Autocentre revenue was £252.5m, growing 31.6% year-on-year and +9.7% on a LFL basis. The overall growth in Autocentres benefited from the annualisation of our FY20 acquisitions and the continued expansion of our Halfords Mobile Expert business, launching new vans and hubs to serve this growing and in-demand service.

It has been a particularly strong year for our areas of strategic focus – Group Services, B2B and Online - demonstrating the resilience and relevance of our strategy in the face of a tough operating environment. Group Services revenue grew +23% on last year and accounted for 29% of the Group; B2B sales were up +40% on the prior year and accounted for 18% of Group revenue; and finally, online revenue was up +110% on last year and accounted for 44% of the Group.

Progress on strategy in FY21

'To Inspire and Support a Lifetime of motoring and cycling.'

At our preliminary results in July 2020, reflecting the unprecedented impact and extreme uncertainty of the COVID-19 pandemic, we highlighted that we would moderate our near-term plan. We adjusted our short-term focus to cost efficiency and cash preservation, ensuring our colleagues are safeguarded and engaged in the success of the business and, of particular importance, adapting quickly to new customer trends. Our aim was to strengthen the core of our business during FY21, in the hope that we could return to more transformative investment in FY22 as the pandemic situation stabilised. Our progress on the key building blocks was as follows:

Continue to transform and build a unique and market-leading Motoring Services offer

• Increased the scale of our Halfords Mobile Expert offer to 143 vans, 14 hubs and over 250 technicians to serve a wider geographic reach.
• Acquired Universal Tyres, adding 20 garages to our fixed estate, as well as 89 vans, enabling us to expand our coverage of the commercial market in FY22.
• Continued to invest in our technology:

• PACE into McConechy's
• Tyres on The Drive ("ToTD") integrated into our Group website
• WeCheck app launched in Retail stores

• Launched our first Group motoring services campaign, contributing to increased awareness and a +28% uplift in consideration scores for our Services offer.
• Implemented a new labour operating model in our Retail stores, designed to significantly increase our scale and capability in motoring and cycling services. We completed consultations with over 5,500 colleagues, with 88% ultimately retained in the business.

A focus on cost and efficiency, creating a leaner and more profitable business

• Cycling profitability improvements of +680bps, far exceeding the targeted +300bps.
• Sustainable working capital improvement of £20m
• In line with our plans announced in November 2019, we closed 80 low-returning stores and garages where we were confident of trade transfer to neighbouring locations. This includes the exit of 22 Cycle Republic stores, announced in FY20.
• Negotiated 19 lease renewals in Retail, achieving an average rent reduction of -30%.
• Secured GNFR annualised cost savings of £7m.

Invest in our Colleagues' welfare, engagement and development

• Colleague safety and wellbeing was our number one priority throughout FY21:
  • We invested £11m in PPE and COVID-19 protocols across the Group.
  • We invested a further £4m in direct financial support, including a Frontline Colleague Support Scheme and the Halfords Here to Help fund.
  • We launched a Wellbeing hub to support colleagues on a range of issues affecting their mental and physical health.
• We commenced our Services skills intervention, significantly increasing our colleagues' ability to provide a broad range of motoring and cycling services to customers and providing them with development opportunities to help further their careers.

FY22 strategy focus

The last 12 months have proven the resilience of our business and the ongoing relevance of our strategy to focus on the growth of motoring services and B2B. Although we expect the volatile and uncertain trading patterns to continue, the period of optimisation we have undertaken has strengthened the core business and it is now well-placed to withstand future challenges. Although we will continue to optimise the business, we will now accelerate the process of transformation that was paused during the pandemic.

By the end of FY22 we expect to see a different business beginning to emerge, with our areas of focus next year as follows:

Inspire

• Project Fusion remains an exciting opportunity and we will trial between two and three towns in FY22. We think of Fusion as 'a customer experience seamlessly, consistently, & conveniently executed across all of our assets in a town'. It will encompass a destination retail store, an updated Autocentre garage, and a Halfords Mobile Expert offer, all operating together in conjunction with centralised customer support channels and an online and home delivery proposition across a major town or city. Focused primarily on improving the customer experience and understanding the potential of combining all Halfords services in the most compelling way, the trial will also test whether a reinvigorated in-store & garage design, focused more heavily on the delivery of services, can further stimulate sales across the Group.
• We will continue to invest heavily in our digital proposition, whether online through the Group web platform, or enabling the wider transformation agenda.
• Through Project 'Peloton 2', we will significantly improve our PACs ("parts, accessories and clothing") offering in Cycling, through better ranging, improved merchandising, and most importantly enabling our colleagues to provide customers with complete solutions to their needs.

Support

• We will increase our Halfords Mobile Expert van network to at least 200, bringing this popular service to more parts of the UK and giving us over 80% national coverage.
• We will increase the number of Autocentres garages, bringing us closer to our medium-term goal of 550 in the UK and ROI.
• We will continue to expand our B2B channel, in particular building on the commercial business we established through our acquisitions of McConechy's and Universal Tyres.
• We will lead the transition to an electric future by investing in training, technology and introducing new products and services, positioning Halfords as the leading voice of E-mobility. This will include a commitment to train over 2,000 Retail and Autocentres colleagues in Electric servicing in FY22.

Lifetime

• We will launch a unique and market-leading motoring services club, rewarding loyal customers with preferential terms and offers.
• The additional value of customers that shop across our Group remains an exciting and valuable opportunity. Although the pandemic caused normal shopping behaviours to be interrupted, we will continue to focus on this and our digital customer experience.
• Our focus on ESG matters will accelerate, centred on four priority areas in which Halfords can make a real difference: Electrification, our Net Zero commitment, Diversity & Inclusion, and Product, Packaging and Waste Management.

Underpinned by:

• Cost and efficiency will remain a focus and although we do not foresee any further large-scale property closures in the near-term, we will retain flexibility in our estate and seek to negotiate further rental savings.
• Our frontline colleagues will benefit from the biggest investment in skills to-date, further enhancing our super-specialist expertise. By the close of H2 we will have completed our skills intervention, resulting in our skills base increasing from 16,000 to over 40,000, with every colleague trained in all core services.
• We will transition to a new Group operating and reward model, better aligned to our Group strategy and our One Halfords Family values.

In addition to these strategic priorities, we will continue to optimise the business to further strengthen our foundations. As mentioned in our Outlook statement above, one key initiative in FY22 will be an investment in core pricing in our motoring products business. The dramatic acceleration in online shopping and a more challenging economic picture have brought value into sharp focus and so we believe this is the right time to make this investment, providing customers with greater value and providing a strong foundation for our services business.

Outlook

In the longer term, we are confident in the outlook for the motoring and cycling markets and our ability to compete strongly in both. We have demonstrated the resilience and growth opportunity in our Services and B2B businesses by gaining market share through increasing scale and convenience alongside enhancing the overall customer experience. We also believe that the increased adoption of Cycling will continue, supported by Government investment and a societal need to tackle climate change. As a business, we will continue to drive our markets by launching more new and exclusive products, becoming the market leader in electric mobility as the UK switches to a sustainable future, and continuing to engage our customers by creating a seamless digital and physical experience. Building on the strong foundations we have created in FY21, Halfords is well-positioned to accelerate its transformation journey.