Slide 1: FY16 Preliminary Results
FY16 Preliminary Results
Slide 2: Introduction
Introduction Jill McDonald Financial Performance Jonny Mason Operational Review & Strategic Progress Jill McDonald Financial Guidance Jonny Mason Questions
Slide 3: Highlights
Highlights Solid service-led sales performance Market share in Retail motoring and cycling grew overall Confident in long-term growth prospects for cycling Strong improvements in customer and colleague metrics Good progress on Moving Up A Gear strategy Debt target of 1x EBITDA, with a range of up to
Slide 4: Financial Performance
Financial Performance Jonny Mason Chief Financial Officer
Slide 5: Group Income Statement
Group Income Statement FY16 FY15 Change £m £m Revenue 1,021.5 1,004.9 +1.7% Gross Profit 543.1 535.1 +1.5% Operating Costs (458.6) (450.5) +1.8% EBIT 84.5 84.6 -0.1% EBIT Margin % 8.3% 8.4% -13bps EBITDA 114.6 109.9 +4.3% EBITDA Margin % 11.2% 10.9% +28bps Net Finance Costs (3.0) (3.5) -14.3% PROFIT
Slide 6: Retail Income Statement
Retail Income Statement FY16 FY15 Change £m £m Revenue 868.5 857.9 +1.2% Gross Profit 444.8 442.0 +0.6% Gross Margin 51.2% 51.5% -30 bps Operating Costs (363.0) (359.3) +1.0% EBIT 81.8 82.7 -1.1% EBIT Margin 9.4% 9.6% -18bps EBITDA 106.0 102.4 +3.5% EBITDA Margin 12.2% 11.9% +30bps Notes: All number
Slide 7: Retail Revenues
Retail Revenues Total Retail LFL % Motoring +2.5 Car Maintenance +3.4 Car Enhancement +1.0 Travel Solutions +2.8 Cycling -0.9 Total +1.3 Online Retail sales grew by 1.4% and represented 12.1% of sales. Circa 90% of online sales were collected in store. Service-related sales increased by 8.5% Notes:
Slide 8: Retail Operating Costs
Retail Operating Costs FY16 FY15 Change £m £m Store Staffing 103.0 99.7 +3.3% Store Occupancy 138.3 139.3 -0.7% Warehouse & Distribution 45.7 43.5 +5.0% Support Costs 76.0 76.8 -1.0% Total 363.0 359.3 +1.0% Depreciation / Amortisation 24.2 19.7 +22.8% Rent* 86.1 87.4 -1.5% *Net of sublet income 8
Slide 9: Autocentres Income Statement
Autocentres Income Statement FY16 FY15 Change £m £m Revenue 153.0 147.0 +4.1% LFL% +2.5% +5.3% Gross Profit 98.3 93.1 +5.6% Gross Margin 64.3% 63.3% +90 bps Operating Costs (94.5) (89.3) +5.8% EBIT 3.8 3.8 - EBIT Margin 2.5% 2.6% -12bps EBITDA 8.6 7.6 +13.2% EBITDA Margin 5.6% 5.2% +36bps 9
Slide 10: Cash Flow and Net Debt
Cash Flow and Net Debt FY16 FY15 £m £m Group Underlying EBITDA 114.6 113.3 Working capital (11.2) 25.3 Capex (38.5) (39.6) Finance costs and tax (19.4) (20.2) Acquisition - (14.0) Dividend (32.4) (28.4) Other 0.8 1.4 Reduction in Net Debt 13.9 37.8 10
Slide 11: Operational Review and Strategic Progress
Operational Review and Strategic Progress Jill McDonald Chief Executive
Slide 12: Performance Summary
Performance Summary Car parts and Connectivity and Service-related sales workshop products dash cams Transition to Acquisition of Tredz Cycling 3-day-a-week deliveries and Wheelies 12
Slide 13: Motoring Market Update
Motoring Market Update Increasing number of cars Average age of car remains around 7.5 years Growing complexity of cars and car parts 13
Slide 14: Cycling Market Update
Cycling Market Update Market stabilising gradually Weather impacts on timing of customer purchase Participation still low – scope for new cyclists Increased spend from existing cyclists Significant government spend on infrastructure 14
Slide 15: Strategy Recap
Strategy Recap Putting Customers in Service in our Building on our the Driving Seat DNA Uniqueness Better Shopping Fit for the Future Experience Infrastructure 15
Slide 16: Putting Customers in the Driving Seat
Putting Customers in the Driving Seat 15% of Retail sales now matched to customers Email campaigns increasingly tailored to customers Using opening price points to improve value perception 16
Slide 17: Putting Customers in the Driving Seat
Putting Customers in the Driving Seat 17
Slide 18: Service in our DNA
Service in our DNA Customer service metrics improved significantly New services introduced 18
Slide 19: Service in our DNA
Service in our DNA Full time colleagues Gears Training Colleague turnover Gear 1 Gear 2 Gear 3 50% 38% 36% 25% 99% 72% c. 600 FY13 FY16 FY13 FY16 19
Slide 20: Service in our DNA: Awards
Service in our DNA Placed 18th in the Sunday Times Best Big Companies to Work For Winner of the Mainstream Retailer of the Year category in the BikeBiz Awards 2015 Winner of Best Partnership in the Community – National CSR Awards 20
Slide 21: Building on our Uniqueness
Building on our Uniqueness 21
Slide 22: Building on our Uniqueness
Building on our Uniqueness 22
Slide 23: Building on our Uniqueness
Building on our Uniqueness 23
Slide 24: Better Shopping Experience
Better Shopping Experience Halfords website & fulfilment upgrades H2 2016 Store of the Future at design phase 24
Slide 25: Better Shopping Experience: Store of the Future
Better Shopping Experience: Store of the Future Builds upon previous refresh design success Leverages technology for colleagues and customers Supports our service proposition Reflects new brand look and feel 25
Slide 26: Fit for the Future Infrastructure
Fit for the Future Infrastructure Good progress in IT application development 25 lease renegotiations 3 relocations / right-sizes 26
Slide 27: Fit for the Future Infrastructure
Fit for the Future Infrastructure 3-day a week deliveries to store working well Long-term supply chain requirements reviewed Supply chain infrastructure to be developed to enable growth… …but no significant change to on-going opex or capex guidance 27
Slide 28: Autocentres
Autocentres Be First Choice for Give a Service that Customers Motorists Come Back For Run a Grand Prix Leverage the Halfords Operation That We Are Brand and Group Capabilities Proud Of 28
Slide 29: Autocentres
Autocentres 11 centres opened and 24 refreshed Online booking revenue up 19% Introduced more customer-focused opening hours Training and people investments 29
Slide 30: Acquisition of Tredz and Wheelies
Acquisition of Tredz and Wheelies Online UK-wide retailer of premium bikes and PACs, trading as Tredz UK’s largest provider of bike replacement for insurers, trading as Wheelies Combined sales of £32m* and EBITDA of £2.4m*. Initial consideration of £18.4m Strategically relevant bolt-on acquisition,
Slide 31: Cycle Republic
Cycle Republic 11 stores now open, six of which are in London 0.5% of Group sales in FY16 Total store & online capex for FY15 to FY17 of around £5m (4% of Group capex in the same period) 31
Slide 32: Cycle Republic
Cycle Republic Cycle Halfords Republic ATV of Bikes ATV of PACs 32
Slide 33: Cycle Republic
MAGFLEX c ” COIL LOCK INSTORE fesctras truvest oes Y 1 i
Slide 34: Financial Guidance
Financial Guidance Jonny Mason Chief Financial Officer
Slide 35: Financial Targets
Financial Targets 1 Grow sales faster than the market 2 Group EBITDA margin broadly flat over the next few years 3 Grow the dividend every year with 2x cover on average over time 4 Net Debt target of 1x EBITDA with a range up to 1.5x 35
Slide 36: Capital Allocation Priorities
Capital Allocation Priorities Pre-conditions of maintaining a strong balance sheet and operating in line with the debt framework 1 Investment for growth 2 Pay and grow the dividend 3 Appropriate M&A 4 Surplus cash returned to shareholders 36
Slide 37: FY17 Financial Guidance
FY17 Financial Guidance All of the following guidance is in respect of the Group and includes the acquired Tredz and Wheelies businesses: Profit Before Tax unchanged on FY16* Depreciation & amortisation charge circa £34m** Net finance costs circa £3m Tax rate circa 20% * Based on an assumption of a
Slide 38: FY17 Capital Expenditure
FY17 Capital Expenditure Capital expenditure circa £45m Retail refreshes Cycle Republic stores and website Autocentre openings and refreshes Distribution and IT improvements, especially EPOS and a resource planning system 38
Slide 39: Summary
Summary Jill McDonald Chief Executive Officer
Slide 40: Summary
Summary Solid service-led sales performance Market share in Retail motoring and cycling grew overall Confident in long-term growth prospects for cycling Strong improvements in customer and colleague metrics Good progress on Moving Up A Gear strategy Debt target of 1x EBITDA, with a range of up to 1.
Slide 41: Photo Montage on loop
Photo Montage on loop
Slide 42: Photo Montage on loop
Photo Montage on loop
Slide 43: Group Components
Group Components Retail Autocentres Amortisation Group FY16 £m £m £m £m Revenue 868.5 153.0 - 1021.5 Gross Profit 444.8 98.3 - 543.1 Operating Costs (363.0) (94.5) (1.1) (458.6) EBIT 81.8 3.8 (1.1) 84.5 EBITDA 106.0 8.6 - 114.6 Retail Autocentres Amortisation Group FY15 £m £m £m £m Revenue 857.9 147
Slide 44: Group Balance Sheet
Group Balance Sheet FY16 FY15 YOY Change £m £m £m Goodwill and Intangible Assets 362.9 356.8 +6.1 +1.7% Property, Plant & Equipment 107.3 103.8 +3.5 +3.4% Derivative Financial Instruments 4.2 3.8 +0.4 +10.5% Net Working Capital 36.1 27.6 +8.5 +30.8% Net Debt (47.9) (61.8) -13.9 -22.5% Other Creditor
Slide 45: Cash flow and Net Debt
Cash flow and Net Debt Operating Cashflow £m Free Cashflow £m Net Debt £m EBIT 82.8 Operating Cashflow 103.7 Opening Net Debt (61.8) Depreciation/ Amortisation/ 30.5 Capital Expenditure (38.5) Free Cashflow 45.4 Loss On Disposal Employee Share Scheme 3.0 Net Finance Costs (2.2) Dividends (32.4) Work
Slide 46: Retail LFLs
Retail LFLs 9.9 8.8 7.9 6.6 5.9 6.8 7.5 5.7 4.6 3.5 3.1 0.4 0.3 0.0 (1.1) (2.1) (2.8) (2.3) (0.6) (4.9) (4.8) (6.6)(6.8) (7.5) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY11 FY11 FY11 FY11 FY12 FY12 FY12 FY12 FY13 FY13 FY13 FY13 FY14 FY14 FY14 FY14 FY15 FY15 FY15 FY15 F
Slide 47: Retail in-store services
Retail in-store services Motoring fitting Motoring checks / top-ups Cycling 3Bs for cars/vans Summer Service and repair Roof box / cycle carriers Winter Accessory fitting Audio Oil Free build Dash cams Number plates 2Bs for motorbikes Windscreen chip repair 47
Slide 48: Retail Portfolio – FY16 space
Retail Portfolio – FY16 space Average Total Average Average Average Lease- Trading Space, Ground Floor Mezzanine able Space including Trading Space Trading Space (sq.ft) Mezzanine (sq.ft) (sq.ft) (sq.ft) 9,121 8,120 6,429 3,092 Notes: 1) Excluding Cycle Republic 2) Ground floor only, including back
Slide 49: Retail Portfolio – Lease Expiries
Retail Portfolio – Lease Expiries Expiries 1 FY16 and earlier 27 FY17 14 FY18 15 FY19 24 FY20 41 Total expiries by end FY20 121 Average remaining lease length: 6.4 years Notes: 1) At 1 April 2016 there were 27 leases that had already expired that were yet to be renegotiated 49
Slide 50: Autocentres Portfolio
Autocentres Portfolio Centres Acquired 223 FY11 230 FY12 250 FY13 283 FY14 303 FY15 305 FY16 314 Average remaining lease length: 6.7 years 50
Slide 51: 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 oper
Slide 52: Contact and Newsflow
Contact and Newsflow For further information, please go to www.halfordscompany.com or contact Adam Phillips Head of Investor Relations adam.phillips@halfords.co.uk Landline: +44 (0)1527 513 113 Mobile: +44 (0)7703 890142 Next newsflow: 14 July 2016: Q1 trading update 52