Final Results

Halfords Group PLC
08 June 2006



                                                                     8 June 2006

                               Halfords Group Plc
                        Preliminary Results Announcement

Halfords Group plc, the UK's leading auto, leisure and cycling products
retailer, announces its Preliminary Results for the 52 weeks ended 31 March
2006.

Financial Highlights

   • Revenue £681.7m up 8.5%, (2005: £628.4m)
   • Like-for-like sales up 6.1%
   • Operating profit £89.1m (2005: £89.3m)
   • Pre-tax profit £77.0m up 3.6% (2005: £74.3m)
   • Basic earnings per share 23.6p (2005: 23.7p)
   • Net debt, excluding finance leases, down £8.4m to £160.7m
   • The Board is recommending a final dividend of 8.75p, making a total of
     12.75p per ordinary share, up 6.3%


Business Highlights

   • Strong growth in cycles and in-car technology products
   • 408 stores with 18 new store openings, including 3 relocations
   • Mezzanines now in half of the superstores including 100 stores in the
     supermezzanine format
   • The Republic of Ireland store opening plan accelerated and a 3-store
     trial planned for Central Europe in Spring 2007
   • Share buy-back returning up to £50m to shareholders over the next two
     years, while maintaining a strong financial position to allow continued
     investment.

Commenting on the results, Ian McLeod, Chief Executive, said:
'Halfords has continued to grow sales and cash margin in a challenging trading
environment. During the year we have strengthened Halfords market-leading
positions in needs-driven car maintenance products and cycling while becoming
the destination store for in-car technology. The significant year-on-year growth
of in-car technology has generated a change in the sales mix, which has resulted
in a 260 basis points dilution in the gross profit percentage. During the
nine-week period since the year-end the level of gross profit percentage
dilution has reduced significantly, a trend we expect to see continue. During
the same period sales have grown by 10.5%, like-for-like sales are up 7.3% and
underlying like-for-like sales are encouraging at 3.2%, excluding Easter. The
combination of these factors therefore provide us with confidence in our future
trading prospects.'

Enquiries:

Halfords Group plc
Ian McLeod, Chief Executive                     01527 513276
Nick Carter, Finance Director                   01527 513276
Tony Newbould, Investor Relations               01527 513113

Gainsborough Communications
Andy Cornelius                                 0207 190 1703
Julian Walker                                  0207 190 1705


Halfords Group plc

Halfords is the UK's leading auto, leisure and cycling products retailer, with
408 stores and 10,000 employees.

The Group sells 11,000 different product lines ranging from car parts and cycles
through to the latest in-car technology, alloy wheels, child seats, roof boxes
and the latest outdoor leisure and camping equipment. Halfords' own brands
include Ripspeed, for car enhancement, and Bikehut, for cycles and cycling
accessories, including the Apollo and Carrera brands. Stores offer a 'We'll fit
it' service for car parts, child seats, satellite navigation and in-car
entertainment systems and a 'We'll repair it' service for cycles.

In addition to the corporate website, www.halfordscompany.com, Halfords operates
an online retail website, which can be found at www.halfords.com.

Halfords was established in 1892, floated on the London Stock Exchange in June
2004 and is a FTSE 250 company.

Cautionary Statement

This report contains certain forward-looking statements with respect to the
financial condition, results of operations, and businesses of Halfords Group
plc. These statements and forecasts involve risk, uncertainty and assumptions
because they relate to events and depend upon circumstances that will occur in
the future. There are a number of factors which could cause actual results or
developments to differ materially from those expressed or implied by these
forward-looking statements. These forward-looking statements are made only as at
the date of this announcement. Nothing in this announcement should be construed
as a profit forecast. Except as required by law, Halfords Group plc has no
obligation to update the forward-looking statements or to correct any
inaccuracies therein.

Chief Executive's Review

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.

Revenue for the year to 31 March 2006 was £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 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.

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 the Easter period are of sufficient weight
within a financial year as to be material.

In addition, a key contribution to our sales growth has been our 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 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 Republic of Ireland at the
end of the 2006 financial year, opening 18 new stores during the period. We
expect to open a further 20 stores in the UK and Republic of Ireland during the
current year and we still 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 trade from an additional floor level, offering up to 40% extra
sales space within our stores. At 31 March 2006 we had 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 feet 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 by customers 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 financial 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.

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 to 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. The 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 of 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 a 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 particularly during the Christmas period.

We have enjoyed significant sales success in this category this year. Though
actual cash profitability per unit is strong, the percentage margin is below the
company average, which impacted 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 re-launched 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. We also received a gold award for the
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 2005 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 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.

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
they are 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 national
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 this 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 taken place 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 re-launched, 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
re-launch, making halfords.com our highest turnover 'store' and the second most
visited sports and leisure website in the UK. Site visits have grown to 150,000
visitors per week. Sales conversion is also ahead and we are targeting further
improvement 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 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 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 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. iPod 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
approximately 500 colleagues as hardwire electronics fitters and more than 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 relatively resilient in
the light of economic change remains 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.


Finance Director's Report

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 ended 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 £89.3m 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%.

Operating leases

All the Group's stores are held 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).

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
downsize through the return of former service centre space, occupied by the
Automobile Association ('AA'). 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).

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.

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 store 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.



Consolidated Income Statement


For the period                                  52 weeks to        52 weeks to
                                              31 March 2006       1 April 2005
                        Notes                            £m                 £m

Revenue                                               681.7              628.4
Cost of sales                                        (335.0)            (292.0)
_______________________________________________________________________________
Gross profit                                          346.7              336.4
Operating expenses                                   (257.6)            (247.1)
_______________________________________________________________________________
Operating profit            2                          89.1               89.3
Finance costs               3                         (12.5)             (15.4)
Finance income              3                           0.4                0.4
_______________________________________________________________________________
Profit before tax                                      77.0               74.3
Taxation                    4                         (23.4)             (23.2)
_______________________________________________________________________________
Profit attributable to
equity shareholders                                    53.6               51.1
_______________________________________________________________________________

_______________________________________________________________________________
Earnings per share
Basic                       6                          23.6p              23.7p
_______________________________________________________________________________

All results relate to continuing operations of the Group.




Consolidated Balance Sheet

                                                  31 March 2006   1 April 2005
                                                             £m             £m
Assets
Non-current assets
Goodwill                                                  253.1          253.1
Intangible assets                                           5.7            6.2
Property, plant and equipment                             104.1           97.8
_______________________________________________________________________________
                                                          362.9          357.1

Current assets
Inventories                                               127.2          108.3
Trade and other receivables                                29.4           23.6
Derivative financial instruments                            1.2              -
Cash and cash equivalents                                   1.5            1.1
_______________________________________________________________________________
                                                          159.3          133.0
_______________________________________________________________________________

Total assets                                              522.2          490.1

Liabilities
Current liabilities

Borrowings                                                (63.5)         (52.2)
Trade and other payables                                 (101.9)         (99.3)
Current tax liabilities                                   (13.1)         (13.3)
Provisions                                                 (1.2)          (1.6)
_______________________________________________________________________________
                                                         (179.7)        (166.4)

Net current liabilities                                   (20.4)         (33.4)

Non-current liabilities
Borrowings                                               (111.7)        (131.3)
Derivative financial instruments                           (2.1)             -
Deferred tax liabilities                                   (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                                               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
_______________________________________________________________________________





Consolidated Statement of Changes in Shareholders' Equity



                          Share     Share   Hedging reserve Retained     Total
                        capital   premium                   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                            -      (1.8)              -          -      (1.8)
ordinary shares
Movement arising from
the                           -         -               -        4.2       4.2
issue of share options
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                      -         -               -        0.4       0.4
share options
Dividends                     -         -               -      (28.0)    (28.0)
_______________________________________________________________________________
Balance at 31 March 2006    2.3     133.2            (0.8)      67.8     202.5
_______________________________________________________________________________





Consolidated Cash Flow Statement



For the period                                       52 weeks to   52 weeks to
                                                   31 March 2006  1 April 2005
                                           Notes              £m            £m
______________________________________________________________________________

Cash flows from operating activities
Cash generated from operations                 7           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                        9           (12.0)       (217.6)
Finance lease principal payments               9            (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       8            (2.9)        (34.0)
Cash and bank overdrafts at beginning of
period                                                     (15.5)         18.5
_______________________________________________________________________________
Cash and bank overdrafts at the end of the
period                                         8           (18.4)        (15.5)
_______________________________________________________________________________



Notes to the preliminary results

1. Accounting policies

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 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.
   •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.
   •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.


2. Operating profit

_______________________________________________________________________________
For the period                                       52 weeks to    52 weeks to
                                                   31 March 2006   1 April 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
_______________________________________________________________________________




3.Net finance costs


_______________________________________________________________________________
For the period                                    52 weeks to      52 weeks to
                                                31 March 2006     1 April 2005
                                                           £m               £m
_______________________________________________________________________________

Finance costs:
Bank borrowings                                          (9.7)           (12.4)
Premium on deep discount bond                               -             (1.5)
Amortisation of issue costs on loans and deep
discount 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 bonds1                            -             (1.7)
Non-recurring swap close out2                               -              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 exceptional income on the termination of the
existing interest rate swaps.



4. Taxation

_______________________________________________________________________________
For the period                                     52 weeks to     52 weeks to
                                                 31 March 2006    1 April 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 current 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 2006    1 April 2005
                                                            £m              £m
_______________________________________________________________________________
Profit before tax                                         77.0            74.3
_______________________________________________________________________________
UK corporation tax at standard rate of 30.0%
(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
_______________________________________________________________________________



5.Dividends

_______________________________________________________________________________
For the period                                    52 weeks to      52 weeks to
                                                31 March 2006     1 April 2005
                                                           £m               £m
_______________________________________________________________________________
Equity - Ordinary
Final for the 52 weeks to 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, which will absorb an estimated
£19.9m of shareholders' funds. The dividend will be paid on 14 August 2006 to
shareholders who are on the Register of Members on 16 June 2006.



6. 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 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 2006    1 April 2005
                                                             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 2006    1 April 2005
                                                            £m              £m
_______________________________________________________________________________
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 2006       1 April 2005
_______________________________________________________________________________
Basic earnings per ordinary share                      23.6p              23.7p

Diluted earnings per ordinary share                    23.6p              23.7p
_______________________________________________________________________________





7. Cash generated from operations

_______________________________________________________________________________
For the period                                    52 weeks to      52 weeks to
                                                31 March 2006     1 April 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
_______________________________________________________________________________



8. Analysis of movements in the Group's net debt in the period

_______________________________________________________________________________
                                   At   Cash flow   Other non cash          At
                                                         changes
                         1 April 2005                            31 March 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)
_______________________________________________________________________________


Non-cash changes relate to finance costs of £0.7m in relation to the
amortisation of capitalised debt issue costs.



9. 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
_______________________________________________________________________________
Cash outflow                                                              12.3
_______________________________________________________________________________

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.




10. Other information

These results for the 52 weeks to 31 March 2006 together with the corresponding
amounts for the 52 weeks to 1 April 2005 are extracts from the Group Annual
Report and Accounts and do not constitute statutory accounts within the meaning
of section 240 of the Companies Act 1985 (as amended).

The Group Annual Report and Accounts for the 52 weeks to 31 March 2006, on which
the auditors have issued a report that does not contain a statement under
section 237(2) or (3) of the Companies Act 1985, will be posted to shareholders
by 23 June 2006 and will be delivered to the Registrar of Companies in due
course. Copies will be available from The Company Secretary, Halfords Group plc,
Icknield Street Drive, Washford West, Redditch, Worcestershire, B98 0DE.

The Annual General Meeting will be held at the Holiday Inn Hotel, Bridgefoot,
Stratford upon Avon, Warwickshire CV37 6YR at 12.30 pm on Wednesday, 2 August
2006.




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