Halfords Group Plc · LSE:HFD
Halfords — H1 FY14 Earnings Presentation
47 slides from Halfords's earnings presentation, November 2013
Slide 1: Interim Results 2013
Interim Results 2013
Slide 2: Introduction
Introduction Financial Performance Andrew Findlay Trading and Strategy Matt Davies Questions
Slide 3: Andrew Findlay, Finance Director
Andrew Findlay Finance Director
Slide 4: Financial Highlights
Financial Highlights • Group Revenue up 7.7% to £490.6m • Retail Gross Margin of 51.2%, down 124 bps in line with expectations • Profit Before Tax up 6.4% to £44.6m • Basic Earnings Per Share up 8.6% to 17.6p • Net Debt down at £57.5m • Free Cashflow up 23.0% to £73.2m • Interim Dividend of 5.2p per
Slide 5: H1 FY14 Retail Revenues
H1 FY14 Retail Revenues Total Retail LFL % Cycling +14.2 Car Maintenance +8.8 Car Enhancement +0.6 Travel Solutions +2.1 Total +7.7 Proportion of Proportion of Total Revenue Online Retail Online Retail Total Retail Growth Sales Sales % % % Home Delivery 12.2 1.4 +22.9 Pick-up In Store 87.8 10.1 +16.
Slide 6: Retail Performance
Retail Performance H1 FY14 H1 FY13 Change £m £m Revenue 424.0 393.0 +7.9% Gross Profit 217.3 206.3 +5.3% Gross Margin 51.2% 52.5% -124bps Operating Costs (171.0) (164.3) +4.1% EBIT 46.3 42.0 +10.2% EBIT Margin 10.9% 10.7% EBITDA 55.7 53.3 +4.5% EBITDA Margin 13.1% 13.6% 6 Notes: All numbers shown ar
Slide 7: Gross Margin % Influences
Gross Margin % Influences Dilutive Accretive Clearance Approach In-store Services Promoting More Effectively The Strength of Car Maintenance The Growth Of Cycling 7
Slide 8: Retail Operating Costs
Retail Operating Costs H1 FY14 H1 FY13 Change £m £m Store Staffing 46.3 42.5 +8.9% Store Occupancy 70.5 69.9 +0.9% Warehouse & Distribution 16.9 14.8 +14.2% Support Costs 37.3 37.1 +0.5% Total 171.0 164.3 +4.1% Depreciation/Amortisation/ 9.4 11.3 -16.8% Impairment 8 Notes: All numbers shown are befo
Slide 9: Autocentres Performance
Autocentres Performance H1 FY14 H1 FY13 Change £m £m Revenue 66.6 62.6 +6.4% Gross Profit 43.3 40.0 +8.3% Gross Margin 65.0% 63.9% +114 bps Core Centres (28.8) (28.7) +0.3% New Centres (8.5) (5.0) +70.0% Operating Costs Support (3.7) (3.0) +23.3% Total (41.0) (36.7) +11.7% EBIT 2.3 3.3 -30.3% EBIT M
Slide 10: Cashflow and Net Debt
Cashflow and Net Debt OPERATING £m FREE CASHFLOW £m NET DEBT £m CASHFLOW EBIT 47.8 Operating Cashflow 92.2 Opening Net Debt (110.6) Depreciation/ Amortisation/ 12.7 Capital Expenditure (11.3) Free Cashflow 73.2 Loss On Disposal Employee Share Scheme 0.2 Net Finance Costs (3.2) Dividends (17.6) Worki
Slide 11: FY14 Guidance
FY14 Guidance Retail Operating Costs 5-6% Retail Gross Margin A decline of 125-175bps Retail Capital Expenditure c.£32m Autocentres EBITDA Down on FY13 Autocentres Capital Expenditure c.£6m Net Finance Costs Marginally down on FY13 Effective Tax Rate 23-24% 11 Notes: All numbers shown are before non
Slide 12: Summary
Summary Financial Performance • A strong revenue performance in Retail • Retail gross margins in line with expectations • Autocentres investment continues • The Retail top line leveraging earnings accretion • Strong cash generation and lower gearing 12
Slide 13: Matt Davies, Chief Executive
Matt Davies Chief Executive
Slide 14: Helping and Inspiring Customers With Their Life On The Move
Helping and Inspiring Customers With Their Life On The Move 14
Slide 15: First-Half Sales Performance
First-Half Sales Performance 14.2% 34.9% 23.5% 27.4% Cycling Car Maintenance Car Enhancement Travel Solutions 15
Slide 16: H1 Cycling Performance
H1 Cycling Performance – Many new additions to our cycle offer • An extended Pendleton range • Boardman team carbon bike • £199 Apollo road bike • Junior Carrera road bike • Apollo Kids and new BMX – Active trading stance – Ensuring proper levels of stock – A new marketing approach 16
Slide 17: H1 Cycling Performance
H1 Cycling Performance – Re~Cycle – Kids workshops – Cycle Repair – Partnership with Sky – Mechanics team – PACs 17
Slide 18: Retail Successes
Retail Successes Online Sales (£m) 3Bs Jobs (m) 48.5 1.0 41.5 0.8 H1 FY13 H1 FY14 H1 FY13 H1 FY14 Cycle Repair Sales (£m) Service Income (£m) 4.0 10.4 3.2 8.7 18 H1 FY13 H1 FY14 H1 FY13 H1 FY14
Slide 19: Getting Into Gear 2016
Getting Into Gear 2016 grivipg, ey service the ‘h’ revolution factor stores fit to shop ==. 218tcentury ¢ click with the “+ infrastructure digital future
Slide 20: Recruitment, Training and Incentives
– Recruitment centralised – Training • Launched 3-Gears: most colleagues already progressing through Gear 1 • Launched Aspire: a focused development programme – Store vs. payroll cost incentives – Mystery shopping 20
Slide 21: On-shelf Availability and Clearance
- On-shelf availability • Improved by over 200 basis points - Store-friendly deliveries • Auto • Cycling - Clearance approach - New leadership 21
Slide 22: Centres of Authority
Centres of Authority • 3Bs • Batteries • Torches 22
Slide 23: Stores Fit To Shop
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Slide 24: Stores Fit To Shop
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Slide 25: Stores Fit To Shop
stores fit driving to shop stopline
Slide 26: Stores Fit To Shop
stores fit to shop aw halfords driving stopline 26
Slide 27: Stores Fit To Shop
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Slide 28: More Than 25 Refurbished Stores By The End Of March
28 More Than 25 Refurbished Stores By The End Of March
Slide 29: Infrastructure Investment
- New chip & PIN devices - Laptops in store - New hand-held terminals in the DC in H2 - SAP upgrade: appointed provider, technical upgrade first 29
Slide 30: Online Phase One and Two
Phase One - New home page - Four product verticals - Simplified check-out - Pay for online orders in store - Rewritten content - Significant expansion of video content Phase Two - My Account - Social network changes 30
Slide 31: Slide 31
Slide 32: The Categories in H2
The Categories in H2 – Boardman Partnership • 2014 Boardman performance series – New adult Apollo range – Kids • Pendleton girls • Personalised Apollos – Car Enhancement: • DAB Digital Radio – Car Maintenance: • 3Bs fitting 32
Slide 33: Car Maintenance in H2
Car Maintenance in H2 33
Slide 34: HITE F2° "| *
2 HITE F2° "| * Ys as
Slide 35: Autocentres
Autocentres - Enhancing the end- to-end customer experience - Investment focus • centres • infrastructure • support for colleagues - New Autocentres CEO to be appointed 35
Slide 36: Summary
Summary - A strong H1 performance - Categories in good shape and performing well - Taking advantage of market opportunities - Getting Into Gear: much groundwork done at pace - Early signs are encouraging - Autocentres: exploit opportunities 36
Slide 37: Interim Results 2013
Interim Results 2013
Slide 38: Appendices
Appendices
Slide 39: Group Income Statement
Group Income Statement H1 FY14 H1 FY13 Change £m £m Revenue 490.6 455.6 +7.7% Gross Profit 260.6 246.3 +5.8% Operating Costs 212.8 201.8 +5.5% EBIT 47.8 44.5 +7.4% EBIT Margin % 9.7% 9.8% -2bps EBITDA 59.6 57.8 +3.1% EBITDA Margin % 12.1% 12.7% -54bps Net Finance Costs (3.2) (2.6) +23.1% PROFIT BEFO
Slide 40: Group Components
Group Components Retail Autocentres Amortisation Group H1 FY14 £m £m £m £m Revenue 424.0 66.6 - 490.6 Gross Profit 217.3 43.3 - 260.6 Operating Costs (171.0) (41.0) (0.8) (212.8) EBIT 46.3 2.3 (0.8) 47.8 EBITDA 55.7 3.9 - 59.6 Retail Autocentres Amortisation Group H1 FY13 £m £m £m £m Revenue 393.0 6
Slide 41: Group Balance Sheet
Group Balance Sheet H1 FY14 H1 FY13 YOY Change £m £m £m Goodwill and Intangible Assets 341.0 342.8 (1.8) -0.5% Property, Plant & Equipment 93.3 91.4 1.9 +2.1% Derivative Financial Instruments (2.6) (0.9) (1.7) +188.9% Net Working Capital 7.5 32.3 (24.8) -76.8% Net Debt (57.5) (107.9) 50.4 -46.7% Oth
Slide 42: Capital Expenditure
Capital Expenditure H1 FY14 H1 FY13 £m £m Portfolio1 5.4 2.3 Infrastructure Systems 5.2 1.2 Other 0.9 1.1 Retail 11.5 4.6 Autocentres 2.7 1.5 TOTAL GROUP 14.2 6.1 Notes: 1) Before capital contributions deferred over the period of the lease 42
Slide 43: Retail Portfolio – H1 FY14 Space
Retail Portfolio – H1 FY14 Space Average Total Average Average Trading Space, Average Ground Mezzanine Leaseable including Floor Trading Trading Space Space1 (sq.ft) Mezzanine Space (sq.ft) (sq.ft) (sq.ft) 9,355 8,109 6,425 3,069 Notes: 1) Ground floor only, including back of house. 43
Slide 44: Retail Portfolio – Lease Expiries
Retail Portfolio – Lease Expiries Expiries H2 FY14 16 FY15 28 FY16 24 FY17 18 FY18 13 Total Expiries 99 % of Retail Portfolio 21 Average remaining leases (total portfolio): 7.5 years 44
Slide 45: Autocentres Portfolio
Autocentres Portfolio Centres Acquired 223 FY11 230 FY12 250 FY13 283 H1 FY14 296 Average remaining leases: 7.5 years 45
Slide 46: Contact and Newsflow
Contact and Newsflow For further information, please go to www.halfordscompany.com or contact Craig Marks Head of Investor Relations craig.marks@halfords.co.uk Landline: +44 (0)1527 513 113 Mobile: +44 (0)7712 888 807 Next newsflow: 16 January: Q3 Interim Management Statement 46
Slide 47: Forward-Looking Statements
Forward-Looking Statements INCLUDED IN THIS PRESENTATION ARE FORWARD- LOOKING MANAGEMENT COMMENTS AND OTHER STATEMENTS THAT REFLECT MANAGEMENT’S CURRENT OUTLOOK FOR FUTURE PERIODS These expectations are based on currently available competitive, financial, and economic data along with our current ope