Halfords Group PLC: Interim Results: Financial Year 2022

DJ Halfords Group PLC: Interim Results: Financial Year 2022

Halfords Group PLC (HFD) Halfords Group PLC: Interim Results: Financial Year 2022 10-Nov-2021 / 07:00 GMT/BST Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.

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10 November 2021

Halfords Group plc

Interim Results: Financial Year 2022

Strong H1 performance; confident outlook, upgrading full year profits to GBP80m - GBP90m.

Market leading position in electric car and bike servicing and repair; plans to double trained electric technicians next year.

Halfords Group plc ("Halfords" or the "Group"), the UK's leading provider of Motoring and Cycling products and services, today announces its interim results for the 26 weeks to 1 October 2021 ("the period").

To provide a better understanding of underlying performance, comparisons of sales, profit and debt will primarily be made relative to FY20, that is, on a 2-year basis unless otherwise stated. The disruption to last year (FY21) from COVID-19 means that one-year comparators are more difficult to interpret but are provided within the tables below. All numbers shown are on a post-IFRS 16 basis and before non-underlying items, unless otherwise stated.

Overview

H1 FY22

-- Strong revenue growth of +19.2% vs. FY20, growing market share in Retail Motoring and Autocentres, withrevenues +7.7% and +88.8% respectively. Cycling growth of +8.8%, despite the known supply chain disruption.

-- Material contribution from areas of strategic focus: Group Services growing +75%, online +81% and B2B+78%.

-- Underlying Profit Before Tax of GBP57.9m, +GBP27.7m (+91.7%) vs. FY20 (note: FY22 includes business ratesrelief of GBP9.2m).

-- Compared to FY21, Group Revenue grew +8.7% and underlying PBT +GBP2.1m (+3.8%).

-- Period ended with Net debt of GBP232.7m or net cash of GBP91.6m when excluding IFRS lease debt; workingcapital abnormally low.

-- Declared interim dividend per share of 3p.

Outlook

-- Positive start to H2, with sales momentum continuing across the business.

-- Confident in our ability to navigate the well-publicised inflationary and operational headwinds throughH2. Supply chain disruption beginning to ease.

-- As previously disclosed, H2 investment in motoring pricing and higher transformation spend to impactnear-term profitability but drive long term growth.

-- Upgrade our FY22 full year underlying PBT forecast to GBP80m - GBP90m, post IFRS 16; previous guidance wasabove GBP75m.

-- Longer term, our more resilient operating model - underpinned by a larger Services, B2B and Retailmotoring business - will enable us to continue to deliver progress, despite the inflationary headwinds whichremain.

Graham Stapleton, Chief Executive Officer, commented:

"We are delighted to have delivered a strong H1 performance, driven by market share gains in Motoring products, Garages and our mobile services business, which now account for more than two thirds of our revenue. We also continued to see a significant contribution from areas of strategic focus, with revenue from Group Services, Online and B2B, all growing by more than 75% on a two-year basis. In cycling, demand levels remain good, and we are pleased with the current availability of kids bikes and e-bikes as we head into the Christmas trading period. We have carried good sales momentum into H2 across our business, supported by the easing of supply chain disruption. This has enabled us to increase our FY22 underlying profit before tax guidance to between GBP80m and GBP90m.

"We are seeing significant growth in the number of customers choosing electric forms of transport, and we continue to have a market-leading position in the servicing and repair of electric vehicles. Sales of e-bikes, e-scooters and accessories grew by more than 140% on two years ago, and servicing for electric cars in our garages was up 120% year-on-year. We have already invested in the training of more than 1,300 electric technicians and are on track to train 2,000 by the end of FY22, equating to more than two per store or garage. This number will double next year."

"There is good momentum in our existing business, the strategically important area of Motoring Services continues to grow strongly, and our recent acquisitions are all performing well. As a result, despite the challenging trading environment, I am very excited about our future growth prospects."

Group financial summary**

FY22 FY20 Var        FY21 
                              Var FY20    Var FY21 Var FY21 
                   H1  H1  FY20       H1 
                              %       GBPm    % 
                   GBPm  GBPm  GBPm        GBPm 
Revenue                694.8 582.7 112.1  19.2%  638.9 55.9   8.7% 
Retail                538.7 500.0 38.7   7.7%   524.2 14.5   2.8% 
Autocentres              156.1 82.7 73.4   88.8%  114.7 41.4   36.1% 
Gross Margin             51.7% 50.1% +167bps      49.3% +230bps 
Retail                50.6% 47.0% +360bps      46.9% +370bps 
Autocentres              55.6% 68.6% -1300bps     60.6% -500bps 
Underlying EBITDA*          115.7 90.8 24.9   27.4%  115.5 0.2   0.2% 
Underlying Profit Before Tax ("PBT")* 57.9 30.2 27.7   91.7%  55.8 2.1   3.8% 
Profit Before Tax           64.3 27.5 36.8   133.8%  55.4 8.9   16.1% 
Underlying Basic Earnings per Share* 24.0p 12.2p     96.7%  23.0p     4.35% 
 

*before non-underlying items. **Alternative performance measures are defined and reconciled to IFRS amounts in the glossary on page 21. The LFL change measure adjusts for the in-year store openings and closures, and acquisitions.

Group revenue summary

Total Revenue LFL Revenue Total Revenue LFL Revenue 
             Vs FY20 %   Vs FY20 %  vs FY21 %   Vs FY21 % 
     Retail Motoring 6.2%     11.9%    34.1%     41.0% 
     Retail Cycling 8.8%     25.3%    -25.2%    -20.5% 
Retail Total       7.7%     17.8%    2.8%     7.0% 
Autocentres       88.8%     15.5%    36.1%     19.3% 
Group          19.2%     17.5%    8.7%     9.3% 

Key H1 highlights

-- Group revenue growth over two years +19.2% and +17.5% LFL, driven by market share gains in Autocentresand Retail Motoring, and Retail Cycling growth, despite ongoing supply chain issues.

-- Group Services +75%, now representing 33% of Group revenues, driven by good growth in our underlyingbusiness and boosted by our acquisitions.

-- Recent sales growth rates from the first half have carried forward to current trading and are broadly inline with first half averages across the business.

-- In Retail two-year comparisons show:? Revenue +7.7% and +17.8% LFL. - Retail Motoring revenue +6.2% and LFL +11.9%, driven by market share gains in core categories andstrong demand for staycation products, up +45%. - Retail Cycling +8.8% and LFL 25.3%, with our award-winning own brand ranges of premium and electricbikes continuing to see high levels of demand, despite supply chain issues. - Electric mobility revenue (i.e., e-bikes, e-scooters and associated accessories) up +140%.

-- In Autocentres two-year comparisons show:? Autocentres revenue +88.8% and +15.5% LFL as we expand our commercial business, leverage ouracquisitions, and group-wide marketing initiatives increase customer awareness. - Strong demand for our Halfords Mobile Expert ("HME") vans. In two years, we have grown to 172 vans,14 hubs and 250 technicians. - Accelerating growth in demand for electric vehicle servicing, with the number of EVs being brought toour garages increasing 123.6% year-on-year.

-- Group sales growth against FY21, whilst lower than the two-year comparator, remains strong at +9.3% LFLand +8.7% total against a very strong comparative. Cycling sales stepped back as supply challenges hit, but RetailMotoring and Autocentres growth was very strong.

-- Group gross margin improved by +167bps over two years (+230bps vs FY21) as our Cycling performance showsa significant improvement against FY20 and our business mixes into higher margin Autocentres.

-- Operating costs were managed well, +16.0% versus FY20 and decreasing as a proportion of revenue by-1.2ppts. Operating Costs include the benefit of GBP9.2m Business rates not levied.

-- Profit Before Tax ("PBT") of GBP57.9m, up +91.7% on FY20 (+3.8% vs FY21).

-- Cash movement of GBP25.0m, driven by strong profit generation, but lower working capital continues toflatter the balance sheet position.

-- Non-underlying items were a credit of GBP6.4m, primarily a result of closed store provisions being revisedas the Group continues to negotiate lease disposals. 1. Group Services includes revenues across both Retail and Autocentres and includes the revenue fromservices provided (e.g., car service, cycling repair, dash cam fit etc) along with any associated products sold inthe same transaction. 2. B2B includes revenues from C2W, Commercial, Fleet and product sales to businesses in both Retail andAutocentres

Enquiries

Investors & Analysts (Halfords)

Loraine Woodhouse, Chief Financial Officer

Neil Ferris, Corporate Finance Director

Andy Lynch, Head of Investor Relations [phone]

Media (Powerscourt) [phone]

Rob Greening [e-mail]

Nick Hayns

Results presentation

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