TIDMHFD
RNS Number : 6971G
Halfords Group PLC
08 November 2018
8 November 2018
Halfords Group plc
Interim Results: Financial Year 2019
New strategy embedding; full-year outlook unchanged
Halfords Group plc, the UK's leading provider of motoring and
cycling products and services, today announces its interim results
for the 26 weeks to 28 September 2018 ("the period"). All numbers
shown are before non-recurring items, unless otherwise stated.
Group Financial Summary
H1 FY19 H1 FY18 change Like-for-Like
GBPm GBPm Revenue
("LFL")*
Revenue 599.9 588.7 +1.9% +2.5%
Retail 519.8 511.0 +1.7% +2.3%
-------- -------- -------- --------------
Autocentres 80.1 77.7 +3.1% +3.3%
-------- -------- -------- --------------
Gross Margin 49.4% 48.6% +80 bps
-------- -------- --------
Retail 46.6% 45.7% +90 bps
-------- -------- --------
Autocentres 67.5% 67.7% -20 bps
-------- -------- --------
Underlying EBITDA* 49.8 54.9 -9.3%
-------- -------- --------
Underlying Profit Before Tax* 30.5 36.8 -17.1%
-------- -------- --------
Underlying Basic Earnings Per Share* 12.4p 14.8p -16.2%
-------- -------- --------
Profit Before Tax after non-recurring
items 28.2 36.6 -23.0%
-------- -------- --------
Basic Earnings Per Share after non-recurring
items 11.4p 14.7p -22.4%
-------- -------- --------
Interim Dividend Per Share 6.18p 6.00p +3.0%
-------- -------- --------
* Alternative performance measures are defined in the glossary
on page 13
Financial highlights
-- Total Group Revenue +1.9% and +2.5% LFL, reflecting good
sales of e-bikes, dash cams and motoring services
-- Gross margin improved
-- Underlying Profit Before Tax broadly in line with our
expectations, reflecting planned operating cost growth, primarily
driven by phasing, one-off items and investments
-- Free Cash Flow of GBP34.2m, up 10% on H1 last year
-- Net debt at GBP77.2m representing 0.7 times Underlying EBITDA
-- Interim dividend per share of 6.18p, up 3.0%
New strategy launched
Early progress against our new strategy to inspire and support a
lifetime of motoring and cycling by:
Inspiring our customers through a differentiated, super
specialist shopping experience
-- Initial optimisation of space implemented in all Retail
stores, further enhancing our specialisms in motoring and
cycling
-- Redefining and differentiating our own label ranges; new own
brand bulb ranges the first category launched
-- Strengthening of cycling specialist credentials via agreement
with Brompton to sell their products across the Halfords Group
Supporting our customers through an integrated, unique and more
convenient services offer
-- On-demand retail motoring services trial launched in garages
-- Strengthened customer offer through launch of financial
services trial in Retail and Autocentres
-- Raising awareness of our services proposition through nationwide sponsorship of ITV Weather
Enabling a lifetime of motoring and cycling
-- 152,000 Retail customers signed up for cross-Group MOT
promotion, 70% of whom are new to Autocentres
Full-year outlook reconfirmed
We continue to anticipate FY19 Group profit before tax broadly
unchanged on FY18, with H2 performance reflecting a shift in our
sales mix towards less discretionary categories, greater FX benefit
of circa GBP3m and lower Retail operating cost growth (circa 3% in
H2 vs 8% in H1). This guidance is subject to our trading
performance over the peak Christmas period and also assumes average
Winter weather. We expect the short term conditions for
discretionary spend to remain challenging.
Graham Stapleton, Chief Executive Officer, commented:
"Despite the challenging UK consumer environment, we delivered a
robust sales and cash flow performance in the first half, with
costs and profit broadly in line with our expectations. We are
making good early progress as we implement our new strategy, and we
are encouraged by the initial signs. We are moving to a more
customer centric approach, leveraging our expertise to provide a
more differentiated shopping experience and an integrated and more
convenient services offer."
Enquiries
Investors & Analysts (Halfords)
Loraine Woodhouse, Chief Financial Officer
Adam Phillips, Group Strategy & Investor Relations
Director +44 (0) 7703 890142
+44 (0) 207 353
Media (Tulchan Communications) 4200
Jonathan Sibun
Will Smith
Financial Guidance reference
For ease of navigation, the following lists the references to
financial guidance contained in this statement:
Description Page reference
FY20 Profit Before Tax Page 5
---------------
Medium-term capital expenditure Page 5
---------------
FY19 outlook Page 6
---------------
FY19 capital expenditure Page 11
---------------
FY19 depreciation and amortisation Page 11
---------------
FY19 tax rate Page 11
---------------
Results Presentation
A presentation for analysts and investors will be held today
starting at 9.00am at Investec, 30 Gresham Street, London, EC2V
7QP. Attendance is by invitation only. A live webcast of the
presentation will be available at www.halfordscompany.com.
Forthcoming Newsflow
On 22 January 2019 we will report on trading for the 15 weeks to
11 January 2019, which includes the peak Christmas trading
period.
Notes to Editors
www.halfords.com www.halfordscompany.com www.halfordsautocentres.com
www.cyclerepublic.com www.boardmanbikes.com www.tredz.co.uk
Halfords is the UK's leading provider of motoring and cycling
products and services. Customers shop at 453 Halfords stores, 25
Performance Cycling stores (trading as Cycle Republic, Tredz,
Boardman and Giant) and 316 garages (trading as Halfords
Autocentres). Customers can also shop at halfords.com,
cyclerepublic.com and tredz.co.uk for pick-up at their local store
or direct home delivery, as well as booking garage services online
at halfordsautocentres.com.
Cautionary Statement
This report contains certain forward-looking statements with
respect to the financial condition, results of operations, and
businesses of Halfords Group plc. These statements and forecasts
involve risk, uncertainty and assumptions because they relate to
events and depend upon circumstances that will occur in the future.
There are a number of factors that could cause actual results or
developments to differ materially from those expressed or implied
by these forward-looking statements. These forward-looking
statements are made only as at the date of this announcement.
Nothing in this announcement should be construed as a profit
forecast. Except as required by law, Halfords Group plc has no
obligation to update the forward-looking statements or to correct
any inaccuracies therein.
Chief Executive's Statement
Summary of Group Results
Group sales of GBP599.9m were up 1.9% in total and +2.5% on a
LFL basis, with Group gross profit up 3.5% and a gross margin of
49.4% (H1 FY18: 48.6%). Total operating costs rose as we had
expected by 6.6%, the majority of which related to one-off /
phasing impacts or planned investments.
Earnings before non-recurring items, finance costs, depreciation
and amortisation ("Underlying EBITDA") were down 9.3% to GBP49.8m.
Underlying Profit Before Tax was broadly in line with our
expectations at GBP30.5m and down 17.1%, reflecting the planned
increase in operating costs. Underlying earnings per share were
12.4p, down 16.2%.
Cash generation remained strong with Free Cash Flow of GBP34.2m,
up GBP3.1m on H1 last year. Net debt of GBP77.2m at the end of the
period was GBP7.6m lower than the prior year end. Net debt to
Underlying EBITDA at the period end was 0.7:1 on a rolling 12 month
basis.
The Board has approved an interim ordinary dividend of 6.18
pence per share, an increase of 3.0% (FY18 interim ordinary
dividend: 6.00 pence, FY18 full-year ordinary dividend: 18.03
pence). This will be paid on 18 January 2019 to shareholders on the
register at the close of business on 14 December 2018.
Operational Review
In Retail, sales were GBP519.8m, up 1.7% on the previous year
and +2.3% on an LFL basis. Motoring LFL sales grew by 3.3% in the
first half. Good growth in sales of tools, metal storage, dash
cams, car cleaning products and motoring services more than offset
the continued market decline in Sat Navs and in-car audio
products.
Cycling sales increased by 1.0% on a LFL basis. A challenging
start to the year, with poor weather in April and an early Easter,
was offset by a better performance in the peak summer period of mid
July to mid August. Electric bikes were the standout performer and
PAC (parts, accessories and clothing) sales continued to grow.
After two years of FX-driven decline, the Retail gross margin
stabilised in the period. The increase of 90 bps in H1 reflected a
number of factors including the mix impact of faster motoring sales
growth and improved stock loss. There was also a small FX benefit
towards the end of the period, reflecting a slightly improved US
dollar buying rate. This benefit accelerates in the second
half.
Retail operating costs increased by 8.0% to GBP211.4m, broadly
in line with our expectations. This cost increase comprised of the
following: 1) inflationary impacts, 2) additional costs from the
weaker cycling market, 3) one-off/timing/reclassification impacts
and 4) planned investments. Over half of the cost increase
comprised of the latter two elements and we expect these to largely
fall away in the second half, resulting in lower cost growth for
the remainder of the year.
During the period we opened two Cycle Republic stores, a
Boardman Performance Centre, one Autocentre and rolled out two more
mobile vans, extending our Halfords Mobile Expert trial to three
cities. We closed four Halfords Retail stores, a Tredz concession
store and one Autocentre.
Service-related Retail sales, which consist of the revenue
generated from paid in-store fitting and repair services plus the
associated product attached to the transaction, continued to grow
faster than total sales. Group online sales were up 10.9% in the
period, reflecting increased traffic and improved conversion
through the mobile channel in particular. The importance of our
store network and service overlay continued to be highlighted by
the strength of click & collect, with around 85% of Halfords
Retail online orders picked up in store.
Total Autocentres revenues were up 3.1% and +3.3% on a LFL
basis, reflecting growth in sales of tyres, air conditioning
services, MOTs and servicing. The implementation of the Autocentres
transformation programme, following the review of the operating
model last year, is well underway and delivering tangible benefits.
Progress to date includes:
-- implementation of a new garage management system, enabling enhanced technician scheduling and improved parts ordering;
-- new process flows for certain activities, delivered via training to all technicians and monitored on an ongoing basis; and
-- new productivity and utilisation reporting and KPIs, with incentives aligned.
The impact of the transformation programme on the operating
model, along with good revenue growth, contributed to the increase
in Autocentres EBIT, which improved by 53.3% to GBP2.3m.
Our New Strategy
On 27(th) September 2018 we published and presented details of
our new strategy. Please refer to our Capital Markets Day
presentation and announcement, available on
www.halfordscompany.com. A short summary is set out below.
Halfords' aim is to inspire and support a lifetime of motoring
and cycling. We will do this through the following strategic
priorities:
1. Inspiring our customers through a differentiated, super
specialist shopping experience. We will become a business more
focused on what it is really known for - its core motoring and
cycling offer. We will have more products and services that have
features and benefits only available at Halfords. We will also have
a more engaging online presence, along with a complementary and
inspiring store environment and in-store tablet, screen and mobile
experience.
2. Supporting our customers through an integrated, unique and
more convenient services offer. We will have a broader range of
services, more easily accessed from one single website. We will
grow our physical estate to around 1,000 convenient service
locations via a choice of mobile, stores and garages. We will be a
market leader in electric bike and car servicing.
3. Enabling a lifetime of motoring and cycling. We will have a
more focussed and targeted approach to loyalty at a Group level,
facilitating greater cross shop. We will accelerate the development
of our CRM program, increase investment in customer data
management, and fully leverage our single customer view.
We will support this strategy with an accelerated programme of
investment to help drive sustainable growth into the future.
Capital expenditure will increase from the prevailing guidance of
c. GBP40m per year to between GBP40m and GBP60m per year over the
medium term, with significant investment in our stores, garages,
and digital platforms.
Alongside this we have commenced a wide-reaching cost and
capital efficiencies programme, which will enable us to fund the
increase in capital expenditure from cash released from within the
business over the life of the plan. Despite incremental investment
in operating expenditure as we implement our long-term strategy, we
continue to anticipate FY20 Profit Before Tax to be broadly flat on
FY19, with mid-single-digit percentage annual growth anticipated
thereafter as the plans take effect.
Our existing debt target and capital allocation priorities
remain unchanged, other than a new commitment to preserve the
ordinary dividend. We also added a new financial target to increase
Free Cash Flow.
Early progress on our new strategy
We are already making good progress against the new strategy.
Some of the early results are set out below:
Inspiring our customers through a differentiated, super
specialist shopping experience
-- Initial optimisation of space implemented in all Retail
stores, further enhancing our specialisms in motoring and
cycling
-- Redefining and differentiating our own label ranges; new own
brand bulb ranges the first category launched
-- Strengthening of cycling specialist credentials via agreement
with Brompton to sell their products across the Halfords Group
Supporting our customers through an integrated, unique and more
convenient services offer
-- On-demand retail motoring services trial launched in garages
-- Strengthened customer offer through launch of financial
services trial in Retail and Autocentres
-- Raising awareness of our services proposition through nationwide sponsorship of ITV Weather
Enabling a lifetime of motoring and cycling
-- 152,000 Retail customers signed up for cross-Group MOT
promotion, 70% of whom are new to Autocentres
Summary and outlook
In a challenging retail environment our first half sales
performance was robust, with growth across all areas of our
business. Underlying Profit Before Tax for the first half was
broadly in line with our expectations. The year-on-year decrease
reflected the operating cost growth in the first half, of which
more than half related to one-off/timing or planned investments
that are not anticipated to recur in the second half. In
Autocentres, we continued to make good progress in transforming the
operational model, resulting in strong profit growth for the first
half, with the business on track to deliver a second consecutive
year of full year profit growth.
Cash generation continued to be strong in the first half. Free
Cash Flow, one of our new medium term financial targets, was up 10%
for the period compared to last year.
Our full year outlook is reconfirmed and we continue to
anticipate FY19 Underlying Profit Before Tax to be broadly
unchanged from FY18. Accordingly we anticipate profit to increase
in the second half. Due to the hedging of our US dollar
requirements we already have certainty over c. GBP3m of
year-on-year FX benefit in H2. In addition, we anticipate lower
operating cost growth, principally reflecting the non-repeat nature
of one-off/timing/reclassification impacts seen in the first
half.
This full year guidance is subject to trading over the peak
Christmas period and also assumes average Winter weather. Whilst we
remain confident in the long-term growth prospects for the cycling
market, we expect the short term conditions to remain challenging
given that cycling is a discretionary category and not immune to
consumer uncertainty. However, the mix of our sales moves more
towards non-discretionary categories in the second half, and these
areas performed well in H1.
During the period we developed our new strategy, culminating in
the communication of this to our colleagues and also externally at
our capital markets day in September. There is good early progress
as we start implementing a more customer centric approach,
leveraging our expertise to provide a more differentiated shopping
experience and an integrated and more convenient services
offer.
Loraine Woodhouse joined the Group as Chief Financial Officer on
1 November 2018 and I look forward to working with her going
forwards.
On behalf of the Board, I would like to thank all colleagues for
their fantastic contribution, support and commitment.
Graham Stapleton
Chief Executive Officer, November 2018
Halfords Group plc's LEI code is 54930086FKBWWJIOB179
Chief Financial Officer's Report
Halfords Group plc ("the Group" or "Group")
Reportable Segments
Halfords Group operates through two reportable business
segments:
-- Retail, operating in both the UK and Republic of Ireland; and
-- Autocentres, operating solely in the UK.
All references to Retail represent the consolidation of the
Halfords ("Halfords Retail") and Cycle Republic businesses,
Boardman Bikes Limited and Boardman International Limited
(together, "Boardman Bikes"), and Performance Cycling Limited
(together, "Tredz and Wheelies") trading entities. All references
to Group represent the consolidation of the Retail and Autocentres
segments.
The "H1 FY19" accounting period represents trading for the 26
weeks to 28 September 2018 ("the period"). The comparative period
"H1 FY18" represents trading for the 26 weeks to 29 September 2017
("the prior period").
Group Financial Results
H1 FY19 H1 FY18
GBPm GBPm Change
Group Revenue 599.9 588.7 +1.9%
Group Gross Profit 296.3 286.3 +3.5%
Underlying EBIT* 32.0 38.3 -16.4%
Underlying EBITDA* 49.8 54.9 -9.3%
Net Finance Costs before non-recurring items (1.5) (1.5)
Underlying Profit Before Tax* 30.5 36.8 -17.1%
----------------------------------------------- -------- -------- -------
Profit Before Tax, after non-recurring items 28.2 36.6 -23.0%
Underlying Basic Earnings per Share* 12.4p 14.8p -16.2%
* Alternative performance measures are defined in the glossary
on page 13
Group revenue in H1 FY19, at GBP599.9m, was up 1.9% and
comprised Retail revenue of GBP519.8m and Autocentres revenue of
GBP80.1m. This compared to H1 FY18 Group revenue of GBP588.7m,
which comprised Retail revenue of GBP511.0m and Autocentres revenue
of GBP77.7m. Group gross profit at GBP296.3m (H1 FY18: GBP286.3m)
represented 49.4% of Group revenue (H1 FY18: 48.6%), reflecting an
increase in the Retail gross margin of 90 basis points ("bps") to
46.6% and a small decrease in the Autocentres gross margin of 20
bps to 67.5%.
Total operating costs before non-recurring items increased to
GBP264.3m (H1 FY18: GBP248.0m) of which Retail comprised GBP211.4m
(H1 FY18: GBP195.8m), Autocentres GBP51.8m (H1 FY18: GBP51.1m) and
unallocated costs GBP1.1m (H1 FY18: GBP1.1m). Unallocated costs
represent amortisation charges in respect of intangible assets
acquired through business combinations, namely the acquisition of
Autocentres in February 2010, Boardman Bikes in June 2014, and
Tredz and Wheelies in May 2016, which arise on consolidation of the
Group.
Group Underlying EBITDA decreased 9.3% to GBP49.8m (H1 FY18:
GBP54.9m), whilst net finance costs were flat at GBP1.5m (H1 FY18:
GBP1.5m).
Underlying Profit Before Tax for the year was down 17.1% at
GBP30.5m (H1 FY18: GBP36.8m). Net non-recurring items of GBP2.3m in
the period (H1 FY18: GBP0.2m) comprised of GBP2.1m for a Group-wide
strategic review and a related GBP0.2m cost for organisational
restructuring. Prior year costs related to GBP0.5m cost from the
review of the operational model of Autocentres and a GBP0.3m credit
from the release of the remaining portion of interest charge due on
the contingent consideration for Tredz. After non-recurring items,
Group Profit Before Tax was GBP28.2m (H1 FY18: GBP36.6m).
Retail
H1 FY19 H1 FY18
GBPm GBPm Change
Revenue 519.8 511.0 +1.7%
Gross Profit 242.2 233.7 +3.6%
Gross Margin 46.6% 45.7% +90 bps
Operating Costs (211.4) (195.8) +8.0%
Underlying EBIT* 30.8 37.9 -18.7%
Non-recurring items (2.3) (0.5)
--------------------------------- -------- -------- --------
EBIT after non-recurring items 28.5 37.4 -23.8%
--------------------------------- -------- -------- --------
Underlying EBITDA* 44.6 50.9 -12.4%
--------------------------------- -------- -------- --------
* Alternative performance measures are defined in the glossary
on page 13
Revenue for the Retail business of GBP519.8m reflected, on a
constant-currency basis, a like-for-like sales increase of 2.3%.
Non LFL revenue in the period included sales from Cycle Republic
stores open for less than 12 months.
Motoring LFL sales grew by 3.3% in the first half. Good growth
in sales of tools, metal storage, dash cams, car cleaning products
and motoring services more than offset the continued market decline
in Sat Navs and in-car audio products. Sales of car security
products grew strongly; this is a category in which we have
increased the range and allocated more space as part of the recent
space optimisation programme.
Cycling sales increased by 1.0% on a LFL basis. A challenging
start to the year, with poor weather in April and an early Easter,
was offset by a better performance in the peak summer period of mid
July to mid August. Electric bikes were the standout performer,
though still a small amount of total cycling sales, and PAC sales
continued to grow.
Like-for-like revenues and total sales revenue mix for the
Retail business are split by category below:
H1 FY19 H1 FY19 H1 FY18
LFL (%) Total sales mix (%) Total sales mix (%)
Motoring +3.3% 58.8 58.3
Car Maintenance +4.5% 26.8 26.3
Car Enhancement +1.1% 18.0 18.2
Travel Solutions +4.0% 14.0 13.8
Cycling +1.0% 41.2 41.7
Total +2.3% 100.0 100.0
Gross profit for the Retail business at GBP242.2m (H1 FY18:
GBP233.7m) represented 46.6% of sales, 90bps up on the prior year
(H1 FY18: 45.7%). This increase comprised a number of factors
including a mix benefit from faster motoring and services sales,
lower stock loss, a reclassification of Tredz carriage costs from
cost of sales to operating costs, and a small benefit from an
improved average buying rate in respect of goods imported in US
dollars. This FX benefit will improve in the second half to c.
GBP3m of year-on-year additional gross profit, reflecting the
improved buying rates already locked in through hedging. The table
below shows the exchange rate reflected in cost of sales:
FY18 full year H1 FY19 H2 FY19
(estimate*)
$ $ $
Average USD:GBP rate reflected in cost of sales $1.29 $1.31 $1.32
--------------- -------- -------------
Year-on-year movement in rate (0.18) 0.01 0.04
--------------- -------- -------------
* The estimated rate for H2 is based on having hedged circa 90%
of requirements as at end of October 2018.
Operating Costs before non-recurring items were GBP211.4m (H1
FY18: GBP195.8m). The breakdown is set out below:
H1 FY19 H1 FY18 Change
GBPm GBPm
Store Colleagues 60.5 58.7 +3.1%
Store Occupancy 72.7 71.4 +1.8%
Warehouse & Distribution 28.9 25.3 +14.2%
Support Costs 49.3 40.4 +22.0%
-------------------------- -------- -------- -------
Total Operating Costs
before non-recurring
items 211.4 195.8 +8.0%
-------------------------- -------- -------- -------
The 8.0% increase in operating costs breaks down into the
following categories of cost driver:
-- Circa 2% of inflationary impact from payroll, rates and
utilities, as well as increased depreciation and amortisation
charges.
-- Circa 1% of increased costs from the weak start to the
cycling season including additional external storage and associated
transport, and additional marketing costs.
-- Circa 3% (circa GBP6m) of one-off / timing / reclassification
impacts, including share option charges, reclassification of Tredz
carriage costs, phasing of marketing costs between H1 and H2, and
the annualisation of next day fulfilment (launched Sept 2017),
which impacted on Warehouse & Distribution cost growth in
H1.
-- Circa 2% of investments, including the operating costs of new
Cycle Republic stores, enhancement and utilisation of single
customer view database, and additional heads in IT and digital.
Looking ahead to the second half, we anticipate a continuation
of the inflationary impacts and some increased costs associated
with the weaker cycling market, albeit we have some planned
mitigations. At this stage we expect the one-off / timing /
reclassification impacts to fall away almost entirely in H2, and we
anticipate a lower impact from cost investments as we reduce or
re-phase activity. Accordingly, we anticipate operating cost growth
to be lower in the second half than it was in the first half.
Autocentres
H1 FY19 H1 FY18 Change
GBPm GBPm
Revenue 80.1 77.7 +3.1%
Gross Profit 54.1 52.6 +2.9%
Gross Margin 67.5% 67.7% -20bps
Operating Costs (51.8) (51.1) +1.4%
--------------------- -------- -------- -------
Underlying EBIT* 2.3 1.5 +53.3%
--------------------- -------- -------- -------
Underlying EBITDA* 5.2 4.0 +30.0%
--------------------- -------- -------- -------
* Alternative performance measures are defined in the glossary
on page 13
There were no non-recurring items related to the Autocentres
business in either period presented.
Autocentres generated total revenues of GBP80.1m (H1 FY18:
GBP77.7m), an increase of 3.1% on the prior period with a LFL
increase of 3.3%. The increase in revenues from the existing
centres reflected growth in tyres, air conditioning services, MOT
and servicing sales.
Gross profit at GBP54.1m (H1 FY18: GBP52.6m) represented a gross
margin of 67.5%; a decrease of 20 bps on the prior period. The
slight decrease in gross profit margin was the result of the mix
effect of faster tyre sales growth.
Autocentres' EBITDA of GBP5.2m (H1 FY18: GBP4.0m), was 30.0%
higher than H1 FY18, and EBIT was GBP0.8m higher than H1 FY18 at
GBP2.3m (H1 FY18: GBP1.5m).
Portfolio Management
The Retail store portfolio at 28 September 2018 comprised 478
stores (end of H1 FY18: 481; end of FY18: 480). The following table
outlines the changes in the Retail store portfolio over the 26 week
period:
Number
Relocations -
-------
Leases re-negotiated 11
-------
Rightsized -
-------
Openings 3
-------
Closed 5
-------
One Autocentre was opened and one was closed in the period,
making the total number of Autocentre locations 316 as at 28
September 2018 (end of H1 FY18: 315; end of FY18: 316).
With the exception of eight long leasehold and two freehold
properties within Autocentres, the Group's operating sites are
occupied under operating leases, the majority of which are on
standard lease terms, typically with a 5 to 15-year term at
inception and with an average lease length of c.7 years.
Future changes to our property portfolio as a result of the new
strategy are outlined in the Capital Markets Day announcement dated
27 September 2018.
Net Non-Recurring items
The following table outlines the components of the non-recurring
items recognised in the period:
H1 FY19 H1 FY18
GBPm GBPm
Organisational restructure 0.2 -
Group-wide strategic review 2.1 -
Operational review of Autocentres - 0.5
Net non-recurring operating costs 2.3 0.5
------------------------------------- -------- --------
Acquisition related interest credit - (0.3)
Net non-recurring items 2.3 0.2
------------------------------------- -------- --------
Non-recurring items in H1 FY19 related to the strategic review
of the business including related organisational restructure costs.
In H1 FY18 they related to the review of the operating model of the
Autocentres business, and there was also a GBP0.3m credit from the
release of the remaining portion of interest charge due on the
contingent consideration for Tredz, which was paid in May 2017.
Finance Expense
The net finance expense (before non-recurring items) for the
year was unchanged year-on-year at GBP1.5m (H1 FY18: GBP1.5m).
Taxation
The taxation charge on profit for the financial period was
GBP5.7m (H1 FY18: GBP7.4m). The effective tax rate of 20.2% (H1
FY18: 20.3%) differs from the UK corporation tax rate (19%)
principally due to non-deductible depreciation charged on capital
expenditure, overseas tax rates and the impact of share options
accounting.
The full year FY19 effective tax rate is expected to be
c.20%.
Earnings Per Share ("EPS")
Underlying Basic EPS was 12.4 pence and after non-recurring
items 11.4 pence (H1 FY18: 14.8 pence, 14.7 pence after
non-recurring items), a 16.2% and 22.4% decrease on the prior
period. Basic weighted-average shares in issue during the period
were 197.2m (H1 FY18: 197.1m).
Dividend ("DPS")
The Board has approved an interim dividend of 6.18 pence per
share (H1 FY18: 6.00 pence), an increase of 3.0% on the prior
period. This will be paid on 18 January 2019 to shareholders on the
register at the close of business on 14 December 2018.
We continue to target coverage of around 2 times over the long
term. Cover will be lower in the medium term as we invest for
sustainable long term growth.
Capital Expenditure
Capital investment in the period totalled GBP16.5m (H1 FY18:
GBP16.8m) comprising GBP14.3m in Retail and GBP2.2m in
Autocentres.
Within Retail, GBP5.6m (H1 FY18: GBP5.3m) was invested in
stores, including store relocations and refreshes, and the opening
of two Cycle Republic stores. Additional investments in Retail
infrastructure included a GBP5.1m investment in IT systems,
including development of the new till hardware and software
upgrade. The balance of GBP3.6m was invested in the Boardman
Performance Centre, warehousing and logistics upgrades, alongside
Tredz & Wheelies infrastructure improvements.
The GBP2.2m (H1 FY18: GBP2.4m) capital expenditure in
Autocentres principally related to the replacement of garage
equipment and fixtures and fittings.
On a cash basis, total capital expenditure in the period was
GBP13.9m (H1 FY18: GBP14.8m).
We anticipate Group capital expenditure of c.GBP30m in FY19 and
a Group depreciation and amortisation charge of c.GBP33m (prior to
the c.GBP2m in respect of amortisation of intangible assets arising
upon consolidation).
Inventories
Group inventory held as at the period end was GBP205.0m (H1
FY18: GBP206.0m). Retail inventory decreased to GBP203.5m (H1 FY18:
GBP204.3m) and includes GBP6.6m (H1 FY18: GBP7.1m) held by Tredz
and Wheelies.
Autocentres' inventory was GBP1.5m (H1 FY18: GBP1.7m). The
Autocentres business model is such that only modest levels of
inventory are held within the centres, with most parts being
acquired on an as-needed basis.
Cashflow and Borrowings
Adjusted Operating Cash Flow during the period was GBP58.5m (H1
FY18: GBP57.7m). After acquisitions, taxation, capital expenditure
and net finance costs, free cashflow of GBP34.2m (H1 FY18:
GBP31.1m) was generated in the period. Group net debt was GBP77.2m
(H1 FY18: GBP84.8m), with the Underlying EBITDA ratio at 0.7:1.
Brexit
As we have previously explained, the decision of the UK to leave
the European Union ("Brexit") presents significant uncertainties to
the Group as a result of the impact on the wider UK economy. We
have previously set out the main areas in which we considered
Brexit was likely to impact the Group. We reaffirm and update our
assessment of these below:
1) Impact on exchange rates. The Group buys a significant
proportion of its goods in US dollars; between $250m and $300m a
year. The weaker pound since the Brexit vote has increased our cost
of sales by a cumulative circa GBP40m by the end of FY18 compared
to FY16. By the end of FY18 over half of the gross headwind had
been mitigated through supplier negotiations, operational
efficiencies and pricing. At current exchange rates we do not
anticipate any further FX headwind. At our preliminary results in
May 2018 we explained that we anticipated the remainder of FX
mitigation to arise from an improved pound/US dollar exchange rate.
We maintain this guidance, albeit we note that there is no
certainty over the timing of that recovery. We also note that a
further weakening in the value of the pound, for example in a "no
deal Brexit" scenario could further increase our cost of sales.
2) Consumer confidence and spending. Prolonged uncertainty over
exit terms and continued weakness in Sterling could lead to a
slowdown in the UK economy, and consequent loss of consumer
confidence, impacting trading conditions for the Group. Halfords
has strong positions in fragmented Motoring and Cycling markets,
and a service-led offer that differentiates us from our
competitors, physical and online. However, the Cycling category,
particularly, is discretionary and is not immune to a slowdown in
consumer spending. Set against this, much of our Motoring sales are
in needs-based categories that are more resilient to macro-economic
cycles.
3) Changes to import tariffs. In the technical papers published
by the UK Government in preparation for a "no deal" Brexit
scenario, import tariffs with non-EU countries are expected to
remain unchanged. Only a very small proportion of the Group's
purchases are from EU countries; the vast majority of imports are
from non-EU countries.
Principal Risks and Uncertainties
The Board considers risk assessment, identification of
mitigating actions and internal control to be fundamental to
achieving Halfords' strategic corporate objectives. In the Annual
Report & Accounts the Board sets out what it considers to be
the principal commercial and financial risks to achieving the
Group's objectives. The main areas of potential risk and
uncertainty in the balance of the financial year are described in
the Strategic Report on page 40 of the 2018 Annual Report and
Accounts. These include:
-- Economic risks; including market risks
-- Business strategy risks
-- Competitive risks
-- Compliance
-- Supply chain disruption
-- Product and service quality
-- Information technology systems and infrastructure
-- Dependence on key management personnel
Specific risks associated with performance include Christmas
trading as well as weather-sensitive sales, particularly within the
Car Maintenance and Cycling categories in the Retail business.
Loraine Woodhouse
Chief Financial Officer, November 2018
Halfords Group plc's LEI code is 54930086FKBWWJIOB179
Glossary of Alternative Performance Measures
In the reporting of financial information, the Directors have
adopted various Alternative Performance Measures ("APMs"),
previously termed as 'Non GAAP measures'. APMs should be considered
in addition to IFRS measurements, of which some are shown on Page
1. The Directors believe that these APMs assist in providing useful
information on the underlying performance of the Group, enhance the
comparability of information between reporting periods, and are
used internally by the Directors to measure the Group's
performance.
The key APMs that the Group focuses on are as follows:
1. Like-for-like ("LFL") sales represent revenues from stores,
centres and websites that have been trading for at least a year
(but excluding prior year sales of stores and centres closed during
the year) at constant foreign exchange rates.
2. Underlying EBIT is results from operating activities before
non-recurring items. Underlying EBITDA further removes Depreciation
and Amortisation.
3. Underlying Profit Before Tax is Profit before income tax and
non-recurring items as shown in the Group Income Statement.
4. Underlying Earnings Per Share is Profit after income tax
before non-recurring items as shown in the Group Income Statement,
divided by the number of shares in issue.
5. Net Debt is current and non-current borrowings less cash and
cash equivalents, both in-hand and at bank, as shown in the
Consolidated Statement of Financial Position.
6. Net Debt to Underlying EBITDA ratio is represented by the
ratio of Net Debt to Underlying EBITDA (both of which are defined
above).
7. Adjusted Operating Cash Flow is defined as EBITDA plus
share-based payment transactions and loss on disposal of property,
plant and equipment, less working capital movements and movements
in provisions, as reconciled below:
H1 FY19 H1 FY18
GBPm GBPm
Underlying EBITDA 49.8 54.9
Non-recurring operating expenses (2.3) (0.5)
EBITDA 47.5 54.4
----------------------------------- --- -------- --------
Share-based payment transactions 1.0 (0.4)
Loss on disposal of property,
plant & equipment 2.2 0.1
Working capital movements 7.2 3.6
Provisions movement & other 0.6 -
----------------------------------- --- -------- --------
Adjusted Operating Cash Flow 58.5 57.7
----------------------------------- --- -------- --------
8. Free Cash Flow is defined as Adjusted Operating Cash Flow (as
defined above) less capital expenditure, net finance costs,
taxation, exchange movements and arrangement fees on loans; as
reconciled below:
H1 FY19 H1 FY18
GBPm GBPm
Adjusted Operating
Cash Flow 58.5 57.7
Capital expenditure (13.9) (14.8)
Net finance costs (1.3) (0.8)
Taxation (6.3) (7.9)
Exchange movements (2.3) (2.3)
Arrangement fees on loans (0.5) (0.8)
---------------------------- --- -------- --------
Free Cash Flow 34.2 31.1
---------------------------- --- -------- --------
Halfords Group plc
Condensed consolidated income statement
For the 26 weeks to 28 September 2018
26 weeks 26 weeks 52 weeks
to to to
28 September 29 September 30 March
2018 2017 2018
Unaudited Unaudited
Notes GBPm GBPm GBPm
Revenue 7 599.9 588.7 1,135.1
Cost of sales (303.6) (302.4) (564.9)
Gross profit 296.3 286.3 570.2
Operating expenses (264.3) (248.0) (495.6)
Operating profit before non-recurring
items 32.0 38.3 74.6
Non-recurring operating expenditure 9 (2.3) (0.5) (4.8)
-------------------------------------- ----- ------------ ------------ -----------------
Results from operating activities 29.7 37.8 69.8
Finance costs 10 (1.6) (1.3) (2.8)
Finance income 10 0.1 0.1 0.1
-------------------------------------- ----- ------------ ------------ -----------------
Net finance costs (1.5) (1.2) (2.7)
Profit before tax and non-recurring
items 30.5 36.8 71.6
Non-recurring operating expenditure 9 (2.3) (0.5) (4.8)
Non-recurring finance cost 9 - 0.3 0.3
Profit before tax 28.2 36.6 67.1
Tax on recurring items 11 (6.1) (7.4) (13.2)
Tax on non-recurring items 9 0.4 - 0.8
Profit for the period attributable
to equity shareholders 22.5 29.2 54.7
Earnings per share
Basic earnings per share 14 11.4p 14.7p 27.8p
Diluted earnings per share 14 11.3p 14.6p 27.5p
Basic underlying earnings per
share 14 12.4p 14.8p 29.6p
Diluted underlying earnings
per share 14 12.2p 14.7p 29.4p
-------------------------------------- ----- ------------ ------------ -----------------
A final dividend of 12.03 pence per share for the 52 weeks to 30
March 2018 (2017: 11.68 pence per share) was paid on 31 August
2018. The directors have approved an interim dividend of 6.18 pence
per share in respect of the 26 weeks to 28 September 2018 (2017:
6.00 pence per share).
The notes on pages 20 to 31 are an integral part of these
condensed consolidated interim financial statements.
Halfords Group plc
Condensed consolidated statement of comprehensive income
For the 26 weeks to 28 September 2018
26 weeks 26 weeks 52 weeks
to to to
28 September 29 September 30 March
2018 2017
Unaudited Unaudited 2018
GBPm GBPm GBPm
Profit for the period 22.5 29.2 54.7
Other comprehensive income
Cash flow hedges:
Fair value changes in the period 8.8 (7.6) (11.0)
Transfers to inventory - (1.0) -
Transfers to net profit:
Cost of sales - 2.3 1.3
Tax on other comprehensive income - (1.4) 0.2
--------------------------------------- ------------ ------------ ------------
Other comprehensive income for
the period,
net of tax 8.8 (7.7) (9.5)
--------------------------------------- ------------ ------------ ------------
Total comprehensive income for
the period
attributable to equity shareholders 31.3 21.5 45.2
--------------------------------------- ------------ ------------ ------------
The notes on pages 20 to 31 are an integral part of these
condensed consolidated interim financial statements.
Halfords Group plc
Condensed consolidated statement of financial position
As at 28 September 2018
As at As at As at
28 September 29 September 30 March
2018 2017 2018
Unaudited Unaudited
Notes GBPm GBPm GBPm
Assets
Non-current assets
Intangible assets 15 391.7 394.5 393.9
Property, plant and equipment 15 99.9 102.5 101.3
Investments 16 8.1 8.1 8.1
--------------------------------- ----- ------------- ------------- -----------
Total non-current assets 499.7 505.1 503.3
--------------------------------- ----- ------------- ------------- -----------
Current assets
Inventories 205.0 206.0 195.5
Trade and other receivables 58.4 57.2 56.0
Derivative financial instruments 4.8 1.0 0.3
Cash and cash equivalents 17 18.5 11.4 27.0
--------------------------------- ----- ------------- ------------- -----------
Total current assets 286.7 275.6 278.8
--------------------------------- ----- ------------- ------------- -----------
Total assets 786.4 780.7 782.1
--------------------------------- ----- ------------- ------------- -----------
Liabilities
Current liabilities
Borrowings 17 (17.3) (14.8) (20.8)
Derivative financial instruments (0.3) (5.9) (5.4)
Trade and other payables (209.4) (214.2) (187.0)
Current tax liabilities (3.1) (8.9) (3.3)
Provisions (13.5) (12.2) (11.9)
--------------------------------- ----- ------------- ------------- -----------
Total current liabilities (243.6) (256.0) (228.4)
--------------------------------- ----- ------------- ------------- -----------
Net current assets 43.1 19.6 50.4
--------------------------------- ----- ------------- ------------- -----------
Non-current liabilities
Borrowings 17 (78.4) (81.4) (94.0)
Trade and other payables (31.3) (31.3) (31.2)
Deferred tax liability (3.3) (1.5) (2.7)
Provisions (4.3) (4.8) (3.9)
Total non-current liabilities (117.3) (119.0) (131.8)
--------------------------------- ----- ------------- ------------- -----------
Total liabilities (360.9) (375.0) (360.2)
--------------------------------- ----- ------------- ------------- -----------
Net assets 425.5 405.7 421.9
--------------------------------- ----- ------------- ------------- -----------
Shareholders' equity
Share capital 18 2.0 2.0 2.0
Share premium account 18 151.0 151.0 151.0
Investment in own shares (9.1) (9.4) (9.4)
Other reserves 3.9 (7.1) (2.9)
Retained earnings 277.7 269.2 281.2
--------------------------------- ----- ------------- ------------- -----------
Total equity attributable to
equity holders of the Company 425.5 405.7 421.9
--------------------------------- ----- ------------- ------------- -----------
The notes on pages 20 to 31 are an integral part of these
condensed consolidated interim financial statements.
Halfords Group plc
Condensed consolidated statement of changes in equity
For the 26 weeks to 28 September 2018
For the period ended 28 September 2018 (Unaudited)
Attributable to the equity holders
of the Company
--------- ----------------------------------------------------------------------
Other reserves
----------------------
Share Investment Capital
Share premium in own redemption Hedging Retained Total
capital account shares reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 30 March
2018 2.0 151.0 (9.4) 0.3 (3.2) 281.2 421.9
Adjustment on initial
application of IFRS
15 (see note 4) - - - - - (3.3) (3.3)
---------------------------- --------- --------- ------------- ----------- --------- ---------- --------
Adjusted balance at
30 March 2018 2.0 151.0 (9.4) 0.3 (3.2) 277.9 418.6
---------------------------- --------- --------- ------------- ----------- --------- ---------- --------
Total comprehensive
income for the period
Profit for the period - - - - - 22.5 22.5
Other comprehensive
income
Cash flow hedges:
Fair value changes in
the period - - - - 8.8 - 8.8
Total other comprehensive
income for the period
net of tax - - - - 8.8 - 8.8
---------------------------- --------- --------- ------------- ----------- --------- ---------- --------
Total comprehensive
income for the period - - - - 8.8 22.5 31.3
Hedging gains and losses
and costs of hedging
transferred to the cost
of inventory - - - - (2.0) - (2.0)
Transactions with owners
Share options exercised - - 0.3 - - - 0.3
Share-based payment
transactions - - - - - 1.0 1.0
Dividends to equity
holders - - - - - (23.7) (23.7)
Total transactions with
owners - - 0.3 - - (22.7) (22.4)
---------------------------- --------- --------- ------------- ----------- --------- ---------- --------
Balance at 28 September
2018 2.0 151.0 (9.1) 0.3 3.6 277.7 425.5
---------------------------- --------- --------- ------------- ----------- --------- ---------- --------
The notes on pages 20 to 31 are an integral part of these
condensed consolidated interim financial statements.
Halfords Group plc
Condensed consolidated statement of changes in equity
(continued)
For the 26 weeks to 28 September 2018
For the period ended 29 September 2017 (Unaudited)
Attributable to the equity holders
of the Company
--------- ------------------------------------------------------------
Other reserves
----------------------
Share Investment Capital
Share premium in own redemption Hedging Retained Total
capital account shares reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 April 2017 2.0 151.0 (9.5) 0.3 0.3 263.4 407.5
Total comprehensive
income for the period
Profit for the period - - - - - 29.2 29.2
Other comprehensive
income
Cash flow hedges:
Fair value changes in
the period - - - - (7.6) - (7.6)
Transfers to inventory - - - - (1.0) - (1.0)
Transfers to net
profit:
Cost of sales - - - - 2.3 - 2.3
Income tax on
other
comprehensive
income - - - - (1.4) - (1.4)
----------------------------- --------- --------- ------------- ----------- --------- ---------- --------
Total other comprehensive
income for the period
net of tax - - - - (7.7) - (7.7)
----------------------------- --------- --------- ------------- ----------- --------- ---------- --------
Total comprehensive
income for the period - - - - (7.7) 29.2 21.5
Transactions with owners
Share options exercised - - 0.1 - - - 0.1
Share-based payment
transactions - - - - - (0.4) (0.4)
Dividends to equity
holders - - - - - (23.0) (23.0)
Total transactions with
owners - - 0.1 - - (23.4) (23.3)
----------------------------- --------- --------- ------------- ----------- --------- ---------- --------
Balance at 29 September
2017 2.0 151.0 (9.4) 0.3 (7.4) 269.2 405.7
----------------------------- --------- --------- ------------- ----------- --------- ---------- --------
The notes on pages 20 to 31 are an integral part of these
condensed consolidated interim financial statements.
Halfords Group plc
Condensed consolidated statement of cash flows
For the 26 weeks to 28 September 2018
26 weeks 26 weeks 52 weeks
to to to
28 September 29 September 30 March
2018 2017 2018
Unaudited Unaudited
Notes GBPm GBPm GBPm
Cash flows from operating activities
Profit after tax for the period
before non-recurring items 24.4 29.4 58.4
Non-recurring items 9 (1.9) (0.2) (3.7)
---------------------------------------- ----- ------------ ------------ --------
Profit after tax for the period 22.5 29.2 54.7
Depreciation and impairment -
property, plant and equipment 11.6 10.5 24.0
Amortisation - intangible assets 6.3 6.1 10.9
Net finance costs 1.5 1.2 2.7
Loss on disposal of property,
plant and equipment 2.2 0.1 4.1
Equity-settled share based payment
transactions 1.0 (0.4) 0.4
Exchange movement (2.3) (2.3) 1.9
Income tax expense 5.7 7.4 12.4
Increase in inventories (7.7) (14.9) (4.4)
(Increase)/decrease in trade and
other receivables (2.4) 1.2 2.4
Increase/(decrease) in trade and
other payables 17.3 17.3 (10.6)
Increase/(decrease) in provisions 0.3 (0.2) (1.4)
Finance income received 0.1 0.1 0.1
Finance costs paid (1.4) (0.9) (2.0)
Corporation tax paid (6.3) (7.9) (16.1)
---------------------------------------- ----- ------------ ------------ --------
Net cash from operating activities 48.4 46.5 79.1
---------------------------------------- ----- ------------ ------------ --------
Cash flows from investing activities
Acquisition of subsidiary, net
of cash acquired - (5.1) (5.1)
Purchase of investment (0.5) (2.0) (3.5)
Purchase of intangible assets (4.0) (10.9) (18.0)
Purchase of property, plant and
equipment (9.9) (3.9) (19.0)
---------------------------------------- ----- ------------ ------------ --------
Net cash used in investing activities (14.4) (21.9) (45.6)
---------------------------------------- ----- ------------ ------------ --------
Cash flows from financing activities
Net proceeds from exercise of
share options 0.3 0.1 0.1
Proceeds from loans, net of transaction
costs 445.7 196.2 415.2
Repayment of borrowings (461.0) (198.0) (404.0)
Payment of finance lease liabilities (0.3) (0.4) (0.6)
Dividends paid 13 (23.7) (23.0) (34.8)
---------------------------------------- ----- ------------ ------------ --------
Net cash used in financing activities (39.0) (25.1) (24.1)
---------------------------------------- ----- ------------ ------------ --------
Net increase / (decrease) in cash
and bank overdrafts 17 (5.0) (0.5) 9.4
Cash and cash equivalents at the
beginning of the period 17 7.5 (1.9) (1.9)
Cash and cash equivalents at the
end of the period 17 2.5 (2.4) 7.5
---------------------------------------- ----- ------------ ------------ --------
The notes on pages 20 to 31 are an integral part of these
condensed consolidated interim financial statements.
Halfords Group plc
Notes to the condensed consolidated interim financial
statements
For the 26 weeks to 28 September 2018
1. General information
The condensed consolidated interim financial statements of
Halfords Group plc (the "Company") comprise the Company together
with its subsidiary undertakings (the "Group").
The Company is a limited liability company incorporated,
domiciled and registered in England and Wales. Its registered
office is Icknield Street Drive, Washford West, Redditch,
Worcestershire, B98 0DE.
The Company is listed on the London Stock Exchange.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 8 November 2018.
2. Statement of compliance
These condensed consolidated interim financial statements for
the 26 weeks to 28 September 2018 have been prepared in accordance
with IAS 34 'Interim financial reporting' as endorsed by the
European Union. They do not include all of the information required
for full annual financial statements, and should be read in
conjunction with the 2018 Annual Report and Accounts, which have
been prepared in accordance with IFRSs as adopted by the European
Union.
This is the first set of the Group's financial statements where
IFRS 15 has been applied. Changes to significant accounting
policies are described in Note 4.
The comparative figures for the financial period ended 30 March
2018 are not the Group's statutory accounts for that financial
period. Those accounts have been reported on by the Group's
auditors and delivered to the registrar of companies. The report of
the auditor was (i) unqualified, (ii) did not include a reference
to any matters to which the auditor drew attention by way of
emphasis without qualifying their report, and (iii) did not contain
a statement under section 498 (2) or (3) of the Companies Act
2006.
3. Risks and uncertainties
The Directors consider that the majority of the principal risks
and uncertainties which could have a material impact on the Group's
performance in the remaining 26 weeks of the financial year remain
the same as those stated on pages 40 to 44 of our Annual Report and
Accounts for the 52 weeks to 30 March 2018, which are available on
our website www.halfordscompany.com.
4. Significant accounting policies
The Directors consider that the Group has adequate resources to
remain in operation for the foreseeable future and have therefore
continued to adopt the going concern basis in preparing the
condensed consolidated interim financial statements. The Group's
forecasts and projections, taking into account reasonably possible
changes in trading performance, show that the Group has adequate
resources to continue in operational existence for the foreseeable
future.
Except for the first time adoption of IFRS 15 detailed below, as
required by the Disclosure and Transparency Rules of the Financial
Conduct Authority, the condensed consolidated interim financial
statements have been prepared by applying the accounting policies
and presentation that were applied in the preparation of the 2018
Annual Reports and Accounts, which are published on the Halfords
Group website, www.halfordscompany.com. The changes to accounting
policies outlined below are also expected to be reflected in the
Group's consolidated financial statements as at and for the year
ending 29 March 2019.
Other than IFRS 15, there are no new or amended standards
effective in the period which has had a material impact on the
interim consolidated financial information.
IFRS 15 'Revenue from contracts with customers'
The Group has initially adopted IFRS 15 'Revenue from contracts
with customers' from 31 March 2018. IFRS 15 supersedes IAS 11
'Construction contracts', IAS 18 'Revenue' and related
interpretations. The new standard establishes a five-step model to
account for revenue, which is recognised at an amount that reflects
the consideration to which an entity expects to be entitled in
exchange for transferring goods or services to a customer. The
majority of the Group's sales are for standalone products made
direct to customers at standard prices either in-store or online,
so the majority of revenue streams are unaffected by the new
standard.
The Group has adopted IFRS 15 using the cumulative effect method
of adoption, with no restatement of comparatives and brought
forward adjustments being made through retained earnings at the
date of initial application, 31 March 2018. The key considerations
along with the impact of adopting the new standard are shown
below.
(a) Principal versus agent considerations
In the vast majority of cases, the Group was considered the
principal in sales transactions under IFRS 15 and therefore
recognised the full value of the sale within revenue, rather than
netting off the costs in revenue, in line with the previous
treatment under IAS 18. However, under IFRS 15 certain revenue
streams within the Group were reclassified to reflect the nature of
the control of the goods before they are transferred to customers
and therefore showing revenue net of costs, resulting in decreased
revenue and cost of sales of GBP0.9m in the 26 weeks to 28
September 2018 with GBPnil impact on profit.
(b) Sales return provision
Under IAS 18 the Group held a sales return provision on the
statement of financial position to provide for expected levels of
product returns at stock margin. IFRS 15 requires a presentational
change where the amount of revenue relating to expected returns is
recognised on the statement of financial position within
provisions, with a corresponding adjustment to revenue, and the
cost value of goods expected to be returned was included within
inventories, with a corresponding adjustment to cost of sales. The
revenue recognition policy on returns has been updated to
illustrate this new classification. The net adjustment is a GBP1.8m
increase to the value of inventories and provisions. Total Group
inventory at 28 September 2018 was GBP205.0m.
(c) Product guarantees
Revenue recognition under IFRS 15 requires identification of
separate performance obligations, a change to the previous approach
under IAS 18. The main impact on adoption was in respect of the
timing of revenue recognition of product guarantees, principally
for certain motoring products. Under IFRS 15, the warranty element
of a product is considered a separate performance obligation, and
so under the new standard a portion of the sale price is allocated
to providing a warranty. This is recorded as a liability on the
statement of financial position and released to revenue over the
period of the warranty. The net adjustment is a GBP3.3m increase to
liabilities, classified within trade and other payables, with the
corresponding adjustment through retained earnings. The split
between current and non-current trade and other payables is shown
in the summary table below.
A summary of the impact on the Group income statement for the 26
weeks to 28 September 2018 is shown below:
Adjustment
For the 26 weeks to as Balance pre IFRS 15 As
described
28 September 2018 above adjustments adjustments reported
GBPm GBPm GBPm
Revenue (a) 600.8 (0.9) 599.9
Cost of sales (a) (304.5) 0.9 (303.6)
Profit for the period
attributable
to equity shareholders 22.5 - 22.5
------------------------------------- ----------- ----------- -----------
A summary of the impact on the Group statement of financial
position as at 28 September 2018 is shown below:
As at 28 September Adjustment
2018 as Balance pre IFRS 15 As
described
above adjustments adjustments reported
GBPm GBPm GBPm
Current assets
Inventories (b) 203.2 1.8 205.0
Current liabilities
Trade and other payables (c) (208.1) (1.3) (209.4)
Provisions (b) (11.7) (1.8) (13.5)
Non-current liabilities
Trade and other payables (c) (29.3) (2.0) (31.3)
Net assets 428.8 (3.3) 425.5
-------------------------------------- ----------- ----------- -----------
Retained earnings (c) 281.0 (3.3) 277.7
------------------------- ----------- ----------- ----------- -----------
New accounting standards not yet adopted
IFRS 16 'Leases' will be effective for the Group from 30 March
2019. Under IFRS 16 the lessee will recognise a right-of-use asset
and a lease liability for all leases currently accounted for as
operating leases. There are exemptions available for low value
assets and assets which are classed as short term (<12
months).
After the initial transitional adjustment the Group will
depreciate the right-of-use asset on a straight line basis over the
remaining lease term and recognise an interest expense in the
income statement representing the unwinding of the lease liability.
The Group expects this to have a significant impact on the
consolidated income statement and consolidated statement of
financial position. There will be no quantitative impact on the
cash flow statement but the presentation will change, resulting in
higher cash inflows from operating activities and cash outflows
from financing activities.
The IFRS 16 implementation project is on track to ensure the
Group will be fully compliant. Significant work is being done on
collecting and validating the relevant data, agreeing the discount
rate methodology, implementation of IT systems and getting relevant
accounting policies approved.
The impact of the standard on the Group is currently being
considered given the complexities and judgments contained within
it. Therefore, it is not yet practicable to provide a full estimate
of its effect on the financial statements.
5. Estimates and judgements
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from those estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those applied to the
consolidated financial statements as at and for the 52 week period
ended 30 March 2018 and the 26 weeks ended 29 September 2017.
6. Operating segments
The Group has two reportable segments, Retail and Car Servicing,
which are the Group's strategic business units. Car Servicing
became a reporting segment of the Group as a result of the
acquisition of Nationwide Autocentres on 17 February 2010. The
strategic business units offer different products and services, and
are managed separately because they require different operational,
technological and marketing strategies.
The operations of the Retail reporting segment comprise the
retailing of automotive, leisure and cycling products through
retail stores and online platforms. The operations of the Car
Servicing reporting segment comprise car servicing and repair
performed from Autocentres.
The Chief Operating Decision Maker is the Executive Directors.
Internal management reports for each of the segments are reviewed
by the Executive Directors on a monthly basis. Key measures used to
evaluate performance are Revenue and Operating Profit. Management
believe that these measures are the most relevant in evaluating the
performance of the segment and for making resource allocation
decisions.
The following summary describes the operations in each of the
Group's reportable segments. Performance is measured based on
segment operating profit, as included in the management reports
that are reviewed by the Executive Directors. These internal
reports are prepared in accordance with IFRS accounting policies
consistent with these Group Financial Statements.
All material operations of the reportable segments are carried
out in the UK and all material non-current assets are located in
the UK. The Group's revenue is driven by the consolidation of
individual small value transactions and as a result Group revenue
is not reliant on a major customer or group of customers. All
revenue is from external customers.
26 weeks
to 28 September
2018
Retail Car Servicing Total Unaudited
Income statement GBPm GBPm GBPm
------------------------------------- ------ ------------- ----------------
Revenue 519.8 80.1 599.9
Segment result before non-recurring
items 30.8 2.3 33.1
Non-recurring items (2.3) - (2.3)
------------------------------------- ------ ------------- ----------------
Segment result 28.5 2.3 30.8
Unallocated expenses(1) (1.1)
------------------------------------- ------ ------------- ----------------
Operating profit 29.7
Net financing expense (1.5)
Profit before tax 28.2
Taxation (5.7)
------------------------------------- ------ ------------- ----------------
Profit after tax 22.5
------------------------------------- ------ ------------- ----------------
26 weeks
to 29 September
2017
Retail Car Servicing Total Unaudited
Income statement GBPm GBPm GBPm
------------------------------------- ------ ------------- ----------------
Revenue 511.0 77.7 588.7
Segment result before non-recurring
items 37.9 1.5 39.4
Non-recurring items (0.5) - (0.5)
------------------------------------- ------ ------------- ----------------
Segment result 37.4 1.5 38.9
Unallocated expenses(1) (1.1)
------------------------------------- ------ ------------- ----------------
Operating profit 37.8
Net financing expense (1.2)
Profit before tax 36.6
Taxation (7.4)
------------------------------------- ------ ------------- ----------------
Profit after tax 29.2
------------------------------------- ------ ------------- ----------------
(1) Unallocated expenses have been disclosed to reflect the
format of the internal management reports reviewed by the Chief
Operating Decision maker and include an amortisation charge of
GBP1.1m in respect of assets acquired through business combinations
(2017: GBP1.1m).
52 weeks
to
30 March
2018
Retail Car Servicing Total
Income statement GBPm GBPm GBPm
------------------------------------- ------ ------------- ---------
Revenue 977.2 157.9 1,135.1
Segment result before non-recurring
items 72.6 4.1 76.7
Non-recurring items (4.8) - (4.8)
------------------------------------- ------ ------------- ---------
Segment result 67.8 4.1 71.9
Unallocated expenses(1) (2.1)
------------------------------------- ------ ------------- ---------
Operating profit 69.8
Net financing expense (2.7)
Profit before tax 67.1
Taxation (12.4)
------------------------------------- ------ ------------- ---------
Profit after tax 54.7
------------------------------------- ------ ------------- ---------
(1) Unallocated expenses have been disclosed to reflect the
format of the internal management reports reviewed by the Chief
Operating Decision maker and include an amortisation charge of
GBP2.1m in respect of assets acquired through business combinations
(2017: GBP1.9m).
26 weeks
to 28 September
2018
Retail Car Servicing Total Unaudited
Other segment items: GBPm GBPm GBPm
---------------------- ------ ------------- ----------------
Capital expenditure 14.3 2.2 16.5
Depreciation expense 9.2 2.4 11.6
Amortisation expense 5.8 0.5 6.3
----------------------- ------ ------------- ----------------
26 weeks
to
29 September
2017
Retail Car Servicing Total Unaudited
Other segment items: GBPm GBPm GBPm
---------------------- ------ ------------- ----------------
Capital expenditure 14.4 2.4 16.8
Depreciation expense 8.3 2.2 10.5
Amortisation expense 4.7 0.3 5.0
----------------------- ------ ------------- ----------------
52 weeks
to
30 March
2018
Retail Car Servicing Total
Other segment items: GBPm GBPm GBPm
---------------------- ------ ------------- ---------
Capital expenditure 30.3 7.0 37.3
Depreciation expense 18.1 5.9 24.0
Amortisation expense 8.3 0.5 8.8
----------------------- ------ ------------- ---------
There have been no significant transactions between segments in
the 26 weeks ended 28 September 2018 (2017: GBPnil).
7. Revenue
A. Revenue streams and location
The Group's operations and main revenue streams are those
described in the last annual financial statements. The Group's
revenue is derived from contracts with customers.
The nature and effect of initially applying IFRS 15 on the
Group's interim financial statements are disclosed in Note 4.
Revenue split by the Group's operating segments are shown in
Note 6.
All revenue is recognised in the United Kingdom and Republic of
Ireland.
B. Seasonality of operations
In general, the Group's results are not seasonal with revenue in
the first half broadly similar to that of the second, however sales
of certain products tend to fluctuate by season. For example, sales
of children's cycles peak in the Christmas season and sales of
adult cycles tend to peak in the summer.
8. Inventories
Following the adoption of IFRS 15, inventories at 28 September
2018 include a right to recover returned goods amounting to GBP1.8m
(see Note 4). These are measured by reference to the former
carrying amount of the sold inventories.
9. Non-recurring items
26 weeks 26 weeks 52 weeks
to to to
28 September 29 September 30 March
2018 2017 2018
Unaudited Unaudited
GBPm GBPm GBPm
Non-recurring operating expenses:
Organisational restructure
(a) 0.2 - 4.3
Operational review of Autocentres
(b) - 0.5 0.6
Acquisition and investment
related fees (c) - - 0.2
Operating lease obligation
(d) - - (0.3)
Group-wide strategic review 2.1 -
(e) -
----------------------------------- ------------ ------------ --------
Non-recurring operating expense 2.3 0.5 4.8
Acquisition related interest
credit (f) - (0.3) (0.3)
Non-recurring items before
tax 2.3 0.2 4.5
Tax on non-recurring items
(g) (0.4) - (0.8)
----------------------------------- ------------ ------------ --------
Non-recurring expense after
tax 1.9 0.2 3.7
----------------------------------- ------------ ------------ --------
(a) In the period termination costs of GBP0.2m were incurred as
part of the strategic review. In the prior year, organisational
restructuring was undertaken across Autocentres and Retail, to
better align resource to the requirements of the business.
(b) Autocentres operational review costs in the prior year
relate to the review of the operating model of the Autocentres
business.
(c) In FY18 further acquisition and investment related fees were
incurred relating to the investment in Tyres On The Drive.
(d) The operating lease obligation in FY18 related to a
provision release of GBP0.3m from amounts originally provided for
the Group's guarantor obligations arising from historically held
lease guarantees.
(e) Costs of GBP2.1m were incurred in the period in relation to
the costs of preparing the new Group strategy, which predominantly
relate to external consultant costs.
(f) There was a GBP0.3m credit in the prior year from the
release of the remaining portion of interest charge due on the
contingent consideration for Tredz, which was paid in May 2017.
(g) The tax credit in both HY19 and FY18 represents a tax rate
of 19.0% applied to non-recurring items.
10. Net Finance Costs
26 weeks 26 weeks 52 weeks
to to to
28 September 29 September 30 March
2018 2017 2018
Unaudited Unaudited
GBPm GBPm GBPm
Finance costs:
Bank borrowings (0.8) (0.6)) (1.3)
Amortisation of issue costs
on loans (0.2) (0.3)) (0.5)
Commitment and guarantee fees (0.3) (0.3)) (0.5)
Acquisition related interest
charges - 0.3) 0.3
Interest payable on finance
leases (0.3) (0.4)) (0.8)
Finance costs (1.6) (1.3)) (2.8)
Finance income:
Bank and similar interest 0.1 0.1 0.1
Income from forward foreign
exchange contracts - - -
Finance income 0.1 0.1 0.1
Net finance costs (1.5) (1.2)) (2.7)
------------------------------ ------------ ------------ --------
11. Income tax expense
Income tax expense is recognised based on management's best
estimate of the weighted average annual income tax rate expected
for the full financial year applied to the pre-tax income of the
interim period.
The effective tax rate before non-recurring items for the 26
weeks to 28 September 2018 is 20.2% (2017: 20.3%). The effective
tax rate is higher than the UK corporation tax rate principally due
to the non-deductibility of depreciation charged on capital
expenditure.
12. Financial Instruments and Related Disclosures
Accounting classifications and fair values
The following table shows the carrying amounts and fair values
of financial assets and liabilities, including their levels in the
fair value hierarchy. It does not include fair value information
for financial assets and financial liabilities not measured at fair
value if the carrying amount is a reasonable approximation of fair
value.
Fair Value FVOCI -
- hedging equity Amortised Other financial Total carrying
instruments instruments cost liabilities amount
28 September 2018 GBPm GBPm GBPm GBPm GBPm
------------------------------ ------------ ------------ --------- --------------- --------------
Financial assets measured
at fair value
Forward exchange contracts
used for hedging 4.8 - - - 4.8
Equity investments - 8.1 - - 8.1
------------------------------- ------------ ------------ --------- --------------- --------------
4.8 8.1 - - 12.9
------------------------------ ------------ ------------ --------- --------------- --------------
Financial assets not measured
at fair value
Trade and other receivables* - - 35.6 - 35.6
Cash and cash equivalents - - 18.5 - 18.5
------------------------------- ------------ ------------ --------- --------------- --------------
- - 54.1 - 54.1
------------------------------ ------------ ------------ --------- --------------- --------------
Financial liabilities
measured at fair value
Forward exchange contracts
used for hedging (0.3) - - - (0.3)
------------------------------- ------------ ------------ --------- --------------- --------------
(0.3) - - - (0.3)
------------------------------ ------------ ------------ --------- --------------- --------------
Financial liabilities
not measured at fair value
Borrowings - - - (84.5) (84.5)
Current tax liabilities - - - (3.1) (3.1)
Finance lease liabilities - - - (11.2) (11.2)
Trade and other payables** - - - (109.6) (109.6)
------------------------------- ------------ ------------ --------- --------------- --------------
- - - (208.4) (208.4)
------------------------------ ------------ ------------ --------- --------------- --------------
* Prepayments and accrued income of GBP22.8m are not included as
a financial asset.
** Other taxation and social security payables of GBP14.1m,
deferred income of GBP29.2m, accruals of GBP41.0m and other
payables of GBP14.2m are not included as a financial liability.
Fair Value FVOCI -
- hedging equity Amortised Other financial Total carrying
instruments instruments cost liabilities amount
29 September 2017 GBPm GBPm GBPm GBPm GBPm
------------------------------ ------------ ------------ --------- --------------- --------------
Financial assets measured
at fair value
Forward exchange contracts
used for hedging 1.0 - - - 1.0
Equity investments - 8.1 - - 8.1
------------------------------- ------------ ------------ --------- --------------- --------------
1.0 8.1 - - 9.1
------------------------------ ------------ ------------ --------- --------------- --------------
Financial assets not measured
at fair value
Trade and other receivables* - - 32.9 - 32.9
Cash and cash equivalents - - 11.4 - 11.4
------------------------------- ------------ ------------ --------- --------------- --------------
- - 44.3 - 44.3
------------------------------ ------------ ------------ --------- --------------- --------------
Financial liabilities
measured at fair value
Forward exchange contracts
used for hedging (5.9) - - - (5.9)
------------------------------- ------------ ------------ --------- --------------- --------------
(5.9) - - - (5.9)
------------------------------ ------------ ------------ --------- --------------- --------------
Financial liabilities
not measured at fair value
Borrowings - - - (84.6) (84.6)
Current tax liabilities - - - (8.9) (8.9)
Finance lease liabilities - - - (11.6) (11.6)
Trade and other payables** - - - (106.4) (106.4)
------------------------------- ------------ ------------ --------- --------------- --------------
- - - (211.5) (211.5)
------------------------------ ------------ ------------ --------- --------------- --------------
* Prepayments and accrued income of GBP24.3m are not included as
a financial asset.
** Other taxation and social security payables of GBP20.3m,
deferred income of GBP31.3m, accruals of GBP41.4m and other
payables of GBP14.8m are not included as a financial liability.
Measurement of fair values
The fair values of each class of financial assets and
liabilities is the carrying amount, based on the following
assumptions:
Trade receivables, trade payables The fair value approximates to the carrying
and finance lease obligations, amount because of the short
short-term deposits and borrowings maturity of these instruments, using an
interest rate of 7.1% for long-term
finance lease obligations.
----------------------------------- ----------------------------------------------
Long-term borrowings The fair value of bank loans and other loans
approximates to the carrying value reported
in the statement of financial position as
the majority are floating rate where payments
are reset to market rates at intervals of
less than one year.
----------------------------------- ----------------------------------------------
Forward currency contracts The fair value is determined using the market
forward rates at the reporting
date and the outright contract rate.
----------------------------------- ----------------------------------------------
Financial instruments carried at fair value are required to be
measured by reference to the following levels:
-- Level 1: quoted prices in active markets for identical assets or liabilities;
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
All financial instruments carried at fair value have been
measured by a Level 2 valuation method, except for the equity
investments, as shown in Note 16, which is valued at Level 3. There
have been no changes to classifications in the current or prior
period.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's receivables from customers.
The Group does not have any individually significant customers
and so no significant concentration of credit risk. The majority of
the Group's sales are paid in cash at point of sale which further
limits the Group's exposure. The Group's exposure to credit risk is
influenced mainly by the individual characteristics of each
customer. The Board of Directors has established a credit policy
under which each new customer is analysed individually for
creditworthiness before the Group's standard payment terms and
conditions are offered. The Group limits its exposure to credit
risk from trade receivables by establishing a maximum payment
period of one month for customers. All trade receivables are based
in the United Kingdom.
The Group has taken into account the historic credit losses
incurred on trade receivables and adjusted it for forward looking
estimates. The movement in the allowance for impairment in respect
of trade receivables during the period was GBP0.1m.
13. Dividends
During the period the Group paid a final dividend of 12.03 pence
per share in respect of the 52 weeks to 30 March 2018 (2017: 11.68
pence per share), which absorbed GBP23.7m of shareholders' funds
(2017: GBP23.0m).
The directors have approved an interim dividend of 6.18 pence
per share for the 26 weeks to 28 September 2018 (2017: 6.00 pence
per share), which is expected to be GBP12.2m (2017: GBP11.8m) and
will be paid on 18 January 2019 to those shareholders on the share
register at the close of business on 14 December 2018.
14. Earnings Per Share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the period. The weighted
average number of shares excludes shares held by the Employee
Benefit Trust and has been adjusted for the issue/repurchase of
shares during the period.
For diluted earnings per share the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. These represent share options
granted to employees where the exercise price is less than the
average market price of the Company's ordinary shares during the 26
weeks to 28 September 2018.
26 weeks 26 weeks 52 weeks
to to to
28 September 29 September 30 March
2018 2017 2018
Unaudited Unaudited
Number Number Number
m m M
Weighted average number of shares
in issue 199.1 199.1 199.1
Less: shares held by the Employee
Benefit Trust (1.9) (2.0)) (2.1)
--------------------------------------- ------------ ------------ --------
Weighted average number of shares
for calculating basic earnings
per share 197.2 197.1 197.0
Weighted average number of dilutive
share options 2.1 1.7 1.6
Total number of shares for calculating
diluted earnings per share 199.3 198.8 198.6
--------------------------------------- ------------ ------------ --------
26 weeks 26 weeks 52 weeks
to to to
28 September 29 September 30 March
2018 2017 2018
Unaudited Unaudited
GBPm GBPm GBPm
Basic earnings attributable to
equity shareholders 22.5 29.2 54.7
Non-recurring items:
Operating expenses 2.3 0.5 4.8
Finance costs - (0.3) (0.3)
Tax charge on non-recurring items (0.4) -) (0.8)
----------------------------------------- ------------ ------------ --------
Underlying earnings before non-recurring
items 24.4 29.4 58.4
----------------------------------------- ------------ ------------ --------
Basic earnings per share 11.4p 14.7p 27.8p
Diluted earnings per share 11.3p 14.6p 27.5p
Basic underlying earnings per
share 12.4p 14.8p 29.6p
Diluted underlying earnings per
share 12.2p 14.7p 29.4p
----------------------------------------- ------------ ------------ --------
The alternative measure of earnings per share is provided
because it reflects the Group's underlying performance by excluding
the effect of non-recurring items.
15. Capital Expenditure - Tangible and Intangible Assets
Unaudited
GBPm
Net book value at 31 March 2017 496.9
Additions 16.8
Disposals (1.4)
Depreciation, amortisation and impairment (15.3)
------------------------------------------- ---------
Net book value at 29 September 2017 497.0
------------------------------------------- ---------
Unaudited
GBPm
Net book value at 30 March 2018 495.2
Additions 16.5
Disposals (11.1)
Depreciation, amortisation and impairment (9.0)
------------------------------------------- ---------
Net book value at 28 September 2018 491.6
------------------------------------------- ---------
16. Investments
Unaudited
GBPm
Investments at 30 March 2018 and 28 September
2018 8.1
----------------------------------------------- ---------
The Group holds a minority stake in an automotive business,
Tyres On The Drive.
17. Analysis of Movements in the Group's Net Debt in the Period
At At
30 March Other non-cash 28 September
2018 Cash flow changes 2018
Unaudited Unaudited Unaudited
GBPm GBPm GBPm GBPm
Cash in hand and at bank 7.5 (5.0) - 2.5
Debt due after one year (83.7) 15.3 (0.1) (68.5)
-------------------------- --------- --------- -------------- -------------
Total net debt excluding
finance leases (76.2) 10.3 (0.1) (66.0)
-------------------------- --------- --------- -------------- -------------
Finance leases due within
one year (1.3) 0.3 (0.3) (1.3)
Finance leases due after
one year (10.3) - 0.4 (9.9)
-------------------------- --------- --------- -------------- -------------
Total finance leases (11.6) 0.3 0.1 (11.2)
-------------------------- --------- --------- -------------- -------------
Total net debt (87.8) 10.6 - (77.2)
-------------------------- --------- --------- -------------- -------------
Non-cash changes comprise finance costs in relation to the
amortisation of capitalised debt issue costs of GBP0.1m, and
movements in finance leases of GBP0.1m. Cash and cash equivalents
at the period end consist of GBP12.4m of liquid assets, GBP6.1m of
cash held in Trust and GBP16.0m of bank overdrafts.
At
At Other non-cash 29 September
31 March Cash flow changes 2017
2017 Unaudited Unaudited Unaudited
GBPm GBPm GBPm GBPm
Cash in hand and at bank (1.9) (0.5) - (2.4)
Debt due after one year (72.0) 1.8 (0.3) (70.5)
-------------------------- --------- --------- -------------- -------------
Total net debt excluding
finance leases (73.9) 1.3 (0.3) (72.9)
-------------------------- --------- --------- -------------- -------------
Finance leases due within
one year (1.4) 0.4 (0.1) (1.1)
Finance leases due after
one year (10.6) - (0.2) (10.8)
-------------------------- --------- --------- -------------- -------------
Total finance leases (12.0) 0.4 (0.3) (11.9)
-------------------------- --------- --------- -------------- -------------
Total net debt (85.9) 1.7 (0.6) (84.8)
-------------------------- --------- --------- -------------- -------------
18. Share Capital
Share
Number of Share premium
shares capital account
m GBPm GBPm
As at 31 March 2017 and 29
September 2017 199.1 2.0 151.0
--------------------------- --------- -------- --------
Share
Number of Share premium
shares capital account
m GBPm GBPm
As at 30 March 2018 and
28 September 2018 199.1 2.0 151.0
------------------------ --------- -------- --------
During the 26 weeks to 28 September 2018 and 29 September 2017,
there were no movements in company share capital. The shares held
in treasury are used to meet options under the Company's share
options schemes.
19. Contingent liability
The Group's banking arrangements include the facility for the
bank to provide a number of guarantees in respect of liabilities
owed by the Group during the course of its trading. In the event of
any amount being immediately payable under the guarantee, the bank
has the right to recover the sum in full from the Group. The total
amount of guarantees in place at 28 September 2018 amounted to
GBP3.7m.
Where right of set off is included within the Group's banking
arrangements, credit balances may be offset against the
indebtedness of other Group companies.
20. Related Party Transactions
There were no (2017: nil) related party transactions during the
26 weeks to 28 September 2018.
Responsibility statement of the Directors in respect of the
half-yearly financial report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU;
-- the interim management report includes a fair review of the information required by:
a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
b. DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
By order of the Board
Graham Stapleton, Chief Executive Officer
8 November 2018
Halfords Group plc
Independent review report to Halfords Group plc
For the 26 weeks to 28 September 2018
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 28 September 2018 which comprises Condensed
Consolidated Income Statement, Condensed Consolidated Statement of
Comprehensive Income, Condensed Consolidated Statement of Financial
Position, Condensed Consolidated Statement of Changes in Equity,
Condensed Consolidated Statement of Cash Flows and the related
explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 28
September 2018 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU and the Disclosure Guidance and Transparency Rules ("the
DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Michael Froom
for and on behalf of KPMG LLP
Chartered Accountants
One Snowhill
Snow Hill Queensway
Birmingham
B4 6GH
8 November 2018
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR EAXFXEDSPFFF
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