Current Mitigation

Focus in 2022

* The appointment of a Transformation Director and a strengthened team with emphasis on project management enabled progress to be maintained during a challenging period for capital investment. The successful acquisition of The Universal Tyre Company (Deptford) Limited ("Universal") in March 2021 demonstrated our intent and ability to grow our services business.

* The continued advancement of our change programme is managed through a Transformation Board, providing the necessary governance for delivery of the strategy. The Transformation Board ensures there is a robust approval process for each project, allocates resource and monitors progress. Project managers are in place within the business
to whom projects can be assigned and this has been supplemented by specialist resource to boost capability. In affecting change, Halfords is requiring all contributing colleagues to observe the principles of
Responsible, Accountable, Consulted, and Informed ("RACI").

* Continue to align our Transformation Plan with the key objectives of our corporate strategy

* Closely monitor progress on individual programmes, realigning resources where necessary.

* Specifically, within the technology and digital teams, address operating model shortcomings to enable faster execution.

 
* Complete organisational design changes to align with the strategic focus of the business.

Current Mitigation

Focus in 2022

* Throughout the year, we demonstrated progress in the execution of our strategy, building confidence in external and internal stakeholders. Our share price responded positively, Customer NPS improved, and our internal engagement scores remained high despite the disruption caused by COVID-19

* Engagement continued throughout the year with customers, investors, and colleagues, keeping them informed of progress against our strategic plans, changing customer propositions as well as the challenges presented by the pandemic

* Maintain progress on the delivery of our strategic
objectives.

* Address colleague engagement challenges through a regular cycle of survey and review

* Proactive investor relations programme of events and communication.

Current Mitigation

Focus in 2022

* To differentiate ourselves in a competitive retail market, our vision is to consolidate Halfords as a super specialist in motoring and cycling. Our strategy emphasises the importance of creating value for the customer by delivering services alongside the sale of a product. Progress continued through the development of new services and greater accessibility through the growth of our Cycle-to-Work programme, financial products, and Halfords Mobile Expert business.

* Optimisation of our Group website with payment online functionality was further enhanced by investment in our fulfilment proposition and enablement of cross-shop opportunities, aligned with more targeted promotions, designed to appeal to customers.

* Launch of a Halfords Motoring loyalty programme, designed to reward loyal customers and inspire a greater proportion to shop across the Group.

* Further investment in pricing of motoring products to deliver greater value for customers.

Current Mitigation

Focus in 2022

* Building on a positive response to our status as an essential retailer, we have grown awareness of our HME and garage services. Customer loyalty and satisfaction has achieved record levels for Trust Pilot and Google scores for the Group

* Improvement of our cycling proposition, allied with better than market availability and support for the cycle voucher scheme, has strengthened market share.

* Continued investment in a Group services marketing campaign.

* A greater focus on E-bike and E-scooter product
sales, alongside a more general electric vehicle
servicing strategy

* Investment in fair pricing for motoring products.

* Improve climate change credentials with ESG targets defined.

Current Mitigation

Focus in 2022

* Significant actions on cost and margin taken in FY21 have collectively built financial resilience, including a successful project to reduce our fixed cost base. A refinancing secured our funding for a three-year period.

* Maintain focus on reducing underlying costs, e.g. rental costs through property renegotiations.

 * Continuing to focus on margin improvement,
eliminating unnecessary cost through targeted
efficiencies and scale benefits.

* A strategic focus on the growth of services will build more stable revenue streams going forward, lessening the Group's exposure to product lifecycles and trends

* The business has a hedging programme in place and is following a
working capital reduction programme, targeted at reducing stock holding
and aligning trade creditor terms.

Current Mitigation

Focus in 2022

* All colleagues are provided with dedicated training and adhere to established quality control and safety procedures, with compliance audits by management. We also have a dedicated compliance team monitoring our regulated activities.

* In Autocentres, we have introduced PACE, our digital operating platform, enabling increased workflow, productivity, and quality assurance. A new store operating model is also now in place with multiskilled retail colleagues operating across all departments.

* Store calls are now managed through a centralised contact centre, improving response times and convenience to customers.

* Full roll-out of new store operating model, with
additional skills training completed for all retail
colleagues.

* Introduction of in-store specialists, focused on
delivering excellence in our different service offerings.

* Ongoing programme of proactive store maintenance and safety checks.

Current Mitigation

Focus in 2022

* Our information security team working with our security partner, TCS, provide valuable support by managing vulnerability scans and email and website security

* A perpetual education and awareness campaign is provided to all colleagues. Regular briefings promote an understanding of the risks to our data and the benefits of good security practices.

* The Audit Committee is regularly briefed by senior IT management on the business' IT security framework.

* Launch of a fully managed security operations centre, increasing visibility and decreasing response time to incidents

Current Mitigation

Focus in 2022

* Our status as an essential retailer during the pandemic provided a strong
sense of purpose and enhanced the culture and identity of Halfords as a
services business

* Regular survey activity to identify areas important to
colleagues in driving continued engagement

* Early in the year, we launched our new colleague values and behaviours
framework and appointed a colleague experience manager to focus on
engagement. An annual engagement survey provides us with reports at
team level. We have an environment that encourages colleagues to feed
back to us about how we can make Halfords an even better place to
work.

* Ongoing wellbeing programme, providing ideas,
support and tips for a better work/life balance.

* Identification and development of top talent, allowing us to develop colleagues to fulfil their potential and, in turn, strengthen our succession pipeline.

* During the year, a hardship fund was founded for the benefit of our
colleagues to provide support and assistance where needed. Equally, a
bonus scheme was established for those colleagues working in a front
line role during the early period of the pandemic.

Current Mitigation

Focus in 2022

* We have a strategy that relies on attracting and retaining colleagues who can inspire and support our customers and encourage them to build a lifetime relationship with the brand

* Our recruitment website highlights the importance of the Halfords behaviours and details the skills and experience required of our colleagues. New starters are given a full induction and all colleagues receive a performance development review. We develop colleagues via the application of a talent matrix, which supports them in fulfilling their potential and enabling succession management

* Training and development are a fundamental part of our business and a great attraction for new applicants. We apply a targeted approach to further enhance skill levels for centres as we do with stores, by mapping against the optimal skills mix

* Material investment programme in skills training to enhance colleague capability and, in turn, improve the customer experience across our touch points.

* As the restrictions associated with COVID-19 ease, develop a revised working model for our Support Centre colleagues, balancing a desire for greater flexibility with the connection and creativity that comes from being in the right office environment

* Extend our eLearning programme for the benefit of all colleagues.

Current Mitigation

Focus in 2022

* Extensive controls are in place to maintain the integrity of our systems and to ensure that systems changes are implemented in a controlled manner. We have resilient infrastructure in place for remote working colleagues to access Halfords hosted applications, such as SAP.

* Continue progression towards a fully cloud based hosting structure with a transfer of risk to cloud-based service providers who can maintain higher levels of contracted availability

* Deep-dive analysis into targeted areas of infrastructure, managed through the Risk Committee

* Halfords' key trading systems are hosted securely within data centres operated by a specialist company and in specialist cloud services operated by Microsoft. These systems are supported by disaster recovery arrangements, including comprehensive backup and patching strategies. IT recovery processes are tested regularly.

Current Mitigation

Focus in 2022

* The need to respond to the pandemic in FY21 has tested our business continuity plans and given us confidence in alternative supply chain solutions and resilience.

* We maintain security and protection measures at our distribution centres and have business continuity plans to manage any incidents that may occur. Our logistics operations are overseen by a dedicated warehouse and logistics team with extensive experience.

* Extensive research is conducted into quality and ethics before the Group procures products from any new country or supplier. A strong management team in the Far East, with an understanding of local culture, market regulations and risks, maintains close relationships with both our suppliers and logistics partners to ensure that disruption to production and supply are managed appropriately.

* Programme of development for warehouse and duty management systems.

* Enhanced flexibility across the supplier base, using a wider range of suppliers, where possible, and additional providers of freight and transport solutions.

* Revised programme of supplier management for all key suppliers.

* Ongoing dialogue with existing and new suppliers to build a joint programme of environmental sustainability.