Annual Report 
and Accounts
2006 Halfords Annual Report and Accounts 2006
Welcome
to Halfords
Financial and Operational Highlights 01
Stores at a Glance 02
Chairman’s Statement 04
Chief Executive’s Review 06
Finance Director’s Report 18
Board of Directors 22
Corporate Social Responsibility 24
Directors’ Report 25
Corporate Governance 28
Directors’ Remuneration Report 34
Statement of Directors’ Responsibilities 40
Independent Auditors’ Report 41
Consolidated Income Statement 42
Consolidated Balance Sheet 43
Consolidated Statement of Changes in Shareholders’ Equity 44
Consolidated Cash Flow Statement 45
Notes to Consolidated Cash Flow Statement 46
Accounting Policies 47
Notes to Financial Statements 52
Five Year Record 73
Parent Company Accounts Under UK GAAP 74
Independent Auditors’ Report 74
Company Balance Sheet 76
Accounting Policies 77
Notes to the Financial Statements 78
Shareholder Information 80
Company Information 81 Halfords Annual Report and Accounts 2006
Financial and Operational Highlights
Highlights 01
Building
on core strengths
Developing
new opportunities for growth
Delivering our Strategy
Financial and Operational Highlights
We continue to focus our strategy on four key areas:
 Investing in the store portfolio
 Leveraging the Halfords brand
 Improving the supply chain
 Marketing the Halfords proposition
 Like-for-like sales up 6.1%
 Strong cash generation reduces net debt by £8.7m 
 Strong growth in sales of in-car technology products and cycles
 408 stores with 18 new store openings, including three relocations
 More than half of the superstores have a mezzanine sales floor
 100 stores in supermezzanine format
 Accelerated store opening programme in the Republic of Ireland
 Strong control on costs
Revenue
8.5%
to £681.7m
(2005: £628.4m)
Operating profit
0.2%
to £89.1m
(2005: £89.3m)
Pre-tax profit
3.6%
to £77.0m
(2005: £74.3m)
Basic earnings 
per share
0.4%
to 23.6p
(2005: 23.7p)
Dividend per 
ordinary share
6.3%
to 12.75p
(2005: 12.0p)
Net debt
4.8%
to £173.7m
(2005: £182.4m)
Halfords Annual Report and Accounts 2006 Highlights  01 Halfords Annual Report and Accounts 2006 02 Stores at a Glance
Stores at a Glance
Our Nationwide Coverage
Nationwide Store Coverage and New Store Focus
32
West
Midlands
8
Republic
of Ireland
9
Northern
Ireland
23
East
Midlands
40
Eastern
England
109
South
East
47
South
West
20
Wales
41
North
East
47
North
West
32
Scotland
As at 31 March 2006 
56%
of the Group’s Superstores 
have mezzanine floors. Halfords Annual Report and Accounts 2006 Stores at a Glance  03
Dublin Supermezzanine Store
The Republic of Ireland saw the opening of five new
stores during the year, taking the total to eight, with
the potential for a total of 20 stores.
Stevenage Supermezzanine Store
56% of Superstores have a mezzanine floor, of
which 100 are in the supermezzanine format.
Leek Neighbourhood Store
Neighbourhood format stores range between 3,000 sq
ft to 5,000 sq ft and are found in smaller catchment
areas, such as market towns and urban infill areas. These are my first annual results as Chairman, although 
I have been a director of the Company for the two 
years since it was listed on the London Stock
Exchange. I am pleased to report that Halfords has
again demonstrated its resilience, benefiting from its
unique market position as the UK’s leading auto, leisure
and cycling products retailer, operating predominantly
from out of town locations. 
Our total sales increase of 8.5% is encouraging against
the background of the broader UK retail market, which
is widely described as “challenging”. Earnings per
share were 23.6p and the Board is recommending a
final dividend of 8.75p per share in addition to the 4.0p
interim dividend already paid, bringing the total
dividend for the year to 12.75p per share, up from 
12.0p per share last year. 
The strong group of independent non-executive
directors have been together since the flotation in 2004,
working closely with our Chief Executive, Ian McLeod,
and Finance Director, Nick Carter, who successfully
lead a wider and equally talented executive
management team. Upon my appointment as
Chairman, Nigel Wilson was appointed Senior
Independent Director, alongside Keith Harris and Bill
Ronald, our existing non-executive directors. The Board
works well together as a balanced team to consider the
full range of issues that matter to our shareholders.
During the year, CVC Capital Partners significantly
reduced their shareholding in the Company, which
stood at 7.3% by the year end, and we thank Jonathan
Feuer, the CVC-nominated director who resigned from
the Board on 11 January 2006, for his contribution to
our success. Rob Templeman led the Company from
March 2003 and resigned as Chairman at the end of the
financial year on 31 March 2006. Rob made a huge and
enduring contribution to the Company and we wish him
well as he pursues his responsibilities elsewhere. 
The results for the year to 31 March 2006 are a credit to
the hard work of the entire Halfords team working in our
stores, our distribution centres and in head office. All of
our people are dedicated to bringing our customers a
great range of products and services and this gives the
Board continuing confidence in the future of the
Company.
Richard Pym, Chairman
7 June 2006
Halfords Annual Report and Accounts 2006 04 Chairman’s Statement
Chairman’s Statement
Richard Pym
“Halfords has again demonstrated
its resilience, benefiting from its
unique market position as the
UK’s leading auto, leisure and
cycling product retailer.” Leisure
Chairman’s Statement 05
The Halfords cycling proposition goes
from strength to strength, with one in
three bikes in the UK now being
purchased from Halfords. Our own brand
Apollo cycle range is the best selling
cycle brand in the country and our higher
end Carrera brand is also performing well.
There are now 339 Bikehut subshops 
in Halfords stores and we have 511
colleagues trained in cycle repair skills.
Going forward, we will be establishing 
cycle training stores of excellence
nationwide and in the Republic of Ireland,
to ensure that we maintain and build
even greater capability across our
business.
Halfords Annual Report and Accounts 2006 Introduction
At Halfords we have been acutely aware of the changes
in retail dynamics over the past year as consumers
become more selective, particularly when it comes to
high-ticket discretionary expenditure. Although Halfords
is not immune to such economic changes, the historic
resilience of the business has again been demonstrated
in the financial year to 31 March 2006, which is our
18th year of consecutive sales growth.
Sales for the year to 31 March 2006 were £681.7m
(2005: £628.4m), which was 8.5% ahead of the prior
year and 6.1% ahead on a like-for-like basis. Pre-tax
profit was up 3.6% at £77.0m (2005: £74.3m).
During the year we have continued to benefit from the
competitive advantage of our strong market position in
each of the key categories in which we operate. In
Cycling, we provide one in three bikes sold in the UK;
we are the market leader in car parts supply and enjoy
similar status among consumers searching for in-car
technology solutions.
This position provides us with unique defensive
characteristics given our scale through 408 stores
within the UK and the Republic of Ireland. Our range,
where we are store of first choice in each category, and
the needs-driven nature of our core offer, also provides
us with some protection from economic cycles and
changes in consumer behaviour.
More generally, our sales performance has been
particularly pleasing, given the fact that the prior year
had the benefit of two Easter periods, whereas the year
to 31 March 2006 included no Easter trading opportunity.
Although not as dependent on Easter as other retailers,
sales during Easter are of sufficient magnitude within a
financial year as to be material. 
In addition, a key contribution to our sales growth has
been the success of in-car technology. These products
provide us with strong cash margin per unit given their
retail price position, albeit the below average gross
margin percentage has precipitated a dilution in this
performance metric. However, given the consumers
acceptance of in-car technology as a growth segment
of their discretionary spend we have ensured that
Halfords is well placed to respond to this demand and
have successfully grown sales in this category. Further
growth is anticipated in the future but is unlikely to be
at the rate of increase experienced in the latter part of
the period.
Over the last two years we have continued to focus our
strategy on four key areas:
 Investing in the store portfolio
 Leveraging the Halfords brand
 Improving the supply chain
 Marketing the Halfords proposition
Investing in the store portfolio
Halfords traded from 408 stores throughout the UK and
the Republic of Ireland at the end of the financial year,
after opening 18 new stores during the period. We
expect to open a further 20 stores in the UK and the
Republic of Ireland during the current year and we see
the potential for up to 150 more stores in these markets
across our different formats.
Supermezzanine
Of the 18 new stores opened, nine were in our
Supermezzanine format, which allows us to also trade
from an additional floor level, offering up to 40% extra
sales space within our stores. At 31 March 2006 we had
Halfords Annual Report and Accounts 2006 06 Chief Executive’s Review
Chief Executive’s Review
Ian McLeod
“The historic resilience of 
the business has again been
demonstrated.” Halfords Annual Report and Accounts 2006
Leisure
Chief Executive’s Review  07
In Travel Solutions we have introduced
a dedicated area for child travel. Child
seat sales have performed well and we
have strengthened the number of
dedicated child seat fitting specialists in
our stores, with over 1,600 colleagues
now trained to give advice and fit
customers’ child seats. Forthcoming
legislation this year will mean that all
children up to around age 11 must sit in
a booster seat, offering us further
growth opportunities.
For the new season we have also
redeveloped and relaunched our
camping and roof box ranges,
ensuring that our sourcing, range
and keen pricing stimulates
consumer purchase and drives
sales performance. Halfords Annual Report and Accounts 2006 08 Chief Executive’s Review
Chief Executive’s Review
Car Enhancement
Car enhancement has performed well 
and has generated a significant
contribution to sales and profit growth,
with the strongest performance from 
in-car technology.
Our market leading offer on satellite
navigation has proved a key sales driver 
and we are improving our position further
with the introduction of our own brand 
sat nav range, Navsure, this summer.
Car enhancement is marketed through
our Ripspeed sub-brand, which has
strong credibility amongst younger car
enthusiasts. Sales of higher-ticket items
such as alloy wheels continue to grow,
showing that discretionary expenditure
amongst this consumer group continues
to flourish. a total of 100 Supermezzanine stores trading, through a
combination of new store development and conversion
of stores within the existing Halfords estate. The
development programme will continue next year, with a
combination of new store and conversion activity.
By adding the Supermezzanine level we increase the
range of products we offer, improve category
segmentation and are able to merchandise the
products more clearly, creating an even more customer-
friendly shopping environment. This opportunity has
been particularly important in more effectively
marketing our sub-brands of Ripspeed and Bikehut. By
trading on two floors, we can also give greater
exposure and presence to our Travel, Touring and
Active Leisure ranges. 
During the year, we also introduced two further store
format programmes:
 Neighbourhood stores
 A low cost space rebalance programme for 
existing stores
Development of Neighbourhood stores
The Halfords portfolio polarises between our 32 high
street “Metro” stores of approximately 2,000 sq ft and
our mainstream superstore format ranging from 8,000
sq ft to 12,000 sq ft located primarily on out of town
retail parks. 
However, we have identified a further opportunity to
meet the needs of consumers located within smaller
catchments, such as market towns, or urban infill areas,
and have developed a new Neighbourhood format in
these locations of between 3,000 sq ft and 5,000 sq ft
in size. These stores carry the full Halfords offer but
with a smaller range breadth; where products are not
available immediately, they can be sourced through the
Halfords website or the nearest larger store. 
Space rebalancing programme
Using the lessons learned from the Supermezzanine
programme, we have carried out a major review of the
effective use of space by improving product display
and adjacency within our stores. This is particularly
relevant where a Supermezzanine conversion would
either be impractical due to physical constraints or
return on capital would be compromised due to
prohibitive store development costs.
As a result, we have developed a new store layout,
which improves the display of our Ripspeed and
Bikehut sub-brands, projects Car Enhancement to
better reflect its increasing prominence, and provides
more space and better visibility for new categories such
as Active Leisure.
We are encouraged by the initial results of the space
rebalancing trials, which will now be rolled out to a
further 20 stores during this year.
International
At the start of the year, Halfords had three stores
trading in the Republic of Ireland around the Dublin
area, which performed ahead of expectations 
indicating that the Halfords brand has been well
received within this market. At 31 March 2006 the
Company had a total of eight stores trading in the
Republic of Ireland and we have subsequently secured
sites in a further nine locations. 
Halfords Annual Report and Accounts 2006 Chief Executive’s Review  09
“The Neighbourhood format will
meet consumer needs located
within smaller catchment areas.” Halfords Annual Report and Accounts 2006 10 Chief Executive’s Review
Chief Executive’s Review
The continuing strong performance 
in Car Maintenance is underpinned by a
needs driven product mix, such as
batteries, bulbs and wiper blades. We
remain the largest car parts retailer in
the UK, with unrivalled access to more
than three million parts.
Our “We’ll Fit It” service effectively
underpins our product offering, with 
a unique customer proposition of
unrivalled product choice, advice and
on-the-spot fitting, with over one 
million jobs completed in the last 
12 months.
Car Maintenance We now estimate that there is the potential for up to 
20 stores in the Republic of Ireland and will continue to
seek further site opportunities this year.
Our success in the Republic of Ireland has provided
further confidence in the ability of the Halfords offer to
trade successfully overseas. Extensive market and
operational feasibility reviews support Halfords increasing
its international presence, and, in order that any expansion
risk is limited, our intention is to pilot three stores within
the Czech Republic during the spring of 2007.
Leveraging the Halfords brand
Car Maintenance
With more than a quarter of the Company’s sales, Car
Maintenance continues to represent an integral element
of the Halfords offer and has demonstrated its
resilience to changes in the economic environment.
With unrivalled accessibility to more than three million
car parts, industry leading availability and a substantial
range in our stores across the country, we remain the
largest car parts retailer in the UK and store of first
choice for the consumer.
Approximately 33 million cars represent the UK car 
parc and our range covers almost all parts for this
population and, given the inevitability that car parts 
will fail, the search for replacement parts becomes a
needs-driven, rather than discretionary, purchase. 
This needs-driven nature of the market provides steady
business throughout the year and provides Halfords 
with a resilient and significant sales base as the
economic climate changes. Our market strength and
breadth of offer has enabled us to continue to grow 
parts sales during the year despite the consumer
downturn and the mild weather conditions at the start 
of 2006.
Car Enhancement
Halfords cemented its position as the market leader for
in-car technology and car enhancement products
during the year.
In-car audio, which includes the CD audio aftermarket,
continues to be the most significant consumer segment
within car enhancement and grew further last year. CD
audio is fitted as standard to most vehicles now, but the
aftermarket also remains strong. The average car on the
road is about seven years old and approximately half the
car parc do not yet have a CD player fitted.
Our car enhancement ranges are marketed through our
Ripspeed sub-brand, which has built strong credibility with
its target market of young car enthusiasts. This has been
achieved through a combination of strong in-store
presence, particularly in Supermezzanine stores, external
advertising in specialist press and Ripspeed sponsorship
support for car enhancement national events.
In-car electronics has been an exception to the broader
consumer trend of discretionary spend reduction.
Falling retail prices over the last 18 months have made
such products much more affordable. For instance,
satellite navigation devices now retail at approximately
one-third of the average price of two years ago, thus
bridging the gap between desirability and affordability.
Similar price deflation has occurred for entertainment
systems such as in-car DVD players. This has
broadened the market appeal for such items, where
sales grew substantially during the Christmas period.
We have enjoyed significant sales success in this category
this year. However, whilst actual profitability per unit is
strong, the percentage margin is below the Company
Halfords Annual Report and Accounts 2006 Chief Executive’s Review  11
“Our success in the Republic of
Ireland has provided further
confidence in our ability to trade
successfully overseas.” Halfords Annual Report and Accounts 2006 12 Chief Executive’s Review
Chief Executive’s Review
Employee Passion and Long Service
Employee Passion
Halfords has around 10,000 employees, many of whom mix a passion
for their work with their hobby. Gerry Poore, a Ripspeed specialist at
Tonbridge, is passionate about cars and has just spent several
months building a drift car to take to shows and feature in
magazines. “Most people would love to combine their job and hobby
so I get the best of both worlds and help to keep Halfords up-to-date
with the latest trends” he said.
Richard Dean is a cycle enthusiast who works for Bikehut in Barnsley.
He has been a successful team member of the Bikehut Development
Squad for three years. “Riding the bikes in competitions gives me a
real insight into the product, which I can then advise my customers
on, so they get the right bike for their needs. It really gives me
credibility as a cycle specialist” he said.
Long Service
Brenda Swainston has worked at Halfords head office since 1973 and,
along with several other colleagues, recently received a long service
award from Chief Executive, Ian  McLeod. “In 33 years I’ve seen a lot
of changes and I think the company is now a better, more exciting
place to work,” she said. Gerry Davis, who works at the Bletchley
store, can top Brenda’s record, having worked for Halfords for 39
years. “Stores have changed beyond recognition. There are always
new products and services coming into stores but we’ve never lost
sight of what we’re famous for — car parts and cycles.” said Gerry.
Gerry Poore
Brenda Swainston
Gerry Davis average, which has had some impact on our percentage
margin, particularly in the second half of the year.
Finally, our collaboration with Autobacs of Japan has
provided an opportunity to bring certain products to
market faster than would otherwise have been possible.
A range of Japanese car accessories was piloted early
in the year and, following their sales success, have
been extended into all Halfords superstores.
Leisure
The Leisure category represents a third of the
Company’s total sales and during the year we
continued to grow sales and profitability, predominantly
driven by our success in cycling, where we now sell
one in three bikes in the UK.
During the year, we successfully relaunched both our
Apollo cycle brand and our Carrera premium brand.
Apollo is now the best selling cycle brand in the UK and
Carrera the best selling premium brand and we also
received a gold award for the new Carrera Kraken
model from “What Mountain Bike” magazine. These
cycle ranges are a good example of our ability to
successfully source directly from the Far East. Cost
prices have improved but so has the quality and
specification of individual cycle models as we have had
direct influence through our sourcing team on the final
specification to be included. This allows us to provide
quality bikes, which deliver both competitive retail
prices and improved buying margins.
The further roll-out of the supermezzanine format has
helped drive awareness of the Bikehut sub-brand.
Bikehut sub-shops are now in place in 339 superstores
across the country. Each includes a bike workshop,
which adds credibility to the Bikehut sub-brand as a
specialist cycle retailer. As our share of the market
increases, the gap between Halfords and the
competition grows further, illustrated by the fact that for
the whole of last year more consumers purchased a
bike from Halfords than from all the independent cycle
retailers added together.
In October 2005 we introduced our Bike Care
Maintenance Plan, encouraging customers to maintain
their bikes regularly and cost-effectively by allowing
Halfords to carry out the work. The enthusiasm and skill
of our colleagues in this area has driven strong sales
growth in our bike maintenance and servicing business.
A bike-repair training programme was conducted
across all stores, supported by the Bicycle Association,
to ensure the necessary skills were available in stores
to provide this service consistently.
The introduction of the Bikehut sub-brand into premium
cycle accessories has also been well received by
consumers who are looking for high quality accessories
at competitive prices. It is the fastest growing brand
within our accessories range and to date has well
exceeded our internal expectations. The Bikehut
accessory sub-brand has subsequently won a gold
award from “Cycling Plus” magazine in its first year of
national availability. We plan to continue this success
with the introduction of new ranges for 2006, which will
include helmets, mudguards, luggage and clothing.
Halfords Annual Report and Accounts 2006 Chief Executive’s Review  13
“More consumers purchased a
bike from Halfords than from all
the independent cycle retailers
added together.”
Richard Dean Halfords Annual Report and Accounts 2006 14 Chief Executive’s Review
Chief Executive’s Review
Halfords Online and Financial Services
Our online store www.halfords.com was relaunched last October
and is now our number one store, with around four million visits. It
is also the UK’s second most visited sports and leisure site.
We also launched our financial services offer and this includes:
 Car and cycle insurance
 Travel insurance
 Car breakdown cover
 Car buying (personal leasing)
 Pet insurance The new Carrera cycles have also proved popular with
customers participating in the government sponsored
“Cycle2work” scheme. This scheme allows employers the
opportunity to offer interest free loans to their employees to
buy a bike and the employee is able to claim tax relief
against the price of the purchase. This is designed as an
incentive to motivate the public to take more exercise and
is growing in popularity as an employment initiative. Given
our scale and store coverage, Halfords is the largest
provider of this facility.
The performance of Leisure was adversely affected by a
disappointing year-on-year performance within Travel
Solutions. Roof carrying equipment such as roof boxes,
which are high-ticket items, were more susceptible to
discretionary spend decisions. We have made changes
to our range and price structures for the current financial
year, which gives us confidence that we can improve
performance for the forthcoming season.
The performance in the year of our camping range was
not as strong as anticipated given the success in the
previous year, after it had been rolled out to all stores. 
For the forthcoming season, considerable effort has been
made to ensure that our sourcing, range, pricing and
marketing drive stimulates stronger consumer awareness
and purchasing of our offer. 
Financial services
Towards the end of the financial year Halfords launched
a range of financial services, primarily targeting the
motorist. Consumers now have the opportunity to
purchase breakdown insurance, car insurance, bike
insurance, travel insurance and even pet insurance
through a range of products marketed under the
Halfords brand. We have also introduced personal car
leasing to complement the financial services offer.
halfords.com
Prior to the Christmas period, the Halfords website was
relaunched, to broaden the opportunity for greater
levels of product purchase, ease of navigation and
facilitate greater levels of conversion. Sales have
increased by 250% since the relaunch, making
halfords.com our highest turnover ‘store’ and the
second most visited sports and leisure website in
Britain. Site visits have grown to 150,000 visitors per
week. Sales conversion is also ahead and we are
targeting further improvements this year.
Improving the supply chain
Our stated strategy has been to increase the level of
product delivered from outside the UK and sourced
directly by Halfords without the cost of third party
agents. The objective has been to improve cost prices,
which can then be utilised better to improve
profitability, improve quality or improve retail prices to
increase competitiveness.
Two years ago, our penetration of foreign direct
sourcing was 7% of purchases and our target was to
grow this penetration to 20% in the medium term. At
the end of this financial year, penetration has improved
significantly and we are therefore confident of achieving
our target ahead of schedule, and seeing further cost
price benefits flow accordingly.
We have achieved most success within Cycling, but we
have also increased foreign direct sourcing within Car
Maintenance, Car Enhancement and Active Leisure.
Initially, we believed that electronics would be an
unlikely addition, but our growth in expertise in this area
has enabled us to develop an entry price point CD
audio, combined car DVD and CD player and satellite
Halfords Annual Report and Accounts 2006 Chief Executive’s Review  15
“More than one million
fitting jobs were completed 
during the year.”
www.halfords.com Chief Executive’s Review
Halfords Annual Report and Accounts 2006 16 Chief Executive’s Review
navigation under our sub-brands of Sendai, Ripspeed
and Navsure respectively. These will be on sale during
summer 2006.
The growth in direct sourcing has been underpinned by
changes in the in-bound supply chain process and
infrastructure. These changes have included using
additional Far East ports to access greater capacity. As
well as allowing consolidation of stock from multiple
suppliers it also improves container fill levels and stock
flow into the UK. A renewed partnership with Maersk
Logistics and greater use of their trading systems has
improved management of the flow of containerised
stock, particularly during peak trading periods. We will
take advantage of further systems developments from
Maersk through greater integration with Halfords SAP
supply chain management tools. This year represented
the first full year of operation of the new warehouse
management system within three sites, without any
service issues occurring.
The outsourced store delivery fleet and operations were
put out to tender during 2006 and the contract was
awarded to DHL/Exel during the third quarter. Benefits
were seen immediately, with stock flow to stores during
peak trading periods improving year-on-year. The
delivery fleet was also equipped with satellite tracking
and central route scheduling software has also been
implemented to further improve service levels to stores.
These changes and new partnerships provide a
platform for continuous improvement in the logistics
operations over the coming years.
Business systems
Completion of the installation of retail systems from
SAP and warehouse systems from Manhattan
Associates at the start of the financial year were well
managed and had no adverse service or cost impact on
the business. The scale of the changes implemented
has been significant as all central finance, human
resource, merchandising, planning and supply chain
systems were replaced and new ways of working
adopted. Despite these changes, year-on-year in-store
availability improved and the successful support
delivered during key trading periods on the new
systems means we are confident of more benefits in the
future.
The next stage of the business systems strategy is a
two-year programme to replace the hardware (including
till systems) and software within stores at an investment
of £8.5m. In preparation for this next phase of
development we have trained over 800 colleagues on
store stock file accuracy processes, the benefits of
which we expect to flow into next year.
Marketing the Halfords proposition
Halfords continues to push forward with its service
programme under the “We’ll fit it” marketing umbrella.
We actively market this service through press and TV
advertising. We completed more than one million fitting
jobs during the year, ranging from wiper blades to
parking sensors and audio units, with the support of
trained in-store colleagues.
As well as increasing our advertising spend year on year,
we also changed the emphasis of featured product to Halfords Annual Report and Accounts 2006 Chief Executive’s Review  17
reflect the changes in consumer interest which have been
identified. In addition, different communication channels
were targeted to ensure the greatest return on our
external marketing investment. Bikes and in-car
technology featured heavily within our TV advertising, 
with all categories featured in black and white press
throughout the year, or colour press inserts to coincide
with key trading periods. Specialist press was also utilised
to support promotional offers or drive new product
awareness in areas such as Car Maintenance and
Cycling.
We’ll fit it
As well as the regular fitting services we provide, it is
essential that we continually update the skill set of
colleagues to service demand as we develop new
categories. A key differentiator when buying in-car
electronics at Halfords, for example, is our ability to fit
products on site. i-Pod connectivity and parking
sensors are sold as a fitted package, given their
complexity, making such strong offers difficult for
competitors to copy with any degree of scale.
The “Drive away with it working” and “Free setup and
demo” marketing messages also proved to be effective
in securing both interest and consumer purchase of
satellite navigation systems.
The knowledge base within stores is critical and we
therefore continue to emphasise development training
for deputy managers to support succession planning
and product-based training for retail colleagues. Last
year we trained around 500 hardwire electronics fitters
and over 2,000 colleagues on satellite navigation
product knowledge and we adopted a manufacturer-run
training programme for child seat fitters that has
included a further 1,600 colleagues across the country. 
With pressure on costs it is important that our in-store
resource is scheduled efficiently. Retail productivity has
therefore improved as we continue to pursue our policy
of driving increased flexibility within store teams using
more appropriate contracts and continuing to match
colleague rotas to our customer needs. This year we
have identified store and product group specific rotas
that have resulted in appropriate cost savings. This has
been achieved through a combination of improved data
provision from our new SAP Business Warehouse and
an external work-study analysis. We expect to reap
further benefits from this approach in the year ahead.
Outlook
This has clearly been a tough year for retailers in
general; an environment which is likely to continue into
the current year. Our results continue to demonstrate a
level of resilience to such conditions. During the year
we have continued to use our competitive advantage of
range, scale and service in order to improve the
consumer offer.
Our product portfolio includes needs-driven purchases
of core car maintenance products, where our range and
scale provide us with strong defensive characteristics in
this sector and our “We’ll fit it” service programmes
provide us with genuine competitive advantage.
The success of our supply chain initiatives, our store
development plans, as well as our product and service
changes, provides reassurance that our strategy is
working.
We have a trading approach which proactively seeks
out new opportunities and seizes the initiative wherever
possible. A clear example of this has been our ability to
develop the in-car technology business to the point
where we are clear market leaders.
During the forthcoming financial year we expect to
further push our market advantage in key categories, as
well as redressing any shortfalls experienced in 2006.
We have developed new range and pricing strategies
within our leisure categories and will continue to drive
momentum in core categories to press home our
competitive advantage.
Our gross profit percentage dilution has been a direct
result of the changing sales mix in the business
following the success of in-car technology. Whilst we
expect further growth in this category in the
forthcoming year, we do not expect it to have a similar
significant impact on our overall sales mix.
Our strategy remains focused and our ability to remain
resilient in the light of economic change is evident.
This gives us confidence that we can continue to
deliver further positive results for our shareholders as
we continue to drive the Halfords business forward in
the forthcoming year.
Ian McLeod, Chief Executive
7 June 2006 International Financial Reporting Standards
The consolidated financial statements of Halfords
Group plc are now prepared in accordance with
International Financial Reporting Standards (“IFRS”)
and International Financial Reporting Interpretation
Committee (“IFRIC”) interpretations that are endorsed
by the European Union and with those parts of the
Companies Act 1985 applicable to those companies
reporting under IFRS. The Group had previously
reported under UK GAAP .
The date of transition to IFRS was 3 April 2004, which
is the beginning of the comparative period for the year
to 31 March 2006. The Group has applied IFRS 1 “First
time adoption of International Financial Reporting
Standards,” and has elected to use the following
exemptions:
 IFRS 3 “Business combinations” has not been
applied retrospectively to business combinations
that occurred before 3 April 2004.
 Share based payment exemption. The Group has
applied IFRS 2 “Share-based payment” from 3 April
2004 to those options that were issued after 
7 November 2002 but had not vested by 
2 April 2005.
 Comparative information has not been restated for
IAS 32 “Financial Instruments: disclosure and
presentation” and IAS 39 “Financial Instruments:
recognition and measurement” for the first year of
transition.
The introduction of IFRS has no impact upon either the
operational capability of the business or its cash flow.
Operating result
Group sales increased by 8.5% to £681.7m (2005:
£628.4m), with like-for-like sales growth increasing by
6.1%. Gross profit increased by 3.1% to £346.7m
(2005: £336.4m). A 260 basis points dilution in gross
profit percentage has resulted from the strength in the
in-car technology category. Good cost control and
operations management has resulted in total operating
expenses as a percentage of sales falling to 37.8%
from 39.3% in the prior year. Operating profit at £89.1m
compares to £89.3 last year. Finance costs decreased
by £2.9m to £12.5m (2005: £15.4m). Profit before tax
was £77.0m, compared with £74.3m in the prior year,
an increase of 3.6%.
Halfords Annual Report and Accounts 2006 18 Finance Director’s Report
Finance Director’s Report
Nick Carter Landlord contributions
Halfords has established an attractive out of town 
store portfolio, which the property team actively manage
to maximise valuation creation through generating cash,
making profits, and reducing the ongoing rental charge.
During the year contributions were received from
landlords as a result of either relocations or downsizing
through the return of former service centre space
occupied by the Automobile Association. The potential
for further contributions from these activities is ongoing.
Contributions from these activities totalling £6.9m (2005:
£2.5m) were received from landlords during the year in
relation to 15 locations (2005: 6 locations).
Operating leases
All the Group’s stores are occupied under operating
leases, the majority of which are on standard lease
terms, typically with a 15-year term at inception. The
Group has a total commitment under non-cancellable
operating leases of £795.3m (2005: £783.7m).
Taxation
The taxation charge on profit for the financial year was
£23.4m (2005: £23.2m), resulting in a full year effective tax
rate of 30.4% (2005: 31.2%) applied to profit before tax.
The underlying tax charge remains at 31.9%, principally
due to the non-deductibility of depreciation charged on
capital expenditure in respect of mezzanine floors and
other store infrastructure. The lower than expected tax
rate in this financial period is due to the progression of
the agreement of prior year tax computations.
Earnings per share
Basic earnings per share were 23.6p (2005: 23.7p). The
weighted number of shares in issue during the year was
227.1m (2005: 215.6m), and it should be noted that in
the comparative year the figure was impacted by the
London Stock Market flotation during that year. 
Halfords Annual Report and Accounts 2006
Revenue
A resilient sales performance, driven by the growth of the in-car
technology category has seen sales grow by 8.5% during the financial
year and by 31.1% over the last five years.
Operating profit 
The year on year growth in gross profit has been at a lesser rate than
the increase in sales and reflects the impact of the changing sales mix,
which has led to a dilution of gross profit percentage. However, good
cost control has resulted in total operating expenses as a percentage
of sales falling from 39.3% to 37.8%.
Finance Director’s Report  19
£519.8m
1
02
£525.8m
1
03
£578.6m
2
04
£628.4m
3
05
£681.7m
3
06
£51.5m
1
02
£50.8m
1
03
£76.6m
2
04
£89.3m
3
05
£89.1m
3
06
1
UK GAAP, as previously reported
2
UK GAAP restated
3
IFRS
Financial performance charts Capital expenditure
Capital investment in the period totalled £27.8m,
compared with £27.7m in the prior year. This included
spend of £11.1m on new store and relocation
investment, and £10.7m on the store conversion
programme. Other capital expenditure included the
investment in head office IT systems, which is now
largely complete. Depreciation and amortisation has
increased during the year by £3.0m to £21.5m (2005:
£18.5m), reflecting the ongoing investment in the share
portfolio and infrastructure.
Working capital
During the year the Company experienced a working
capital outflow of £11.5m compared to a £3.6m inflow in
the prior year. Inventories increased by 17.5% to
£127.2m (2005: £108.3m), reflecting underlying increases
in stock to support sales growth and specifically into the
faster growing technology areas. During the fourth
quarter of the financial year, the business built stock
ahead of Easter trading, which fell in April, notably in the
areas of cycles and in-car technology.
Cash flow, net debt and capital structure
The Group continues to demonstrate that it is a strong
driver of cash and during the year generated an
operating cash inflow of £100.9m (2005: £117.0m).
Total net debt at 31 March 2006 was £173.7m (2005:
£182.4m) and underlying net debt (total net debt
excluding finance leases) was £160.7m (2005:
£169.1m), a reduction of £8.4m on the prior year.
In the short to medium term the Group considers that
a level of net debt at £180m generates an optimal level
of gearing.
Dividend and share buy-back
The Board is recommending a final dividend of 8.75p
per share in addition to the 4.0p per share interim
dividend already paid, bringing the total dividend for the
year to 12.75p per share.
Subject to shareholder approval at the Annual General
Meeting on 2 August 2006, the final dividend will be
paid on 14 August 2006 to shareholders on the register
at the close of business on 16 June 2006. Shares will
be quoted ex dividend from 14 June 2006.
The Board is today announcing its intention, over the
next two years, to buy back up to £50m of its own
shares. This programme recognises the highly cash
generative nature of our business and management’s
commitment to improving total shareholder returns.
With our strong cash generative business model we are
able to undertake the buy-back whilst maintaining
sufficient flexibility to invest in our store opening and re-
fit programme and other opportunities as they might
arise. In addition to further improving the Group’s
capital efficiency, this share buy-back enables
shareholders to have greater participation in the strong
cash flows generated by our business.
Retirement benefit
All employees following three months’ service are
offered membership of Halfords Pension Plan, a defined
contribution pension arrangement.
Treasury policies and financial risk management
The Group’s Treasury function is principally responsible
for managing the Group’s funding, as well as certain
financial risks described below, and manages these
risks using policies approved by the Board.
Halfords Annual Report and Accounts 2006 20 Finance Director’s Report
Finance Director’s Report
“The share buy-back programme
recognises the highly cash generative
nature of our business and
management’s commitment to
improving total shareholder returns.” Halfords sub brands
Liquidity risk
The Group has committed bank facilities comprising an
amortising five year term loan of £120m and a revolving
credit facility of £120m, which, together with a series of
uncommitted bank facilities and occasional cash surpluses,
provide sufficient funding for the Group’s operations.
In accordance with the committed facility dated 
17 May 2004, the Group repaid £10.0m of term debt on
30 September 2005 and a further £10.0m on 31 March
2006, and will continue to repay £10.0m bi-annually for
the remaining term of the facility. At 31 March 2006, the
Group had undrawn committed bank facilities totalling
£107.9m (2005: £119.0m).
Interest rate risk
The Group’s bank term debt carries a variable rate of
interest linked to prevailing LIBOR rates. In order to
mitigate the risk of a rise in UK interest rates, the Group
has entered into a single rate swap until 8 June 2009. As
at 31 March 2006, 83% (2005: 81%) of bank borrowings
and loans carried a fixed rate of interest and the weighted
average pre-tax cost of debt was 6.2% (2005: 6.4%).
The position is regularly reviewed and the Group’s
policy of hedging at least 75% of the following year’s
forecast interest rate exposure is satisfied for the period
ending 30 March 2007. As at 31 March 2006, £25.0m
(2005: £32.8m) of net debt was floating rate.
Counterparty risk
The Treasury function occasionally deposits cash and
transacts foreign exchange and derivative contracts
according to the counterparty’s credit rating. The Group
ensures that such counterparties hold at least an AA
credit rating.
Foreign exchange risk
The Group uses a combination of forward exchange
contracts and zero-cost options to hedge the foreign
exchange risk of imports (paid in US dollars) from the
Far East.
Nick Carter, Finance Director
7 June 2006
Halfords Annual Report and Accounts 2006 Finance Director’s Report  21
During the year we
successfully relaunched both
our Apollo cycle brand and our
Carrera premium brand. Apollo
is now the best selling cycle
brand in the UK.
Bikehut sub-shops are now in
place in 339 superstores
across the country.
Ripspeed has built strong
credibility with its target market
of young car enthusiasts. Halfords Annual Report and Accounts 2006 22 Board of Directors
Board of Directors
01 Richard Pym (56)
Non-executive Chairman
Richard joined the Board as the Senior
Independent Director in May 2004 and was
appointed Chairman on 1 April 2006. He is
Group Chief Executive of Alliance & Leicester
plc. He was a non-executive director of
Selfridges plc and has held various roles at
Thomson McLintock & Co, British Gas plc, BAT
Industries plc and The Burton Group plc.
02 Ian McLeod (47)
Chief Executive
Ian joined Halfords in September 2003 and was
appointed to the Board in May 2004. He became
Chief Executive in April 2005. Previously, he was
Chief Executive of Celtic plc for two years. Prior
to this Ian was on the Executive Board of Wal-
Mart, Germany and held several positions within
Asda over the course of 20 years and was
director of Asda Stores Limited between 1997
and 2001. Ian is a non-executive director of
Fulham Football Club (1987) Limited.
03 Nick Carter (39)
Finance Director
Nick was appointed Finance Director in August
2003. Prior to this he was Finance Director at
Birthdays Group Limited and held a number of
finance and commercial roles at Superdrug
Stores plc and Kingfisher plc. Nick qualified as 
a Chartered Accountant at KPMG. 
04 Nigel Wilson (49)
Non-executive Director
Nigel joined the Board as a non-executive
director in May 2004 and was appointed Senior
Independent Director on 1 April 2006. 
Currently he is Chief Financial Officer of United
Business Media plc. Prior to this Nigel held
various director roles at Viridian Group plc,
Waste Management International plc, GPA,
Stanhope Properties plc and Dixons plc, and he
was a management consultant at McKinsey 
and Company.
Group Board
01
02
03
04 Halfords Annual Report and Accounts 2006 Board of Directors  23
05 Keith Harris (53)
Non-executive Director
Keith was appointed a non-executive director in
May 2004. He has been Executive Chairman of
Seymour Pierce Limited since its acquisition
from Investment Management Holdings plc.
Prior to this, Keith was Chairman of the Football
League and Chief Executive of HSBC
Investment Bank plc. Keith is currently on the
boards of Wembley National Stadium Limited,
Benfield plc and CLS Holdings plc.
06 Bill Ronald (50)
Non-Executive Director
Bill joined the Board as a non-executive
director in May 2004. He is Executive Chairman
of Bezier Limited. Previously, he was Chief
Executive of Uniq plc for three years. Prior to
this, Bill spent 23 years in a variety of roles
within the Mars Corporation. His final positions
there were Managing Director of the UK
confectionery operation and Vice-President of
Masterfoods Europe.
Halfords Limited Management Board
(left to right)
Nick Carter
Finance Director
Andy Torrance
Retail Operations Director
Paul McClenaghan
Trading Director
Ian McLeod
Chief Executive
Nick Wharton
Business Development and HR Director
Steve Whyman
Supply Chain and Business Systems Director
Phil Parker
Company Secretary
06
05 Halfords Annual Report and Accounts 2006 24 Corporate Social Responsibility
Corporate Social Responsibility
Halfords has an ongoing corporate social responsibility
programme, which is designed to promote
understanding amongst our stakeholders of the
important issues for our business and to facilitate
appropriate management approaches. It is our aim to
continually improve our management of social,
environmental and economic issues throughout the
business and our supply network. 
A summary of our policies and developments over the
past year is given below. A full copy of our corporate
social responsibility report for 2006 can be found on the
Company’s website, www.halfordscompany.com 
In the marketplace
Our policy is to meet or exceed the requirements of
legislation, industry standards, international
conventions and codes of practice. We oppose the
exploitation of children and young people, and the
exploitation of workers generally, and we support fair
and reasonable rewards and conditions for workers. 
To this end, we conduct factory, warehouse and tied
accommodation inspections and audits to ensure that
our standards are being implemented.
The health and safety of workers employed in our
supply chain is a key concern for us. We require all
activities to be carried out under conditions that have
proper and adequate regard for the health and safety of
those involved.
In the workplace
Engaging with our employees has been one of our main
objectives. One of our greatest achievements regarding
employee engagement has been our ability to reward
our people following the flotation and let them share in
our future success as a listed company. To do this we
successfully launched a Company share option scheme
that invited employees to accept a grant of options
through the scheme. The most innovative aspect of this
scheme was the decision to include all of our people,
irrespective of their position within the business. We are
particularly proud of this achievement, as similar
schemes are usually designed for the executive or
senior management population. We also encourage
wider share ownership within the business through a
sharesave scheme, which is available to all employees,
subject to eligibility criteria.
Employee engagement and support are vitally important
to the Company and several initiatives are in place to
achieve this, e.g. a website has been set up enable
employees to post comments on any business matter,
and particular support sessions have been created for
major business changes, such as the introduction of
new systems. In addition, training and development
programmes are in place throughout the business to
maximise people’s skills and advancement.
In the environment
Our commitment is to understand and improve the
performance and management of our environmental
impact throughout the Halfords supply chain. We aim to
achieve a high standard of responsible care for people
and the environment, whilst maximising business
efficiency and growth. 
In the community
The Company is the technical sponsor of the British
Heart Foundation London to Brighton cycle ride,
providing 150 cycle mechanics from our stores to keep
the fund-raisers on the road. Our cycle specialists
provide help and service to the estimated 57,000 riders
who take part each year. The British Heart Foundation
is the UK’s leading charity on heart disease and its
prevention, and this is the third year of sponsorship 
by Halfords.
Around eight out of ten child seats in the UK are
wrongly fitted in cars, sometimes leading to injury or
death of babies and toddlers. As one of the UK’s
leading retailers of child seats, Halfords has invested in
training around 1,600 store staff in the demonstration
and free fitting of child seats. We also run roadshows at
Halfords stores across the UK, working with road safety
officers to give free advice and fitting services to
parents and guardians and we also promote our own
national child seat safety week at all superstores to
raise awareness of the issue.
For 2006 the Company has chosen The Meningitis Trust
as our Charity of the Year. This will involve all of our
employees in the UK and the Republic of Ireland in fund-
raising initiatives to support the Trust. On average, one
person in the UK dies every day from meningitis and it
kills more children under five than any other infectious
disease. The Halfords partnership will focus on raising
awareness amongst our staff and customers and raising
money to support the charity’s many campaigns. Halfords Annual Report and Accounts 2006 Directors’ Report  25
Directors’ Report
The directors of Halfords Group plc (the “Company”)
present their annual report to shareholders, together
with the audited consolidated financial statements for
the financial year ended 31 March 2006.
Principal activities and business review
The principal activity of the Group is the retailing of
auto, leisure and cycling products. The Chief
Executive’s Review and the Finance Director’s Report
on pages 6 to 21 set out in more detail the Group’s
business during the year and its plans and prospects
over the coming year. The Corporate Social
Responsibility statement referred to on page 24
includes a report on the Group’s performance 
against relevant environmental criteria. 
Results and dividend
The Group’s results for the year are set out in the
Consolidated Income Statement on page 42.
The profit of the Group before tax amounted to £77.0m
(2005: £74.3m) and the profit after tax amounted to
£53.6m (2005: £51.1m).
Subject to shareholders’ approval at the Annual General
Meeting to be held on Wednesday 2 August 2006, a
final dividend of 8.75p per ordinary share will be paid
on 14 August 2006 to shareholders whose names are
on the register of members at the close of business on 
16 June 2006. This payment, together with the interim
dividend of 4.0p per ordinary share paid on 9 January
2006, makes a total for the year of 12.75p per ordinary
share. The total dividend payable to shareholders 
is estimated to be £19.9m. 
Directors
Profiles of the current directors are given on pages 22
and 23.
The following have served as directors during the year
ended 31 March 2006: 
Rob Templeman (resigned 31 March 2006)
Richard Pym
Ian McLeod 
Nick Carter
Jonathan Feuer (resigned 11 January 2006)
Keith Harris
Bill Ronald 
Nigel Wilson 
Rob Templeman resigned as Chairman on 31 March
2006 and Richard Pym was appointed Chairman on 
1 April 2006. 
In accordance with the Company’s Articles of
Association, Nick Carter is retiring by rotation at the
forthcoming Annual General Meeting and, being
eligible, has indicated that he will offer himself for 
re-election at that meeting. 
Directors’ interests
The directors’ interests in shares and options over
shares in the Company are shown in the Directors’
Remuneration Report on pages 34 to 39. No director
has any other interest in any shares or loan stock of any
Group company.
No director was or is materially interested in any
contract subsisting during or existing at the end of the
financial year which was significant in relation to the
Group’s business, other than his service contract.
During the year the Company maintained liability
insurance for its directors and officers. The directors of
the Company, and the directors of each of the
Company’s subsidiaries, have the benefit of an
indemnity provision in the Company’s Articles of
Association that was approved by shareholders at last
year’s Annual General Meeting. The indemnity
provision, which is a qualifying third party indemnity
provision as defined by section 309A of the Companies
Act 1985, was in force throughout the year and is
currently in force.
The Articles of Association of the Company were
amended by special resolution at last year’s Annual
General Meeting in order to reflect the relaxation of the
prohibition contained in the Companies Act 1985
regarding indemnities granted to directors and others.
Having reviewed the existing indemnity provision in the
Company’s Articles of Association in light of current
market practice, the directors have proposed that the
existing indemnity provision is replaced by a new
indemnity provision so that the Company shall
indemnify its directors and other officers (but not its
auditor) to the full extent permitted by the Companies
Act 1985. The directors believe that amending the
existing Article 143 is important to ensure that the
Company can continue to attract and retain both
executive directors and non-executive directors, and
other senior officers, of the highest calibre. Full details
regarding the proposal will be set out in the Notice of
Annual General Meeting to be sent to shareholders in
advance of this year’s Annual General Meeting to be
held on Wednesday 2 August 2006. Halfords Annual Report and Accounts 2006 26 Directors’ Report
Directors’ Report
Charitable donations and political contributions
During the year the Group contributed £20,000 (2005:
£36,000) to charities in the UK, principally to support
motor industry families in need. The Group’s policy is
not to make any donations for political purposes.
However, the Companies Act 1985 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
2005 Annual General Meeting that provided for limited
authority for such expenditure, such authority remaining
valid until the conclusion of the Annual General Meeting
to be held in 2008.
Employees
The Board seeks to instil high standards of customer
care and service in the Group and the commitment of
every employee to this business requirement is
considered to be critical. The Company has established
a framework of communication for employees
concerning business performance (including financial
and economic factors affecting performance), Company
benefits (including share options), and innovation.
Group-wide training reinforces the Group’s commitment
to employee involvement and development.
The Group is committed to the principle of equal
opportunity in employment and to ensuring that no
applicant or employee receives less favourable
treatment on the grounds of gender, marital status,
race, ethnic origin, religion, disability, sexuality or age,
or is disadvantaged by conditions or requirements
which cannot be shown to be justified. The Group
applies employment policies which are fair and
equitable and which ensure entry into and progression
within the Group. Appointments are determined solely
by application of job criteria, personal ability and
competency.
The Group gives full and fair consideration to
applications for employment made by disabled
persons, having regard to their particular aptitudes and
abilities, wherever suitable opportunities exist, and
training and career development support are provided,
where appropriate. Should an employee become
disabled when working for the Group, efforts are made
to continue their employment and retraining is provided,
if necessary.
A “whistle-blowing” policy and procedure is in place
and has been notified to staff. The policy enables them
to report any concerns on matters affecting the Group
or their employment, without fear of recrimination, and
reduces the risk of things going wrong or of malpractice
taking place and remaining unreported. In addition, the
Group takes a zero-tolerance approach to matters of
discrimination, harassment and bullying in all aspects of
its business operations, whether they relate to sex,
race, national origin, disability, age, religion or sexual
orientation, and policies and procedures are also in
place for reporting and dealing with these matters.
Owning shares in the Company is an important way of
strengthening employees’ involvement in the
development of the Group’s business and bringing
together their and shareholders’ interests. The
Company therefore encourages and helps the Group’s
employees to participate in its Sharesave Scheme.
The Company’s pension arrangements for the UK-
based employees of the Group are summarised in 
note 23 on page 68.
Corporate social responsibility
The Group takes its obligations to employees,
customers, suppliers, and to the environment and
society generally, very seriously. To this end, a detailed
statement of corporate social responsibility has been
developed and can be found on the Group’s website:
www.halfordscompany.com. The statement includes the
Group’s environmental policy, including waste
management and recycling, prevention of pollution and
damage to the environment, compliance with applicable
industry standards and legislation. The statement also
sets out the Group’s social responsibility policy which,
amongst other matters, sets out the Group’s
commitment to fair employment practices, working
arrangements and pay and working hours, health and
safety matters, and a prohibition on the exploitation of
the labour of children and young people.
A summary of the statement is on page 24.
Supplier payment policy
The Group does not follow any formal code or standard
on payment practice, but agrees terms and conditions
for its business transactions when orders for goods and
services are placed, and includes the relevant terms in
contracts, where 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 at the period
end for the Group was 49 days (2005: 53 days). The
Company is a holding company and had no trade
creditors at the end of the financial year. Halfords Annual Report and Accounts 2006 Directors’ Report  27
Disclosure of information to auditors
Each of the persons who are directors at the date of
approval of this report state that so far as he is aware,
there is no relevant audit information of which the
Company’s auditors are unaware, and that he has taken
all the steps that he ought to have taken as a director in
order to make himself aware of any relevant audit
information and to establish that the Company’s
auditors are aware of that information.
Going concern
The directors believe, after making enquiries that they
consider to be appropriate, that the Group and the
Company have adequate resources to continue in
operational existence for the foreseeable future. For this
reason they continue to adopt the going concern basis
in preparing the financial statements. 
Auditors
PricewaterhouseCoopers LLP has indicated its
willingness to accept reappointment as the external
auditor of the Company. A resolution proposing its
reappointment is contained in the Notice of the Annual
General Meeting and will be put to shareholders at the
meeting.
Annual General Meeting
The Annual General Meeting will be held at the Holiday
Inn Hotel, Bridgefoot, Stratford-upon-Avon,
Warwickshire, CV37 6YR, on Wednesday 2 August
2006 at 12.30 pm. The notice of the Annual General
Meeting and explanatory notes regarding the special
business to be put to the meeting are set out in a
separate circular to shareholders accompanying the
Annual Report and Accounts.
By order of the Board
Philip Parker, Company Secretary
7 June 2006
Major shareholders
At 7 June 2006, the Company’s share register of
substantial shareholdings showed the following
interests in 3 per cent or more of the Company’s issued
ordinary shares:
Number  % of 
Holder of shares issued shares
Henderson Global Investors 17,026,300 7.5
CVC European Equity Partners 16,698,400 7.3
F&C Asset Management 14,647,800 6.4
Resolution Asset Management 11,469,000 5.0
Autobacs Seven Co. Limited 11,400,000 5.0
Newton Investment Management 10,568,900 4.6
Jupiter Asset Management 9,173,500 4.0
Legal & General Investment Management 8,533,200 3.7
M&G Investment Management 8,012,765 3.5
State Street Global Markets Europe 6,996,300 3.0 Halfords Annual Report and Accounts 2006 28 Corporate Governance
Corporate Governance
Corporate governance
The Board is responsible for the Group’s system of
corporate governance. The Board is committed to high
standards of corporate governance and its policy has
been to manage the affairs of the Company in
accordance with the principles of good governance and
the provisions set out in Section 1 of the Combined
Code on Corporate Governance, issued by the
Financial Reporting Council in July 2003 (the
“Combined Code”). The following statement describes
how the Company has applied the main and supporting
principles set out in the Combined Code. 
Compliance with the Combined Code
The directors consider that the Company has fully
complied with the requirements of the Combined Code
throughout the period under review. 
The directors
The following persons were directors of the Company
during the year: 
Rob Templeman (Chairman to 31 March 2006)
Richard Pym (Senior Independent Director to 31 March
2006, Chairman from 1 April 2006)
Ian McLeod (Chief Executive)
Nick Carter (Finance Director)
Jonathan Feuer (non-executive director to 
11 January 2006)
Keith Harris (non-executive director)
Bill Ronald (non-executive director)
Nigel Wilson (non-executive director, Senior
Independent Director from 1 April 2006)
The Board’s role is to determine the long-term direction
and strategy of the Group, create value for
shareholders, monitor the achievement of business
objectives and ensure that good corporate governance
is practised and that the Group meets its other
responsibilities to its shareholders, customers and other
stakeholders. The Board is also responsible for
ensuring that appropriate processes are in place in
respect of succession planning for appointments to 
the Board and to senior management positions.
The Board is currently composed of six members,
consisting of two executive directors, a non-executive
chairman and three non-executive directors. The
Chairman, Richard Pym, was deemed by the Board to be
independent on his appointment as Chairman. The three
non-executive directors are considered by the Board to
be independent. Accordingly, no individual or group of
individuals dominates the Board’s decision-making and
the requirement of the Combined Code that at least half
of the Board (excluding the Chairman) should comprise
independent non-executive directors is satisfied. For the
period under review until his resignation on 11 January
2006, Jonathan Feuer was deemed by the Board not to
be independent, due to him being the appointee of the
CVC Shareholders under Article 73 of the Company’s
Articles of Association. 
It is the policy of the Nomination Committee and the
Board to maintain an appropriate balance between
executive and non-executive directors in line with the
provisions of the Combined Code. As reflected in the
biographical details of the directors given on pages 22 
and 23, the directors have wide experience, which enables
them to contribute fully to the Board and to the Group’s
business and ensures that independent judgement is
exercised on issues such as strategy and performance
and also that a proper balance of power is maintained for
full and effective control. The Board believes that all the
directors devote sufficient time and attention as necessary
in order to perform their duties.
The Company is supportive of executive directors who
wish to take one non-executive directorship with a
company outside the Group, as exposure to such duties
can broaden experience and knowledge, which will be to
the benefit of the Company. Executive Directors may retain
any fees they receive. Ian McLeod is currently a non-
executive director of Fulham Football Club (1987) Limited.
Richard Pym was the Senior Independent Director
throughout the period under review. The Board has
appointed Nigel Wilson as the Senior Independent
Director with effect from 1 April 2006. The Senior
Independent Director is available to meet shareholders
upon request if they have concerns which contact
through the normal channels of the Chairman or
executive directors has failed to resolve, or for which
such contact is inappropriate.
The Board will appoint any new directors having first
considered recommendations made to it by the
Nomination Committee. Following such appointment, the
director will be required to retire and seek reappointment
at the next Annual General Meeting of the Company.
Under the Company’s Articles of Association there is also
a process of rotation, which ensures that approximately
one-third of all directors are required to retire and seek
re-appointment at each Annual General Meeting and that
no director serves for more than three years without
being proposed for reappointment at an Annual General
Meeting. At this year’s Annual General Meeting Richard
Pym and Nick Carter will, in accordance with the Articles,
seek re-election.
Non-executive directors are appointed for specified
terms (normally three years), subject to reappointment
under the Company’s Articles of Association and subject
to Companies Act provisions relating to the removal of a
director. The Chairman will confirm to shareholders when
proposing an appointment or reappointment that, Halfords Annual Report and Accounts 2006 Corporate Governance 29
following formal performance evaluation, the individual’s
performance continues to be effective and they
demonstrate commitment to the role. 
The Chairman is primarily responsible for the workings of
the Board and is not involved in day-to-day operational
issues. Save for matters reserved for decision by the
Board, the Chief Executive, with the support of the
Finance Director, is responsible for the running of the
Group’s business, carrying out the agreed strategy
adopted by the Board and implementing specific Board
decisions relating to the operation of the Group.
The Board meets on a regular basis. During the
financial year ended 31 March 2006, the Board met
formally nine times. Appropriate documentation and
financial information is provided on a monthly basis and
also in advance of each Board meeting. These normally
include monthly management accounts, reports on
current trading and papers on matters in respect of
which the Board makes decisions or is invited to give
its approval. Specific presentations are also made on
business or strategic issues, when appropriate. The
Board also receives information from management on
the current trading of its retail units and their prospects
and the market position of the Group, together with key
issues being addressed by the management team.
Minutes of committee meetings are circulated to all
Board members, unless a conflict of interest arises.
These procedures are intended to ensure that the
Board is supplied in a timely manner with information
appropriate to enable the Board to discharge its duties.
The number of meetings of the Board and of each of
the Audit, Remuneration and Nomination Committees
held during the year ended 31 March 2006, together
with a record of the attendance, is set out below:
Number of meetings attended
Remuner- Nomin-
Board Audit ation ation
Meetings Committee Committee Committee
Rob Templeman 
(resigned 31 March 
2006) 8 — — —
Ian McLeod 9 — — 3
Nick Carter 9 — — —
Richard Pym 9 3 2 3
Nigel Wilson 9 3 2 —
Bill Ronald 9 3 — 4
Keith Harris 8 — 2 3
Jonathan Feuer 
(resigned 11 January 
2006) 5 — — —
Total meetings in year 9 3 2 4
note: no entry denotes that a director was not a member of the relevant
Committee 
In addition to the scheduled meetings, the Board held
an additional meeting to review corporate strategy, the
Audit Committee held meetings to review the various
trading statements, and the Nomination Committee met
to discuss the appointment of the new Chairman.
The Board has a formal schedule of reserved powers,
which it retains for Board decision-making on a range
of key issues, including the formulation of strategy,
financial reporting and controls, corporate governance
matters, and treasury and risk management. A
procedure has been adopted for directors to obtain
independent professional advice, where appropriate, at
the cost of the Company and all directors have
unrestricted access to the Company Secretary. In
relation to non-reserved matters, the Board is assisted
by a number of committees with delegated authority.
The make-up and roles of the Audit, Remuneration and
Nomination Committees are described below and (in
relation to the Remuneration Committee) in the
Directors’ Remuneration Report on pages 34 to 39.
The Board has formally adopted an induction
programme for new directors, which will be tailored to
each new director who joins the Board and includes
briefings regarding the activities of the Group and visits
to stores. Documentation and training on their duties as
directors are also available to all directors. In addition,
directors are also informed regularly on relevant
material changes to laws and regulations affecting the
Group’s business. All directors have access to the
advice and services of the Company Secretary, who is
also responsible for advising the Board, through the
Chairman, on all governance matters.
The Board has established a formal process for the
annual evaluation of the performance of the Board, its
principal committees and individual directors.
Questionnaires are drawn up, which provide the
framework for the evaluation process. Each member of
the Board or appropriate Committee submits replies to
the questionnaires, which are collated. Following a
review of these responses by the Board or the
appropriate Committee, any appropriate action will be
taken to ensure that the performance of the Board as a
whole, its principal Committees and individual directors
is such that each can perform at the optimum level for
the benefit of the Company. The Senior Independent
Director and the other independent non-executive
directors conduct the annual performance evaluation of
the Chairman.
The Company maintains an appropriate level of
Directors’ and Officers’ liability insurance to provide
cover for its directors and officers for claims and
liabilities or legal actions arising out of the performance
of their duties or roles. The directors of the Company, Halfords Annual Report and Accounts 2006 30 Corporate Governance
Corporate Governance
and the directors of each of the Company’s
subsidiaries, have the benefit of an indemnity provision
in the Company’s Articles of Association that was
approved by shareholders at last year’s Annual General
Meeting. The indemnity provision, which is a qualifying
third party indemnity provision as defined by Section
309A of the Companies Act 1985, was in force
throughout the year and is currently in force.
Board committees
The Board has established Nomination, Remuneration
and Audit Committees, with formally delegated duties
and responsibilities and written terms of reference. The
Company Secretary acts as secretary to all three
Committees. Only the members of each Committee are
entitled to attend its meetings, although other Directors,
professional advisers and members of the senior
management team attend when invited to do so. The
Audit Committee will invite the external auditor to
certain of its meetings. In the cases of the Nomination
and Remuneration Committees, no member is present
when business pertinent to them is under discussion. 
A Treasury Committee, chaired by the Finance Director,
has been established to manage the day-to-day
treasury needs of the Group. The Treasury Committee’s
membership is drawn from senior members of the
finance and treasury teams. When the need arises,
separate ad hoc committees may be set up by the
Board to consider specific issues.
Audit Committee
For the year ended 31 March 2006, the Audit Committee
comprised Nigel Wilson, Richard Pym and Bill Ronald.
From 1 April 2006 the Audit Committee comprised Nigel
Wilson, Keith Harris and Bill Ronald, all of whom are
independent non-executive directors. The Committee
chairman is Nigel Wilson, who, being also Chief Financial
Officer of United Business Media plc, is considered by
the Board to have recent and relevant financial
experience. Each of the other independent non-executive
directors on the Committee has, through their other
business activities, significant experience in financial
matters. 
The Committee has formal terms of reference and meets
at least three times a year, according to the requirements
of the Company’s financial calendar. The meetings of the
Audit Committee also provide the opportunity for the
independent non-executive directors to meet without the
executive directors present. The independent non-
executive directors also have the opportunity at this time
to raise any issues of concern with the Company’s
external auditor.
In addition to monitoring the internal and external audit
functions and ensuring the integrity of the Group’s
interim and full-year financial statements before
publication, the Committee has responsibility for
monitoring a number of other areas of activity including:
— the effectiveness of the Group’s internal controls
and the Group’s risk management policies and
systems
— the integrity, performance, and independence of the
Group’s relationship with the external auditor—
reviewing the nature and extent of non-audit
services by the external auditor. The Committee
requires any proposal for expenditure of over
£25,000 on non-audit services to be referred to it
for scrutiny and approval. The Committee will
determine whether the provision of such services
may affect the objectivity and independence of the
external auditor 
— making recommendations to the Board on the
appointment of auditors and the audit fee
— keeping under review the scope and results of the
audit and its cost-effectiveness
At least once a year the Audit Committee meets with
the external auditor without any executive directors
present.
Nomination Committee
For the year ended 31 March 2006 the Nomination
Committee comprised Richard Pym (Chairman), Keith
Harris, Bill Ronald and Ian McLeod (from 27 April 2005).
From 1 April 2006 the Committee also included Nigel
Wilson. Keith Harris, Nigel Wilson and Bill Ronald are
independent non-executive directors. 
The Nomination Committee has formal terms of
reference and meetings are held as and when required,
although the Committee is required to meet at least
twice each year. During the period under review it met
to consider succession planning for the Board and
senior management generally, and to propose the
appointment of the new Chairman. 
In addition, its remit includes:
— nominating candidates (both executive and non-
executive) for appointment to the Board, to fill
vacancies or appoint additional persons to the
Board 
— monitoring the size, structure, balance and
composition of the Board
— evaluating the balance of skills, knowledge and
experience of the Board’s members
— making recommendations in respect of the
membership of the Audit and Remuneration
Committees
— making recommendations in respect of the
reappointment (or not) of non-executive directors
and of the continuance in service (or not) of
executive directors. Halfords Annual Report and Accounts 2006 Corporate Governance  31
In discharging its duties, the Committee considers the
challenges and opportunities facing the Group and the
skills and expertise required for the future. In relation to
any new appointments the Committee evaluates the
balance of skills, knowledge and experience on the
Board and, in the light of this evaluation, prepares a
description of the role and capabilities required for a
particular appointment. 
During the year, the Committee nominated Richard Pym
(who was not present at that meeting) for appointment as
Chairman, having unanimously agreed that he possessed
the requisite qualities, skills and experience for the role.
The Committee also noted that on his initial recruitment
to the Board as the Senior Independent Director in 2004,
Richard Pym had been identified by the external search
agency engaged as being suitable to step into the
Chairman’s position should a vacancy arise. The Board
subsequently approved the nomination and Richard Pym
was appointed as Chairman on 1 April 2006.
Remuneration Committee
For the year ended 31 March 2006, the Remuneration
Committee comprised Keith Harris (Chairman), Richard
Pym and Nigel Wilson. From 26 April 2006 the
Committee also included Bill Ronald. Keith Harris, Nigel
Wilson and Bill Ronald are all independent non-executive
directors. The Board has agreed that Richard Pym will
remain a member of the Committee, in anticipation of the
Financial Reporting Council’s recommendation to amend
the Code, so as to allow company chairmen to sit on
remuneration committees, being brought into effect.
The Committee has formal terms of reference and
meetings are held as and when required, although the
Committee is required to meet at least twice each year.
The Committee, on behalf of the Board, determines all
elements of the remuneration packages of the executive
directors and certain senior executives of the Group. It
approves the terms of service contracts with executive
directors and would also approve any compensation
arrangements resulting from the termination by the
Company of a director’s service contract. The Committee
also approves the grant of share options. The terms of
reference of the Committee include the following:
— making recommendations to the Board on the
Company’s framework of executive remuneration
and its cost
— reviewing and determining on behalf of the Board,
the remuneration and incentive packages of the
Company’s executive directors and certain senior
executives of the Group to ensure that they are
fairly rewarded for their individual contributions to
the Group’s overall performance
— determining the basis on which the employment of
the Company’s executive directors and certain
senior executives of the Group is terminated
— operating and administering the Company’s share
option schemes and employee benefit trust.To
assist the Committee in its work, the services of
remuneration consultants Watson Wyatt LLP were
retained to provide advice on appropriate levels of
remuneration or fees for each of the directors and
for other senior executives in the Group.
The Committee also assists the Board in preparing the
annual report on directors’ remuneration. The Board’s
remuneration report for the year ended 31 March 2006
is set out on pages 34 to 39 of this report.
Accountability, risk management and internal
control
The respective responsibilities of the directors and the
external auditor in connection with the Company’s
financial statements are explained below under the
headings “Statement of Directors’ Responsibilities” on
page 40 and “Respective Responsibilities of Directors
and Auditors” on page 41. The directors are responsible
for presenting a clear and balanced assessment of the
financial situation and prospects of the Group and, as
part of this assessment, the Chief Executive’s Review is
set out on pages 6 to 17 and the Finance Director’s
Report is set out on pages 18 to 21. 
The Board has overall responsibility for the system of
internal control and for reviewing its effectiveness
throughout the Group. The system of internal control is
designed to manage, rather than eliminate, the risk of
failing to achieve business objectives and can provide
only reasonable and not absolute assurance against
material misstatement or loss. The Audit Committee on
behalf of the Board reviews the effectiveness of the
Group’s systems of internal control. 
The Board considers risk assessment and control to be
fundamental to achieving its corporate objectives within
an acceptable risk/reward profile, and there is an
ongoing process for identifying and evaluating the
significant risks faced by the Group and the effectiveness
of related controls. The key elements of this process are:
— reviews of Group risk assessment reports by the
Audit Committee 
— reviews of performance, through a comprehensive
system of reporting, based on an annual budget,
with monthly reviews against actual results,
analysis of variances, key performance indicators
and regular forecasting
— well-defined policies governing appraisal and
approval of capital expenditure and treasury
operations Halfords Annual Report and Accounts 2006 32 Corporate Governance
Corporate Governance
— the Chairman of the Audit Committee reports the
outcome of the Audit Committee meetings to the
Board and the Board receives minutes of those
meetings.
The Board’s internal control system focuses on a wide
range of business risks and financial risks as follows:
Business risks: There is an ongoing process for
identifying, evaluating and managing the business risks
faced by the Group and this process was in place for
the year under review and up to the date of this Report.
Business risks are identified and evaluated through
senior management’s ongoing review of progress
against strategic objectives agreed with the Board. The
business risks reviewed include:
— external business risks, including regulatory and
compliance obligations
— operational risks arising from, e.g. supplier
dependency, fire, material damage, etc. 
— legal risks, e.g. the risks arising under leases of
retail units and under contracts with suppliers 
— informational risks, including the integrity of IT
systems and the security of information
— the risks to members of staff from crime.
The Audit Committee reviews the effectiveness of these
controls on behalf of the Board.
Financial risks: The key internal financial control
procedures, which operated in the Group throughout the
period covered by the financial statements, are as follows:
— Control environment: Levels of authority and
accountability are defined. The Group’s business
operates within a framework of procedures laid
down in written policy documents and the Group’s
personnel are required to comply with these
procedures as relevant to their functions and
responsibilities. Financial reporting follows generally
accepted accounting practice.
— Identification and evaluation of risks and control
objectives: The process of risk assessment and the
evaluation of its related financial impact is an
ongoing process reflected in decision-making at
Group and operating levels. 
— Monitoring and management of risk: Central review
and approval procedures are in place in respect of
the major areas of risk such as acquisitions and
disposals, major contracts, capital expenditure,
litigation, treasury management and taxation.
Conformity with procedures is monitored on an
ongoing basis. 
— Information and communication: Comprehensive
information systems are maintained at Group and
operating unit levels and are subject to scrutiny by
the Board, as follows:
— detailed budgeting procedures, with an annual
budget approval
— monthly consideration of actual results
compared with budgets and forecasts
— regular reviews of rolling profit and cash flow
forecasts
— regular reviews of the Group capital
expenditure plan
— reporting of legal and accounting
developments.
Regular executive and Board meetings and operational
reviews are held with a view to ensuring variances and
discrepancies are identified and investigated in a timely
way. Reviews of issues arising under the annual audit
are brought to the attention of the Audit Committee and
the Board and corrective action agreed and
implemented. The external auditor reports directly to
the Audit Committee.
Deloitte & Touche LLP , as independent adviser, is
formally engaged to provide internal audit services
reporting to the Board, via the Audit Committee. These
reports evaluate the adequacy and effectiveness of our
internal controls and recommend improvement, based
on a systematic risk assessment of the business. Halfords Annual Report and Accounts 2006 Corporate Governance  33
Relationship with shareholders
The Board recognises the importance of establishing
and maintaining good relationships with all of the
Company’s investors. The Chief Executive, Finance
Director and the Chairman meet regularly with analysts
and institutional shareholders to keep them informed of
significant developments and report to the Board
accordingly on the views of the major shareholders. The
Senior Independent Director is also available to attend
such meetings, if required. Each of the other non-
executive directors is also offered the opportunity to
attend meetings with major shareholders and would do
so if requested by any major shareholder. The
Company’s investor relations programme includes
formal presentations of full year and interim results.
Feedback from these meetings is provided to the
Board. The Company Secretary is also charged with
bringing to the attention of the Board any material
matters of concern raised by the Company’s
shareholders, including private investors.
The Interim Report and the Annual Report and
Accounts are the primary means the Board has of
communicating during the year with all of the
Company’s shareholders. The Board also recognises
the importance of the Internet as a means of
communicating widely, quickly and cost-effectively and
an extensive investor relations website (at
www.halfordscompany.com) has been developed to
facilitate communications with shareholders.
Information available online includes copies of the full
and interim financial statements, press releases and
Company news, corporate governance information and
statements, the schedule of matters reserved for the
Board, and the terms of reference for the Audit,
Nomination and Remuneration Committees. 
The Board is committed to the constructive use of the
Annual General Meeting as a forum to meet with
investors and to hear their views and answer their
questions about the Group and its business. The
Company will dispatch the notice of the Annual General
Meeting, with an explanatory circular describing any
items of special business, at least 20 working days
before the meeting. The Chairmen of the Remuneration,
Nomination and Audit Committees will normally attend
the meeting and will answer questions that may be
relevant to the work of those Committees. If they are
unable to attend they will appoint a deputy to attend in
their place. It is the Company’s practice to propose
separate resolutions on each substantially separate
issue at the Annual General Meeting. The Chairman will
advise shareholders on the proxy voting details for each
resolution after it has been put to the meeting.
The Company’s financial calendar is set out on 
page 80.
Directors’ remuneration
Details of directors’ remuneration and emoluments
(required to be disclosed by the Combined Code’s
requirements regarding remuneration matters and by
Schedule 7A of the Companies Act 1985) are set out in
the Directors’ Remuneration Report on pages 34 to 39.
The Directors’ Remuneration Report will be put to an
advisory vote of shareholders at the forthcoming Annual
General Meeting.
By order of the Board
Philip Parker, Company Secretary
7 June 2006 Halfords Annual Report and Accounts 2006 34 Directors’ Remuneration Report
Directors’ Remuneration Report
The following report outlines the Company’s policy on
the remuneration of executive directors and gives details
of the remuneration packages of executive directors and
of the fees paid to non-executive directors for the year
ended 31 March 2006. The Report has been prepared in
accordance with the requirements of Schedule 7A to the
Companies Act 1985. Part 3 of Schedule 7A requires
designated parts of the Remuneration Report to be
audited, whilst other parts are not. In preparing this
report, consideration has been given to the Listing Rules
of the UK Listing Authority and to the Combined Code
and the report has been approved by both the
Remuneration Committee and by the Board. A resolution
to approve the report will be proposed at the Annual
General Meeting of the Company. 
Part A of the report, which is not subject to audit, sets
out the Company’s remuneration policy. Part B, which
has been audited, provides details of the remuneration,
pensions and share incentives of the directors for the
52 weeks to 31 March 2006.
Part A — Unaudited information
Remuneration Committee
The Remuneration Committee, which met twice during
the year, comprises Richard Pym and the three
independent non-executive directors, Keith Harris
(Chairman), Bill Ronald (from 26 April 2006) and Nigel
Wilson. The Committee’s terms of reference, which are
available from the Company’s website, set out the
responsibilities of the Committee and are described in
more detail on page 31. 
During the year, the Committee received advice from
Watson Wyatt LLP and the Hay Group, its external
independent advisers.
Remuneration policy
The remuneration policy of the Committee and of the
Board is to provide remuneration packages for the
executive directors and other senior executives in the
Group which are appropriate to the size and nature of the
Group’s business and which will attract and retain high
calibre executives. It is the Company’s policy that a
substantial proportion of the executive directors’
remuneration should be performance related in order to
encourage and reward superior business performance and
shareholder returns and that remuneration should be linked
to both individual and Company performance. Accordingly,
executive directors may earn up to an additional 80%
(100% from 1 April 2006 in the case of the Chief Executive)
of their basic salaries as a performance bonus and have
benefited from participation in the Company’s share option
scheme as set out below. No further awards will be made
under the share option scheme to the executive directors
but they were able to participate in the 2005 Performance
Share Plan. The executive directors are also able to
participate in an all-employee save-as-you-earn scheme
(“the Halfords Sharesave Scheme”), referred to on page 35.
It is the policy of the Committee and the Board to
maintain the above approach to remuneration packages
for executive directors and other senior executives of
the Group for the current financial year and future
financial years, subject to review in the light of any
changes in relevant legislation, regulations or market
practice. No significant changes to the remuneration
arrangements for executive directors are currently
anticipated. However, the Committee will continue to
review base salaries and performance targets to ensure
that they align with the remuneration policy of the
Committee and the Board and with the Company’s
strategic objectives. The individual salary, bonus and
benefit levels of the executive directors are, and will
continue to be, reviewed annually by the Committee. 
It is the Company’s policy to employ executive directors
under contracts with an indefinite term, subject to
termination by notice given by either party of 12 months.
Any compensation payable by the Company would be
subject to the normal legal principles of mitigation of
loss. No compensation would be payable if the service
contracts were to be terminated by notice from the
executive director or for lawful termination by the
Company. There are no provisions for payment of pre-
determined compensation under the service contracts. 
Details of individual directors’ remuneration and share
options are set out on pages 37 and 38 of this report.
The main components of the remuneration package for
executive directors are:
Basic salary
The Company’s policy is that basic salaries for executive
directors should take into account the individual’s role
and responsibilities, performance and experience. For an
executive director who is experienced and fully effective
in his role, basic salary is targeted at the retail market
median for comparable roles. 
Annual bonus
Executive directors are eligible to receive an annual
performance bonus up to a maximum of 80% (100% from
1 April 2006 in the case of the Chief Executive) of their
annual basic salary at the time the bonus scheme is
announced. The amount of bonus is based on the
achievement of profit and earnings per share targets,
specified and agreed at the beginning of the year. Bonus
payments do not form part of the directors’ pensionable
earnings. The performance targets for bonus entitlements
are intended by the Remuneration Committee to create
keen incentives to perform at the highest levels.
Share option schemes
In May 2004 the Company adopted the Halfords
Company Share Option Scheme and the Halfords
Sharesave Scheme, under which employees are eligible Halfords Annual Report and Accounts 2006 Directors’ Remuneration Report  35
for the grant of options to acquire ordinary shares in the
Company.
Halfords Company Share Option Scheme
Options are granted at an exercise price not less than
market value at the date of grant and may normally only
be exercised if performance conditions set at the time
of grant have been achieved, which were if the EPS
(earnings per share) for the financial year last preceding
the third anniversary of the grant date equals or
exceeds the percentage growth in RPI (retail price
index) plus five per cent per annum.
Halfords Sharesave Scheme
Options are granted at an exercise price not less than
80% of market value at the date of grant. Options may
not normally be exercised until the option holder has
completed his or her savings contract (which will
normally be three or five years) from the date of
commencement of the savings contract.
Details of options granted to executive directors which
are outstanding and further details of the share option
schemes are set out on page 38.
2005 Performance Share Plan
Under the 2005 Performance Share Plan, approved by
shareholders at the Annual General Meeting in 2005,
conditional rights to receive shares will be awarded to
participants. The extent to which such rights vest will
depend upon the Company’s performance over the
three-year period following the award date. The vesting
of 50% of the awards will be determined by the
Company’s relative total shareholder return (“TSR”)
performance and the vesting of the other 50% by the
Company’s absolute earnings per share performance
against RPI. The Company’s TSR performance will be
measured against a comparator group of retailers. No
retesting will be permitted. In order to ensure that the
performance targets for the 2006–2009 scheme remain
stretching but achievable, the earnings over share
performance spread will be RPI plus 4% compound at
entry to RPI plus 11% compound at maximum.
Pensions
The Company Pension Plan is a defined contribution
scheme, which is open to the executive directors. The
Company’s contributions during the year are shown in
the table on page 38.
Other benefits
Executive directors are entitled to be provided with a
company car or an equivalent allowance, contribution
to a personal pension scheme, permanent health
insurance, life assurance cover, membership of a
private medical insurance scheme and travelling
expenses, etc. Executive directors may also join the
Halfords Sharesave Scheme.
Non-executive directors
The Board as a whole, following a recommendation by
the Chief Executive, determines the fees of the non-
executive directors. 
The Company’s practice is to appoint non-executive
directors under letters of appointment, rather than
under service contracts. Those letters of appointment
set out fixed terms of appointment (normally three
years). 
Performance graph
Schedule 7A of the Companies Act 1985 requires listed
companies to provide, by graph, an analysis of the
performance of the Company over time as compared
with an appropriate and broad equity market index. The
FTSE Mid-250 Index has been selected because it is a
broad equity market index which includes the
Company’s shares and the Committee believes that no
other index would provide a more appropriate
comparator, given the nature of the Group’s activities.
The graph below shows the Total Shareholder Return
(“TSR”) performance of an investment of £100 in
Halfords Group plc shares over the period following
flotation (June 2004) compared with an equivalent,
hypothetical, holding of shares in the companies
represented in FTSE Mid-250 Index:
170
160
150
140
130
120
110
100
90
cumulative TSR based to 100
June 04 Sept 04 Dec 04 Mar 05 June 05 Sept 05 Dec 05 Mar 06
FTSE 250
Halfords Group plc Halfords Annual Report and Accounts 2006 36 Directors’ Remuneration Report
Directors’ Remuneration Report
Executive directors’ service contracts
Details of the executive directors’ service contracts are
given below.
Date of service
agreement Notice period
Ian McLeod 29 March 2005 12 months
Nick Carter 17 May 2004 12 months
The Company may terminate either of the above
service contracts by giving not less than 12 months’
notice. Any compensation payable by the Company for
early termination would be subject to the normal legal
principles of mitigation of loss. No compensation would
be payable if a service contract were to be terminated
by notice from an executive director or for lawful early
termination by the Company. 
Non-executive directors: letters of appointment
Non-executive directors are appointed under letters 
of appointment (rather than under service contracts),
which set out fixed terms of appointment (normally
three years). Updated letters of appointment for each 
of the non-executive directors were signed on 
1 April 2006.
Details of the non-executive directors’ updated letters
of appointment are:
notice period/
date of unexpired term at the
appointment date of this report
Richard Pym 17 May 2004 3 months/12 months
Keith Harris 17 May 2004 3 months/12 months
Nigel Wilson 17 May 2004 3 months/12 months
Bill Ronald 17 May 2004 3 months/12 months
Each letter of appointment is terminable by either party
by giving not less than three months’ notice or by the
Company on payment of fees in lieu of notice. No
compensation would be payable to a non-executive
director if his engagement were terminated as a result of
him retiring by rotation at an annual general meeting, not
being elected or re-elected at an annual general meeting
or otherwise ceasing to hold office under the provisions
of the Articles of Association of the Company. Halfords Annual Report and Accounts 2006 Directors’ Remuneration Report  37
Part B — Audited information
The following section provides details of the remuneration, pension and share interests of the directors for the year
ended 31 March 2006 and has been audited.
Directors’ remuneration
The remuneration and taxable benefits provided by the Company for each director for the 52 weeks to 31 March
2006 were as follows:
52 weeks to 52 weeks to
31 March 1 April
Salaries/ 2006 2005
Fees Bonuses Benefits Total Total
executive directors Note £’000 £’000 £’000 £’000 £’000
Ian McLeod 310 — 20 330 283
Nick Carter 185 — 12 197 220
David Hamid 1 — — — — 445
2 495 — 32 527 948
non-executive directors 3
Rob Templeman 4 75 — — 75 71
Richard Pym 60 — — 60 52
Keith Harris 40 — — 40 35
Nigel Wilson 40 — — 40 35
Bill Ronald 35 — — 35 31
Jonathan Feuer 5 27 — — 27 38
Christopher Woodhouse 6 — — — — 5
Soren Vestergaard-Poulsen 6 — — — — 5
277 — — 277 272
Notes:
1 David Hamid resigned as a director on 29 March 2005.
2 Benefits include all taxable benefits arising from employment by the Company, including company car, private
petrol, medical insurance and life cover. All executive directors receive these benefits.
3 The remuneration of the Chairman and other non-executive directors consists only of annual fees for their
services, both as members of the Board and of the Committees on which they serve.
4 Rob Templeman resigned as a director on 31 March 2006.
5 Jonathan Feuer resigned as a director on 11 January 2006.
6 Christopher Woodhouse and Soren Vestergaard-Poulsen resigned as directors on 30 May 2004.
Ian McLeod is paid a non-executive director fee of £25,000 p.a. by Fulham Football Club (1987) Limited and retains
such fee. Halfords Annual Report and Accounts 2006 38 Directors’ Remuneration Report
Directors’ Remuneration Report
Directors’ pensions
Pension contributions to defined contribution money purchase schemes made by the Company during the 52
weeks to 31 March 2006 in respect of executive directors were as follows:
52 weeks to 52 weeks to
31 March 1 April
2006 2005
Note £’000 £’000
Ian McLeod 47 30
Nick Carter 28 23
David Hamid 1 — 46
75 99
Note:
1 David Hamid resigned as a director on 29 March 2005.
Long-Term Incentive Plan (“LTIP”)
The following table gives details of the conditional awards of shares made to the executive directors under the LTIP .
As at Awarded As at
1 April in the 31 March Exercise Performance
2005 period 2006 price period
Ian McLeod — 100,977 100,977 3.07 3 yrs to 1 Apr 2008
Nick Carter — 60,261 60,261 3.07 3 yrs to 1 Apr 2008
For notes on conditions, see Note 21 on page 67.
Directors’ interests in share options
The following table gives details of share options held for each executive director who served during the year:
As at Awarded As at Exercise
1 April in the 31 March price Exercisable Exercisable
Notes 2005 period 2006 (£) from to
Ian McLeod
Share Option Scheme 1 192,308 — 192,308 2.60 2 June 2007 2 June 2014
Sharesave Scheme 2 — 3,086 3,086 3.07 1 Oct 2008 1 Mar 2009
Total 192,308 3,086 195,394
Nick Carter
Share Option Scheme 1 149,038 — 149,038 2.60 2 June 2007 2 June 2014
Sharesave Scheme 2 3,563 — 3,563 2.64 1 Aug 2007 1 Feb 2008
Total 152,601 — 152,601
Notes:
1 Options granted under the Halfords Share Option Scheme are subject to the achievement of a three year
performance condition. For grants up to 150% of basic salary the options can only be exercised if the increase
in the defined EPS over the period is not less than the increase in the Retail Price Index (“RPI”) plus 6% per
year. In the case of grants in excess of 150% of basic salary, the excess can only be exercised in full if the
increase is not less than RPI plus 10% per year. For increases in excess of 6% but less than 10%, a proportion
of the option in excess of 150% of salary can be exercised.
2 The Halfords Sharesave Scheme is a Save-As-You-Earn scheme and is open to all full-time directors and
employees with eligible employment service. Options may be exercised under the scheme at £2.64 per share
(2004 scheme) and £3.07 (2005 scheme) if the option holder completes his saving contract for a period of three
years and then not more than six months thereafter.
For details of the grant dates of options see note 21 on pages 66 and 67. Halfords Annual Report and Accounts 2006 Directors’ Remuneration Report  39
The closing share price on 31 March 2006 was £3.38 and the price range during the period from 2 April 2005 to 
31 March 2006 was £2.64 to £3.55.
The following table shows the beneficial interest of the directors and their families in the ordinary shares of the
Company. 
Directors’ interests in shares
Shareholdings Shareholdings
as at 31 March as at 1 April
2006 2005
executive directors
Ian McLeod 804,757 1,129,757
Nick Carter 1,038,972 1,338,972
non-executive directors
Rob Templeman 966,672 966,672
Richard Pym 11,538 11,538
Keith Harris 3,846 3,846
Bill Ronald 11,538 11,538
Nigel Wilson 10,000 10,000
From 31 March 2006 to 7 June 2006 there were no changes in the above interests. All of the above interests were
beneficial at each of the above dates. 
Ian McLeod and Nick Carter were, at 31 March 2006 and at 7 June 2006, deemed to be interested as discretionary
beneficiaries of the Halfords Employees’ Share Trust, in so far as it relates to the share options noted on page 66.
881,350 ordinary shares in the Company were held by the trustees of that Trust on those dates. Save as mentioned
above, no director had any interest in any share capital of the Company or of any subsidiary.
Approved by the Board and signed on its behalf by
Keith Harris, Chairman of the Remuneration Committee
7 June 2006 Halfords Annual Report and Accounts 2006 40 Statement of Directors’ Responsibilities
Statement of Directors’ Responsibilities
Company law requires the directors to prepare financial
statements for each financial period which provide a
true and fair view of the state of the affairs of the
Company and of the Group and of the profit or loss of
the Group in that period. The directors have elected to
prepare financial statements for the Company in
accordance with UK GAAP . In preparing those
statements the directors are required to:
— select suitable accounting policies and apply them
consistently;
— make judgements and estimates which are prudent
and reasonable; 
— state that the financial statements comply with
IFRS or UK GAAP as appropriate;
— state whether applicable accounting standards
have been followed, and to disclose and explain
and any material departures from those standards;
and
— prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group will continue in business.
The directors are responsible for the financial
statements on pages 42 to 72 complying with all of the
above requirements. The maintenance and integrity of
the Halfords Group plc website is the responsibility of
the directors; the work carried out by the Auditor does
not involve consideration of these matters and,
accordingly, the Auditor accepts no responsibility for
any changes that may have occurred to the financial
statements since they were initially presented on the
website. Legislation in the United Kingdom concerning
the dissemination of financial statements may differ
from legislation in other jurisdictions.
The directors are also responsible for maintaining
adequate accounting records which disclose with
reasonable accuracy at any time the financial position
of the Company and of the Group and which allow
them to ensure that the financial statements comply
with the requirements of the Companies Act 1985. They
also have a general responsibility at law for taking such
suitable measures as are available to them to safeguard
the assets of the Company and of the Group and to
take reasonable steps to prevent and detect fraud and
other irregularities.
By order of the Board
Philip Parker, Company Secretary
7 June 2006 Halfords Annual Report and Accounts 2006 Independent Auditors’ Report  41
Independent Auditors’ Report to the
Members of Halfords Group plc
We have audited the Group financial statements of
Halfords Group plc for the 52 weeks to 31 March 2006
which comprise the Consolidated Income Statement,
the Consolidated Balance Sheet, the Consolidated
Cash Flow Statement, the Consolidated Statement of
Changes in Shareholders’ Equity and the related notes.
These Group financial statements have been prepared
under the accounting policies set out therein.
We have reported separately on the parent company
financial statements of Halfords Group plc for the year
ended 31 March 2006 and on the information in the
Directors’ Remuneration Report that is described as
having been audited on pages 34 and 39.
Respective Responsibilities of Directors and
Auditors
The directors’ responsibilities for preparing the Annual
Report and the Group financial statements in
accordance with applicable law and International
Financial Reporting Standards (IFRS) as adopted by the
European Union are set out in the Statement of
Directors’ Responsibilities.
Our responsibility is to audit the Group financial
statements in accordance with relevant legal and
regulatory requirements and International Standards on
Auditing (UK and Ireland). This report, including the
opinion, has been prepared for and only for the
Company’s members as a body in accordance with
Section 235 of the Companies Act 1985 and for no
other purpose. We do not, in giving this opinion, accept
or assume responsibility for any other purpose or to any
other person to whom this report is shown or into
whose hands it may come save where expressly agreed
by our prior consent in writing.
We report to you our opinion as to whether the Group
financial statements give a true and fair view and
whether the Group financial statements have been
properly prepared in accordance with the Companies
Act 1985 and Article 4 of the IAS Regulation. We report
to you whether in our opinion the information given in
the Directors’ Report is consistent with the Group
financial statements. We also report to you if, in our
opinion, we have not received all the information and
explanations we require for our audit, or if information
specified by law regarding directors’ remuneration and
other transactions is not disclosed.
We review whether the Corporate Governance
Statement reflects the Company’s compliance with the
nine provisions of the 2003 FRC Combined Code
specified for our review by the Listing Rules of the
Financial Services Authority, and we report if it does
not. We are not required to consider whether the
Board’s statements on internal control cover all risks
and controls, or form an opinion on the effectiveness of
the Group’s corporate governance procedures or its
risk and control procedures.
We read other information contained in the Annual
Report and consider whether it is consistent with the
audited Group financial statements. The other
information comprises only the Directors’ Report, the
unaudited part of the Directors’ Remuneration Report,
the Chairman’s Statement, the Chief Executive’s
Review, the Finance Director’s Report and the
Corporate Governance Statement. We consider the
implications for our report if we become aware of any
apparent misstatements or material inconsistencies
with the Group financial statements. Our responsibilities
do not extend to any other information.
Basis of Audit Opinion
We conducted our audit in accordance with
International Standards on Auditing (UK and Ireland)
issued by the Auditing Practices Board. An audit
includes examination, on a test basis, of evidence
relevant to the amounts and disclosures in the Group
financial statements. It also includes an assessment of
the significant estimates and judgements made by the
directors in the preparation of the Group financial
statements, and of whether the accounting policies are
appropriate to the Group’s circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all
the information and explanations which we considered
necessary in order to provide us with sufficient
evidence to give reasonable assurance that the Group
financial statements are free from material
misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also
evaluated the overall adequacy of the presentation of
information in the Group financial statements.
Opinion
In our opinion:
 the Group financial statements give a true and fair
view, in accordance with IFRS as adopted by the
European Union, of the state of the Group’s affairs
as at 31 March 2006 and of its profit and cash
flows for the 52 weeks then ended;
 the Group financial statements have been properly
prepared in accordance with the Companies Act
1985 and Article 4 of the IAS Regulation; and
 the information given in the Directors’ Report is
consistent with the Group financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Birmingham
7 June 2006 Halfords Annual Report and Accounts 2006 42 Financial Statements
Consolidated Income Statement
For the period
52 weeks to 52 weeks to
31 March 1 April
2006 2005
Notes £m £m
Revenue 1 681.7 628.4
Cost of sales (335.0) (292.0)
Gross profit 346.7 336.4 
Operating expenses 2 (257.6) (247.1)
Operating profit 4 89.1 89.3 
Finance costs 6 (12.5) (15.4)
Finance income 6 0.4 0.4
Profit before tax 77.0 74.3 
Taxation 7 (23.4) (23.2)
Profit attributable to equity shareholders 53.6 51.1
Earnings per share
Basic 9 23.6p 23.7p
All results relate to continuing operations of the Group. Halfords Annual Report and Accounts 2006 Financial Statements  43
Consolidated Balance Sheet
31 March 1 April
2006 2005
Notes £m £m
Assets
Non-current assets
Goodwill 10 253.1 253.1
Other intangible assets 10 5.7 6.2
Property, plant and equipment 11 104.1 97.8
362.9 357.1
Current assets
Inventories 12 127.2 108.3
Trade and other receivables 13 29.4 23.6
Derivative financial instruments 19 1.2 —
Cash and cash equivalents 14 1.5 1.1
159.3 133.0
Total assets 522.2 490.1
Liabilities
Current liabilities
Borrowings 16 (63.5) (52.2)
Trade and other payables 15 (101.9) (99.3)
Current tax liabilities (13.1) (13.3)
Provisions 17 (1.2) (1.6)
(179.7) (166.4)
Net current liabilities (20.4) (33.4)
Non-current liabilities
Borrowings 16 (111.7) (131.3)
Derivative financial instruments 19 (2.1) —
Deferred tax liabilities 18 (3.5) (5.1)
Accruals and deferred income (22.7) (11.6)
(140.0) (148.0)
Total liabilities (319.7) (314.4)
Net assets 202.5 175.7
Shareholders’ equity
Share capital 20 2.3 2.3
Share premium account 133.2 132.9
Hedging reserve (0.8) —
Retained earnings 67.8 40.5
Total equity 202.5 175.7
The financial statements on pages 42 to 72 were approved by the Board of Directors on 7 June 2006 and were
signed on its behalf by: 
Nick Carter, Finance Director Ian McLeod, Chief Executive Halfords Annual Report and Accounts 2006 44 Financial Statements
Consolidated Statement of Changes 
in Shareholders’ Equity
Share Share Hedging Retained Total
capital premium reserve earnings equity
£m £m £m £m £m
Balance at 2 April 2004 — 0.1 — (7.3) (7.2)
Profit for the period — — — 51.1 51.1
Shares issued 2.3 134.6 — — 136.9
Bonus issue in respect of
ordinary shares — (1.8) — — (1.8)
Movement arising from the 
issue of share options — — — 4.2 4.2
Employee share options — — — 1.0 1.0
Dividends — — — (8.5) (8.5)
Balance at 1 April 2005 2.3 132.9 — 40.5 175.7
Balance at 1 April 2005 
as previously reported 2.3 132.9 — 40.5 175.7
Application of IAS 39 Fair value at 
opening balance sheet — — (2.9) — (2.9)
Balance at 1 April 2005 restated 2.3 132.9 (2.9) 40.5 172.8
Profit for the period — — — 53.6 53.6
Shares issued — 0.3 — — 0.3
Cash flow hedges:
Fair value gains in the period — — 3.2 — 3.2
Transfers to inventory — — (0.8) — (0.8)
Transfers to net profit — — (0.3) — (0.3)
Employee share options — — — 1.3 1.3
Deferred tax on employee share options — — — 0.4 0.4
Dividends — — — (28.0) (28.0)
Balance at 31 March 2006 2.3 133.2 (0.8) 67.8 202.5 Halfords Annual Report and Accounts 2006 Financial Statements  45
Consolidated Cash Flow Statement
For the period
52 weeks to 52 weeks to
31 March 1 April
2006 2005
Notes £m £m
Cash flows from operating activities
Cash generated from operations I 100.9 117.0
Finance income received 0.4 0.4
Finance costs paid (11.0) (12.5)
Cost of forward foreign exchange contracts (0.9) —
Taxation paid (24.8) (20.1)
Net cash from operating activities 64.6 84.8
Cash flows from investing activities
Purchase of intangible assets (1.4) (4.3)
Purchase of property, plant and equipment (26.1) (23.3)
Net cash used in investing activities (27.5) (27.6)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital 0.3 135.1
Repayment of borrowings III (12.0) (217.6)
Finance lease principal payments III (0.3) (0.2)
Dividends paid to shareholders (28.0) (8.5)
Net cash used in financing activities (40.0) (91.2)
Net decrease in cash and bank overdrafts II (2.9) (34.0)
Cash and bank overdrafts at the beginning of the period (15.5) 18.5
Cash and bank overdrafts at the end of the period II (18.4) (15.5) Halfords Annual Report and Accounts 2006 46 Financial Statements
Notes to Consolidated 
Cash Flow Statement
I. Cash generated from operations
For the period
52 weeks to 52 weeks to
31 March 1 April 
2006 2005
£m £m
Operating profit 89.1 89.3
Depreciation — property, plant and equipment 19.6 17.4
Amortisation — intangible assets 1.9 1.1
Loss on sale of property, plant and equipment 0.5 0.4
Non-cash charge for employee share schemes — 4.2
Share option scheme charges 1.3 1.0
Increase in inventories (18.9) (3.8)
Increase in debtors (5.8) (0.1)
Increase in creditors 13.2 7.5
100.9 117.0
II. Analysis of movements in the Group’s net debt in the period
Other
At 1 April non-cash At 31 March 
2005 Cash flow changes 2006
£m £m £m £m
Cash in hand and at bank 1.1 0.4 — 1.5
Bank overdraft (16.6) (3.3) — (19.9)
(15.5) (2.9) — (18.4)
Debt due within one year (35.3) 12.0 (20.0) (43.3)
Debt due after one year (118.3) — 19.3 (99.0)
Total net debt excluding finance leases (169.1) 9.1 (0.7) (160.7)
Finance leases due within one year (0.3) 0.3 (0.3) (0.3)
Finance lease due after one year (13.0) — 0.3 (12.7)
Total finance leases (13.3) 0.3 — (13.0)
Total net debt (182.4) 9.4 (0.7) (173.7)
The total debt cash outflow consists of £12.0m net repayment of borrowings and £0.3m repayment of finance lease
obligations, offset by an increase in overdrafts of £3.3m.
Non-cash changes relate to finance costs of £0.7m in relation to the amortisation of capitalised debt issue costs.
III. Movement in borrowings
52 weeks to
31 March
2006
£m
Debt due within 1 year:
Unsecured bank loans 12.0
Finance lease principal payments 0.3
12.3 Halfords Annual Report and Accounts 2006 Financial Statements  47
Accounting Policies
Basis of preparation
The consolidated financial statements of Halfords Group plc are now prepared in accordance with International
Financial Reporting Standards (“IFRS”) and International Finance Reporting Interpretation Committee (“IFRIC”)
interpretations that are endorsed by the European Union and with those parts of the Companies Act 1985
applicable to those companies reporting under IFRS. The Group had previously reported under UK GAAP . A
reconciliation between the figures for the 52 weeks to 1 April 2005 as previously presented under UK GAAP and as
restated under IFRS is given in note 25.
The consolidated financial statements are prepared under the historical cost convention. The preparation of
financial statements in conformity with generally accepted accounting principles requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s
accounting policies. Although these judgements and estimates are based on management’s best knowledge of the
amount, event or actions and actual results may ultimately differ from these.
Transition to IFRS
The date of transition to IFRS was 3 April 2004, which is the beginning of the comparative period for the 52 weeks to 
31 March 2006. The Group has applied IFRS 1 “First time adoption of International Financial Reporting Standards”, and
has elected to use the following exemptions:
 IFRS 3 “Business combinations” has not been applied retrospectively to business combinations that occurred
before 3 April 2004.
 The Group has elected to apply the share-based payment exemption. It has applied IFRS 2 “Share-based
payment” from 3 April 2004 to those options that were issued after 7 November 2002 but had not vested by 2
April 2005.
Adoption of IAS 32 and IAS 39
In accordance with IFRS 1, the Group has applied the exemption from the requirement to restate comparative
information under IAS 32 and IAS 39. In the comparative period, financial instruments within the scope of IAS 32
and IAS 39 have been accounted for in accordance with the provisions of UK GAAP . The main adjustments that
would make the information comply with IAS 32 “Financial Instruments: disclosure and presentation” and IAS 39
“Financial Instruments: recognition and measurement” relate to:
 Derivative instruments. Under UK GAAP , many derivative instruments are not accounted for at fair value, but
are generally treated as off-balance sheet.
 Hedge accounting. Hedge designation under UK GAAP is less restrictive than IAS 39, thereby allowing
designation of hedge relationships in cases where IAS 39 does not permit hedge accounting.
During the 52 weeks to 1 April 2005, the Group presented financial instruments in line with FRS 13 “Derivatives and
other financial instruments: disclosures”. 
Basis of consolidation
Subsidiaries
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They cease to be
consolidated from the date that the Group no longer has control. All subsidiaries have been consolidated.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are
eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred.
The financial statements of all subsidiaries are prepared to the same reporting date as the parent company. 
The principal subsidiary undertakings of the Company at 31 March 2006 are as follows:
Principal activity % Ownership
Halfords Holdings Limited Intermediate holding company 100
Halfords Finance Limited Intermediate holding company 100
Halfords Limited Retailing of auto parts, accessories, 100
cycles and cycle accessories
Halfords Payment Services Limited Financial services (non-trading from 100
31 January 2006)
Segmental reporting
The Group has one main business segment, which is retail, and one main geographical segment which is the United
Kingdom. The business segment reporting format reflects the Group’s management and internal reporting structure. Halfords Annual Report and Accounts 2006 48 Financial Statements
Accounting Policies
Revenue recognition
Revenue comprises the fair value of the sale of goods and services to external customers, net of value added tax,
rebates, promotions and returns. Revenue is recognised on the sale of goods when the significant risks and
rewards of ownership of the goods have passed to the buyer and the amount of revenue can be measured reliably.
Revenue on goods delivered is recognised when the customer accepts delivery. The Group operates a variety of
sales promotion schemes that give rise to goods being sold at a discount to standard retail price. Revenue is
adjusted to show sales net of all related discounts. A provision for estimated returns is made, representing the
profit on goods sold during the year which will be returned and refunded after the year end based on past
experience. Revenue is reduced by the value of sales returns provided for during the year.
Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in sterling, which is the Group’s functional and presentation
currency. Items included in the financial statements of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the functional currency).
Transactions and balances
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. At
each balance sheet date, monetary assets and liabilities denominated in foreign currencies are retranslated at the
exchange rate prevailing at the balance sheet date. Translation differences on monetary items are taken to the
income statement with the exception of differences on transactions that are subject to effective cash flow hedges.
Translation differences on non-monetary items are reported as part of the fair value gain or loss and are included in
either equity or the income statement as appropriate.
Share-based payments
The Group operates a number of equity-settled, share-based compensation plans.
The fair value of the employee services received under such schemes is recognised as an expense in the income
statement. Fair value is determined by use of the Black Scholes Option Pricing Model. The amount to be expensed
over the vesting period is determined by reference to the fair value of share incentives, excluding the impact of any
non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of
share incentives that are expected to vest. At each balance sheet date, the Group revises its estimates of the
number of share incentives that are expected to vest. The impact of the revision of original estimates, if any, is
recognised in the income statement, with a corresponding adjustment to equity, over the remaining vesting period.
Equity dividends
Final dividends are recognised in the Group’s financial statements in the period in which the dividends are
approved by shareholders. Interim equity dividends are recognised in the period they are paid.
Property, plant and equipment
Property, plant and equipment are held at cost less accumulated depreciation and any impairment in value.
Depreciation of property, plant and equipment is provided to write off the cost, less residual value, on a straight-line
basis over their useful economic lives as follows:
 Leasehold premises with lease terms of 50 years or less are depreciated over the remaining period of the lease
 Motor vehicles are depreciated over 3 years 
 Store fixtures are depreciated over the period of the lease to a maximum of 25 years
 Fixtures, fittings and equipment are depreciated over 4 to 10 years according to the estimated life of the asset
 Computer equipment is depreciated over 3 years
 Land is not depreciated 
Residual values, remaining useful economic lives and depreciation periods and methods are revised annually and
adjusted if appropriate. 
Goodwill and intangible assets
Goodwill is the excess of the fair value of the consideration payable for an acquisition over the fair value of the
Group’s share of identifiable net assets of a subsidiary acquired at the date of acquisition. Fair value is attributed to
the identifiable assets, liabilities and contingent liabilities that existed at the date of acquisition, reflecting their
condition at that date. Adjustments are made where necessary to bring the accounting policies of acquired
businesses into alignment with those of the Group. Halfords Annual Report and Accounts 2006 Financial Statements  49
Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is stated at cost less any
impairment. Goodwill is not amortised but is tested annually for impairment. An impairment charge is recognised
for any amount by which the carrying value of goodwill exceeds its fair value.
Costs that are directly associated with the production of identifiable and unique software products controlled by
the Group, and that will generate economic benefits beyond one year are recognised as intangible assets. These
intangible assets are stated at cost less accumulated amortisation and impairment losses. Software is amortised
over 3 to 5 years depending on the estimated useful economic life.
Financial instruments
The Group holds financial instruments which have been classified as financial assets and liabilities designated at
fair value through profit or loss and loans and receivables.
Financial assets and liabilities at fair value through profit or loss
These include financial instruments held for trading and those assets designated at fair value through profit and
loss. A financial instrument is classified in this category if it is principally acquired for the purpose of selling or
repurchasing in the short term. Derivatives are classified as held for trading unless they are designated as hedges.
Items in this category are classified as current assets or current liabilities if they are expected to be realised within
12 months of the balance sheet date.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They arise when the Group provides money, goods or services directly to a debtor with no
intention of trading the receivable. They are included in current assets, except for those with maturities greater than
12 months after the balance sheet date, which are classified as non-current assets. Loans and receivables are
included in trading and other receivables in the balance sheet.
Accounting for derivative financial instruments and hedging activities
Derivatives are recognised at fair value on the date a contract is entered into and are subsequently remeasured at
their fair value.
The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging
instrument and, if so, the nature of the item being hedged. The Group designates certain derivatives as:
 Fair value hedges — hedges of the fair value of recognised assets or liabilities or a firm commitment; or
 Cash flow hedges — hedges of highly probable forecast transactions
The Group documents the relationship between hedging instruments and hedged items at the hedge inception
stage, as well as its risk management objective and strategy for undertaking various hedge transactions. The
Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the
derivatives that are used in hedging transactions are highly effective in offsetting changes in fair value or cash flow
hedged items. Movements on the hedging reserve in equity are shown in the Group statement of recognised
income and expense. 
Fair value hedges
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income
statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the 
hedged risk.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are
recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately in the income statement.
Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item will
affect profit or loss (for instance when the forecast purchase that is hedged takes place). However, when the
forecast transaction that is hedged results in the recognition of a non-financial asset or liability, the gains and
losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost
of the asset or liability. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria
for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised
when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no
longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the
income statement. Halfords Annual Report and Accounts 2006 50 Financial Statements
Accounting Policies
Non-hedging derivatives
Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised
immediately in the income statement.
Fair value estimation
The fair value of financial instruments traded in organised active financial markets is based on quoted market
prices at the close of business on the balance sheet date. The quoted market price used for financial assets held
by the Group is the current bid price; the appropriate quoted market price for financial liabilities is the current offer
price.
The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair
value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to
approximate to their fair values.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to
approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by
discounting the future contractual cash flows at the current market interest rate that is available to the Group for
similar financial instruments.
Trade receivables
Trade receivables are recognised and carried at original invoice amount less provision for impairment.
A provision for impairment of trade receivables is established when there is objective evidence that the Group will
not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is
recognised in the income statement. 
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost comprises the purchase cost of goods
and cost related to distribution.
Impairment of assets
Assets that are attributed an indefinite useful life are not subject to amortisation but are tested annually for
impairment. Other tangible and intangible assets that are subject to amortisation and depreciation are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units). Each store is deemed to be a cash-generating unit.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet. For the purpose of the Consolidated Cash Flow Statement,
cash and cash equivalents are as defined above, net of outstanding bank overdrafts.
Borrowings and borrowing costs
All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs
associated with the borrowing. Borrowings are subsequently stated at amortised cost; any difference between the
proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period
of the borrowings using the effective interest method.
Borrowing costs are expensed in the period in which they are incurred, except for issue costs which are amortised
over the period of the borrowing.
Basis of charge for taxation
The tax base of an asset is the amount that will be deductible for tax purposes against any taxable economic
benefits that will flow to an entity when it recovers the carrying amount of the asset. If those economic benefits will
not be taxable, the tax base of the asset is equal to its carrying amount. 
The tax base of a liability is its carrying amount, less any amount that will be deductible for tax purposes in respect
of that liability in future periods. In the case of revenue which is received in advance, the tax base of the resulting
liability is its carrying amount, less any amount of the revenue that will not be taxable in future periods. Halfords Annual Report and Accounts 2006 Financial Statements  51
Deferred taxation
Deferred taxation is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the
deferred taxation arises from initial recognition of an asset or liability in a transaction other than a business
combination, that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not
accounted for. Deferred taxation is calculated using rates that are expected to apply when the related deferred
asset is realised or the deferred taxation liability is settled.
Deferred taxation assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Provisions 
Provisions are recognised when:
 the Group has a present legal or constructive obligation as a result of past events;
 it is more likely than not that an outflow of resources will be required to settle the obligation; and
 the amount has been reliably estimated
Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a
whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the
same class of obligations may be small.
Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset when
the reimbursement is certain.
If the effect of the time value of money is material, provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost.
Leases
Finance leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership
are classified as a finance lease. Finance leases are capitalised at the lease’s inception at the lower of the fair value
of the leased property and the present value of the minimum lease payments. Each lease payment is allocated
between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The
corresponding rental obligations, net of finance charges, are included in other long-term payables. The interest
element of the finance cost is charged to the income statement over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each period. Property, plant and equipment
acquired under finance leases is depreciated over the shorter of the useful life of the asset and its lease term. In
determining whether a lease is a finance lease, the building and land elements of the lease are reviewed separately.
Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. Payments made under operating leases are charged to the income statement on a straight-line
basis over the period of the lease. Incentives from lessors are recognised as a systematic reduction in the charge
over the lease term.
Landlord contributions
Contributions received from landlords that do not represent an incentive for future rental commitments are
recognised in the income statement on the exchange of contracts. Income is netted off against selling and
distribution costs.
Sublease income
The Group leases properties from which it no longer trades. These properties are often sublet to third parties. Rents
receivable are recognised by offsetting the income against rental costs accounted for within selling and distribution
costs in the income statement.
Pensions
Employees are offered membership of Halfords Pension Plan, a defined contribution pension arrangement. The
costs of contributions to the scheme are charged to the income statement in the period that they arise. Halfords Annual Report and Accounts 2006 52 Financial Statements
Notes to the Financial Statements
1. Segmental reporting
The Group has one main business segment, which is retail, and one main geographical segment, which is the
United Kingdom. The business segment reporting format reflects the Group’s management and internal reporting
structure. 
2. Operating expenses
For the period 52 weeks to 52 weeks to
31 March 1 April 
2006 2005
£m £m
Selling and distribution costs 221.5 210.2
Administrative expenses 36.1 40.9
Other operating income — (4.0)
257.6 247.1
3. Non-recurring items
For the period 52 weeks to 52 weeks to
31 March 1 April 
2006 2005
£m £m
Employee share options
(1)
— (4.2)
Lease incentive premium
(2)
— 4.0
— (0.2)
Notes:
(1) In the 52 weeks to 1 April 2005 there was a non-cash charge of £4.2m in respect of employee share options,
which were exercised at the time of the IPO. 
(2) In August 2001 Halfords Limited sold its garaging servicing business to the AA. Under the terms of the sale
124 garage premises were sublet to GB Gas Holdings by way of an underlease agreement from Halfords
Limited. On 16 November 2004 the Group entered into an agreement with GB Gas Holdings Limited and the
AA, under which the Group received a £4.0m premium in consideration for providing consent to the
assignment of the above underlease from GB Gas Holdings Limited to the AA and the subsequent subletting
by the AA of 49 premises to Nationwide Autocentres Limited.
The Group’s tax charge for the 52 weeks to 1 April 2005 included credits of £2.0m and £0.8m respectively for the
above items. Halfords Annual Report and Accounts 2006 Financial Statements  53
4. Operating profit
For the period 52 weeks to 52 weeks to
31 March 1 April
2006 2005
£m £m
Operating profit is arrived at after charging/(crediting):
Operating lease rentals:
— plant and machinery 0.8 0.9
— property rents 66.3 60.2
— rentals receivable under operating leases (10.7) (10.1)
Landlord contributions (6.9) (2.5)
Loss on disposal of property, plant and equipment 0.5 0.4
Amortisation of intangible assets 1.9 1.1
Depreciation of 
— owned property, plant and equipment 18.9 16.7
— assets held under finance leases 0.7 0.7
Net foreign exchange gains (2.0) (1.9)
Auditors’ remuneration:
— audit fees 0.2 0.2
— non-audit services 0.3 0.3
The total fees payable by the Group to PricewaterhouseCoopers LLP and their associates during the period was
£0.5m (2005: £1.6m), of which £nil (2005: £1.1m) relates to charges incurred in respect of the flotation and the
issue of new finance that has been offset against the cash proceeds received from the finance. 
Non-audit services
For the period 52 weeks to 52 weeks to
31 March 1 April
2006 2005
£m £m
Fees principally relating to IPO and refinancing — 0.9
Taxation services — compliance 0.2 0.4
Other services — advisory 0.1 0.1
0.3 1.4 Halfords Annual Report and Accounts 2006 54 Financial Statements
Notes to the Financial Statements
5. Employee benefit expense
For the period 52 weeks to 52 weeks to
31 March 1 April
2006 2005
£m £m
The aggregated remuneration of all employees including directors comprised:
Wages and salaries 88.5 89.8
Social security costs 6.8 6.4
Share-based payment charge 1.3 1.0
Other pension costs (note 23) 3.3 3.0
99.9 100.2
Number Number
Average number of persons employed by the Group during the period:
Stores 9,385 9,245
Central warehousing 223 231
Head office 461 464
10,069 9,940
Full details of directors’ remuneration and interests are set out in the Remuneration Report on pages 34 to 39.
Key management compensation
For the period 52 weeks to 52 weeks to
31 March 1 April 
2006 2005
£m £m
Salaries and short-term benefits 1.4 2.0
Social security costs 0.2 0.3
Pensions 0.2 0.2
Termination benefits — 0.1
Share based payment charge 0.7 0.7
2.5 3.3
6 Net finance costs
For the period 52 weeks to 52 weeks to
31 March 1 April
2006 2005
£m £m
Finance costs:
Bank borrowings (9.7) (12.4)
Premium on deep discounted bond — (1.5)
Amortisation of issue costs on loans and deep discounted bonds (0.7) (0.8)
Commitment and guarantee fees (0.3) (0.4)
Cost of forward foreign exchange contracts (0.9) —
Interest payable on finance leases (0.9) (0.8)
Finance costs before non-recurring items (12.5) (15.9)
Non-recurring amortisation of issue costs on loans and deep discounted bonds
(1)
— (1.7)
Non-recurring swap close out
(2)
— 2.2
Finance costs (12.5) (15.4)
Finance income: Bank and similar interest 0.4 0.4
Net finance costs (12.1) (15.0)
Notes:
(1) At IPO, on 8 June 2004, Halfords Group plc redeemed and replaced all of its existing borrowings. As a
consequence, a charge of £1.7m was made in respect of accelerated amortisation of the issue costs 
associated with these borrowings.
(2) On repayment of the existing borrowings, the Group hedged its new borrowing facilities during the 52 weeks to
1 April 2005 using new interest rate swaps and received £2.2m of income on the termination of its existing
interest rate swaps.  Halfords Annual Report and Accounts 2006 Financial Statements  55
7. Taxation 
For the period 52 weeks to 52 weeks to
31 March 1 April 
2006 2005
£m £m
Current taxation
UK corporation tax charge for the period 25.8 23.6
Adjustment in respect of prior periods (1.2) (0.3)
24.6 23.3
Deferred taxation
Origination and reversal of timing differences (1.2) (0.1)
23.4 23.2
The tax charge is reconciled with the standard rate of UK corporation tax as follows:
For the period 52 weeks to 52 weeks to
31 March 1 April
2006 2005
£m £m
Profit before tax 77.0 74.3
UK corporation tax at standard rate of 30% (2005: 30%) 23.1 22.3
Factors affecting the charge for the period:
Depreciation on expenditure not eligible for tax relief 1.1 1.1
Deduction for employee share options — (0.4)
Other disallowable expenses 0.4 0.5
Adjustment in respect of prior periods (1.2) (0.3)
Total tax charge for the period 23.4 23.2
8. Dividends
For the period 52 weeks to 52 weeks to
31 March 1 April
2006 2005
£m £m
Equity — Ordinary
Final for the 52 weeks ended 1 April 2005 — paid 8.3p (2005: £nil) 18.9 —
Interim — paid 4.0p (2005: 3.7p) 9.1 8.5
28.0 8.5
In addition, the directors are proposing a final dividend in respect of the financial year ended 31 March 2006 of
8.75p per share which will absorb an estimated £19.9m of shareholders’ funds. It will be paid on 14 August 2006 to
shareholders who are on the register of members on 16 June 2006. Halfords Annual Report and Accounts 2006 56 Financial Statements
Notes to the Financial Statements
9. Earnings per share
Basic earnings per share are 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 an Employee Benefit Trust (see note 20) and has been adjusted for the issue of shares
during the year. 
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 52 weeks to 
31 March 2006. 
For the period 52 weeks to 52 weeks to
31 March 1 April
2006 2005
Number Number
m m
Weighted average number of shares in issue 228.0 216.5
Less: shares held by Employee Benefit Trust (0.9) (0.9)
Weighted average number of shares for calculating basic earnings per share 227.1 215.6
Weighted average number of dilutive shares 0.2 0.1
Total number of shares for calculating diluted earnings per share 227.3 215.7
For the period 52 weeks to 52 weeks to
31 March 1 April
2006 2005
£m £m
Basic earnings attributable to equity shareholders 53.6 51.1
Earnings per share is calculated as follows:
For the period 52 weeks to 52 weeks to
31 March 1 April
2006 2005
Basic earnings per ordinary share 23.6p 23.7p
Diluted earnings per ordinary share 23.6p 23.7p
10. Intangible assets 
Computer Product
software rights Goodwill Total
£m £m £m £m
Cost
At 1 April 2005 7.4 0.2 274.8 282.4
Additions 1.4 — — 1.4
At 31 March 2006 8.8 0.2 274.8 283.8
Amortisation
At 1 April 2005 1.2 0.2 21.7 23.1
Charge for the period 1.9 — — 1.9
At 31 March 2006 3.1 0.2 21.7 25.0
Net book value at 31 March 2006 5.7 — 253.1 258.8
Net book value at 1 April 2005 6.2 — 253.1 259.3 Halfords Annual Report and Accounts 2006 Financial Statements  57
10. Intangible assets (continued)
Computer Product
software rights Goodwill Total
£m £m £m £m
Cost
At 2 April 2004 3.1 0.2 274.8 278.1
Additions 4.3 — — 4.3
At 1 April 2005 7.4 0.2 274.8 282.4
Amortisation
At 2 April 2004 0.1 0.2 21.7 22.0
Charge for the period 1.1 — — 1.1
At 1 April 2005 1.2 0.2 21.7 23.1
Net book value at 1 April 2005 6.2 — 253.1 259.3
Net book value at 2 April 2004 3.0 — 253.1 256.1
The Group has one main business segment, which is retail, and one main geographical area, which is the United
Kingdom and as such goodwill is calculated assuming one cash-generating unit (“CGU”).
The recoverable amount of goodwill is determined based on “value-in-use” calculations. These calculations use
cash flow projections based on financial budgets approved by management covering a five year period.
The key assumptions used in the value-in-use calculation for goodwill held at 31 March 2006 and 1 April 2005 are
as follows:
2006 2005
Discount rate
(1)
8.6% 8.6%
Growth rate
(2)
0.0% 0.0%
Tax rate 31.9% 31.9%
Notes:
(1) Post-tax discount rate applied to the cash flow projections.
(2) Growth rate used to extrapolate cash flows beyond the budget period.
11. Property, plant and equipment
Payments
Short on account 
leasehold Fixtures, and assets
land and fittings and in course
buildings equipment of construction Total
£m £m £m £m
Cost
At 1 April 2005 41.0 211.0 0.4 252.4
Additions 2.2 23.2 1.0 26.4
Disposals (0.1) (2.2) — (2.3)
Reclassifications 0.20.2(0.4)—
At 31 March 2006 43.3 232.2 1.0 276.5
Depreciation
At 1 April 2005 12.5 142.1 — 154.6
Depreciation for the period 1.9 17.7 — 19.6
Disposals (0.1) (1.7) — (1.8)
At 31 March 2006 14.3 158.1 — 172.4
Net book value at 31 March 2006 29.0 74.1 1.0 104.1
Net book value at 1 April 2005 28.5 68.9 0.4 97.8 Halfords Annual Report and Accounts 2006 58 Financial Statements
Notes to the Financial Statements
11. Tangible fixed assets (continued)
Payments
Short on account
leasehold Fixtures, and assets
land and fittings and in course
buildings Motor vehicles equipment of construction Total
£m £m £m £m £m
Cost 
At 2 April 2004 39.7 0.1 189.5 1.9 231.2
Additions 1.9 — 21.1 0.4 23.4
Disposals (0.7) (0.1) (1.4) — (2.2)
Reclassifications 0.1 — 1.8 (1.9) —
At 1 April 2005 41.0 — 211.0 0.4 252.4
Depreciation
At 2 April 2004 11.2 0.1 127.7 — 139.0
Depreciation for the period 1.8 — 15.6 — 17.4
Disposals (0.5) (0.1) (1.2) — (1.8)
At 1 April 2005 12.5 — 142.1 — 154.6
Net book value at 1 April 2005 28.5 — 68.9 0.4 97.8
Net book value at 2 April 2004 28.5 — 61.8 1.9 92.2
Included in the above are assets held under finance leases as follows: 
Fixtures,
Land and fittings, and
buildings equipment Total
£m £m £m
As at 31 March 2006
Cost 12.70.813.5
Accumulated depreciation (1.0) (0.4) (1.4)
Net book value 11.7 0.4 12.1
As at 1 April 2005
Cost 12.70.813.5
Accumulated depreciation (0.5) (0.2) (0.7)
Net book value 12.2 0.6 12.8
No fixed assets are held as security for external borrowings. 
12. Inventories
2006 2005
£m £m
Finished goods for resale 127.2 108.3
The Group consumed £335.2m (2005: £290.9m) of inventories during the period.
Finished goods inventories of £6.4m (2005: £6.5m) are carried at fair value less costs to sell being lower than cost.
The Group did not reverse any unutilised provisions during the period. Halfords Annual Report and Accounts 2006 Financial Statements  59
13. Trade and other receivables
2006 2005
£m £m
Falling due within one year:
Trade receivables 4.0 3.8
Less: Provision for impairment of receivables (0.1) (0.2)
Trade receivables — net 3.9 3.6
Other receivables 5.1 0.2
Prepayments and accrued income 20.4 19.8
29.4 23.6
The fair value of receivables is calculated based on cash flows discounted using a rate based on the borrowings
rate of 4.9%. The above balances are short-term and therefore there is no difference between the book value and
the fair value of the above debtors.
There is no concentration of credit risk with respect to trade receivables, as the Group has a large number of
customers.
14. Cash and cash equivalents
2006 2005
£m £m
Cash at bank and in hand 1.5 1.1
Cash and bank overdrafts include the following for the purposes of the cash flow statement:
2006 2005
£m £m
Cash at bank and in hand 1.5 1.1
Bank overdrafts (19.9) (16.6)
(18.4) (15.5)
15. Trade and other payables — current
2006 2005
£m £m
Trade payables 65.2 60.8
Other taxation and social security payable 17.0 15.4
Other payables 1.5 0.7
Accruals and deferred income 18.2 22.4
101.9 99.3
The Group’s banking arrangements are subject to a netting facility whereby credit balances may be offset against
the indebtedness of other Group companies. Halfords Annual Report and Accounts 2006 60 Financial Statements
Notes to the Financial Statements
16. Borrowings
2006 2005
Current £m £m
Bank loans and overdrafts due within one year or on demand — unsecured 63.2 51.9
Finance leases 0.3 0.3
63.5 52.2
Non-current
Bank loan-unsecured 99.0 118.3
Finance leases 12.7 13.0
111.7 131.3
The exposure of borrowings to interest rate changes when borrowings reprice is as follows:
1 year 1–5 years Total
As at 31 March 2006 £m £m £m
Total borrowings 162.2 — 162.2
Effect of interest rate swaps (100.0) 100.0 —
62.2 100.0 162.2
1 year 1–5 years Total
As at 1 April 2005 £m £m £m
Total borrowings 170.2 — 170.2
Effect of interest rate swaps (120.0) 120.0 —
50.2 120.0 170.2
The effective interest rates at the balance sheet date were as follows:
2006 2005
Bank overdraft 5.50% 5.75%
Bank borrowings 5.22% 5.38%
Finance leases 7.14% 7.14%
Maturity of financial liabilities
The maturity profile of the carrying amount of the Group’s non-current liabilities at 31 March 2006 was as follows:
Finance 2006 Finance 2005
Debt Leases Total Debt Leases Total
£m £m £m £m £m £m
Expiring between 1 and 2 years 19.5 0.3 19.8 19.4 0.3 19.7
Expiring between 2 and 5 years 79.5 0.9 80.4 98.9 0.9 99.8
Expiring after 5 years — 11.5 11.5 — 11.8 11.8
99.0 12.7 111.7 118.3 13.0 131.3
Bank loans are stated net of unamortised issue costs of £1.7m (2005: £2.4m). 
The term loan is repayable in six-monthly instalments of £10.0m until 31 March 2009, with the remaining balance
being repayable on 17 May 2009. The loan carries interest of LIBOR plus a variable margin of between 0.5% and
0.8% depending on covenant fulfilment. The revolving credit facility permits borrowings from time to time up to a
maximum of £120.0m. The facility expires on 8 June 2009 and drawings under the facility attract interest at LIBOR
plus 0.5% to 0.8%.
Included within bank loans is £24.0m (2005: £16.0m) of short-term loans drawn from uncommitted facilities. The
loans attract interest at 5.24% and were used to cover short-term working capital requirements. Halfords Annual Report and Accounts 2006 Financial Statements  61
16. Borrowings (continued)
Borrowing facilities
The Group has the following undrawn committed borrowing facilities available during the period in respect of which
all conditions precedent had been met at that date:
2006 2005
£m £m
Expiring within 1 year 1.0 1.0
Expiring between 2 and 5 years 106.9 118.0
107.9 119.0
The facilities expiring within one year were annual facilities subject to review at various dates during the period. 
The other facilities were arranged to help finance the proposed expansion of the Group’s activities. All these 
facilities incurred commitment fees at market rates.
The minimum lease payments under finance leases fall due as follows:
2006 2005
£m £m
Not later than one year 1.1 1.1
Later than one year but not more than five 4.2 4.3
More than five years 20.1 21.1
25.4 26.5
Future finance charges on finance leases (12.4) (13.2)
Present value of finance lease liabilities 13.0 13.3
17. Provisions 
Vacant
property Returns Total
£m £m £m
At 1 April 2005 1.1 0.5 1.6
Charged during the period — 0.5 0.5
Utilised during the period (0.4) (0.5) (0.9)
At 31 March 2006 0.7 0.5 1.2
Both of the above provisions are classified as current as they are expected to be utilised in the next financial year.
Provisions comprise vacant property provisions of £0.7m (2005: £1.1m) and a provision of £0.5m (2005: £0.5m) in
respect of estimated sales returns. The vacant property provision represents recognition of the net costs arising
from vacant properties and sub-let properties. Halfords Annual Report and Accounts 2006 62 Financial Statements
Notes to the Financial Statements
18. Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 30% 
(2005: 30%)
52 weeks to 52 weeks to
31 March 1 April 
2006 2005
£m £m
The movement on the deferred taxation provision is shown below:
At the beginning of the period 5.1 5.2
Income statement credit (1.2) (0.1)
Credited to equity (0.4) —
At the end of the period 3.5 5.1
Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an
intention to settle the balances net.
Deferred tax liabilities:
Accelerated tax
depreciation
£m
At 2 April 2004 (9.0)
Credit to the income statement 0.3
At 1 April 2005 (8.7)
Credit to the income statement 0.3
At 31 March 2006 (8.4)
Deferred tax assets: Provisions
and share options
£m
At 2 April 2004 3.8
Charged to the income statement (0.2)
At 1 April 2005 3.6
Credit to the income statement 0.9
Credit to equity 0.4
At 31 March 2006 4.9
Net deferred tax liability
At 1 April 2005 5.1
At 31 March 2006 3.5 Halfords Annual Report and Accounts 2006 Financial Statements  63
19. Derivative financial instruments
FRS 13 “Derivatives and other financial instruments: disclosure” applies to the comparatives as a result of the
exemption taken under IAS 32 as stated in the accounting policy note. As a result, disclosures under this standard
are given below for the comparatives, where disclosure requirements are different to those required under IAS 32.
Fair value of derivative financial instruments
The Group’s policy is to hedge the following exposures:
 Interest rate risk — using interest swaps and a cap.
 Forward foreign currency contracts are also used for currency exposures on next year’s expected purchases.
All the gains and losses on the hedging instruments are expected to be matched by losses and gains on the
hedged transactions or positions. Under the Group’s accounting policy, foreign currency transactions, which are
hedged using forward foreign currency contracts are translated at the contracted rates. Consequently, the carrying
value of the relevant asset or borrowings effectively includes the gain or loss on the hedging instrument. 
2006 2006
Assets Liabilities
£m £m
Interest rate swaps — 2.1
Forward foreign currency contracts 1.2 —
Total 1.2 2.1
Less non-current portion
Interest rate swaps — (2.1)
Current portion 1.2 —
Forward foreign exchange contracts
The notional principal amounts of the outstanding forward foreign exchange contracts at 31 March 2006 are
£63,588,000 (2005: £29,880,000). Gains and losses in equity on forward foreign exchange contracts as of 31 March
2006 will be released to the income statement at various dates between three and seven months from the balance
sheet date.
Interest rate swaps
The notional principal amount of the outstanding interest rate swap contract at 31 March 2006 was £120m 
(2005: £140m). At 31 March 2006 the fixed interest rate was 5.5875% and the floating rate is LIBOR.
Treasury policy
The Group’s objective in using financial instruments is to minimise its exposure to financial risk. The Group’s 
treasury department’s main responsibilities are to:
 Ensure adequate funding and liquidity for the Group;
 Manage the interest risk of the Group’s debt;
 Invest surplus cash; 
 Manage the clearing bank operations of the Group; and
 Manage the foreign exchange risk on its non-sterling cash flows.
The main risk arising from the Group’s financial instruments is interest rate risk. Policies for managing financial risks
are governed by Board approved policies and procedures, which are reviewed on an annual basis. The latest policy
review was performed in May 2006.
The Group’s debt management policy is to provide an appropriate level of funding to finance the Business Plan over
the next three to five years at a reasonable cost and ensure adequate flexibility to meet the changing needs of the
enterprise. Halfords Annual Report and Accounts 2006 64 Financial Statements
Notes to the Financial Statements
19. Derivative Financial instruments (continued)
Financial risk
The Business Plan and cash flow forecasts are subject to key assumptions such as interest rates and the
significance of these risks is dependent upon the level of the trading profit and the strength of the balance sheet.
Interest rate risk
The Group maintains its policy to minimise interest rate risk on its borrowings and deposits by using interest rate
derivatives where appropriate. The Group’s policy aims to manage the interest cost of the Group within the
constraints of the Business Plan and its financial covenants. The aim is to reduce exposure to the effect of interest
rates movements by hedging at least 75% of the following period’s net interest rate exposure, whilst maintaining
the flexibility to minimise early termination costs.
Foreign currency risk
The Group has a significant transaction exposure with increasing, direct source purchases of its supplies from the
Far East, with most of the trade being specifically US Dollar denominated. The Group’s policy is to manage the
foreign exchange transaction exposures of the business for a minimum period of twelve months forward to ensure
the actual costs do not exceed the budget costs by 10% (excluding increases in the base cost of the product). The
Group does not hedge either economic exposure or the translation exposure arising from the profits, assets and
liabilities of non-sterling business whilst they remain immaterial.
Credit risk
The Group’s policy is to minimise the risk that foreign exchange and interest rate derivative counterparties, the
holders of surplus cash and the providers of debt will be unable to fulfil their obligations and also, in the case of
lenders, will be unwilling to renegotiate the terms of the borrowings. The Group ensures that such counterparties
used for credit transactions hold at least an AA credit rating.
Liquidity risk
The Group ensures that it has sufficient cash or loan facilities to meet all its commitments when required. The
Group ensures that it has sufficient funding to meet its Business Plan requirements so that it is not reliant on there
being sufficient liquidity in the market when it needs the funding.
Fair values of non-derivative financial liabilities
The following table is a comparison by category of the carrying amounts and the fair values of the Group’s financial
assets and financial liabilities at 31 March 2006 and 1 April 2005. 
2006 2006 2005 2005
Book Value Fair Value Book Value Fair Value
£m £m £m £m
Short term borrowings (63.2) (63.2) (51.9) (51.9)
Long term borrowings (99.0) (99.0) (118.3) (118.3)
Finance leases (13.0) (13.0) (13.3) (13.3)
Other financial liabilities — current (102.6) (102.6) (100.4) (100.4)
Other financial liabilities — non-current (22.7) (22.7) (11.6) (11.6)
Cash at bank and in hand 1.5 1.5 1.1 1.1
Total (299.0) (299.0) (294.4) (294.4)
Fair value assumptions
Short-term deposits and borrowings The fair value of short-term deposits, loans and overdrafts approximates
to the carrying amount because of the short maturity of these instruments.
Long-term borrowings The fair value of the Group’s bonds has been estimated using quoted
market prices. In the case of bank loans and other loans, the fair value
approximates to the carrying value reported in the balance sheet as the
majority are floating rate where payments are reset to markets rates at
intervals of less than one year.
As discussed above, the FRS 13 disclosures for the comparatives are as follows.
Short-term debtors and creditors
Short-term debtors and creditors have been excluded from all the following disclosures, other than the currency risk
disclosures.
The disclosures below have been made after taking account of interest rate swaps, currency swaps and forward
contracts. Halfords Annual Report and Accounts 2006 Financial Statements  65
19. Derivative Financial instruments (continued)
Interest rate risk profile of financial liabilities
Financial 
Floating Fixed liabilities 
rate rate on which 
financial financial no interest 
Total liabilities liabilities is paid
Currency — Sterling £m £m £m £m
Financial liabilities at 1 April 2005 170.8 32.8 138.0 —
All the Group’s creditors falling due within one year (other than bank and other borrowings) are excluded from the
above table due to the exclusion of short-term items, taxation balances, or because they do not meet the definition
of financial liabilities.
The effect of the Group’s interest rate swap at 1 April 2005 was to classify £138.0m of sterling borrowings in the
above table as fixed rate. The Group has a sterling interest rate cap, which matures in June 2009.
In addition to the above, the Group’s provisions of £1.2m (note 17) met the definition of financial liabilities. These
financial liabilities are considered to be floating rate financial liabilities. This is because, in establishing the
provisions, the cash flows are discounted and the discount rate reappraised at each half yearly reporting date to
ensure that it reflected the current market assessment of the time value of money and the risks specific to the
liability.
Interest rate risk of financial assets
2005
Cash at bank
and in hand
Currency £m
Sterling — floating rate 1.1
Floating rate cash earns interest based on relevant national LIBID equivalents or government bond rates.
Currency exposures
At 1 April 2005 the Group had the following monetary assets and liabilities in currencies other than the Group’s
functional currency which is sterling:
— Financial assets in US dollars as shown in the “Interest rate risk of financial assets” table above.
— £10.7m of US dollar liabilities for purchases; these were fully hedged into sterling as at 1 April 2005.
Hedges
The Group’s policy is to hedge the following exposures:
— Interest rate risk — using interest swaps and a cap.
— Forward foreign currency contracts are also used for currency exposures on next year’s expected sales.
All the gains and losses on the hedging instruments were expected to be matched by losses and gains on the
hedged transactions or positions. Under the Group’s accounting policy, foreign currency transactions, which are
hedged using forward foreign currency contracts are translated at the contracted rates. Consequently, the carrying
value of the relevant asset or borrowings effectively includes the gain or loss on the hedging instrument. 
2005
£m
Unrecognised gains on hedges (2.9)
As at 1 April 2005, £1.5m of unrecognised gains were expected to be included within income of the following
financial year and £1.4m was expected to be recognised thereafter. Halfords Annual Report and Accounts 2006 66 Financial Statements
Notes to the Financial Statements
20. Equity share capital
2006 2006 2005 2005
Number of Number of
Ordinary shares of 1p each: shares £ shares £
Authorised 295,000,000 2,950,000 295,000,000 2,950,000
Allotted, called up and fully paid 228,027,743 2,280,277 227,936,743 2,279,367
Allotted, called up and fully paid share capital increased during the period due to the early exercising of share
options by members of the Halfords Share Option Scheme. Early exercise of the options are allowed if an option
holder ceases to be employed by reason of death, injury, disability, redundancy, retirement or on the sale of his
employing company or business.
Interest in own shares
At 31 March 2006, the Company held in Trust 881,350 (2005: 887,068) of its own shares with a nominal value of
£8,814 (2005: £8,871). The Trust has waived any entitlement to the receipt of dividends in respect of its holding of
the Company’s ordinary shares.
21. Share-based payments
As at 31 March 2006, the Group operated three share award plans:
1. Halfords Company Share Option Scheme (“CSOP”)
2. Halfords Sharesave Scheme (“SAYE”)
3. Long-Term Incentive Plan (“LTIP”)
1. Halfords Company Share Option Scheme
The CSOP was introduced in June 2004. Options are granted with a fixed exercise price equal to the market price 
of the shares under option at the date of grant. The contractual life of an option is 10 years.
The Company has made annual grants in both the 52 weeks to 31 March 2006 and the 52 weeks to 1 April 2005.
Options granted will become exercisable on the third anniversary of the date of grant, subject to the achievement of
a three year performance condition. For grants up to 150% of basic salary the options can only be exercised if the
increase in earnings per share (“EPS”) over the period is not less than the increase in the Retail Price Index (“RPI”)
plus 5% (2005: 6%) per year. Exercise of an option is subject to continued employment. 
The expected volatility is based on historical volatility of a peer group of companies since the IPO in June 2004. 
The expected life is the average expected period to exercise. The risk-free rate of return is the yield on zero-coupon
UK government bonds.
Options were valued using the Black-Scholes option-pricing models. No performance conditions were included in
the fair value calculations. The fair value per option granted and the assumptions used in the calculations were as
follows:
Grant date 13 July 2005 2 June 2004
Share price at grant date £2.955 £2.600
Exercise price £2.955 £2.600
Number of employees 42 3,598
Shares under option 294,000 6,556,953
Vesting period (years) 33
Expected volatility 37% 40%
Option life (years) 10 10
Expected life (years) 4.85 3.85
Risk-free rate 4.68% 4.68%
Expected dividend yield 4.00% 4.00%
Possibility of ceasing employment before vesting 32% 34%
Expectations of meeting performance criteria 100% 100%
Fair value per option £0.79 £0.70
Number of options outstanding at 31 March 2006 287 5,739
2. Halfords Sharesave Scheme
The Halfords Sharesave Scheme (“SAYE”) is open to all employees with eligible employment service. Options may
be exercised under the scheme if the option holder completes his savings contract for a period of three years and
then not more than six months thereafter. Special provisions allow early exercise in the case of death, injury,
disability, redundancy, retirement or because the company or business which employs the option holder is
transferred out of the Group, or in the event of a change of control, reconstruction or winding up of the
Company.The fair value option granted and the assumptions used in the calculations were as follows: Halfords Annual Report and Accounts 2006 Financial Statements  67
21. Share-based payments (continued)
Grant date 1 October 2005 7 June 2004
Share price at grant date £3.07 £2.64
Exercise price £3.07 £2.64
Number of employees 573 1,561
Shares under option 269,037 1,364,861
Vesting period (years) 33
Expected volatility 36% 39%
Option life (years) 33
Expected life (years) 3.5 3.5
Risk-free rate 4.68% 4.68%
Expected dividend yield 4.00% 4.00%
Possibility of ceasing employment before vesting 53% 36%
Expectations of meeting performance criteria 100% 100%
Fair value per option £0.81 £0.65
Number of options outstanding at 31 March 2006 233 1,022
3. Long-Term Incentive Plan
The LTIP was approved at the Annual General Meeting in August 2005 awarding the executive directors and certain
senior management conditional rights to receive shares.
The extent to which such rights vest will depend upon the Group’s performance over the three financial years ending
in March 2008.
The vesting of 50% of the awards will be determined by the Group’s relative total shareholder return (“TSR”)
performance compared with specific retailers and the vesting of the other 50% by the Group’s earnings per share
(“EPS”) performance against RPI.
Options were valued using a Monte Carlo simulation option pricing model. The fair value per option granted and the
assumptions used in the calculation were as follows:
Grant date 8 August 2005
Share price at grant date £3.070
Exercise price £3.070
Number of employees 17
Shares under option 537,417
Vesting period (years) 3
Expected volatility 31%
Option life (years) 3
Expected life (years) 3
Risk-free rate 4.30%
Expected dividend yield 4.00%
Possibility of ceasing employment before vesting 30%
Expectations of meeting performance criteria 50%
Fair value per option £2.19
Number of shares outstanding at 31 March 2006 538
A reconciliation of option movements for both the CSOP , SAYE and LTIP performance plans over the 52 weeks to 
31 March 2006 are shown below:
31 March 2006 1 April 2005
Weighted Weighted
average average
Number exercise price Number exercise price
(’000) £ (’000) £
Outstanding at start of year 7,067 2.61 ——
Granted 1,100 3.04 7,922 2.61
Forfeited (7) 2.96 ——
Exercised (85) 2.60 (28) 2.61
Lapsed (256) 2.67 (827) 2.62
Outstanding at end of year 7,819 2.67 7,067 2.61
Exercisable at end of year 3 2.60 —— Halfords Annual Report and Accounts 2006 68 Financial Statements
Notes to the Financial Statements
21. Share-based payments (continued)
2006 2005
Weighted Weighted
Range of average Weighted average average Weighted average
exercise exercise Number remaining life (years) exercise Number remaining life (years)
prices price of price of
£ £ shares Expected Contractual £ shares Expected Contractual
2.60 2.60 5,739 2.0 8.2 2.60 6,044 3.0 9.2
2.64 2.64 1,022 1.6 1.6 2.65 1,022 2.6 2.6
2.95 2.95 287 4.2 9.3 ————
3.07 3.07 223 3.0 3.0 ————
0.00 0.00 538 2.0 2.0 ————
The weighted average share price during the period for options exercised was £2.60 (2005: n/a). The total charge
for the year relating to employee share-based payment plans was £1.3m (2005: £1.0m), all of which related to
equity-settled share-based payment transactions. 
22. Commitments
2006 2005
£m £m
Capital expenditure: Contracted but not provided 1.3 1.2
At 31 March 2006, the Group was committed to making payments in respect of non-cancellable operating leases in
the following periods:
Land and Other Land and Other 
buildings assets buildings assets
2006 2006 2005 2005
£m £m £m £m
Within one year 69.6 0.7 64.6 0.7
Later than one year and less than five years 274.6 0.9 256.5 0.7
After five years 449.5 — 461.2 —
793.7 1.6 782.3 1.4
The operating lease commitments are shown before receipts of sublet income.
23. Pensions
From 1 December 2002, employees have been offered membership of the Halfords Pension Plan, a defined
contribution pension arrangement. The costs of contributions to the scheme are charged to the income statement
in the period that they arise. The contributions to the scheme for the period amounted to £3.3m (52 weeks to 
1 April 2005: £3.0m) representing 3% of pensionable salaries for new employees and 5% to 12% of pensionable
salaries for employees who transferred from the Boots Group pension scheme, plus a further 2% to 7% for
employees whose earnings are above the upper earning threshold.
24. Contingent liabilities
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 31 March 2006 amounted to £3.1m (2005: £2.0m).
The Group’s banking arrangements are subject to a netting facility whereby credit balances may be offset against
the indebtedness of other Group companies. Halfords Annual Report and Accounts 2006 Financial Statements  69
25. Reconciliation of net assets and profit under UK GAAP to IFRS
The Group reported under UK GAAP in its published financial statements for the 52 weeks to 1 April 2005. The
analysis below shows a reconciliation of net assets and profit as reported under UK GAAP for the 52 weeks to 
1 April 2005 to the revised net assets and profit under IFRS as reported in these financial statements. In addition,
there is a reconciliation of net assets under UK GAAP to IFRS at the transition date for the Group being 3 April
2004.
Key impacts
The main impacts of IFRS on the reported results of the Group are listed below and are described in greater detail
in the following sections.
 Goodwill (IFRS 3) — Acquired goodwill should no longer be amortised and is instead subjected to an annual
impairment review. At the date of transition to IFRS the value of goodwill is frozen. 
 Share Based Payments (IFRS 2) — Fair value based charges are required for all awards made for share
schemes on or after 7 November 2002 which had not vested by 2 April 2005. 
 Property Leases (IAS 17) — The building element of the lease relating to the Group’s head office in Redditch
has been reclassified as a finance lease. Lease incentives must now be amortised in the income statement
over the lease term not to the date of the first rent review.
 Timing and Recognition of Dividends (IAS 10) — Final dividends declared after the Balance Sheet date
cannot be recognised at the Balance Sheet date and instead are reported in the period in which they are
approved.
 Intangible Assets (IAS 38) — Software costs previously categorised within tangible fixed assets must now be
shown as intangible assets in the Balance Sheet.
52 weeks to
1 April
2005
£m
Operating profit under UK GAAP as previously reported 78.3
Prior year adjustment — rebates (1.3)
Operating profit under UK GAAP restated 77.0
Goodwill amortisation 13.7
Share-based payment (1.0)
Reclassification of assets from operating to finance leases 0.4
Lease incentives (0.8)
IFRS adjustments 12.3
Operating profit under IFRS 89.3
1 April
2005
£m
Net assets under UK GAAP as previously reported 156.3
Prior year adjustment — rebates (3.9)
Net assets under UK GAAP restated 152.4
Goodwill amortisation 13.7
Holiday pay accrual (0.5)
Reclassification of assets from operating to finance leases (0.5)
Lease incentives (6.4)
Tax on above adjustments (1.9)
Dividend recognition 18.9
IFRS adjustments 23.3
Net assets under IFRS 175.7 Halfords Annual Report and Accounts 2006 70 Financial Statements
Notes to the Financial Statements
Reconciliation of the income statement for the 52 weeks to 1 April 2005
UK GAAP IFRS
2005 2005 Difference
Ref £m £m £m
Revenue 628.4 628.4 —
Cost of sales 1.1 (290.7) (292.0) (1.3)
Gross profit 337.7 336.4 (1.3) 
Operating expenses 1.2 (259.4) (247.1) 12.3
Operating profit 78.3 89.3 11.0
Net finance costs 1.3 (14.2) (15.0) (0.8)
Profit before tax 64.1 74.3 10.2
Taxation 1.4 (24.2) (23.2) 1.0
Profit attributable to equity shareholders 39.9 51.1 11.2
Basic EPS (pence) 18.5p 23.7p 5.2p
The differences upon the profit attributable to equity shareholders are:
Reference 1.1 2005
Cost of sales £m
Prior year adjustment to “Inventories”: an adjustment has been made for a UK GAAP 
error to absorb an appropriate portion of rebate income into the cost of inventories, which 
was previously recognised as received in the income statement. (1.3)
Reference 1.2 2005
Operating expenses £m
IFRS 2 “Share-based payment” requires the assignment of fair values at the date of 
grant to the options granted to employees after 7 November 2002 which had not 
vested by 2 April 2005. The expense is spread over the vesting period of these options. (1.0)
IAS 17 “Leases” results in the reclassification of the head office building from being held 
as an operating lease to a finance lease. The asset has been depreciated over the useful 
economic life and the interest associated with the lease reclassified from operating 
expenses to finance costs. 0.4
IAS 17 “Leases” requires the release of lease incentives over the life of the lease rather 
than over the period to the first rent review. Consequently, there has been a reduction in the 
release of lease incentives from the balance sheet. (0.8)
IFRS 3 “Business combinations” requires the non-amortisation of goodwill arising on 
business combinations. Under UK GAAP goodwill was amortised over 20 years. 13.7
12.3
Reference 1.3 2005
Net finance costs £m
IAS 17 “Leases” resulted in the reclassification of the head office building from an operating 
to a finance lease. The interest associated with the lease has been reclassified from operating 
expenses to finance costs. (0.8)
Reference 1.4 2005
Taxation £m
IAS 12 “Income taxes” resulted in the recognition of a deferred tax liability regarding 
assets acquired in prior periods that did not qualify for capital allowances. This deferred 
tax liability has been released as follows: 0.8
IAS 17 “Leases” led to the creation of deferred tax assets relating to lease premiums that 
were not previously accounted for under UK GAAP . The movement on the deferred tax asset 
has been as follows: 0.1
IAS 19 “Employee benefits” led to the recognition of a deferred tax asset for employee holiday pay. 0.1
1.0 Halfords Annual Report and Accounts 2006 Financial Statements  71
Reconciliation of equity at 1 April 2005 and 3 April 2004 (Date of transition to IFRS)
UK GAAP IFRS UK GAAP IFRS
2005 2005 Difference 2004 2004 Difference
Ref £m £m £m £m £m £m
Non-current assets
Goodwill 2.1 239.4 253.1 13.7 253.1 253.1 —
Intangible assets 2.2 — 6.2 6.2 — 3.0 3.0
Property, plant and 
equipment 2.3 91.8 97.8 6.0 82.5 92.2 9.7
331.2 357.1 25.9 335.6 348.3 12.7
Current assets
Inventories 2.4 112.2 108.3 (3.9) 107.1 104.5 (2.6)
Trade and other receivables 23.6 23.6 — 23.5 23.5 —
Cash and cash equivalents 1.1 1.1 — 25.6 25.6 —
136.9 133.0 (3.9) 156.2 153.6 (2.6)
Current liabilities
Borrowings 2.5 (52.1) (52.2) (0.1) (189.4) (189.5) (0.1)
Trade and other payables 2.6 (117.7) (99.3) 18.4 (94.3) (94.8) (0.5)
Current tax liabilities (13.3) (13.3) — (10.1) (10.1) —
Provisions (1.6) (1.6) — (1.0) (1.0) —
(184.7) (166.4) 18.3 (294.8) (295.4) (0.6)
Net current liabilities (47.8) (33.4) 14.4 (138.6) (141.8) (3.2)
Non-current liabilities
Borrowings 2.7 (118.7) (131.3) (12.6) (185.6) (198.2) (12.6)
Deferred tax liabilities 2.8 (3.2) (5.1) (1.9) (2.3) (5.2) (2.9)
Other non-current liabilities 2.9 (5.2) (11.6) (6.4) (4.6) (10.3) (5.7)
(127.1) (148.0) (20.9) (192.5) (213.7) (21.2)
Net assets 156.3 175.7 19.4 4.5 (7.2) (11.7)
Equity
Share capital 2.3 2.3 — ———
Share premium 132.9 132.9 — 0.1 0.1 —
Retained earnings 2.10 21.1 40.5 19.4 4.4 (7.3) (11.7)
Total equity 156.3 175.7 19.4 4.5 (7.2) (11.7)
The differences are explained as follows:
Reference 2.1 2005 2004
Goodwill £m £m
IFRS 3 “Business combinations” resulted in the write-back of goodwill previously 
amortised since the transition date of 3 April 2004. 13.7 —
Reference 2.2 2005 2004
Intangible assets £m £m
IAS 38 “Intangible assets” requires the reclassification of software development costs 
from property, plant and equipment to intangible fixed assets. 6.2 3.0
Reference 2.3 2005 2004
Property, plant and equipment £m £m
IAS 17 “Leases” resulted in the reclassification of a building from an operating
lease to a finance lease. The asset is being depreciated over its useful economic life. 12.2 12.7
IAS 38 “Intangible assets” requires the reclassification of software development
costs from property, plant and equipment to intangible fixed assets. (6.2) (3.0)
6.0 9.7 Halfords Annual Report and Accounts 2006 72 Financial Statements
Notes to the Financial Statements
Reference 2.4 2005 2004
Inventories £m £m
Prior year adjustment to “Inventories”: an adjustment has been made for a
UK GAAP error to absorb an appropriate portion of rebate income into inventories,
which was previously recognised in the Income Statement. (3.9) (2.6)
Reference 2.5 2005 2004
Borrowings £m £m
IAS 17 “Leases” results in the reclassification of a lease relating to the head
office building which was formerly held as an operating lease as a finance lease. (0.1) (0.1)
Reference 2.6 2005 2004
Trade and other payables £m £m
IAS 37 “Provisions, contingent liabilities and contingent assets” requires
that dividends are recognised in the period in which they are approved. 18.9 —
IAS 19 “Employee benefits” requires the recognition of holiday pay due to
and from employees. A liability arises at the year end due to employees carrying
forward accrued benefits to the following financial year. (0.5) (0.5)
18.4 (0.5)
Reference 2.7 2005 2004
Borrowings £m £m
IAS 17 “Leases” results in the recognition of a building as a finance lease,
which was formerly held as an operating lease (see note 2.3). (12.6) (12.6)
Reference 2.8 2005 2004
Deferred income tax liabilities £m £m
IAS 12 “Income taxes” results in the recognition of a deferred tax liability
regarding assets acquired in prior periods that did not qualify for capital
allowances. (4.0) (4.8)
IAS 17 “Leases” leads to the creation of deferred tax assets relating to
lease incentives. 1.9 1.7
IAS 19 “Employee benefits” led to the recognition of a deferred tax asset
for employee holiday pay. 0.2 0.2
(1.9) (2.9)
Reference 2.9 2005 2004
Other non-current liabilities £m £m
The adoption of IAS 17 “Leases” results in the profit on the sale of a property
being reclassified as deferred income rather than being recognised in the
Income Statement. The effect on deferred income was: (3.6) (3.7)
The adoption of IAS 17 “Leases” requires the release of lease incentives over
the life of the lease rather than over the period to the first rent review.
Consequently, there has been a reduction in the release of lease incentives
from the Balance Sheet. The effect on deferred income was: (2.8) (2.0)
(6.4) (5.7)
Reference 2.10 2005 2004
Retained earnings £m £m
The adoption of IFRS and the UK GAAP error had the following net impact
on retained earnings.
Cumulative total of all adjustments to the Balance Sheet was: 19.4 (11.7)
Reconciliation of the Consolidated Cash Flow Statements
The principal difference between UK GAAP and IFRS in the Group’s statement of cash flow is the reconciliation to
cash and bank overdrafts rather than net debt (which included bank loans and finance lease creditors). Halfords Annual Report and Accounts 2006 Five Year Record  73
52 weeks to 52 weeks to 53 weeks to 52 weeks to 52 weeks to
29 March 28 March 2 April 1 April 31 March
2002 2003 2004 2005 2006
£m £m £m £m £m
UK GAAP* UK GAAP* UK GAAP† IFRS IFRS
Revenue 519.8 525.8 578.6 628.4 681.7
Cost of sales (243.3) (244.4) (271.6) (292.0) (335.0)
Gross profit 276.5 281.4 307.0 336.4 346.7
Operating expenses (225.0) (247.9) (244.1) (247.1) (257.6)
Operating profit before exceptional 
items and goodwill amortisation 51.5 50.8 76.6 89.5 89.1
Goodwill amortisation — (8.0) (13.7) — —
Exceptional items — (9.3) — (0.2) —
Operating profit 51.5 33.5 62.9 89.3 89.1
Loss on sale of business (2.3) — — — —
Profit on sale of fixed assets — — 6.4 — —
Net finance costs (0.5) (21.9) (44.1) (15.0) (12.1)
Profit before tax 48.7 11.6 25.2 74.3 77.0
Tax (16.7) (6.5) (14.3) (23.2) (23.4)
Profit attributable to 
equity shareholders 32.0 5.1 10.9 51.1 53.6
Basic earnings per share n/a n/a 6.7p 23.7p 23.6p
Basic earnings per share before 
goodwill amortisation and 
exceptional items n/a n/a 16.1p 23.7p 23.6p
* as previously reported
† restated
Halfords Group plc acquired Halfords Limited on 30 August 2002. Prior to this date, Halfords Limited was a wholly
owned subsidiary of Boots Group plc and therefore, prior to 30 August 2002, the financial information above is
based on the financial statements of Halfords Limited. In June 2004, Halfords Group plc listed on the London Stock
Exchange. Consequently, the results across the periods reflect the differences in the capital and financing structure
under the different ownerships.
An analysis of the main differences between UK GAAP and IFRS are detailed in note 25 to the financial statements.
Five Year Record Halfords Annual Report and Accounts 2006 74 Independent Auditors’ Report
Parent Company Accounts 
Under UK GAAP
Independent Auditors’ Report to the
Members of Halfords Group plc
The Company has elected to prepare its financial statements under UK GAAP; these policies are outlined 
on page 77.
We have audited the parent company financial
statements of Halfords Group plc for the 52 weeks to 
31 March 2006 which comprise the Profit and Loss
Account, the Balance Sheet and the related notes.
These parent company financial statements have been
prepared under the accounting policies set out therein.
We have also audited the information in the Directors’
Remuneration Report that is described as having been
audited.
We have reported separately on the Group financial
statements of Halfords Group plc for the 52 weeks to 
31 March 2006.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual
Report, the Directors’ Remuneration Report and the
parent company financial statements in accordance
with applicable law and United Kingdom Accounting
Standards (United Kingdom Generally Accepted
Accounting Practice) are set out in the Statement of
Directors’ Responsibilities.
Our responsibility is to audit the parent company
financial statements and the part of the Directors’
Remuneration Report to be audited in accordance with
relevant legal and regulatory requirements and
International Standards on Auditing (UK and Ireland).
This report, including the opinion, has been prepared
for and only for the Company’s members as a body in
accordance with Section 235 of the Companies Act
1985 and for no other purpose. We do not, in giving this
opinion, accept or assume responsibility for any other
purpose or to any other person to whom this report is
shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
We report to you our opinion as to whether the parent
company financial statements give a true and fair view
and whether the parent company financial statements
and the part of the Directors’ Remuneration Report to
be audited have been properly prepared in accordance
with the Companies Act 1985. We report to you
whether in our opinion the information given in the
Directors’ Report is consistent with the parent company
financial statements. We also report to you if, in our
opinion, the Company has not kept proper accounting
records, if we have not received all the information and
explanations we require for our audit, or if information
specified by law regarding directors’ remuneration and
other transactions is not disclosed. Halfords Annual Report and Accounts 2006 Independent Auditors’ Report  75
Independent Auditors’ Report to the Members of Halfords Group plc
We read other information contained in the Annual
Report and consider whether it is consistent with the
audited parent company financial statements. The other
information comprises only the Directors’ Report, the
unaudited part of the Directors’ Remuneration Report,
the Chairman’s Statement, the Chief Executive’s
Review, the Finance Director’s Report and the
Corporate Governance statement. We consider the
implications for our report if we become aware of any
apparent misstatements or material inconsistencies
with the parent company financial statements. Our
responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with
International Standards on Auditing (UK and Ireland)
issued by the Auditing Practices Board. An audit
includes examination, on a test basis, of evidence
relevant to the amounts and disclosures in the parent
company financial statements and the part of the
Directors’ Remuneration Report to be audited. It also
includes an assessment of the significant estimates and
judgements made by the directors in the preparation of
the parent company financial statements, and of
whether the accounting policies are appropriate to the
Company’s circumstances, consistently applied and
adequately disclosed.
We planned and performed our audit so as to obtain all
the information and explanations which we considered
necessary in order to provide us with sufficient
evidence to give reasonable assurance that the parent
company financial statements and the part of the
Directors’ Remuneration Report to be audited are free
from material misstatement, whether caused by fraud
or other irregularity or error. In forming our opinion we
also evaluated the overall adequacy of the presentation
of information in the parent company financial
statements and the part of the Directors’ Remuneration
Report to be audited.
Opinion
In our opinion:
 the parent company financial statements give a true
and fair view, in accordance with United Kingdom
Generally Accepted Accounting Practice, of the
state of the Company’s affairs as at 31 March 2006;
 the parent company financial statements and the
part of the Directors’ Remuneration Report to be
audited have been properly prepared in accordance
with the Companies Act 1985; and
 the information given in the Directors’ Report is
consistent with the parent company financial
statements.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Birmingham
7 June 2006 Company Balance Sheet
Restated
As at As at
31 March 1 April 
2006 2005
Notes £m £m
Fixed assets
Investments 4 0.1 0.1
0.1 0.1
Current assets
Debtors falling due within one year 5 37.7 37.1
Debtors falling due after one year 5 149.3 141.6
Cash at bank and in hand 0.8 6.7
187.8 185.4
Creditors: amounts falling due within one year 6 — (1.1)
Net current assets 187.8 184.3
Net assets 187.9 184.4
Capital and reserves
Called up share capital 7 2.3 2.3
Share premium account 8 133.2 132.9
Profit and loss account 8 52.4 49.2
Equity shareholders’ funds 187.9 184.4
The financial statements on pages 76 to 79 were approved by the Board of Directors on 7 June 2006 and were
signed on its behalf by: 
Nick Carter, Finance Director Ian McLeod, Chief Executive
Halfords Annual Report and Accounts 2006 76 Financial Statements Halfords Annual Report and Accounts 2006 Financial Statements  77
Accounting Policies
Basis of preparation
The accounts of the Company are prepared for the period up to the Friday closest to 31 March each year.
Consequently, the financial statements for the current period cover the 52 weeks to 31 March 2006, whilst the
comparative period covered the 52 weeks to 1 April 2005. The accounts are prepared under the historical cost
convention, in accordance with the Companies Act 1985, applicable accounting standards and specifically in
accordance with the Accounting Policies set out below.
A consolidated cash flow statement has been included in the Halfords Group plc consolidated accounts. The
Company has therefore taken advantage of the exemption under FRS 1 (Revised 1996) “Cash flow statements” 
not to produce a cash flow statement. 
Changes in accounting policies
The Company has adopted FRS 20 “Share-based payment” and FRS 21 “Events after the balance sheet date”. The
adoption of each of these standards represents a change in accounting policy and the comparative figures have
been restated accordingly. The effect of the change in accounting policy to adopt FRS 20 was to recognise a
charge to the profit and loss account in relation to share-based payments of £1.3m (2005: £1.0m). The effect of the
change in accounting policy to adopt FRS 21 was to recognise the final proposed dividend for the 52 weeks to 
1 April 2005 of £18.9m in the current year. The final proposed dividend of the current year of £19.9m will be
recognised in the following year as it has yet to be approved by the shareholders.
Pensions
Employees are offered membership of Halfords Pension Plan, a defined contribution pension arrangement. The
costs of the contribution to the scheme are charged to the profit and loss account in the period that they arise.
Share-based payments
The Company operates a number of equity-settled, share-based compensation plans.
The fair value of the employee services received under such schemes is recognised as an expense in the profit and
loss account. Fair value is determined by use of the Black Scholes Option Pricing Model. The amount to be
expensed over the vesting period is determined by reference to the fair value of share incentives, excluding the
impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the
number of share incentives that are expected to vest. At each balance sheet date, the Company revises its
estimates of the number of share incentives that are expected to vest. The impact of the revision of original
estimates, if any, is recognised in the profit and loss account, with a corresponding adjustment to equity, over the
remaining vesting period. If any of the beneficiaries of the schemes are employed in the Company’s subsidiary
companies, any associated costs are recharged to those subsidiary companies.
Investments
Investments in subsidiary undertakings are stated at the original cost of the investments. Provision is made against
cost where, in the opinion of the directors, the value of the investments has been impaired.
Equity dividends
Final dividends are recognised in the Group’s financial statements in the period in which the dividends are
approved by shareholders. Interim equity dividends are recognised in the period they are paid. Halfords Annual Report and Accounts 2006 78 Financial Statements
Notes to the Financial Statements
1. Profit and loss account
The Company made a profit before dividends for the financial period of £29.9m (52 weeks to 1 April 2005: £40.4m).
The directors have taken advantage of the exemption available under section 230 of the Companies Act 1985 and
not presented a profit and loss account for the Company alone.
2. Audit fees
The total fees payable by the Company to PricewaterhouseCoopers LLP and their associates during the period
were borne by Halfords Limited. In the 52 weeks to 1 April 2005 the Company expensed £0.1m.
3. Employee benefit expense
The Company has no employees other than directors. Full details of the directors’ remuneration and interests are set 
out in the Directors’ Remuneration Report on pages 34 to 39.
4. Investments 
2006
£m
Shares in Group undertaking
Cost
At 1 April 2005 and 31 March 2006 0.1
The investment in the subsidiary undertaking as at 31 March 2006 is as follows:
Ordinary shares
Incorporated percentage Principal
in owned % activities
Halfords Holdings Limited Great Britain* 100 Intermediate
holding company
* Registered in England and Wales.
In the opinion of the Directors the value of the investment in the subsidiary undertaking is not less than the amount
shown above.
Principal subsidiaries
The principal subsidiary undertakings of the Company at 31 March 2006 are as follows:
Principal activity % Ownership
Halfords Holdings Limited Intermediate holding company 100
Halfords Finance Limited Intermediate holding company 100
Halfords Limited Retailing of auto parts, accessories, 100
cycles and cycle accessories
Halfords Payment Services Limited Non-trading 100
The principal activity of Halfords Payment Services Limited was the provision of payment processing services to
Halfords Limited’s customers. The Company ceased to provide this service with effect from 
31 January 2006.
All the above subsidiaries are incorporated in Great Britain and registered in England and Wales. All other
subsidiary undertakings are dormant and did not trade during the year.
5. Debtors
2006 2005
£m £m
Falling due within one year:
Prepayments and accrued income — 0.1
Amounts owed by Group undertakings 37.7 37.0
37.7 37.1
Falling due after more than one year:
Amounts owed by Group undertakings 149.3 141.6
Amounts owed by Group undertakings are interest bearing at a rate of 5.22%.  Halfords Annual Report and Accounts 2006 Financial Statements  79
6. Creditors: amounts falling due within one year
2006 2005
£m £m
Amounts owed to Group undertakings — 1.1
7. Equity share capital
2006 2006 2005 2005
Number Number
Ordinary shares of 1p each: of shares £ of shares £
Authorised 295,000,000 2,950,000 295,000,000 2,950,000
Allotted, called up and fully paid 228,027,743 2,280,277 227,936,743 2,279,367
Allotted, called up and fully paid share capital increased during the period due to the early exercising of share
options by members of the Halfords Share Option Scheme. Early exercise of the options are allowed if an option
holder ceases to be employed by reason of death, injury, disability, redundancy, retirement or on the sale of his
employing company or business.
Potential issue of ordinary shares
The Company has three employee share option schemes, which were set up following the Company’s flotation.
Further information regarding these schemes can be found in note 21 of the Group financial statements.
Interest in own shares
At 31 March 2006, the Company held in Trust 881,350 (2005: 887,068) own shares with a nominal value of £8,814
(2005: £8,871). The Trust has waived any entitlement to the receipt of dividends in respect of its holding of the
Company’s Ordinary Shares.
8. Reserves
Share Profit and
premium loss account Total
£m £m £m
At 1 April 2005 — as previously reported 132.9 29.3 162.2
Prior year adjustment — FRS 21 — 18.9 18.9
Prior year adjustment — FRS 20 — 1.0 1.0
At 1 April 2005 — as restated 132.9 49.2 182.1
Profit for the financial period — 1.9 1.9
Employee share options — 1.3 1.3
Proceeds from issue of Ordinary Shares 0.3 — 0.3
At 31 March 2006 133.2 52.4 185.6
9. Related party disclosures
Under FRS 8 “Related party disclosures’ the Company is exempt from disclosing related party transactions with
entities over which it has 90% control or more.
10. Contingent liabilities
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 31 March 2006 amounted to £3.1m (2005: £2.0m). The Company’s banking arrangements
are subject to a netting facility whereby credit balances may be offset against the indebtedness of other Group
companies. Halfords Annual Report and Accounts 2006 80 Shareholder Information
Shareholder Information
Analysis of shareholders
As at 31 March 2006, the number of registered shareholders was 1,890 and the number of ordinary shares in issue
was 228,027,743.
Number of % of total Number % of issued
holdings shareholders of shares share capital
Range of holdings
1–5,000 1,404 74.3 2,240,768 0.9
5,001–10,000 116 6.1 841,108 0.4
10,001–50,000 162 8.6 3,810,272 1.7
50,001–100,000 31 1.6 2,212,926 0.9
100,001–500,000 88 4.7 20,649,665 9.1
500,001 and above 89 4.7 198,273,004 87.0
Total 1,890 100.0 228,027,743 100.0
Held by
Individuals 696 36.8 2,418,751 1.0
Institutions 1,194 63.2 225,608,992 99.0
Total 1,890 100.0 228,027,743 100.0
Results and financial diary
Annual General Meeting: 2 August 2006
Final dividend payable: 14 August 2006
Trading update: 5 October 2006
Interim results: 23 November 2006
Ex dividend date: 29 November 2006
Record date: 1 December 2006
Interim dividend payable: 8 January 2007
Annual General Meeting
The Annual General Meeting will be held at 12.30 pm on Wednesday 2 August 2006 at the Holiday Inn Hotel,
Bridgefoot, Stratford-upon-Avon, Warwickshire, CV37 6YR.
Each shareholder is entitled to attend and vote at the meeting.
Dividend payments
The proposed final dividend (if approved) will be paid on 14 August 2006 to shareholders on the register on 
16 June 2006.
Payment of dividends by BACS
Many shareholders have already arranged for dividends to be paid by mandate directly to their bank or building
society account. The Company mandates dividends through the BACS (“Bankers’ Automated Clearing Services”)
system. The benefit to shareholders of the BACS payment method is that the Registrar posts the tax vouchers directly
to them, whilst the dividend is credited on the payment date to the shareholder’s bank or building society account.
Shareholders who have not yet arranged for their dividends to be paid direct to their bank or building society account
and wish to benefit from this service should complete the mandate form attached to their dividend tax voucher or,
alternatively, request the Company’s Registrar (address below) to send them a dividend mandate form.
Dividend reinvestment plan 
The Company offers a dividend reinvestment plan that gives shareholders the opportunity to use their cash
dividend to buy Halfords Group plc ordinary shares. The plan is run by Capita IRG Plc (“Capita”). For further
information on the plan and how to join please contact Capita at The Registry, 34 Beckenham Road, Beckenham,
Kent, BR3 4TU (tel: 0870 162 3100) or the Company Secretary.
Shareholder information on the Internet
The Company maintains an investor relations section on its website (www.halfordscompany.com) which allows access
to share price information, management biographies, copies of Company reports and other useful investor information.
Halfords Group plc is registered in England and Wales (Number 4457314).
A copy of this Annual Report is being sent to all shareholders. Copies are also available from the registered office
shown below. The Report is also placed on the investor relations section of the Company’s website,
www.halfordscompany.com. Company Information
Registered and Head Office
Halfords Group plc
Icknield Street Drive
Redditch
Worcestershire
B98 0DE
Registrars
Capita IRG Plc
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Auditors
PricewaterhouseCoopers LLP
Cornwall Court
19 Cornwall Street
Birmingham
B3 2DT
Joint Brokers
Merrill Lynch International
2 King Edward Street 
London 
EC1A 1HQ
Citigroup 
33 Canada Square
London 
E14 5LB
Solicitors
Clifford Chance LLP
10 Upper Bank Street
London 
E14 5JJ
Halfords Annual Report and Accounts 2006 Company Information  81
Designed and Printed by Jones & Palmer Limited, Birmingham. tel: (0121) 236 9007 www.halfordscompany.com
www.halfords.com