We constantly measure consumer confidence which can be impacted by many things, including Brexit. In 2018, we launched a new business strategy designed to vitalise our position in the market as a services business (see strategy).

Following the announcement of an extension to 31 October 2019 for approval of a withdrawal agreement, the prospect of a hard Brexit has abated although departure from the EU without a free trade deal remains a possibility.

We have a Brexit steering committee that evaluates the risk factors to the business in support of the Group's post-Brexit readiness, actions already taken include:

• authorised Economic Operator ("AEO") status secured in full, allowing lower friction customs procedures;
• CCG ("Comprehensive Customs Guarantee") granted in conjunction with AEO allowing deferral of all VAT and Duty payments with a lower guarantee level;
• an ongoing 18-month hedging policy;
• buffer stocks maintained within Halfords and with Vendors to mitigate border delays;
• lead times extended for European vendors;
• support provided to our EU workers based in the UK.

In the period to October, we will continue to work on our readiness and have identified areas of focus. We anticipate cost inflation from border transactions and duty and this will affect all importers and exporters. Vendor negotiations or terms changes are likely to be required post a hard Brexit and we will be estimating the sort of costs our suppliers will face to allow us to engage in constructive negotiations.

Our Republic of Ireland stores will become an export and therefore we are designing a process to allow continued replenishment and returns to these stores.

During the year, in recognition of the significance of the regulatory framework to the Group, a compliance department was formed with a new role of Head of Compliance. The function is responsible for verifying that business activities are compliant with licensed and regulatory obligations.

An assessment of vulnerabilities as part of a refresh of the corporate risk register and horizon scanning across several business areas was undertaken during the year. Visibility of emerging risks will continue to improve as responsibilities are clearly defined through the development of functional risk registers. Brexit, as monitored by the Group's Brexit steering committee, is summarised above.

Strategic priorities have been clearly defined following an in-depth strategic review supported by comprehensive customer, colleague, market and competitor research and with powerful insights from our single customer view.

A Transformation Board has been formed to institute governance into the change programme necessary for the delivery of the strategy. The 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 effecting change, Halfords is requiring all contributing colleagues to observe the principles of Responsible, Accountable, Consulted and Informed ("RACI")

The Board holds regular meetings with shareholders and their representatives. Recent discussions have focussed on our strategic ambitions and understanding expectations to enable us to form the best plan.

The new strategy for the business was launched to Colleagues through the annual team conference which was streamed live to those who were unable to attend. All colleagues were able to contribute to a Q&A session. The Senior Management Team communicate directly to Support Centre colleagues via a weekly huddle, all colleagues receive a weekly blog from the CEO and a monthly newsletter.

An annual conference is held with our suppliers where we inform them of our strategic plans as key partners and listen to their insights and observations to enhance our working relationship.

Changes in the UK economy (including consumer confidence and the value of the £) could materially impact our revenue and / or costs, and therefore the profitability of the business.

Unless we can reduce our exposure to these economic variables (e.g. our Forex exposure and fixed cost base) we will not create a sustainable business model.

A number of strategic initiatives are underway to reduce our exposure to changes in the UK economy that adversely impact 'business as usual' and the delivery of our strategy:

• procurement savings programme in place for direct and indirect costs;
• supply chain efficiencies under review with opportunities for strategic sourcing alliances;
• developing opportunities to lower warehouse and distribution costs;
• working capital reduction programme targeted at stock holding and aligning trade creditor terms;
• a formal hedging programme has been extended to reduce foreign exchange risk;
• initiatives to drive revenue by extending our service offering to our existing customer base through financial services products and B2B; and
• continued evaluation of the impact of the UK's departure from the European Union and the impact on trade tariffs.

Our strategy requires us to attract and retain colleagues who can inspire and support our customers and encourage them to build a lifetime relationship with the brand. Through our in-house resourcing team we have developed a recruitment website which highlights the importance of the Halfords behaviours and details the skills and experience required of our future colleagues. There are clear and detailed recruitment processes in place which are reviewed regularly to respond to changes in the business. We train our managers in recruitment best practice and support them by providing up-to-date and engaging recruitment collateral to enable local attraction. In the last year, we have updated our induction programme for large parts of the business and given prominence to our development offer.

In our stores, our Gears training programme provides our colleagues with structured training taking them through their first 18 – 24 months. By linking the development of skills to qualifications and reward, we use our training programme to enhance skill, reinforce our behaviours, keep colleagues engaged and reach a competitive hourly rate of pay. The quality of the Gears Training programme has led to us receiving a Princess Royal Training Award and an Ofsted Inspection outcome of 'Good' in FY19. Gears is in continual review with our in-house team of learning designers working with our commercial and operations teams to develop the programme to meet the dynamic needs of the business. This year, our in-house team developed and launched our first gamified e-learning module which was a popular and effective tool for training knowledge and behavioural change.

In our Autocentres, training is a fundamental part of our business and a great attraction tool for applicants. We support the training of colleagues ranging from our Apprentices right through to a Level 3 Technician. We provide in-house Hybrid and MOT tester courses ensuring that we can service the full car parc.

Conscious of the future talent requirements for our business, and especially the desire to increase the proportion of female colleagues, we are visiting 50 schools in FY20 to engage and inspire emerging talent for the future. We will create an ongoing relationship with the students we meet through an interactive digital platform and our digital mentors.

Colleague engagement is vital to our success as a business. As such, it is a measure in our Executive bonus scheme and we set targets for improved engagement right across the organisation. We run an annual engagement survey, administered and analysed by a third party, which provides us with reports at team level. We create an environment which encourages colleagues to feed back to us about how we can make Halfords an even better place to work and this is clearly successful as last year we had a survey response rate of 94%. Our engagement index of 79% demonstrates that the vast majority of our colleagues enjoy working at Halfords.

Following the distribution of reports across the business, every team produces an engagement action plan which includes actions that they can take locally to improve colleague engagement. Key themes are also pulled out at a Company level in order to inform improvements for the year ahead. This could include changes to reward, learning and development, tools and equipment, leadership development right through to physical changes to buildings or our IT provisions. Managers who achieve significant improvements to colleague engagement receive recognition and for those managers who receive poor engagement results a development plan is put in place to support them to improve this.

Our Retail business enters the Sunday Times Best Companies Survey and in 2019 we achieved 15th place in the Best 25 Big Companies to Work For category.

If we fail to sufficiently detect, monitor or respond to cyber-attacks against our systems they may result in disruption of service; compromise of sensitive data; financial loss; reputational damage.

If we fail to adequately protect customer (and others') data, we may breach GDPR legislation.

We review our IT security processes and risk assessments on an ongoing basis and our IT team has dedicated IT security and continuity experts. We utilise appropriate firewalls and we have undertaken network penetration testing.

In addition to ongoing Company-wide training and awareness, SIEM ("Security Information and Event Management") and IDS ("Intrusion Detection Software") tools have been introduced in-part across the Group's technology estate. Further deployment of these tools (along with the introduction of Intrusion Prevention Software) will continue once the decision regarding outsourcing elements of the IT function has been confirmed and established.

The Audit Committee is briefed by senior IT management on the business' IT security framework and continues to closely monitor this area.

Extensive controls are in place to maintain the integrity of our systems and to ensure that systems changes are implemented in a controlled manner. Halfords' key trading systems are hosted within a secure data centre operated by a specialist company remote from our Support Centre. These systems are also supported by several disaster recovery arrangements including a comprehensive backup and patching strategy, and a hotlink secure data centre hosted in a different location. IT recovery processes are tested regularly.

We are increasingly hosting more of our data in the cloud and rely on cloud-based security services from Microsoft and other third parties to protect that data.

We have an acute understanding of the factors which can influence its currency, and we focus constantly on protection, enhancement and penetration.

Our strategy – To Inspire and Support a Lifetime of motoring and cycling – is the way in which we articulate our brand values and we do so in ways which attract, engage and retain customers.

To differentiate ourselves in a competitive retail market, our super-specialist sub-brand proposes a customer experience that benefits from a unique and convenient approach to service in both our Retail and Autocentre businesses.

To create and maintain top-of-mind awareness, we strategically partner with organisations that possess credibility and gravitas, whilst simultaneously enabling reach and relevance.

In the online space, we partner with Google to build and maintain a sophisticated understanding of our current and future audiences in order to better reflect their digital needs and behaviours.

At the same time, we drive quality content through our social media channels which focuses less on direct response activity in favour of a more inspirational and motivational approach.

Both of these maximise our cost-effective reach and inform our future targeted digital activity.

In the offline space, we have this year partnered with ITV and Channel 4.

Going forward, our ITV collaboration – continuing to sponsor three-times daily weather forecast bulletins – will deliver high-volume, engaged and relevant audiences.

We also partner with New Global Media; sponsoring national radio traffic and travel broadcasts.

In the community too, our brand is strong and present.

Halfords has been the official cycling retail partner of Bikeability, the Government-backed UK-wide cycle training programme, which promotes accessibility of cycling and safety training for young children and families.

We are aligned with Netmums, the UK's biggest parenting website, which endorses our brand and our products, and which benefits from reciprocal support and advice on getting children into the saddle.

Finally, across our physical stores and Autocentres estate, we deliver a connected, omni-channel customer journey and experience designed to improve accessibility and customer engagement.

To underpin and intensify that approach in FY20, an integrated Group website will be launched that will provide an easy route to the consumption all of our services and products in a single location; driving brand awareness and encouraging cross-shop.

The development of a customer loyalty scheme in FY20 will also both enhance and extend the reach and power of our brand going forward.

All our 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 Autocentre operations.

We provide centralised training for our Retail colleagues through our Gears 1 & 2 programme to ensure they are consistently knowledgeable about our products and able to deliver a quality service to our customers and colleagues also complete an annual assessment of their understanding of our quality procedures. We have four equipped training academies where in 2018 we delivered 1,800 days of training for Autocentre technicians. The technician grading assessment is linked to quality of workmanship as well as skills and qualifications.

Our products are risk assessed and rigorously tested for quality and safety by qualified engineers in our dedicated quality team. We monitor customer comments and complaints and, when necessary, we have established recall processes.

In 2018, a new till system was introduced to our Retail stores empowering colleagues to move more freely around store and improve their interaction with customers using mobile tablets. In our Autocentres we introduced industry-leading parts ordering and stock control and a new eDiary mechanism to optimise labour availability.

We continue to invest in our estate, and this is enabling us to enhance our service offering to customers by evolving the layout of our stores in addition to further developments in IT Infrastructure, training and online functionality.

Extensive research is conducted into quality and ethics before the Group procures products from any new country or supplier. The Group's strong management team in the Far East blends expatriate and local colleagues. It understands the local culture, market regulations and risks and we maintain very close relationships with both our suppliers and shippers to ensure that disruption to production and supply are managed appropriately.

We work with suppliers in a number of territories to reduce the risks of disruption, and we monitor sourcing opportunities nearer to the UK.

We maintain firm security and protection measures at our distribution centres. We have business continuity plans to manage any incidents that may occur. Our logistics are overseen by an experienced, dedicated warehouse and logistics team who maintain contacts with a range of logistics businesses who could be utilised if necessary. We are closely monitoring Brexit developments and preparing contingency plans for any changes in the nature of the border between the UK and the Republic of Ireland.