Slide 1: FY18 Preliminary Results
halfords for life’s journeys FY18 Preliminary Results
Slide 2: Introduction
Introduction Graham Stapleton – CEO FY18 Operational highlights & financial results FY19 outlook Jonny Mason – CFO Initial thoughts on Halfords Graham Stapleton – CEO Q&A Graham Stapleton – CEO Jonny Mason – CFO
Slide 3: FY18 Operational highlights & financial results
FY18 Operational highlights & financial results Jonny Mason
Slide 4: FY18 overview
FY18 overview Pleased with performance in a challenging retail environment; Motoring and Cycling sales growth Further progress on growing services, customer relationships and online sales FX mitigation plans worked well against c.£25m in-year headwind FY18 Group PBT of £71.6m in line with ma
Slide 5: Operational highlights
Operational highlights Improved customer relationship metrics Enhanced colleague training; target ‘Gears’ proportions maintained; steady colleague turnover 9th place in ‘Sunday Times Best Big Companies To Work For’ Own-brand range roll-outs across both Motoring and Cycling Autocentres oper
Slide 6: Group financial highlights
Group H1 Financial Highlights Group financial highlights +3.7% Revenue: £1,135.1m +£40.1m +2.0% LFL Underlying EBITDA: £109.5m +0.7% +£0.8m Underlying PBT: £71.6m -5.0% -£3.8m Basic Underlying EPS: 29.6p -2.3% -0.7p Free Cash Flow: £41.5m +10.1% +£3.8m Full year Dividend*: 18.03p +3.0% +0.52p Group
Slide 7: Retail like-for-like sales
Retail Financial Highlights Retail like-for-like sales Motoring +1.9% Car Maintenance +3.7% Car Enhancement -2.2% Travel Solutions +3.6% Cycling +2.9% Service c.85% of related Online Halfords.com Retail sales orders collected sales +6.0% in store +14.2% 7
Slide 8: Retail financial highlights
Retail Financial Highlights Retail financial highlights +4.1% Revenue: £977.2m +2.3% LFL Gross Margin: 47.4% -123 bps Operating costs: £391.0m +2.9% Store Colleague costs +3.9% Underlying EBIT: £72.6m -5.5% Store Occupancy costs +2.7% Warehouse & +5.5% Distribution costs Underlying EBITDA: £99.0m -2
Slide 9: Retail gross margin
Retail Gross Margin – decline of x bps as expected Retail gross margin 48.6% -270 bps 47.4% +197 bps -50 bps FY17 Increase in Mix impact** Impact of our FY18 COGS* from FX offset the weaker actions, and pound other movements *COGS refers to ‘cost of goods sold’. **This comprises: a) Circa 30 bps fro
Slide 10: Retail gross margin: cumulative FX impact
Retail Gross Margin – decline of x bps as expected Retail gross margin Cumulative FX impact We have now had circa £40m of FX headwind cumulatively since FY16 FY17 FY17 FY18 FY18 FY19 FY19 FY20 FY20 H1 H2 H1 H2 H1 H2 H1 H2 We have mitigated over half of this. We do not anticipate further price ri
Slide 11: Autocentres financial highlights
Autocentres Financial Highlights Autocentres financial highlights +0.8% Revenue: £157.9m +0.2% LFL Gross Margin: 67.5% +238 bps Operating costs: £102.5m +2.7% Underlying EBIT: £4.1m +86.4% Underlying EBITDA: £10.5m +38.2% 11
Slide 12: Autocentres – operational review update
Autocentres – operational review update Good opportunities for profit improvement across estate Implementation of better systems to improve oversight More consistent application of best practices across garages Early progress is encouraging EBIT margin 5.0% Hybrid / electric trained techni
Slide 13: Cash flow
Cash flow Cash flow £109.5m -£12.6m -£37.0m -£18.4m £41.5m -£34.8m -£8.6m -£1.9m EBITDA Working Capex Tax and Free Cash Ordinary M&A Net cash capital other dividend Flow outflow Net Debt Full-year RCF to ordinary amended EBITDA dividend and 0.8 times +3.0% extended 13
Slide 14: FY18 Summary
FY18 Summary Further operational improvements Financial performance in line with expectations Material FX headwind mitigated Consistent cash generation with higher Free Cash Flow year-on-year Increased Ordinary Dividend 14
Slide 15: FY19 Outlook
FY19 Outlook We will continue to develop our strong market positions in motoring and cycling Capital allocation priorities and dividend policy remain unchanged Remaining FX mitigation likely to come through in FY20 Acceleration of investments in services and customer capabilities Therefore
Slide 16: Initial thoughts on Halfords
Initial thoughts on Halfords Graham Stapleton
Slide 17: Progress of the last few years
Progress of the last few years Focus on training, engagement and retention of colleagues Growing our services offering and services businesses Further building our customer relationships and insights Increased presence in the cycling market Continuing our infrastructure improvements 17
Slide 18: Key strengths
Key strengths A strong heritage and brand awareness Market leader in many categories Engaged colleagues with a “can do” attitude Cash generative Resilient financial position; low gearing, short leases and no pension deficit 18
Slide 19: Unrealised potential
Unrealised potential Increase awareness of our services businesses to fully leverage our unique positioning Optimise our Group-wide customer data and insight Build on an established and scaled B2B business Many more opportunities identified: to be presented in September 19
Slide 20: Summary
Summary Good business, strong foundations Unrealised potential to invest in Plans to be set out in September Exciting future ahead 20
Slide 21: Summary
Summary 21
Slide 22: Q&A
Q&A Graham Stapleton Jonny Mason
Slide 23: Group income statement
Group income statement Group Income Statement FY18 FY17 Change £m £m Revenue 1,135.1 1,095.0 +3.7% Gross Profit 570.2 558.6 +2.1% Operating Costs (495.6) (481.5) +2.9% Underlying EBIT 74.6 77.1 -3.2% EBIT Margin % 6.6% 7.0% - Underlying EBITDA 109.5 108.7 +0.7% EBITDA Margin % 9.6% 9.9% - Net Financ
Slide 24: Retail income statement
Retail Income Statement Retail income statement FY18 FY17 Change £m £m Revenue 977.2 938.4 +4.1% Gross Profit 463.6 456.6 +1.5% Gross Margin 47.4% 48.6% - Operating Costs (391.0) (379.8) +2.9% Underlying EBIT 72.6 76.8 -5.5% EBIT Margin 7.4% 8.2% - Underlying EBITDA 99.0 101.1 -2.1% EBITDA Margin 10
Slide 25: Group balance sheet
Group Balance Sheet Group balance sheet FY18 FY17 YOY % Change £m £m £m Goodwill and Intangible 393.9 394.1 -0.2 -0.1% Assets Property, Plant & Equipment 101.3 102.8 -1.5 -1.5% Investments 8.1 8.1 - - Derivative Financial (5.1) 3.7 -8.8 -237.8% Instruments Net Working Capital 48.7 26.1 +22.6 +86.6%
Slide 26: Cash flow and net debt
Cash flow and Net Debt Cash flow and net debt Adjusted Operating £m Free Cashflow £m Net Debt £m Cashflow Operating Underlying EBIT 74.6 95.4 Opening Net Debt (85.9) Cashflow Non-recurring operating Capital (4.8) (37.0) Free Cashflow 41.5 expenses Expenditure Depreciation, amortisation, Finance leas
Slide 27: Group cash flow
Group Cash Flow Group cash flow FY18 FY17 £m £m Underlying EBITDA 109.5 108.7 Non-recurring operating expenses (4.8) (3.4) Change in inventories (4.4) (33.2) Change in receivables 2.4 2.3 Change in payables (10.7) 14.6 Change in provisions (1.4) (0.2) Loss on disposal of assets 4.2 0.2 Other 0.6 1.0
Slide 28: Group components
Group Components Group components Retail Autocentres Amortisation Group FY18 £m £m £m £m Revenue 977.2 157.9 - 1,135.1 Gross Profit 463.6 106.6 - 570.2 Operating Costs (391.0) (102.5) (2.1) (495.6) EBIT 72.6 4.1 (2.1) 74.6 EBITDA 99.0 10.5 - 109.5 Retail Autocentres Amortisation Group FY17 £m £m £m