The Directors present their report and the audited financial statements of Halfords Group plc (the "Company") together with its subsidiary undertakings (the "Group") for the period ended 29 March 2013.
|Halfords Group plc|
|Registered Office Address||Icknield Street Drive, Washford West, Redditch, Worcestershire, B98 0DE|
|Country of Incorporation||England and Wales|
|Type||Public Limited Company|
|Principal Activities||Whilst the Company is a holding company, the Group is a retailer of automotive, leisure and cycling products operating, as at 29 March 2013, from 466 retail stores (2012: 467); and offers Car Servicing and repair from 283 autocentres (2012: 260).|
Summary of General Disclosures (incorporated into this Directors' Report)
The following information required to be disclosed in this Directors' Report has been provided by the Company:
|A review of the Group's business activities and progress against key performance indicators ("KPIs"), together with the factors likely to affect its future development, performance and position, including the principal risks and uncertainties facing the Group within the Chairman's Statement and Business Review.||Market Review, Shareholder KPIs, Retail KPIs, Autocentre KPIs, Chairman's Statement, Strategy|
|The financial position of the Group, its cash flows, liquidity position and borrowing facilities within the Finance Director's Report.||Group Finance Director's Report|
|The Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk withinNote 19 to the Group Financial Statements.||Note 18, Note 19|
|The Statement of Compliance with the UK Corporate Governance Code and description of the Group's corporate governance framework within the Corporate Governance Report.||Corporate Governance Report|
|A summary of how the Company recognises its responsibility to its colleagues, customers, environment, and community through various initiatives within the Corporate Responsibility Report.||Corporate Responsibility Report|
|The Statement of Directors' Responsibilities in respect of the Annual Report and the Financial Statements.||Statement of Directors' Responsibilities in Respect of the Annual Report & Accounts|
|Board of Directors||Board of Directors|
|Directors including interests and indemnities||Directors Interests|
|Going Concern||Going Concern|
|Supplier Payment Policy||Supplier Payment Policy|
|Share Capital, Major Shareholders and Authority to Purchase Shares||Share Capital, Major Shareholders, Authority to Purchase Shares|
Role of the Board
Composition of the Board
Internal Control & Risk Management
|Relations with Shareholders||Relations with Shareholders|
Profits and Dividends
The Group's results for the year are set out in the Consolidated Income Statement. The profit before tax on ordinary activities was £71.0m (2012: £94.1m) and the profit after tax amounted to £52.7m (2012: £68.4m). The Board proposes that a final dividend of 9.1 pence per ordinary share be paid on 2 August 2013 to shareholders whose names are on the register of members at the close of business on 5 July 2013. This payment, together with the interim dividend of 8 pence per ordinary share paid on 24 January 2013, makes a total for the year of 17.1 pence per ordinary share. The total final dividend payable to shareholders for the year is estimated to be £17.7m. Computershare Nominees (Channel Islands) Limited, trustee of the Halfords Employee Share Trust, has waived its entitlement to dividends.
The delivery of the Group's strategic objectives is monitored by the Board through KPIs and the periodic review of various aspects of the Group's operations. The Board considers the Shareholder KPIs, Retail KPIs and Autocentre KPIs are appropriate measures for the delivery of the strategy of the Group via its Retail and Autocentres divisions.
The following persons were Directors of the Company during the period ended 29 March 2013 and unless otherwise stated at the date of this Annual Report:
David Wild (resigned 18 July 2012)
Matt Davies (appointed 4 October 2012)
Paul McClenaghan (resigned 12 April 2013)
In accordance with the Company's Articles of Association and the UK Corporate Governance Code guidelines, all those persons holding positions as Directors of the Company on 29 March 2013 will offer themselves for re-election at the AGM on 30 July 2013(1). Matt Davies, who was appointed on 4 October 2012, will stand for election at the AGM.
- As Paul McClenaghan resigned his directorship on 12 April 2013, he will not be offering himself for re-election.
The Directors' interests in shares and options over shares in the Company are shown in the Directors' Remuneration Report. In line with the requirements of the Companies Act 2006, each Director has notified the Company of any situation in which he or she has, or could have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the Company (a situational conflict). These were considered and approved by the Board in accordance with the Company's Articles of Association and each Director informed of the authorisation and any terms on which it was given.
The Company maintains liability insurance for its Directors and officers. The Directors of the Company, and the Company's subsidiaries, have the benefit of a third-party indemnity provision, as defined by section 236 of the Companies Act 2006, in the Company's Articles of Association.
At the 2012 AGM, KPMG Audit Plc was appointed as the Company's Auditor. KPMG Audit Plc has indicated its intention to notify the Company of its orderly wind down of business so that this statutory entity would cease to act as Auditor of the Company. A resolution proposing the appointment of KPMG LLP, an intermediate parent of KPMG Audit Plc, is expected to be contained in the Notice of the AGM and will be put to the shareholders at the meeting.
Disclosure of Information to the Auditor
So far as the Directors are aware, there is no relevant audit information of which the Auditor is unaware and the Directors have taken all reasonable steps to ascertain any relevant audit information and ensure the Auditor is aware of such information. The Directors are responsible for maintaining the integrity of financial information including this Annual Report, together with other financial statements, presentations and announcements on the Company's corporate website. Legislation in the UK concerning the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Group's strategic objectives are monitored by the Board through KPIs and the periodic review of various aspects of the Group's operations.
With effect from 5 November 2010 the Group secured a four-year £300m revolving credit facility (extendable by a further year) and at 29 March 2013 the Group had undrawn borrowing facilities of £197m (30 March 2012: £160m). The Group's previous and current committed borrowing facilities contain certain financial covenants, which have been met throughout the period. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its borrowing facilities and covenants for the foreseeable future. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the uncertain economic outlook. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, hence they continue to adopt the going concern basis of accounting in preparing the Financial Statements.
The Group has established a framework of colleague communications, including a monthly colleague magazine, to provide colleagues with information on matters of concern to them and business performance, as well as to encourage the engagement of every colleague in the Board's commitment to high standards of customer care and service provision. This is reinforced via training initiatives across the business, details of which can be found in the Group Chief Executive Officer's Review, Service Revolution andCorporate Responsibility Report, and the facilitation of colleague share ownership via a Sharesave Scheme.
The Group is dedicated to the principle of equal opportunity in employment. No potential or current colleague receives less favourable treatment on grounds such as gender, marital status, race, ethnic origin, religion, disability, sexual orientation, or age, or is disadvantaged by conditions or requirements which cannot be shown to be justified. Fair and equitable employment policies are applied which seek to promote entry into, and progression within, the Group. The basis for all appointments is personal ability and competency relevant to the specific job criteria.
Full and fair consideration is given to employment applications by disabled persons wherever suitable opportunities exist, having regard to their particular aptitudes and abilities. Training and career development support is provided where appropriate. Should a colleague become disabled, efforts are made to ensure their continued employment with the Group and retraining provided if necessary.
A whistleblowing policy and procedure enables colleagues to report concerns on matters affecting the Group or their employment, without fear of recrimination. In addition, the Group takes a zero-tolerance approach to matters of discrimination, harassment and bullying in all aspects of its business operations, including in relation to gender, race, national origin, disability, age, religion or sexual orientation. Appropriate policies and procedures are in place for reporting and dealing with such matters.
During the year the Group contributed £50,000 (2012: £50,000) to charities in the UK, including donations to BEN, a charity supporting individuals and families linked to the motor industry and associated trades, and Cancer Research UK, its Charity Partner until the end of the financial year.
The Group's policy is not to make any donations for political purposes. However, the Companies Act 2006 defines the term "donations" very widely and, as a result, certain expenses legitimately incurred as part of the process of talking to Government at all levels and making the Group's position known are now reportable. Although during the year no such expenditure or political donations were made, resolutions were passed at the 2012 Annual General Meeting ("AGM") that provided for limited authority for such expenditure, such authority remaining valid until the earlier of 29 September 2013 or the conclusion of the AGM to be held in 2013, and as such the Company will be asking for this limited authority to be renewed at the AGM to be held on 30 July 2013.
Supplier Payment Policy
The Group does not follow any formal code of practice on payment, agreeing terms and conditions for transactions when orders for goods or services are placed, and including relevant terms in contracts, as appropriate. These arrangements are adhered to when making payments, subject to the terms and conditions being met by suppliers. The number of trade creditor days outstanding as at 29 March 2013 for the Group was 57 days (2012: 59 days). The Company is a holding company and has no trade creditors.
Contractual or Other Arrangements
The Directors consider that there are no contractual or other arrangements, such as those with major suppliers, which are likely to influence, directly or indirectly, the performance of the business and its value.
Details of the Company's share capital, including changes during the year in the issued share capital and details of the rights attaching to the Company's ordinary shares, are set out in Note 20. All ordinary shares, including those acquired through Company share schemes and plans, rank equally with no special rights. All shareholders are entitled to attend and speak at the general meetings of the Company, appoint proxies, receive any dividends, exercise voting rights and transfer shares without restriction. There are no known arrangements which may restrict the transfer of shares or voting rights.
The Company has term and revolving credit facilities which require the Company in the event of a change of control to notify the facility agent and, if required by the majority lenders, these facilities may be cancelled. The Company does not have agreements with any Director or employee that would provide compensation for loss of office or employment resulting from a takeover except that provisions of the Company's share schemes and plan may cause options and awards granted to Directors and employees under such schemes and plans to vest on a takeover.
Rules relating to the appointment or removal of the Directors, and their powers, are contained within the Company's Articles of Association, which in accordance with legislation can only be changed with shareholder approval.
At 29 March 2013, the Company's register of substantial shareholdings
showed the following interests of 3% or more of the Company's issued ordinary shares:
|Holder||Number of shares||% of issued shares|
|Legal & General Group Plc||9,671,846||4.85|
Authority to Purchase Shares
At the 2012 AGM, shareholders approved a special resolution authorising the Company to purchase a maximum of 19,906,322 shares, representing less than 10% of the Company's issued share capital at 19 June 2012, such authority expiring at the conclusion of the AGM to be held in 2013.
Annual General Meeting
The AGM will be held at the Crowne Plaza Birmingham NEC, Pendigo Way, National Exhibition Centre, Birmingham, B40 1PS on Tuesday 30 July 2013. The notice of the AGM and explanatory notes regarding the special business to be put to the meeting will be set out in a separate circular to shareholders.
By order of the Board
23 May 2013