Slide 1: FY20 Preliminary Results
HALFORDS GROUP PLC FY20 PRELIMINARY RESULTS 7TH JULY 2020
Slide 2: Agenda
2 Agenda FY20 Financial Performance Loraine Woodhouse, CFO Strategy Update Graham Stapleton, CEO Focus For The Year Ahead Graham Stapleton, CEO FY21 Outlook & Summary Loraine Woodhouse, CFO Q&A
Slide 3: FY20 Financial Performance
3 FY20 FINANCIAL PERFORMANCE Loraine Woodhouse, CFO
Slide 4: FY20 Group Financial Highlights
4 FY20 Group Financial Highlights • Revenue growth of +0.3%, despite subdued customer confidence from Brexit and more recently COVID-19 • Group PBT of £55.9m in line with last year, excluding the impacts of acquisitions and COVID-19 • Gross Profit % increase of +27bps with underlying margin improvin
Slide 5: Group Financial Overview
5 Group Financial Overview FY20 52-week vs. FY19 52-week FY20 53-week +0.3% YoY Revenue £1,142.4m £1,155.1m -1.8% LFL Underlying PBT pre-IFRS 16 £55.9m -4.9% YoY £52.6m Non-Underlying items (£32.1m) (£32.1m) PBT after Non-Underlying items post-IFRS £22.7m £19.4m 16 Basic Underlying EPS pre-IFRS 16 2
Slide 6: Group PBT
6 Group PBT Group PBT Bridge £0.7m -£1.2m -£3.5m £3.1m -£2.0m -£3.3m -£1.1m Underlying PBT in line with last year excluding £58.8m acquisitions and COVID-19 impacts £55.9m -£32.1m £19.4m Note: * The 53rd week would normally result in a small profit, but the COVID-19 lockdown resulted in a loss of -£
Slide 7: Retail Financial Overview
7 Retail Financial Overview LFL Sales Growth -2.7% YoY Revenue £950.6m 5.0% -2.3% LFL 2.3% Gross Margin 48.2% +20 bps 0.2% H1 H2 FY Operating Costs* £404.3m -1.5% YoY Underlying EBIT* £54.1m -8.0% YoY -5.3% -5.3% -5.3% Motoring Cycling Note: *numbers are reflected on a pre-IFRS 16 basis
Slide 8: Retail Gross Margin
8 Retail Gross Margin Retail Gross Margin % Gross Margin Improvement FY 20 48.2% (23 bps) 57 bps (11 bps) FY 19 48.0% 48.2% FY 18 47.4% 48.0% FY19 GFR Efficiencies Commission Motoring mix FY20 & Targeted promotions FY 17 48.6%
Slide 9: Retail Operating Costs
9 Retail Operating Costs +0.8% +1.1% (3.3%) +1.5% Note: numbers are reflected on a pre- IFRS 16 basis; “+” = increase and “(-)” = reduction
Slide 10: Autocentres Financial Overview
10 Autocentres Financial Overview +18.8% YoY Revenue £191.8m Autocentres EBIT +1.4% LFL Gross Margin 65.5% -250 bps 4.7% Operating Costs* £118.9m +14.1% YoY 1.4% 2.6% 3.4% 3.5% Underlying EBIT* £6.7m +21.8% YoY EBIT % : EBIT as a % of Sales Note: *numbers are reflected on a pre-IFRS 16 basis
Slide 11: Group Cash Flow
11 Group Cash Flow FY20 FY19 YOY £m £m £m EBIT 23.3 54.4 -31.1 Average stock Depreciation & Amortisation 40.0 41.5 -1.5 £193.4m Working Capital 48.7 -10.4 59.1 Provisions Movement -3.1 2.7 -5.8 £182.4m Employee Share Scheme 1.0 0.3 0.7 Operating Cash Flow 109.9 88.5 21.4 Capex -34.1 -29.4 -4.7 Net F
Slide 12: Net Debt and Dividend
12 Net Debt and Dividend Change in Net Debt Year-on-Year -£3.3m £12.7m -£54.6m £36.6m £81.8m £73.2m -£8.6m Reduction Opening Net Debt Free Cash Flow Dividends Acquisitions Other Closing Net Debt Net Debt to EBITDA Dividend per Ordinary Share 1.8 1.6 1.4 Debt target of 1x 1.2 (with range up to 1.5x 1
Slide 13: Strategy Update
13 STRATEGY UPDATE Graham Stapleton, CEO
Slide 14: To Inspire and Support a Lifetime of motoring and cycling
14 To Inspire and Support a Lifetime of motoring and cycling
Slide 15: We are confident the strategy remains the right direction for the business
15 We are confident the strategy remains the right direction for the business 1 Inspire our customers through a differentiated, super-specialist shopping experience 2 Support our customers through an integrated, unique and more convenient services offer 3 Enable a lifetime of motoring and cycling Un
Slide 16: Reminder of our accelerated strategy
16 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.”
Slide 17: Different parts of our business deliver different levels of return
17 Different parts of our business deliver different levels of return Product Autocentres has 2% market share Services Autocentres Size of bubble represents relative Retail size of segment Motoring Services Market Growth Opportunity B2B Cycling Products Motoring Products Performance Retail Cycling C
Slide 18: FY20 Strategic Highlights: Inspire customers
18 FY20 Strategic Highlights Inspire our customers through a differentiated, super-specialist shopping experience • New Group web platform launched in Q4, transforming the digital experience for customers • Optimised cycling space in all retail stores, improving the customer experience and financial
Slide 19: FY20 Strategic Highlights: Support customers
19 FY20 Strategic Highlights Support our customers through an integrated, unique and more convenient services offer • Accelerated our growth in Autocentres through the acquisition of McConechy’s Tyre Service Limited • Continued development and growth in our Halfords Mobile Expert proposition through
Slide 20: FY20 Strategic Highlights: Lifetime of motoring and cycling
20 FY20 Strategic Highlights Enable a lifetime of motoring and cycling • Improved financial service offer implemented across the Group giving us double-digit sales growth year- on-year and access to a new customer demographic • Our targeted CRM programme is now more relevant to customers – more cust
Slide 21: FY20 Strategic Highlights: Cost and Efficiency
21 FY20 Strategic Highlights Our customer strategy is supported by our focus on Cost and Efficiency • Delivered significant cost savings through: • Supply chain efficiencies • Retail productivity programmes • Property savings • Improved procurement practices • Agreed strategic buying alliance with M
Slide 22: FY20 Strategic Highlights: Investment in Colleagues
22 FY20 Strategic Highlights Our customer strategy is supported by our investment in Colleagues • Included in Top 25 employer by the Sunday Times • Significant investment in upskilling colleagues across all areas of the Group • Gained approval to deliver Hybrid and Electric vehicle level 3 training
Slide 23: Summary of FY20
23 Summary of FY20 Growth of Group service-related sales Autocentres NPS • Acquired two businesses – McConechy’s Tyre Service Limited and Tyres on the Drive +9% 69.0 (+3.5 YoY) • Strategically reviewed our Cycling business and announced the exit of Cycle Republic and Boardman Total Group sales Perfo
Slide 24: Focus for the Year Ahead
24 halfords FOCUS FOR THE YEAR AHEAD
Slide 25: COVID-19: Our Experience
25 COVID-19: Our Experience Great pic somewhere of us repairing an ambulance • As an essential retailer, the majority of our stores and garages remained opened during lockdown • Cycling sales boosted through the period, up 57%, with families getting outdoors and customers avoiding crowded public tra
Slide 26: Post-COVID-19 impact on Halfords
26 Post-COVID-19 impact on Halfords Opportunities Challenges • Increase in motoring and cycling journeys • Accelerated shift to online and home delivery channels • An ageing UK car parc • More expensive operating model • Healthy living and climate change • Potential disruption to supply chain • Oppo
Slide 27: Our focus for FY21
27 Our focus for FY21 1 • Materially upweight our Group web platform and digital Inspire our customers through a differentiated, customer experience, to create an even more differentiated super-specialist shopping experience and specialist proposition • Expand our Motoring Services proposition • Swi
Slide 28: Continue to transform and build a market-leading Motoring Services offer
28 Continue to transform and build a market-leading Motoring Services offer • Significantly improve awareness of our unique retail store, garage and mobile services • Expand the scale of our mobile services business • Continue to assess opportunities to acquire garages • Further develop our digital
Slide 29: Increase the returns of our cycling business
29 Increase the returns of our cycling business Focus for FY21 Targeted Outcomes • Investment in the infrastructure of Tredz • Improved overall customer experience • Significantly improving the digital customer shopping experience • Improved net profitability • Improve effectiveness of promotions •
Slide 30: Unlocking value within our property estate
30 Unlocking value within our property estate Closing uneconomic locations This year Lower rentals on existing estate We expect to close up to 10% of the Group’s physical Of the 20 completed Retail lease agreements in FY20, 16 estate during FY21, which includes the 22 Cycle have resulted in downward
Slide 31: Summary of FY21 Priorities
31 Summary of FY21 Priorities • Our biggest priority is a focus on cost and efficiency, creating an even leaner and more profitable business • Continue to build a unique and market leading position for motoring services • Enhancing our Group web platform and digital customer experience, to create an
Slide 32: FY21 Outlook & Summary
32 FY21 OUTLOOK & SUMMARY Loraine Woodhouse, CFO
Slide 33: Q1 FY21 Current trading
33 Q1 FY21 Current trading Group Sales LFL% Retail Split - Sales LFL% (4.3%) (6.5%) (19.2%) 57.1% (45.4%) YTD YTD Retail HAC Group Motoring Cycling Available Liquidity £25m The Group has an existing facility of £20m £200m comprising a £180m RCF, which is fully drawn, and a £20m £20m £20m overdraft.
Slide 34: Outlook scenarios
34 Outlook scenarios The table below shows our updated scenarios for possible revenue outturns in FY21: LFL revenue growth (YOY%) Scenario 1 Scenario 2 Scenario 3 Quarter 1 -6.5% -6.5% -6.5% Rest of Year -10.5% -7.5% -4.5% Full-Year -9.5% -7.5% -5.0% Based on the revenue scenarios above, we estimate
Slide 35: Summary
35 Summary • Strong financial results for FY20; significant progress against operational and strategic objectives in a challenging trading environment • Clear strategic priorities for FY21 • Current year uncertainty - but Halfords is resilient and well-financed
Slide 36: Q&A
36 Q&A
Slide 37: Appendices
37 halfords APPENDICES
Slide 38: Our ESG Strategy
38 Our ESG Strategy FY20 Highlights Focus for the year ahead • Accelerate our investment in training and • Published a report on E-bikes to better educate upskilling colleagues to better support Championing the shift consumers on the benefits of electric mobility. customers 1 to electric smart trave
Slide 39: Appendix 1 - IFRS 16
39 Appendix 1 - IFRS 16 Income statement impact FY20* FY19 Rent £85.8m Depreciation (£72.6m) - The Group has initially applied IFRS 16 at 30 March 2019 FX movements and impairment (£1.4m) - A right-of-use lease asset and a lease liability is Operating profit adjustment £11.8m included on the balance
Slide 40: Appendix 2 - Group Financial Overview post-IFRS 16
40 Appendix 2 – Group Financial Overview post-IFRS 16 Revenue £1,155.1m Gross Profit 51.1% Non-Underlying Items (£32.1m) IFRS 16 (£1.1m) Profit Before Tax £19.4m Basic Underlying EPS 22.9p Free Cash Flow £54.6m Note: numbers are on a 53-week basis
Slide 41: Non-Underlying Items
41 Non-Underlying Items Non-Underlying Items FY20 £m Organisational restructure £2.8m Strategic Review £1.0m Acquisitions £1.9m One Off Claims £0.8m Closure Costs £25.6m Non-Underlying Items Pre-IFRS 16 £32.1m Closure Costs £1.2m Impairment of Right of Use Assets £0.9m Non-Underlying Items Post-IFRS
Slide 42: Contact and Newsflow
42 Contact and Newsflow For further information, please go to www.halfordscompany.com or contact: Neil Ferris Corporate Finance Director neil.ferris@halfords.co.uk Next newsflow: 8th September 2020: FY21 20-week trading update