Slide 1: Interim Results
Interim Results 26 Weeks to 28 September 2007 City Presentation Centre 22 November 2007
Slide 2: Nick Wharton, Finance Director
Nick Wharton Finance Director
Slide 3: Financial Highlights
Financial Highlights z Sales £400.7m + 8.5% z Like-for-like sales + 5.5% z Operating profit £52.6m + 8.5% z Profit before tax £47.6m + 16.4% (Underlying +9.4%) z Basic EPS 15.3 pence + 20.5% (Underlying +13.3%) z Interim dividend up 9.2% to 4.75 pence z Net Debt £173m, strong cash generation z Since
Slide 4: Profit and Loss Account
Profit and Loss Account 2007/08 2006/07 H1 H1 Growth £m £m % Revenue 400.7 369.2 +8.5% Gross profit 204.0 188.4 +8.3% Net operating expenses (151.4) (139.9) +8.2% Operating profit 52.6 48.5 +8.5% Operating profit % 13.1% 13.1% Net finance costs (excl. exceptional) (5.0) (5.0) 0.0% Exceptional financ
Slide 5: Sales Growth and Margin Per Cent
Sales Growth and Margin Per Cent 2007/08 2006/07 H1 H1 % % Underlying Like-for-like sales growth 5.5 5.0 Easter adjustment 0.0 1.5 Like-for-like sales growth 5.5 6.5 Net new space 3.0 2.8 Total sales growth 8.5 9.3 2006/07 2007/08 H1 H2 Full Year H1 Like-for-like comparatives1 5.0% 5.6% 5.3% 5.5% Gr
Slide 6: Operating Expenses
Operating Expenses 2007/08 2006/07 H1 H1 Growth Selling & Distribution1 (£m) 129.0 120.8 +6.8% % Revenue 32.2% 32.7% Administrative (£m) 22.4 19.1 +17.3% % Revenue 5.6% 5.2% Operating expenses (£m) 151.4 139.9 +8.2% % Revenue 37.8% 37.9% Key Ratios (% Revenue): Store Payroll 11.5% 11.4% Store Rent &
Slide 7: Balance Sheet
Balance Sheet H1 H1 FY 2007/08 2006/07 Growth 2006/07 £m £m % £m Goodwill and intangible assets 258.2 258.1 0.0% 257.8 Property, plant and equipment 110.5 105.2 +5.0% 107.5 Derivative financial instruments (1.8) (2.0) -10.0% (1.0) Net working capital 46.6 42.1 +10.7% 45.7 Cash and financial instrume
Slide 8: Capital Expenditure Summary
Capital Expenditure Summary H1 H1 FY 2007/08 2006/07 2006/07 £m £m £m New stores and re-sites 5.5 5.2 11.3 Store conversions 0.8 1.3 2.3 Czech Republic (incl. Systems development) 1.0 0.0 0.4 Total portfolio 7.3 6.5 14.0 Head office systems 0.4 0.7 2.2 Store systems 4.1 1.9 4.2 Supply chain 0.6 0.5
Slide 9: Cash Flow and Net Debt
Cash Flow and Net Debt Operating cash flow Free cash flow Net debt1 £m £m £m Operating profit 52.6 Op. cash flow 59.4 Net debt 30.03.07 (180.0) Depreciation/Amortisation 10.1 Net finance costs (4.6) Free cash flow 18.2 Employee share scheme 0.6 Taxation (13.4) Share capital 12.3 Fixed asset write-of
Slide 10: Share Buy Back and Net Debt
Share Buy Back and Net Debt Share Buy Back z 13.1m shares acquired at a cost of £45.5m since June 2006 z Progressive dividend policy maintained z Adequate free cash flow to fund portfolio expansion Net Debt z Maintaining key debt metrics: Adjusted Net Debt/EBITDAR >3.9x Fixed charge cover 2.25x
Slide 11: Ian McLeod, Chief Executive Officer
Ian McLeod Chief Executive Officer
Slide 12: Overview
Overview z Growth delivery continues in each key category z Continue to capitalise on our market leading positions z Needs-driven purchases underpin economic resilience z Portfolio growth reinforces Halfords defensive qualities z Genuine competitive advantage through range, scale, service z Strategi
Slide 13: Strategic Growth Plan
Strategic Growth Plan z Investing in the Store Portfolio z Leveraging the Halfords Brand. z Supply Chain Development z Marketing our Service Advantage Driving competitive advantage through range, scale and service 13 Halfords Group plc Interim Results – 22 November 2007
Slide 14: Expanding Store Portfolio
Expanding Store Portfolio Overview z Total portfolio now 433 stores z Utilising 3 Halfords formats: Superstore, Neighbourhood and Metro z Operating in 3 countries: UK, ROI and Czech Republic z 10 stores opened in the period: 9 Superstores 1 Neighbourhood z Stand alone bikehut continues to ev
Slide 15: Expanding Store Portfolio
Expanding Store Portfolio Portfolio Development z UK portfolio growth continues: (Excl. Bik e hut and Cze ch) 450 c.18 net new stores by year end 430 Store No: 410 Similar programme planned for 390 FY09 370 350 FY04 FY05 FY06 FY07 FY08 Financial Year z Republic of Ireland successful: UK and ROI
Slide 16: Expanding Store Portfolio
Expanding Store Portfolio Czech Republic z 29 June 2007: 3 stores, 3 countries, 3 currencies z Second store now open with third pre-Christmas z 3 further stores planned for 2008 z c.30% product locally sourced z Offer tailored to Czech market Bikes performing well Strong participation in servicing
Slide 17: Expanding Store Portfolio
Expanding Store Portfolio Bikehut z 4 further stores trading pre-Christmas: Brighton and Putney Twickenham and Dorking z Further 2 pilots to open early 2008 z Dedicated product offer: 60% range differentiation Strong accessory participation More brands added e.g. Condor and Rocky Mountain
Slide 18: Leveraging Halfords Brand
Leveraging Halfords Brand Car Maintenance z Destination store status, category growth continues z Promotion of core products drives incremental sales z Needs driven product generates above average margins z Increased stock depth further improves peak demand availability z Incremental Tradecard contr
Slide 19: Leveraging Halfords Brand
Leveraging Halfords Brand FY FY Car Enhancement Solution Examples 07 08 New CD Audio 21 6 5 z No:1 in-car technology specialist (UK and ROI) Hands Free Phone 7 16 16 MP3 Connectivity 18 37 31 z c.200 ICT solutions available In-Dash DVD 6 8 8 z New MP3 range introduced Portable Music Players 4 17 16
Slide 20: Leveraging Halfords Brand
Leveraging Halfords Brand Camping and Travel Equipment z Sub-shop successfully implemented Ranges reviewed and new products introduced Own brand packaging redeveloped Customer communication improved in-store Comprehensive colleague training programme z Growth achieved in sales, profit and AT
Slide 21: Leveraging the Halfords Brand
Leveraging the Halfords Brand Bikehut sub-shop z Emphasis on end to end service Product, advice, maintenance z Re-launch of both and ranges z Boardman sales have exceeded expectations z 66 strong kids range introduced for Christmas Includes 8 premium models Prices range from £139.99 -£199.99 S
Slide 22: Sponsorship Strategy
Sponsorship Strategy Key Considerations z Reinforcing brand positioning z Driving awareness and perception z Relevance to target market Key Sponsorships z British Touring cars for last 5 seasons z Team Bikehut downhill MTB team z Tour de France ITV1 sponsorship z “Dave” channel (formerly UKTV G2) mo
Slide 23: Multi Channel Development
Multi Channel Development Halfords.com z c.7,000 lines now available +60% year-on-year increase z Includes more than 700 web exclusive lines z c.10m visitors year to date z Customer conversion rates increased by 130% z Sales growth nearly double last year z “reserve & collect” successfully launched:
Slide 24: Multi-Channel Strategy
Multi-Channel Strategy Ripspeed.com z Launching December 2007 z Targeting the performance styling enthusiast z 2,000+ skus with “reserve and collect” and “next day/name day” options z Further product ranges planned for 2008 z “My Ripspeed” interactive community web space Evolution of a multi channel
Slide 25: Multi-Channel Strategy
Multi-Channel Strategy Halfords Outlet.com z Launching December 2007 z Auction and standard transactions via “ebay” style website z Opportunity for sale of residual product, refurbished units and ex-display stock z Consolidated disposal to optimise retained margin z Initial focus on technology produ
Slide 26: Supply Chain Development
Supply Chain Development z Far East sourcing ahead of target z Long term relationships developing: Apollo, Carrera, Boardman Electronics exclusivity/joint product development Halfords tools z In-house expertise driving product innovation: Dedicated quality control In-dash sat nav Multi f
Slide 27: Navsure 400i
Navsure 400i z Feature rich multi-media product, less than half price of comparable brands Sat Nav Screen Audio z Samsung CPU 2440 z 7" motorised LCD screen z 4x40W max power output z SD card (512MB) z 16:9 widescreen format z CD/CD-R/CD-RW/MP3/ WMA compatible z Windows CE 4.2 platform z Touch scree
Slide 28: Marketing our Service Advantage
Marketing our Service Advantage z “we fit” re-branding currently in progress z Growing consumer resonance and integral to advertising z Extends to bike build, bike care and paint mixing z 55% growth in 3B’s fitting jobs: Bulbs +66% Blades +59% Batteries +11% z 31% growth in bikehut service rev
Slide 29: Developing a Platform for Growth
Developing a Platform for Growth z 19th year of consecutive sales growth z Consistent growth since IPO: 34% growth in sales 71 new stores opened Investment in every store z Results demonstrate our resilience and defensive character z Vibrant growth strategy: Pro-active product development in
Slide 30: Appendices
Appendices Store Portfolio Bike Advertising Strategy
Slide 31: Portfolio By Store Type
Portfolio By Store Type Mezzanine Flat Neighborhood Metro Bikehut Total SM/M F N Me B Opening 211 165 15 33 2 426 New Store 9 1 10 Closures (2) (1) (3) Conversions 5 (5) 1 (1) 0 Closing Balance 225 158 17 31 2 433 07/08 store rollout Q1 Q2 New stores (10) Tallaght (SM) Dundalk (SM) Ashford (SM) Exmo
Slide 32: Cycles Advertising Strategy
Cycles Advertising Strategy 32 Halfords Group plc Interim Results – 22 November 2007