HALFORDS GROUP PLC The Board considers the assessment of risk assessment and the identification of mitigating actions and internal control to be fundamental to achieving Halfords' strategic corporate objectives. In the Annual Report and 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 of the 2021 Annual Report and Accounts. These include: ? Business Strategy
-Capability and capacity to effect change
-Stakeholder support
- Value proposition
-Brand appeal and market share ? Financial
-Short, sharp interruptions in cashflows
- Sustainable business model ? Compliance
-Regulatory and compliance
-Service quality
-Cyber security ? Operational
- Colleague engagement / culture
- Skills shortage
- IT infrastructure failure
- Critical physical infrastructure failure (including supply chain disruption)
Specific risks associated with performance include the success, or otherwise of peak trading periods (e.g., Christmas) as well as weather-sensitive sales, particularly within the Car Maintenance and Cycling categories in the Retail business.
Loraine Woodhouse Chief Financial Officer 16 June 2021
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 22. 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. All numbers are shown pre-IFRS 16 (on an IAS 17 basis) to enable comparability with the prior period performance:
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-underlying items. Underlying EBITDA further removes Depreciation and Amortisation.
3.Underlying Profit Before Tax is Profit before income tax and non-underlying items as shown in the Group Income Statement.
4.Underlying Earnings Per Share is Profit after income tax before non-underlying 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.
FY21 FY21 FY20 FY20
Pre-IFRS 16 Post-IFRS 16 Pre-IFRS 16 Post-IFRS 16
GBPm GBPm GBPm GBPm
Cash & cash equivalents** 67.2 67.2 115.5 115.5
Borrowings - current (2.2) (63.6) (1.8) (83.4)
Borrowings - non-current (6.9) (280.9) (186.9) (511.9)
Net Debt* 58.1 (277.3) (73.2) (479.8) *The statutory 53-week period to 3 April 2020 comprises reported results that are non-comparable to the 52-week period reported in the current period.
**Included within cash and cash equivalents is an amount of GBP6.3m which is restricted and is not available to circulate within the Group on demand.
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 movement in provisions; as reconciled below.
FY21 FY21 FY20 FY20
Pre-IFRS 16 Post-IFRS 16 Pre-IFRS 16 Post-IFRS 16**
GBPm GBPm GBPm GBPm
Underlying EBIT 101.8 114.5 55.4 67.2
Depreciation, amortisation & impairment 38.0 118.5 37.2 118.7
Underlying EBITDA 139.8 233.0 92.6 185.9
Non-underlying operating expenses (37.3) (35.0) (32.1) (34.2)
EBITDA 102.5 198.0 60.5 151.7
Share-based payment transactions 6.4 6.4 1.0 1.0
Loss on disposal of property, plant & equipment 1.7 1.7 2.8 2.8
Working capital movements** 43.4 49.0 48.7 38.3
Provisions movement and other** 32.6 25.7 (3.1) (0.7)
Adjusted Operating Cash Flow* 186.6 280.8 109.9 193.1 *The statutory 53-week period to 3 April 2020 comprises reported results that are non-comparable to the 52-week period reported in the current period.
**As restated see note 11
8.Free Cash Flow is defined as Adjusted Operating Cash Flow (as defined above) less capital expenditure, net finance costs, taxation, exchange movement and arrangement fees on loans; as reconciled below.
FY21 FY21 FY20 FY20
Pre-IFRS 16 Post-IFRS 16 Pre-IFRS 16 Post-IFRS 16**
GBPm GBPm GBPm GBPm
Adjusted Operating Cash Flow** 186.6 280.8 109.9 193.1
Capital expenditure (28.0) (27.5) (34.1) (33.6)
Net finance costs (5.5) (15.5) (2.4) (13.2)
Taxation (10.8) (10.8) (16.3) (16.3)
Exchange movements 3.0 2.1 (2.5) (2.0)
Free Cash Flow* 145.3 229.1 54.6 128.0 *The statutory 53-week period to 3 April 2020 comprises reported results that are non-comparable to the 52-week period reported in the current period.
** As restated see note 11
Halfords Group plc?
Consolidated Income Statement?
?
??????????????????????????For the 52 weeks to 2 April 2021?
?
?
?
For the period? ? 52?weeks to?2 April 2021? ? 53 weeks to?3 April 2020?
Before? Non-underlying?? Before? Non-underlying??
? ? Non-underlying?? items? Total? ? Non-underlying? items? Total?
items? (note 4)? items? (note 4)?
? Notes? GBPm? GBPm? GBPm? ? GBPm? GBPm? GBPm?
? ? ? ? ? ? ? ? ?
Revenue? ? 1,292.3 -? 1,292.3 ? 1,155.1? -? 1,155.1?
Cost of sales? ? (636.0) -? (636.0) ? (565.4)? -? (565.4)?
? ? ? ? ? ? ?
Gross profit? ? 656.3 -? 656.3 ? 589.7? -? 589.7?
? ? ? ? ? ? ?
Operating expenses? 2? (541.8) (35.0) (576.8) ? (522.5)? (34.2)? (556.7)?
? ? ? ? ? ?
? ? ? ? ? ?
Results from
operating 3? 114.5 (35.0) 79.5 ? 67.2? (34.2)? 33.0?
activities?
? ? ? ? ? ?
Finance costs? 5? (15.0) - (15.0) ? (13.9)? -? (13.9)?
Finance income? 5? - - - ? 0.3? -? 0.3?
? ? ? ? ? ?
Net finance expense ? (15.0) - (15.0) ? (13.6)? -? (13.6)?
?
? ? ? ? ? ?
Profit before ? 99.5 (35.0) 64.5 ? 53.6? (34.2) 19.4?
income tax?
Income tax expense? 6? (17.4) 6.1 (11.3) ? (6.9)? 5.0? (1.9)?
? ? ? ? ? ?
Profit for the
financial period
attributable to ? 82.1 (28.9) 53.2 ? 46.7? (29.2)? 17.5?
equity shareholders
?
? ? ? ? ? ? ? ? ?
Earnings per share? ? ? ? ? ? ? ? ?
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