Slide 1: Interim Results Financial Year 2013
Interim Results Financial Year 2013
Slide 2: Introduction
Introduction Financials Andrew Findlay Business Update Dennis Millard Q&A
Slide 3: Overview Of Results
Overview Of Results Group revenue up despite tough Q1 conditions Retail gross margin broadly flat as expected Further top-line growth in Autocentres underpins investment Strong group cash flows with a maintained dividend Strategic progress in line with our plans
Slide 4: Andrew Findlay, Finance Director
Andrew Findlay Finance Director
Slide 5: HY Financial Highlights
HY Financial Highlights Group Revenue up 0.4% to £455.6m Retail Gross Margin down 19bps to 52.5% Profit Before Tax down 23.4% to £41.9m Earnings Per Share down 18.2% to 16.2p Group Inventories down 13.3% to £132.9m Net Debt £107.9m, down £32.8m Underlying Free Cash Flow of £59.5m, up 47.3% Interim D
Slide 6: Retail Revenues
Retail Revenues HY13 Category Sales % Total HY13 2Q13 14.9 Retail LFLs LFLs 32.9 Cycling +1.9% +14.7% 25.1 Car Maintenance +1.8% +2.7% 27.1 Cycling Car Maintenance Car Enhancement -6.0% -1.5% Car Enhancement Travel Solutions Travel Solutions -6.6% -0.9% HY12 Category Sales % Total -1.6% +4.6% 15.7 3
Slide 7: Retail Performance
Retail Performance HY13 HY12 Change £m £m Revenue 393.0 400.6 -1.9% Gross Profit 206.3 211.0 -2.2% Gross Margin 52.5% 52.7% -19bps Operating Costs (164.3) (156.0) +5.3% Operating Profit 42.0 55.0 -23.6% Operating Margin 10.7% 13.7% -300bps Notes All numbers shown are before non-recurring items. 7
Slide 8: HY Retail Gross-Margin Influences
HY Retail Gross-Margin Influences Adverse Favourable Strong Cycling performance Growing importance of Car Maintenance Cash-accretive promotional activity Car Enhancement mix impact Other weather-sensitive areas Continued supply-chain leverage Continuing to focus on cash 8 profit
Slide 9: Retail Operating Costs
Retail Operating Costs HY13 HY12 Change £m £m Store Staffing 42.5 39.8 +6.8% Store Occupancy 69.9 70.6 -1.0% Warehouse & Distribution 14.4 13.8 +4.4% Support Costs 37.5 31.8 +17.9% Total 164.3 156.0 +5.3% Depreciation/ 13.3 13.0 +2.3% Amortisation/ Impairment Notes All numbers shown are before non-r
Slide 10: Retail Inventories
Retail Inventories £m Closely-managed stock purchasing targeting a reduction of prior-year overstocks Opening Stock 152.0 Planned reduction of over-stocked lines -7.8% Improved focus on range-change exit planning Exit of aged and redundant lines -3.0% Review and exit of very slow-moving & Increased
Slide 11: Autocentres Performance
Autocentres Performance HY13 HY12 Change £m £m Revenue 62.6 53.4 +17.2% Gross Profit 40.0 35.5 +12.7% Gross Margin 63.9% 66.5% -260bps Acquired Centres (28.7) (27.6) +4.0% New Centres (5.0) (2.4) +108.3% Operating Costs Support (3.0) (2.5) +20.0% Total (36.7) (32.5) +12.9% Operating Profit 3.3 3.0 +
Slide 12: Capital Expenditure
Capital Expenditure HY13 HY12 £m £m 1 Retail Portfolio 2.3 5.0 Retail Infrastructure Systems 1.2 1.2 Warehouse & Distribution 1.0 0.5 Retail Other 0.1 0.0 Total Retail 4.6 6.7 Autocentres 1.5 1.6 TOTAL GROUP 6.1 8.3 Notes 1. Before capital contributions deferred over the period of the lease 12
Slide 13: Cashflow and Net Debt
Cashflow and Net Debt OPERATING FREE £m £m NET DEBT £m CASHFLOW CASHFLOW Operating Profit 44.5 Operating Cashflow 78.3 Opening Net Debt (139.2) Depreciation/ 13.7 Capex (8.0) Free Cashflow 59.5 Amortisation Employee Share Scheme 0.7 Net Finance Costs (2.0) Lease/Other (0.1) Working Capital 19.9 Taxa
Slide 14: Full-Year Guidance & Planning Assumptions
Full-Year Guidance & Planning Assumptions Retail LFLs (reflecting planning assumptions only) H2 0% to -5% Retail Operating Costs – Underlying Increases +c.4% Retail Operating Costs – Investing For Growth +c.£6m Retail Gross Margin Broadly flat Retail Capital Expenditure Up to £20m Autocentres Operat
Slide 15: Dennis Millard, Chairman
Dennis Millard Chairman friend ofthe best cy cle great a pone motorist shop i a2 Ga 3°'"""s
Slide 16: Strategy to Drive Growth
Strategy to Drive Growth We help and inspire our customers with their life on the move &) friend:« ~ best s A great’ point for SJ Yy shop in town |__ Operations Marketing 16
Slide 17: Growth Opportunity Examples
Growth Opportunity Examples 3Bs Cycle Repair c.£950m (Parts & Labour) c.£85m Petrol Forecourts 26% 1% Halfords Rest of market 11% Parts Factors 95% 5% 51% Halfords 10% Independent Garages Franchise Dealers Car Aftercare Cycling Parts, Accessories & c.£8-10bn Clothing c.£615m Independent Garages 19%
Slide 18: Friend of the Motorist
Friend of the Motorist ee friend: motorist
Slide 19: Friend of the Motorist: 3Bs Fitting
Friend of the Motorist Halfords 3Bs Fitting Penetration Retail H1 • Our 3Bs now cover 97% 8.9% 19.0% 26.2% of the UK car parc FY08 FY10 FY12 • Over 450 fitters recruited • 6,000 colleagues retrained 3Bs Market c.£950m (Parts & Labour) • Sustained TV & radio Petrol Forecourts 26% advertising 1% Halfo
Slide 20: Friend of the Motorist: Autocentres
Friend of the Motorist Autocentres H1 • 265 Autocentres • Trialed Sunday opening • Upgraded tyre-fitting equipment • Created Business Development function • Trialed e-diary booking system Six Consecutive Quarters Of LfL Growth 20
Slide 21: Friend of the Motorist: H2 Plans
Friend of the Motorist H2 • 3Bs: TV and radio advertising through the winter • Add up to 25 more centres • Re-platform the Autocentres website • Launch the e-diary booking system Executing Key Opportunities 21
Slide 22: Best Cycle Shop In Town
Best Cycle Shop In Town thats thats 55 best cycle s shop in town
Slide 23: Cycles: H1 Progress
Best Cycle Shop In Town Cycles H1 • Pendleton range launched • High-end brands – Cinelli and Tifosi • £1,000 Carrera Virago launched • New range of 23 kids Apollo character bikes • Extended range of children’s scooters • Innovative TV idents around TdF coverage • Cycle repairs +37% Capitalising On E
Slide 24: Cycles: H2 Plans
Best Cycle Shop In Town Cycles H2 • Potential for a new Pendleton range for 2013 • New Boardman sub-£500 range • Introduce new Turbo Trainer range • Launch RADIO BMX range • Boardman and Voodoo 29ers and Fixies • Trials of upgraded cycle-repair process and capability Focusing On Areas On Opportunity
Slide 25: Cycle Parts, Accessories & Clothing: H1
Best Cycle Shop In Town Cycle Parts, Accessories & Clothing H1 • Recruited commercial team • Agreements with c.170 leading brands such as SRAM and Adidas • Split website into Cycles, Accessories and Clothing • Wholesale preparations for PACs Rest of market 86% 14% Halfords launch next year Putting t
Slide 26: Cycle Parts, Accessories & Clothing: H2
Best Cycle Shop In Town Cycle Parts, Accessories & Clothing H2 • 13,000 SKUs ready for launch – Clothing up from 200 to 4,000 lines – Parts up from 750 to 6,000 lines Rest of market • Significant increases of our 86% 14% Halfords premium brands • Focus online initially Material Opportunities in £615
Slide 27: Great Getaways
Great Getaways starting point for Ss a great
Slide 28: Great Getaways: Brands and Solutions
Great Getaways • Our wefit offer drove roofbar-fitting sales up 4.5% in H1 • Introducing Aventura, a new camping brand • Adding leading brands • Invest in Exodus roofbox brand • Increase DAB range and fitting capability Delivering Compelling Brands and Solutions 28
Slide 29: Strategy Enablers
Strategy Enablers oe oe oe C} enablers 29
Slide 30: Web / IT Infrastructure
Web / IT Infrastructure • Reorganisation of web team • New 24-hr Reserve & Collect fulfillment offer – Nearly 90% of online purchases • Launched dynamic e-mails • Growing presence on Facebook and Twitter • Replacing the site-search engine Enhancing Capability for Sustained Growth 30
Slide 31: Laboratory Stores
Laboratory Stores • Five stores today, several planned for opening • Testing concepts – experimental at this stage • Formats differ between stores • Testing: • Space • SKUs • Customer interaction • Category locations A Range of Concepts and Stores 31
Slide 32: Customer Service
Service • Head Office renamed Support Centre • Customer engagement training for nearly 9,000 colleagues • Customer Services Manager – trialing in in 25 stores • Till-receipt system – capturing customer feedback • Fundamentally reviewing: • store rotas • hours • training needs Restarting The Service
Slide 33: Colleagues
Colleagues • Colleague Engagement survey: • 12,000 responses • 8,000 individual comments • Opening regional training centres • Introducing NVQs for store colleagues • Investment in Autocentre apprentice scheme Focusing on Colleague Engagement 33
Slide 34: Summary
Summary Improved performance Progress with strategic initiatives Solid programme of strategic activity in H2 H2 Retail planning assumptions unchanged Robust balance sheet underpinned by strong cash generation 34
Slide 35: Interim Results Financial Year 2013
Interim Results Financial Year 2013
Slide 36: Appendices
Appendices friend ofthe best cycle ais point for motorist shop i ney " 77 Ee
Slide 37: Group Income Statement
Group Income Statement HY13 HY12 Change £m £m Revenue 455.6 454.0 +0.4% Gross Profit 246.3 246.5 -0.1% Operating Costs (201.8) (189.6) +6.4% OPERATING PROFIT 44.5 56.9 -21.8% Operating Profit % 9.8% 12.5% -270bps Net Finance Costs (2.6) (2.2) +18.2% PROFIT BEFORE TAX 41.9 54.7 -23.4% Basic Earnings
Slide 38: Group Components
Group Components Total Retail Autocentres Amortisation Group HY13 £m £m £m £m Revenue 393.0 62.6 - 455.6 Gross Profit 206.3 40.0 - 246.3 Operating Costs (164.3) (36.7) (0.8) (201.8) OPERATING PROFIT 42.0 3.3 (0.8) 44.5 Total Retail Autocentres Amortisation Group HY12 £m £m £m £m Revenue 400.6 53.4 -
Slide 39: Group Balance Sheet
Group Balance Sheet HY13 HY12 YOY Change £m £m £m Goodwill and Intangible Assets 342.8 345.7 (2.9) -0.8% Property, Plant & Equipment 91.4 98.5 (7.1) -7.2% Derivative Financial Instruments1 (0.9) 2.0 (2.9) -145.0% Net Working Capital 35.2 53.8 (18.6) -34.6% Net Debt (107.9) (140.7) 32.8 +23.3% Other
Slide 40: HY13 Retail Store Portfolio
HY13 Retail Store Portfolio Mezzanine Flat Compact Metro Total OPENING NUMBER OF STORES 2 243 159 34 31 467 (3.83m ft ) CLOSING NUMBER OF STORES 2 244 158 34 31 467 (3.82m ft ) Re-gears in situ 2 2 - - 4 • Relocations: Durham, Chingford (latter also downsized) • Downsizes: Ipswich, Cheltenham • Re-g
Slide 41: Autocentre Portfolio
Autocentre Portfolio HY13 Opening number of centres 260 New centres 5 Closing number of centres 265 Today 269 FY13 Target Up to 290 41
Slide 42: 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