Slide 1: Preliminary Results
Preliminary Results 52 Weeks to 2 April 2010 City Presentation Centre 10 June 2010 1
Slide 2: David Wild, Chief Executive
David Wild Chief Executive 2
Slide 3: Overview of Results
Overview of Results Year of significant achievement z Earnings per share growth 24 24.8% 8% z Core categories: LFL sales growth and market share gains z Service and multi-channel revenues increase z Effective gross margin management and cost reduction programmes z Strategic decision to focus on dome
Slide 4: Nick Wharton, Finance Director
Nick Wharton Finance Director 4
Slide 5: Group Financial Highlights
Group Financial Highlights1 Strong progression against all key performance metrics z Sales £831.6m +4.6% z Retail like-for-like sales +1.3% (Easter adjusted +0.7%) z Gross margin increased by 230bps (FY09: 160bps) z Profit before tax and non-recurring items £117.1m +26.7% z Basic EPS before non-recu
Slide 6: Group Income Statement
Group Income Statement FY101 FY09 52 week FY09 52 week 52 week Growth 53 week £ £m £ £m % £ £m Revenue 831.6 794.7 +4.6% 809.5 Gross profit 452.7 413.7 +9.4% 421.4 Net operating expenses2 (333.0) (311.8) +6.8% (317.4) Operating profit 119.7 101.9 +17.5% 104.0 O Operating ti profit fit % 14 4% 14.4%
Slide 7: Retail Income Statement
Retail Income Statement Revenue growth, margin and cost management drives 180 bps strengthening in UK1 operating margins Excluding non-recurring items FY102 52 FY09 52 week FY092 week 52 week Growth 53 week £m £m % £m Revenue 818.1 794.7 +2.9% 809.5 Gross profit 443 9 443.9 413 7 413.7 +7 3% +7.3% 4
Slide 8: Group Revenue Growth
Group Revenue Growth Resilient sales performance, mix and trading strategies benefit margin FY10 FY09 400bps 2-year margin progression % % Gross Margin % Progression 56 55.3 55 54.4 Underlying retail LFL sales +0.7 -3.3 oss Margin % 54 53.3 52.6 53 52.1 51.6 52 50.9 50.5 51 50.1 50 Gro Easter adjust
Slide 9: Retail Net Operating Costs
Retail Net Operating Costs Cost & productivity focus offsets revenue & inflationary pressures £m % Revenue FY09 52-weeks operating p g costs 311.8 z Core payroll productivity 39.2% % i improvement t FY10 non comparables:1 8.0 z Rent inflation moderating with Space increase 4.2 future re-gear opportu
Slide 10: Nationwide Income Statement
Nationwide Income Statement Initial Nationwide trading ahead of expectation Excluding non-recurring items FY101 FY102 Nationwide ROCE 20.0% 20.0% 18.0% Post Acq 52 week 15.0% 16.0% 14.0% ROCE% WACC% 12.0% 10.0% 10.0% 8.0% £m £m 5.0% 6.0% 4.0% 2.0% 0.0% 0.0% Revenue 13.5 96.6 FY11 ROCE FY12 WACC FY13
Slide 11: Group Balance Sheet
Group Balance Sheet Balance sheet management remains a clear focus 52 week 53 week 52 week FY10 FY09 YOY Growth FY09 £m £m £m % £m Goodwill and intangible assets 348.7 259.5 +89.2 +34.4% 259.6 Property, y plant and equipment 102.9 107.5 -4.6 -4.3% 107.9 Derivative financial instruments1 2.2 13.3 -11
Slide 12: Capital Expenditure Summary
Capital Expenditure Summary Capital investment centred on high return investments £m FY10 FY09 New stores and re-sites 3.6 7.0 Growth capex requirement lower Store refurbishment 3.8 3.9 Capex/ Free Cash Flow than sector pre Capex 80% Total portfolio 7.4 10.9 70% Distribution centre 6.7 0.0 60% 50% M
Slide 13: Cash Flow and Net Debt
Cash Flow and Net Debt Operating cash flow Free cash flow Net debt £m £m £m O Operating f 1 profit 112.3 O cash flow Op. f 179.6 Net debt 3.4.09 ( (176.2) ) Depreciation/Amortisation2 29.1 Net finance costs (2.5) Free cash flow 107.5 Employee share scheme 2.5 Taxation (30.4) Nationwide4 (72.3) Fixed
Slide 14: Balance Sheet Management
Balance Sheet Management Dividend Growth History Financing Strategy 24.0 z Ongoing commitment to balance sheet efficiency 20.0 20.0 z Interest rate hedging to be re-instated re instated when appropriate 15.9 16.0 15.1 13.9 Cash-Flow Characteristics 12.0 12.8 14.0 12.0 z Strong core business cash flo
Slide 15: David Wild, Chief Executive
David Wild Chief Executive 15
Slide 16: Halfords Overview
Halfords Overview Unique business model advantaged in its core markets z Market leadership and scale z Resilient markets open for consolidation z Differentiating through unique service proposition z Multi-channel attracts new customers z Expanding p g more deeply p y into auto aftercare market z Str
Slide 17: Strategic Vision
Strategic Vision Halfords Group generates long-term sustainable growth z Grow retail operating profit at 8% CAGR extending market leadership z Develop multi multi-channel channel sales and improve net margin z Expand Halfords brand in UK automotive aftermarket z Leverage retail capabilities in other
Slide 18: Growth Strategy
Growth Strategy Consistent and effective strategy for growth Organic growth through: 1. Extend range and service advantage 2. Ongoing focus on cost control 3. Leveraging the Halfords brand in multi-channel 4. Investing in the store portfolio Augmented by acquisition that meets strategic criteria1 z
Slide 19: Extend Range Advantage
Extend Range Advantage Core Categories provide Growth opportunities 5-year Car Parc Evolution Car Maintenance Synthetic now 35% of oil sales 35 30 13+ years z Increasing and ageing car parc 25 10 to 12 years 20 z Needs driven 15 7 to 9 years z Fragmented competition 10 4 to 6 years z Manufacturer in
Slide 20: Extend Range Advantage
Extend Range Advantage Core categories provide growth opportunities Cycling z Health/leisure z Sustainability z Economy/commuting z Market leading own brands Travel Solutions 21 000 Boardman Bikes sold 21,000 z Growth in domestic holidays z Leisure z Associated products - roof bars and cycle carrier
Slide 21: Extend Service Advantage
Extend Service Advantage Differentiating Our Business Through Service 3B sales up 64% Auto z1.7m z1 7m fitting jobs completed z 3B’s penetration now 20% (FY09: 12%) z National radio advertising increases awareness z Rostering ensures high operating returns Sales up 57% Cycling z 444k repairs underta
Slide 22: Controlling Costs - Distribution
Controlling Costs - Distribution Active management to control costs z Consolidate operations at new central DC z Materially lower operational cost base: Reduced rent costs Rebased pay rates and working practices Productivity gains through proven technology Increased fleet efficiency through
Slide 23: Controlling Costs - Stores
Controlling Costs - Stores Active management to control costs z Enhance labour flexibility through better mix of Full Time and Part Time colleagues z Improve rostering to match customer footfall z Store Management: Dedicated Bikehut resource Incremental management at weekends z Improved focus on
Slide 24: halfords.com
halfords.com Multi-channel represents fast growing profitable channel z Sales growth 34% Visitors to Halfords.com 900,000 z Visitor numbers c.30m up 40% 800,000 700,000 600,000 No. Visitors 500,000 z 6.1% of sales (FY09: 4.8%) 400,000 300,000 200,000 z Profitability increased by >100% YOY 100,000 0
Slide 25: halfords.com
halfords.com Increasing engagement with customers FY 10 Achievements z 80% off orders d are “Reserve “R andd Collect” C ll t” z Successful launch of “Order and Collect” z 33,000 customer reviews driving conversion z Launched “Ask and Answer” z Targeted advertising as customers browse across the net
Slide 26: Autocentre Update
Autocentre Update Trading momentum maintained and integration on-plan z Sales in line with expectations z Cross C marketing k i - Testing T i underway: d halfords.com click through Halfords H lf d customer t emails il In-store activity z Re-branding Re branding and new centre rollout 4 Halfo
Slide 27: Outlook
Outlook Halfords well positioned to deliver future growth z Resilient core business business, focused on customer needs z Effective margin management z Crystallising benefits from two major cost initiatives z Confident in first full year earnings from autocentres z Cautious regarding economic and co
Slide 28: Summary
Summary Markets and strategy provides basis for long term sustainable growth z A year of great progress z Ongoing potential to grow core business z Significant opportunity in multi-channel z Strong St b brand d resonance iin th the automotive t ti servicing i i sector t z Well resourced to expand fu
Slide 29: Questions
Questions 29
Slide 30: Appendices
Appendices z Retail Portfolio by Store Type z Retail Portfolio by Location z Operating O ti Cost C t Efficiencies Effi i i
Slide 31: Retail Portfolio By Store Type
Retail Portfolio By Store Type Retail Space 3,910,823 ft2 Mezzanine Flat Compact Metro Bikehut Total SM/M F C Me BH Opening p g Number 239 162 29 28 8 466 New Store 1 4 4 0 0 9 Relocations 1 1 0 0 0 2 Closures ((1)) ((1)) 0 ((4)) ((2)) ((8)) Conversions 0 0 0 4 (4) 0 Closing Number 240 166 33 28 2 4
Slide 32: Retail Portfolio by Type and Location
Retail Portfolio by Type and Location UK ROI Poland CZ Total Superstore 378 21 1 6 406 Mezzanine 227 12 0 1 240 Flat 151 9 1 5 166 Compact 31 2 0 0 33 Metro 28 0 0 0 28 Bikehut 2 0 0 0 2 Total 439 23 1 6 469 UK ROI Poland CZ Total Opening Number 438 22 1 5 466 New stores 9 1 0 1 11 Closed stores (8)
Slide 33: Operating Cost Efficiency
Operating Cost Efficiency FY09 FY10 FY11 FY12 Payback £m £m £m £m Yrs (Costs)/Benefits: Headcount1 (2.8) 4.0 4.0 4.0 0.7 Further store headcount - - 2.0 0 2.0 0 0.3 0 3 Distribution Centre (8.3) - 2.0 4.0 3.5 Bikehut (1.2) 0.2 0.2 0.2 - Operational (12.3) 4.2 8.2 10.2 2.3 Financial: Swap close-out2