For the period52 weeks to
2 April
2021
£m
53 weeks to
3 April
2020
£m
Non-underlying operating expenses:
Organisational restructure costs (a)5.92.8
Group-wide strategic review (b)1.0
Closure costs (c)26.026.8
Acquisition and investment-related fees (d)0.61.9
One-off claims (e)2.90.8
Impairment of right-of-use asset (f)(0.4)0.9
Non-underlying items before tax35.034.2
Tax on non-underlying items (g)(6.1)(5.0)
Non-underlying items after tax28.929.2
  1. In the current and prior period separate and unrelated organisational restructuring activities were undertaken.
    Current period costs comprised:
    • Costs relating to a strategic redesign of our instore operating model undertaken to better meet our customers' expectations and deliver a consistent shopping experience across our estate. Redundancy costs of £5.9m were incurred to transition to the new operating model. These costs have materially been spent during the year.
    Prior period costs comprised:
    • Redundancy and transition costs of £1.4m relating to roles which have been outsourced or otherwise will not be replaced; and
    • £1.4m of asset write offs, principally resulting from the strategic decision to re-platform the Retail and Autocentres websites.
  2. In the prior period costs were incurred in preparing and implementing the new Group strategy.
    • £0.4m of external consultant costs; and
    • £0.6m of store labour costs, point of sale equipment and other associated costs in completing the cycling space relay across the store estate.
  3. Of the closure costs £28.5m represents costs associated with the closure of a number of stores and garages following a strategic review of the profitability of the physical estate. The costs mostly relate to the impairment of right-of-use assets (£12.2m), tangible assets and ongoing onerous commitments under the lease agreements and other costs associated with the property exits.
    Closure costs in the prior period represented costs associated with the closure of the operations of Cycle Republic and the Boardman Performance Centre ("Cycle Republic") following a strategic review of the Group's cycling businesses. The costs mostly relate to the impairment of right-of-use assets, intangible assets, tangible assets and inventories. £2.5m of these costs have been reversed during the year as the Group continues to negotiate lease disposals and was able to release stock provisions previously in place (£1.8m).
  4. In the current and prior period costs were incurred in relation to the investment in Universal Tyres, McConechy's Tyre Services and Tyres On The Drive.
    • In FY21, £0.6m relating to professional fees in respect of the acquisition of Universal Tyre Services;
    • Tyres On The Drive acquisition costs comprised of £1.0m (FY20) principally relating to the costs of dual running Halfords Mobile Expert and Tyres on The Drive, as well as the write off of sales income due from Tyres On the Drive in respect of Halfords Mobile Expert prior to acquisition; and
    • £0.9m (FY20) relating to professional fees in respect of the acquisition of McConechy's Tyres Services
  5. During the prior year, the Group incurred £0.2m in settling a court case. In addition, a provision of £0.6m was created in relation to the HMRC audit relating to the national minimum wage. The Group has continued to work with HMRC and external advisors during FY21 and a full data validation exercise is underway to determine the required Notice of Underpayment. The exercise is in progress and based on information available to date and the Group's assessment of a range of potential outcomes, management has increased the provision to £3.4m which represents management's best estimate of the value of underpayments and the associated penalty charge.
  6. In light of the ongoing COVID-19 pandemic, the Group revised future cash flow projections for stores and garages. As a result, in FY20 £0.9m incremental impairment has been recognised in relation to garages where the current and anticipated future performance did not support the carrying value of the right-of-use asset and associated tangible assets. This charge is directly attributable to impairment due to COVID-19 and relates primarily to the right-of-use asset value. During the year, £0.4m of this impairment has been reversed as the stores and garages have returned to a profitable position.
  7. The tax credit of £6.1m represents a tax rate of 17.4% applied to non-underlying items. The prior period represents a tax credit at 14.6% applied to non-underlying items.