Corporate Governance Report Chairman's Letter

My role is to lead the Board, ensure it operates effectively and contains the right balance of skills, diversity and experience.

Keith Williams

Chairman

Chairman's Letter

Chairman's Introduction and Section 172 Statement

As Chairman, I lead the Board which is collectively responsible for the long-term success of the Company. My role is to ensure that we have a Board which contains the right balance of skills, diversity and experience, to set the strategy of the Company and oversee the successful execution of it by the business.

We know that a key element of our business success is having good corporate governance and so we have implemented effective frameworks and practices to ensure that high standards of governance, as well as good values and behaviours, are consistently applied throughout the Group. We see these as being critical factors for the integrity of our business and in helping to maintain the trust of all our stakeholders in Halfords.

Company Purpose

Halfords has a clear purpose which is to Inspire and Support a Lifetime of motoring and cycling for an increasingly mobile population. We fulfil an important role in the social fabric of our society by helping our customers with their 'life's journeys'.

Board Leadership

The role of the Board is to ensure not only that the Company's strategic objectives are delivered but that in doing so, our business acts in the right way and has a positive impact on the communities in which we operate.

To achieve this, we engage with a wide variety of stakeholders (including: colleagues; customers; suppliers; and those communities in which we operate). We consider their interests as well as the long-term consequences of any decision on our business and the Company.

Our Commitment to Engaging with Stakeholders

We remain committed to engaging with a wide variety of stakeholders as we see this as an important part of making our company successful. One example of this is the consultation we undertook with shareholders over our new Remuneration Policy prior to it being presented at this year's Annual General Meeting. A further example is the creation of our colleague listening groups, many of which are attended by Helen Jones, our designated Non-Executive Director responsible for our 'employee voice' programme, these groups ensure colleague feedback is brought to the attention of the Board and helps shape and influence some of the decisions that are taken.

You can read more throughout this report about how we have engaged with these groups and the impact this has had on the decisions we have taken during the year.

We very much hope that we will be able to hold our 2020 AGM in the usual way, but will continue to monitor the COVID-19 situation and have regard to developments over the coming weeks ahead of the meeting.

Please continue to monitor our website and announcements for any updates in relation to the AGM arrangements that may need to be provided to ensure we continue to act in accordance with guidance issued by the UK Government and relevant health authorities.

Keith Williams

Chairman

6 July 2020

Corporate Governance Statement

The Board confirms that during the year ended 3 April 2020, and as at the date of this report, the Company has applied the principles of, and complied with, the provisions of the 2018 UK Corporate Governance Code ("Code") throughout the year. Given the exceptional circumstances in which we find ourselves in regard to COVID-19, it has been agreed that David Adams will stay in office until the end of 2020. The Board recognises that as it has assessed that David will no longer be regarded as independent for the purposes of the Code because of his extended tenure, this has created a technical breach of the Code's recommendation that the majority of the Board be independent Non-Executive Directors. However, the Board believes that this short-term situation is justified in these unprecedented and challenging circumstances.

The Board welcomes the changes introduced by the new Code in July 2019 to enhance long-term success and trust in business. This report, together with the other statutory disclosures and reports from the Audit, Nomination and Remuneration Committees, provides details of how the Company has applied the principles of good governance as set out in the Code during the period under review. A copy of the Code is available on the Financial Reporting Council's website at www.frc.org.uk.

The Company has complied with the relevant requirements under the Disclosure Guidance and Transparency Rules, the Listing Rules, the Directors' Remuneration Reporting regulations and narrative reporting requirements.

Section	Description	Further information
Board leadership and Company purpose	The Company is led by an effective Board, which promotes the long-term success of the Company and engages with its shareholders and stakeholders. The Board has established the Company's purpose, values and strategy and is satisfied that these and its culture are aligned. The Board has established an effective governance and risk framework. The Board has ensured that the workforce is able to raise any matters of concern, and that all policies and practices are consistent with the Company's values.	Read more on Stakeholder Engagement in the Corporate Governance Report.Read more on Culture in the Corporate Governance Report.Read more on Principal Risks and Uncertainties.
Division and responsibilities	The Chair leads the Board which includes an appropriate combination of Executive Directors and Non-Executive Directors. The Non-Executive Directors provide constructive challenge, strategic guidance and advice, and have sufficient time to meet their Board responsibilities. There is a clear division of responsibilities between the running of the Board and the running of the business, and the Board has identified certain 'reserved matters' that only it can approve. Other matters, responsibilities and authorities have been delegated as appropriate, and there are relevant policies and processes in place for the Board to function effectively and efficiently.	Read more on Board Composition in the Corporate Governance Report.Read more on Board Responsibilities in the Corporate Governance Report.Read more on Key Board and Committee Responsibilities and Matters Reserved for the Board in the Corporate Governance Report.
Composition, succession and evaluation	A comprehensive and tailored induction programme is in place for new Directors joining the Board. The induction programme facilitates their understanding of the Group and the key drivers of the business's performance. A rigorous, effective and transparent appointment procedure is in place, which, together with the effective succession plans, promotes diversity of gender, social and ethnic backgrounds, cognitive and personal strengths.	Read more on Directors' induction, training and development in the Corporate Governance Report.Read more on Diversity and the Group's Diversity Policy in the Nomination Committee Report.
Audit, risk and internal control	The Board has established formal and transparent policies and procedures to ensure the independence and effectiveness of both internal and external audit functions, and satisfies itself on the integrity of financial and narrative statements. The Board presents a fair, balanced and understandable assessment of the Group's position and prospects. The Board has established procedures to manage risk, oversee the internal control framework and determine the nature and extent of the principal risks of the Group.	Read more in the Audit Committee Report.Read more on Risk in the Principal Risks and Uncertainties Report.
Remuneration	The Company has designed the remuneration policies and practices to support strategy and promote long-term sustainable success. The Executive remuneration is aligned to the Company's purpose and values and is clearly linked to the successful delivery of our long-term strategy. There is a formal and transparent procedure for developing executive remuneration policy and determining director and senior management remuneration. Directors are able to exercise independent judgement and discretion when authorising remuneration outcomes, taking into account Company and individual performance and wider circumstances.	Read more on Executive Remuneration in the Remuneration Committee Report.Read more on our Remuneration Policy in the Remuneration Committee Report.Read more on Remuneration in the Remuneration Committee Report.

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