Slide 1: FY22 Interim Results
FY22 Interim Results Halfords Group PLC 10th November 2021
Slide 2: Agenda
Agenda FY22 H1 Financial Performance and Outlook Loraine Woodhouse, CFO Strategic Update Graham Stapleton, CEO Summary Graham Stapleton, CEO Q&A 2
Slide 3: FY22 Financial Performance
FY22 FINANCIAL PERFORMANCE Loraine Woodhouse, CFO 3
Slide 4: Basis of financial information
Basis of financial information ✓ Covers the 26-week period from 3 April to 1 October 2021 ✓ All comparators are on a two-year basis unless otherwise stated ✓ All figures are now post-IFRS 16 4
Slide 5: Strong financial performance on all metrics
Strong financial performance on all metrics. Strong Group Strong gross margin Tight cost control in an revenue growth* improvements* inflationary environment* Group Sales Growth* Group Gross Margin* Costs as % revenue** +19.2% 51.7% -1.2ppts (LFL revenue +14.2%) (+167bps Yo2Y) (Costs* +16.0% Yo2Y) S
Slide 6: Strong EPS growth and interim dividend of 3p
Strong EPS growth and interim dividend of 3p. Non- underlying credit reflects provision releases. H1 FY22 vs. FY20 vs. FY21 +19.2% Yo2Y +8.7% YoY Revenue £694.8m +14.2% LFL +15.6% LFL +£27.7m Yo2Y +£2.1m YoY Underlying Profit Before Tax “PBT” £57.9m +91.7% Yo2Y +3.8% YoY Non-Underlying Items +£6.4m
Slide 7: FY22 Group PBT driven by strong performances across Retail
FY22 Group PBT driven by strong performances across Retail; Autocentres impacted in Q1 by MOT deferment. Group PBT Bridge £1.5m £0.8m £1.0m £9.2m -£1.6m £16.9m £57.9m £55.8m £30.2m Note: Underlying numbers exclude business rates relief of £9.2m 7
Slide 8: Retail performance driven by strong revenue growth
Retail performance driven by strong revenue growth; underlying margin improvements. H1 FY22 vs. FY20 vs. FY21 +7.7% Yo2Y +2.8% YoY Revenue £538.7m +14.0% 2LFL +7.0% LFL +360bps Gross Margin 50.6% +370bps YoY Yo2Y Operating Costs* £211.4m +5.1% Yo2Y +14.0% YoY Underlying EBIT £61.2m +80.5% Yo2Y +1.5%
Slide 9: Retail Motoring strong in H1; Cycling volatile
Retail Motoring strong in H1; Cycling continues to be volatile. Halfords Retail 2 Year LFL %s Motoring Cycling Total 38.5% 20.3% 13.4% 15.8% 14.0% 9.9% 11.5% 11.9% 8.4% Q1 Q2 H1 9
Slide 10: Improvements in Cycling GM% evident
The improvements in Cycling GM% are evident as category mix normalises. Retail Gross Margin % Gross Margin Improvement FY22 50.6% (0.1%) (1.1%) FY21 46.9% * (0.3%) 5.1% FY20 47.0% 50.6% 47.0% FY19 46.6% FY20 Promotional Mix Other FX FY22 effectiveness and buying FY18 45.7% practices * Impact of mix
Slide 11: Retail costs managed well
Retail Costs managed well; investment in our transformation programme. Retail Costs Bridge -£6.6m £10.4m £9.4m -£7.9m £5.0m £211.4m £201.1m £185.4m 11
Slide 12: MOT deferrals impacted Autocentres H1 profitability
MOT deferrals impacted H1 profitability in Autocentres; acquisitions have driven strong revenue growth. H1 FY22 vs. FY20 vs. FY21 +88.8% Yo2Y +36.1% YoY Revenue £156.1m +15.5% 2LFL +70.1% LFL Gross Margin 55.6% -1300bps Yo2Y -500bps YoY Operating Costs* £83.1m +57.7% Yo2Y +28.2% YoY Underlying EBIT
Slide 13: Cash position remains strong
Our cash position remains strong, albeit still flattered by an abnormally low working capital position. H1 FY22 H1 FY21 YoY Profit After Tax 52.7 45.0 7.7 Depreciation, Amortisation & Loss on Disposal of Assets 52.0 51.8 0.2 Working Capital (12.1) 97.3 (109.4) Taxation (5.3) (3.0) (2.3) Net Finance
Slide 14: Net debt reduces; capital allocation priorities unchanged
Net debt reduces; capital allocation priorities remain unchanged. Capital Allocation Priorities Net Debt £m 271.6 232.7 1 Maintaining a prudent balance sheet 2 Investment for growth 3 M&A focused on Autocentres H1 FY21 H1 FY22 4 Progressive dividend policy Cash Lease debt 5 Surplus cash returned to
Slide 15: Declared interim dividend of 3p per share
Declared interim dividend of 3p per share. Capital Allocation Priorities 1 Maintaining a prudent balance sheet Interim Dividend per Share 2 Investment for growth 3 M&A focused on Autocentres 4 Progressive dividend policy 6.18 0.00 3.00 FY20 FY21 FY22 5 Surplus cash returned to shareholders 15
Slide 16: Upgrading full year underlying PBT guidance
Upgrading full year underlying PBT profit guidance. Drivers of profitability H2 FY22 vs H2 FY20 Outlook • Strong H1 performance, with sales momentum carried forward into H2. • Investment in motoring pricing and higher transformation costs through H2. • Profit outlook upgraded to £80m - £90m. • Worki
Slide 17: A more resilient business model in a challenging environment
A more resilient business model will help us in a challenging medium-term environment. Tailwinds Headwinds • Greater resilience in revenue streams as • Inflation within labour, logistics, Services and B2B continue to grow. energy and cost of goods. • Underlying business more profitable. • Challengin
Slide 18: FY22 Strategy Update
FY22 STRATEGY UPDATE Graham Stapleton, CEO 18
Slide 19: Our Group Purpose
To Inspire and Support a Lifetime of motoring and cycling. Our Group Purpose 19
Slide 20: Our Group Strategy remains as relevant today
Our Group Strategy, announced in September 2018, remains as relevant today as it was then Support our customers through Inspire our customers with a Enable a lifetime of motoring an integrated, unique and more differentiated, super-specialist offer and cycling convenient services offer Underpinned b
Slide 21: Reminder of our accelerated strategy
Reminder of our accelerated strategy “Evolve into a consumer and B2B services-focused business, with a greater emphasis on motoring, generating higher and more sustainable financial returns.” 21
Slide 22: Services and B2B offer higher financial returns
Services and B2B offer higher financial returns in markets with strong growth opportunities Size of bubble represents relative Autocentres has size of segment to 4% market share the Group Autocentres Retail Mainstream Motoring Cycling Services Products Market Opportunity Motoring B2B Products Motori
Slide 23: COVID-19 meant we re-prioritised our strategic focus
COVID-19 meant that we re-prioritised our strategic focus. 2018 March 2020: Now Start of pandemic The start of our Re-prioritised plan Transformation journey A balanced strategic Focus on Renewed focus on approach across Cost and Efficiency Inspire and Inspire, Support and and Lifetime. Lifetime sup
Slide 24: Before / After
24 After autocentre @owWveEcor Expert tyre fitting at home or work. ae = BOOK AN MOT & one exer? ERVICE TOGETHER WE'LL COME TO YOU = = ‘ halfords retail halfords
Slide 25: Our Inspire Pillar has changed the way customers shop
Inspire Our Inspire Pillar has changed the way customers shop. Progress since 2018 Group Digital Revenue • Launched our Group web platform giving customers 700 access to all our products and services on one website. 600 500 • More customers now shop across the Group digitally. % of Overall Revenue •
Slide 26: WeFit in Retail stores
Support Vans Group Services Garages ‘WeFit’ in Retail stores 26
Slide 27: We have transformed our Services business
Support We have transformed our Services business. • Halfords Mobile Expert: • Service offering to customers at home or at work. Group Service Revenue • Grown from 1 van to a fleet of over 170. • From tyre fitting to offering 19 additional services. 400 £370m • Three Garage Services acquisitions: 36
Slide 28: PACE
Support PACE • Market leading in-garage digital operating platform. • Putting a tablet in every technician’s hands to deliver best-in-class service. • Reducing paper and optimising workflow in garages with an integrated booking feature. 28
Slide 29: PACE has transformed productivity and customer experience
Support PACE has transformed the productivity and customer experience of our business. 60.0 Q1 & H2 impacted by FY21 A fully digitalised garage operation Autocentres Sales per Work Hour MOT deferment. 55.0 Q2 representative of run rate. 50.0 +25% vs FY19 • Efficiently allocates time and technicians
Slide 30: B2B is an important and growing revenue stream
Support Our Progress since 2018 B2B is a important and growing revenue • Our B2B business has doubled since FY18 and stream that leverages our existing represents a growing proportion of our revenues. assets. • A fleet of over 190 Commercial vans allows us to grow 300 30.0% our share of the Commerci
Slide 31: Lifetime is the least developed but will release significant value
Lifetime Lifetime is the least developed but will release significant value in the future. Our Progress since 2018 • Building the foundations of our customer lifetime CRM Engagement experience has driven improved customer interaction and Spend per Customer* 14% satisfaction. Email click through £170
Slide 32: We have improved the profitability of the underlying business
Cost & Efficiency We have improved the profitability of the underlying business. Retail Stores Progress since 2018 480 477 472 • We have closed 10% of estate saving £9m. 407 407 • Lowered working capital requirements by over £30m since 2018. FY18 FY19 FY20 FY21 H1 FY22 • Improved Cycling gross margi
Slide 33: Our colleagues are a point of differentiation
Colleagues Our colleagues are a point of differentiation and we now have more super-specialist expertise. Progress since 2018 • New Retail operating model, delivering an additional 1.4m customer facing hours. • Centralised customer contact from our entire network of Retail stores, improving the call
Slide 34: Strategic Focus in FY22
Strategic Focus in FY22 34 halfords
Slide 35: Inspire continues to transform the customer experience
Inspire Focus for H2 This year, Inspire continues to • Further enhancements to our digital proposition and transform the customer experience. web platform to encourage cross shop. • Roll out Project ‘Peloton 2’ to all stores. Our Progress This Year • Fusion trials extended to a second town during •
Slide 36: Halfords Digital / Halfords Physical (Fusion)
Halfords Digital Halfords Physical (Fusion) Integrated New Group Platform Fusion Town 36
Slide 37: Fusion towns help customers shop across the offer
Inspire Our revolutionary Fusion towns help customers shop across our retail stores, garages and our mobile offer. Retail Store Exterior Mobile Expert Van Garage Exterior Retail Store Interior WeFit Bays in the Car Park Garage Interior 37
Slide 38: Support continues to see significant progress
Support Support continues to see significant progress driving Services further. Our Progress This Year Focus for H2 • HME • Continue to scale our HME business to 200 vans • 172 vans against our full year target of 200. achieving 80% UK coverage. • Two new fitting services launched. • Continue to sca
Slide 39: New B2B markets offering international growth
We’ve entered new B2B markets that offer international growth opportunities.
Slide 40: New B2B markets offer international growth opportunities
Support Focus for H2 We’ve entered new B2B markets that offer international growth opportunities. • Avayler has seen strong interest and development of our next new product, ‘Avayler Hub’, will arrive in FY23. Our Progress This Year • Avayler Mobile will be now be deployed across Tirebuyer and their
Slide 41: Market-leading multi-channel Motoring loyalty club
Lifetime We will introduce a market-leading, multi-channel, Motoring loyalty club. Bespoke Advice Focus for FY22 • A market-leading, Motoring loyalty club will launch at the end of FY22 putting the customer and their car Repairs Offers at the centre of our club. • Bespoke advice, offers and savings
Slide 42: ESG remains a core part of our strategy
Lifetime ESG remains a core part of our strategy and represents a significant strategic commercial opportunity. Focus for FY22 • Continued progress on our ESG plan, including: • Launch partnership with 3rd party to provide customers with EV home-charging solution. • The use of electricity from 100%
Slide 43: Cost and Efficiency
Cost & Efficiency Cost and Efficiency Our Progress This Year Focus for H2 • Utilise our hedging policies to mitigate risk and take • Settled 28 Retail rent negotiations at 25% below advantage of favourable markets. existing. • Established workstreams continue to target efficiency • Our FY23 energy r
Slide 44: Super-specialist colleagues offer market-leading advice
Colleagues Our super-specialist colleagues offer market-leading advice and knowledge. This year % of Retail Colleagues trained in Services - some examples • Transitioned to a new Group operating and 65% 65% 64% reward model, better aligning to our Group 55% strategy and our One Halfords Family value
Slide 45: The scale of our change
The scale of our change We have doubled the number of …and our revenue sources have motoring services locations... shifted as a result. Retail Stores 480 86% Retail Store Garages 316 Online FY18 FY18 16% 1 HME Van 4 Websites 14% Garages and Vans Retail Stores 404 78% Retail Store Garages 374 H1 H1 O
Slide 46: Customers responding to greater scale and convenience
The scale of our change Customers are responding to our …resulting in both our Services and B2B greater scale and convenience… businesses growing significantly… Services 23% Services 33% FY18 B2B FY22 B2B 10% 20% Product 77% Product 67% …which together now account for approximately half of Group rev
Slide 47: Summary
Summary • We are making significant progress in changing the shape and scale of our business. • Despite the impact of a global pandemic, our ambition to become a consumer and B2B, services-focused business is being realised, at pace. • We have generated a strong platform from which to further transf
Slide 48: Q&A
Q&A 48 halfords
Slide 49: Contact and Newsflow
Contact and Newsflow For further information, please go to www.halfordscompany.com or contact: Andy Lynch Head of Investor Relations and Corporate Finance andrew.lynch@halfords.co.uk Next newsflow: 13 January 2022: FY22 Q3 trading update 49