Small pre-opening revenue requirement Gros
Slide 18: Integration Plan
Integration Plan Due diligence validates plan to double operating profit in three years z Financial, commercial, legal and environmental diligence completed z Detailed 100 day plan accelerates synergies & addresses execution risk z Integration plan focused on highest value opportunities FY11 FY12 FY
Slide 19: David Wild, Chief Executive, Halfords Group plc
David Wild Chief Executive Halfords Group plc 19
Slide 20: Summary
Summary Car servicing and repair provides an exciting growth opportunity z Quality business in attractive, adjacent market z Financial performance, EBITDA 15% CAGR z c.6% Earnings accretive in financial year 2011 z Management experience/expertise retained z Clearly identified growth opportunity with
Slide 21: Appendices
Appendices 1. Nationwide Financials FY06 – FY08 2. Senior Management CV’s 21
Slide 22: Key Nationwide Financials FY06 - 08
Key Nationwide Financials FY06 - 08 Nationwide Abridged Profit and Loss Account £m FY06 FY07 FY08 CAGR FY09 Sales 82.4 87.2 92.6 6.6% 96.6 Gross Margin 54.9 58.2 61.9 64.3 Direct Labour 26.9 27.5 29.5 30.4 Contribution 28.0 30.7 32.4 5.0% 33.9 Overheads 21.8 23.1 24.2 24.9 EBITDA 7.4 8.6 9.2 10.1 EB
Slide 23: Senior Management CVs
Senior Management CVs Duncan Wilkes, Chief Executive Officer z Managing Director, RAC Business Solutions z UK Managing Director then COO, 7C Limited z Sales and Marketing Director then COO, Action Computer Supplies z European Marketing Director, Wang Laboratories Bill Duffy, Chief Operating Officer