Slide 1: FY22 Preliminary Results
FY22 Preliminary Results Halfords Group PLC 16th June 2022
Slide 2: Agenda
Agenda FY22 Financial Performance Loraine Woodhouse FY22 Strategic Update Graham Stapleton Focus on FY23 Jo Hartley Summary Graham Stapleton Q&A 2
Slide 3: FY22 Financial Performance
FY22 FINANCIAL PERFORMANCE Loraine Woodhouse 3
Slide 4: Basis of financial information
Basis of financial information • Covers the 52-week period from 3 April 2021 to 1 April 2022 • All comparators are on a two-year basis unless otherwise stated • All figures are post-IFRS 16 4
Slide 5: Strong financial performance on all metrics
Strong financial performance on all metrics. Strong Group Gross Margin Expansion* Tight Cost Control in an Revenue Growth* Inflationary Environment* Group Sales Growth Group Gross Margin* Costs as % revenue** Yo2Y* 19.9% 52.7% +0.4ppts (+157bps Yo2Y) (Costs* +20.9% Yo2Y) (LFL revenue +16.7%) Signifi
Slide 6: Strong EPS growth and proposed final dividend of 6.00p
Strong EPS growth and proposed final dividend of 6.00p. Non-underlying credit reflects provision releases. FY22 vs. FY20 vs. FY21 +19.9% Yo2Y +6.0% YoY Revenue £1,369.6m +16.7% LFL +2.0% LFL Underlying Profit Before Tax +£32.9m Yo2Y -£9.7m YoY £89.8m (“PBT”) +57.8% Yo2Y -9.7% YoY Non-Underlying Item
Slide 7: FY22 Group PBT driven by strong performances across all areas
FY22 Group PBT driven by strong performances across all areas of the business. Group PBT Bridge £11.0m £2.3m £3.2m £3.2m £1.7m £11.5m (+32.7% ) £99.5m (+19.4% ) £89.8m £56.9m Note: numbers exclude business rates relief of 7 £11.0m, shown in a separate bar
Slide 8: Retail performance driven by revenue growth and margin improvements
Retail performance driven by revenue growth and Retail underlying margin improvements. FY22 vs. FY20 vs. FY21 +5.4% Yo2Y -3.7% YoY Revenue £1,001.6m +15.2% 2LFL -0.6% LFL Gross margin has grown significantly Gross Margin 51.0% +277bps Yo2Y +270bps YoY driven by Cycling optimisation. Operating Costs*
Slide 9: Retail sales volatile across quarters
Retail has performed well all year but sales were volatile Retail across quarters. Halfords Retail Sales - 2 Year LFL %s Motoring Cycling Total • LFL performance has been strong but with volatility from quarter to quarter. • Cycling was more challenging in H2 with supply disruption and cost of livin
Slide 10: Strong growth in retail gross margin
Strong growth in retail gross margin as category Retail mix normalises to pre-pandemic levels. Retail Gross Margin % Gross Margin Improvement FY22 51.0% 3.3% 0.1% (0.3%) (0.3%) FY21 48.3% FY20 48.2% 51.0% 48.2% FY19 48.0% FY20 Promotional Mix Other FX FY22 effectiveness and buying FY18 47.4% practic
Slide 11: Underlying Retail costs managed well
Underlying Retail Costs managed well; targeted investment in our Retail longer term transformation programme. Retail Costs Bridge £12.4m £8.2m £6.6m £2.1m £4.7m £7.3m £7.8m -£10.6m -£3.6m £420.9m -£9.6m Investment in Strategic £395.6m Initiatives. £398.3m 11 *Savings from the closure of Cycle Republ
Slide 12: Strong profitability growth in the Autocentre Group
Strong profitability growth in the Autocentre Group. Autocentres Autocentres EBIT Including National and associated FY22 vs. FY20 vs. FY21 synergies +91.9% Yo2Y +45.7% YoY Revenue £368.0m +23.4% 2LFL +12.6% LFL +45% 14.4 Gross CAGR 13.1 57.3% -815bps Yo2Y -380bps YoY **£1.4m Margin 9.8 *£6.0m Operat
Slide 13: Autocentres gross margin growing, with rate dilution
Autocentres Gross margin (£) growing, with rate dilution Autocentres driven by a different business model within our acquisitions. Autocentres Gross Margin (£m) Gross Margin (%) Bridge FY22 211.0 57.3% 3.2% Part year impact. Full year impact estimated to be c.500bps. 3.9% FY21 154.3 61.1% 3.2% 65.5%
Slide 14: Our cash position remains strong despite working capital normalisation
Our cash position remains strong despite working Cash capital normalisation. FY22 FY21 YoY Profit After Tax 77.7 53.2 24.5 Depreciation, Amortisation & Loss on Disposal of Assets 107.8 120.2 (12.4) Working Capital (70.0) 49.0 (119.0) FY22 has seen a working capital Taxation 6.7 0.5 6.2 outflow again
Slide 15: Net debt increase reflects leases associated with National
Net debt increase reflects leases associated with National; Cash debt remains well within target structure. Net Debt £m Net Debt:EBITDA 2.3x with M&A Includes National lease debt of £71m Range 344.9 1.8x 277.3 1.67 1.19 FY22 FY21 FY22 FY21 Cash Lease debt 15
Slide 16: Proposed final dividend of 6.00p per share
Proposed final dividend of 6.00p per share. Capital Allocation Priorities Maintaining a prudent Proposed final Dividend per Share balance sheet Investment for growth 6.00 Final 9.00p M&A focused on Full Year Autocentres 6.18 Interim 5.00 Final 3.00 Interim Progressive dividend policy FY20 FY21 FY22
Slide 17: y uit motoring & cycling experts ae parts
J y uit motoring & cycling experts ae parts tniehs nee
Slide 18: FY22 Strategy Update
FY22 STRATEGY UPDATE Graham Stapleton 17
Slide 19: To Inspire and Support a Lifetime of motoring and cycling
To Inspire and Support a Lifetime of motoring and cycling. Our Purpose 18
Slide 20: Our Group Strategy
Our Group Strategy Inspire our customers with a differentiated, super- specialist offer. Support our customers through an integrated, unique and more convenient services offer. Enable a lifetime of motoring and cycling. Underpinned by: A Focus on Cost and Efficiency. Investment in our Colleagues. Ou
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.” 20
Slide 22: Progress against our strategy has created a very different business
Progress against our strategy has created a very different business. FY20 FY22 Revenue £1.1bn £1.4bn (+19.9%) Revenue from Services £0.3bn £0.5bn (26% of Group) (39% of Group) Revenue from Motoring £0.75bn £1.0bn (65% of Group) (70% of Group) Revenue from B2B £0.17bn £0.3bn (15% of Group) (20% of Gr
Slide 23: Inspire our customers with a differentiated, super-specialist offer
Inspire our customers with a differentiated, super-specialist offer. 22
Slide 24: Fusion transforms the customer experience
Fusion transforms the customer Fusion Net Promoter Score experience by investing in the physical and digital infrastructure. +9pt Fusion % of Autocentres sales generated from a Fusion trial towns at Colchester and Halifax: Retail referral* • New format Retail store, updated Garage and extended HME o
Slide 25: Fusion transforms the customer experience
Slide 26: Fusion transforms the customer experience
Fusion transforms the customer Fusion Net Promoter Score experience by investing in the physical and digital infrastructure. +9pt Fusion % of Autocentres sales generated from a Fusion trial towns at Colchester and Halifax: Retail referral* • New format Retail store, updated Garage and extended HME o
Slide 27: Providing customers with access to new markets and new services
Providing customers with access to new markets and new services. Offering a differentiated service to our customers: • UK’s biggest E-bike trial scheme. • Multi-award winning own brand bikes and exclusive ranges of motoring products. • Electric Charging partnership – the first mainstream retailer to
Slide 28: Support our customers through an integrated services offer
Support our customers through an integrated, unique and more convenient services offer. 25
Slide 29: Acquisition Timeline
Acquisition Timeline 70 Consumer We have transformed the scale of our Oct FY20 Vans business, making it more convenient for customers to access our services 60 Garages Nov FY20 100 Commercial Consumer Business Vans • Three acquisitions; National*, Iverson Tyres and Havebike. 20 Garages Mar FY21 89 C
Slide 30: National is our largest and most valuable acquisition
National is our largest and most valuable acquisition undertaken. • Acquired National Tyres for £62m consideration. • Deal included 234 sites, 68 vans and 1,200 colleagues. • Tyre Shopper is a leading UK online value Tyre retailer. • A wholesale distribution network of 8 warehouses. • Significant sy
Slide 31: Significant progress realising anticipated synergies
Significant progress and already realising anticipated synergies per business case. • Purchasing synergies delivered: • Significant benefit from Halfords Group freight contract • Aligned to Group purchasing contracts • Performance synergies will begin FY23: • implemented during Q3 • MOT equipment ro
Slide 32: Our HME business is now scaled
Our HME business is now scaled, offering a convenient and best-in- class service. • Grown fleet from 7 to 253 vans in two years, providing National coverage. • Carried out 320,000 jobs through FY22, driving revenue growth of +44% YoY. • Rated “excellent” by over 220,000 Trustpilot reviews. Support 2
Slide 33: Unique market leader in motoring services
…and we are now the unique market 600 45% leader, offering customers the largest and Group Service Revenue 550 £531m most convenient motoring service 40% 500 network in the UK. 450 % of Group Revenue 39% 35% 400 £370m • 350 Almost 40% Group revenues now Services 30% 300 £268m • 8m services carried o
Slide 34: Autocentres productivity and SaaS revenue streams
underpins the success of our Autocentres Productivity +8% YoY services business, at the same time as giving access to SaaS revenue streams. • Driven significant performance improvement in our business – both productivity and customer satisfaction • Well placed to sell in the SaaS market, leveraging
Slide 35: Autocentres productivity and SaaS revenue streams
Slide 36: Autocentres productivity and SaaS revenue streams
underpins the success of our Autocentres Productivity +8% YoY services business, at the same time as giving access to SaaS revenue streams. • Driven significant performance improvement in our business – both productivity and customer satisfaction • Well placed to sell in the SaaS market, leveraging
Slide 37: Enable a lifetime of motoring and cycling
Enable a lifetime of motoring and cycling. 32
Slide 38: Despite our breadth of offer, our existing cross shop is low
Despite our breadth of offer, our existing cross shop is low. Our breadth of offer should enable greater Only 4% of customers currently shop cross shop and Lifetime time value. across the Group Retail 4% Products MOT and Repairs Servicing Bespoke Parts Lifetime Advice WeCheck Tyres 33
Slide 39: Creating lifetime value with customers
Creating lifetime value with customers across the life of a car. Customers that shop the breadth of categories Customers engaged over 1+ years spend more than 2.5x across the Group spend up to 3.4x more more. 3.4x 2.5x 2.9x 1.3x 1.3x Lifetime 1 2 3 4 1 2 3 Categories Shopped No. Years Shopped 34
Slide 40: Helping customers keep moving, safe and saving money
Helping to keep our customers moving, keep them safe and saving money. Both membership types allow us Customers can chose from two access to rich vehicle data through an membership types. easy multi-channel sign-up process. Lifetime 35
Slide 41: Unique market leading loyalty platform
We’ve created a unique market leading platform from which the Group can build significant opportunities in the future. • The launch of our market-leading, multichannel, Motoring loyalty club. • Bespoke advice, offers and savings across the lifetime of a vehicle. • Free and Premium subscription optio
Slide 42: We continue to remove cost and improve profitability
Cumulative* Retail Rent Saving We continue to remove cost and 12.0 improve underlying profitability. 10.0 8.0 • Our store closure programme has delivered our trade Cost & Efficiency 6.0 transfer assumptions and reduced anticipated lease 10.6 obligations. 4.0 6.8 2.0 • Settled 69 Retail lease renewal
Slide 43: Our super-specialist colleagues offer market-leading advice
Our super-specialist colleagues offer market-leading advice and knowledge. Increasing our specialist skills base Supporting our Colleagues • Transitioned to a new Group operating and reward • 100 mental health first aiders trained. model. • “Here to Help” fund providing £0.4m of support to Our Colle
Slide 44: ESG priorities complement our Group strategy
Our ESG priorities are complementary to our Group strategy, in particular our goal to be market-leader in electric vehicle servicing. Market-leading provider of Science-based targets Reduced Scope 1 and 2 electric vehicle services, for carbon reduction carbon emissions by 25%. supporting the UK’s ap
Slide 45: Progress against our strategy has created a very different business
Progress against our strategy has created a very different business. FY20 FY22 Revenue £1.1bn £1.4bn (+19.9%) Revenue from Services £0.3bn £0.5bn (26% of Group) (39% of Group) Revenue from Motoring £0.75bn £1.0bn (65% of Group) (70% of Group) Revenue from B2B £0.17bn £0.3bn (15% of Group) (20% of Gr
Slide 46: Focus on FY23
FOCUS ON FY23 Jo Hartley 41 halfords
Slide 47: The strategy is delivering, but the journey isn't complete
Our current strategy leaves us better placed to navigate through the challenging times ahead, but the journey isn’t complete. Growing proportion of Cycling represents less B2B revenue more “needs-based” revenue than a third of Group sales predictable The Strategy is Delivering 42
Slide 48: Sharpened strategic priorities
We have sharpened our strategic priorities to focus on what matters most for customers whilst carefully managing our cost base. Supporting Customers Business Focus Non-discretionary and needs based spend. Efficiency and Profitability. Transformation continues against our Best value across the breadt
Slide 49: FY23 Focus: Inspire
Inspire our customers with a differentiated, super-specialist offer. Roll out capital efficient Fusion investment. • Train colleagues in ‘Solution Selling’. • Car park referrals and managers in up to 100 Retail sites. • Roll out further 3Bs and Click and Collect Hubs in Retail. • Capacity increased
Slide 50: FY23 Focus: Support
Support our customers through an integrated, unique and more convenient services offer. Grow Integrate National By the close of FY23: • PACE implemented in all sites. • All sites live on Halfords.com. • Increased colleague headcount across network. • MOT equipment roll out sites FY23 Focus currently
Slide 51: FY23 Focus: Lifetime
Enable a lifetime of motoring and cycling. Accelerate and optimise the Loyalty platform. • Target 0.5m to 1m memberships using new VRN data to optimise and grow club benefits. FY23 Focus • Test premium membership targeting 10% mix. 46
Slide 52: FY23 Focus: Cost, Data, Colleagues, ESG
Launch the Group Data In year cost A Focus on Cost and Platform driving savings of +£15m Efficiency. efficiency and greater across the Group. analytical capability. Increased Investment in Investment in Our investment in apprentices in Colleagues. FY23 Focus training. Autocentres. Support the growth
Slide 53: FY23 Outlook
We’ve mitigated several challenges already, but uncertainty remains in the consumer environment and inflationary backdrop. Drivers of profitability FY22 vs FY23 Outlook • National acquisition in-line with business case. • Business rates relief in FY22 non-recurring. • Strategic investment held in mo
Slide 54: Summary
Summary • FY22 was a year of significant progress, with our ambition to become a motoring services-focused business being realised, at pace. • We are now a more resilient business with a higher proportion of needs- based spend, which in turn, will help us navigate a challenging year ahead. • We have
Slide 55: Q&A
Q&A 50 halfords