Halfords has a clear Group strategy for how we operate our business to benefit our customers and colleagues, and of course, to generate value for our shareholders. We recognise that to be successful in achieving our Group strategy Halfords must contribute positively to the world in which we operate. Acting responsibly in all our operations, and towards our colleagues, customers and other stakeholders, supports the delivery of our Group strategy and thereby benefits our business and our brand.

As part of this, in January 2013 we recognised that the development of a Community Strategy was a fundamental part of our Group strategy. Hence, a dedicated Community & CSR Manager was appointed to explore opportunities for developing and implementing community programmes. Since then, with the support of the Chief Executive Officer and Chairman, she has focused on building the foundations for a long-term Community Strategy.

The Chief Executive Officer is responsible for the alignment of our wider sustainability initiatives with our Group strategy. Executive Management monitor the achievement of related KPIs.

We endeavour to monitor our exposure and response to sustainability issues, to preserve not only our business, but also the environment and the local communities in which we operate.

Communities

Our extensive store and autocentre network puts us in an ideal position to become the hub of our local communities.

We have made significant progress, developing links with local communities by launching various initiatives to inspire cyclists of every age with a particular focus on primary school-age children.

Re~cycle

In 2013, we agreed a long-term charity partnership with Re~Cycle, a UK charity that sends unwanted bikes, going to waste in sheds and garages across the country, to Africa. We are proud to support this initiative because in some areas of Africa, a bike can be the only means of transport. Owning a bike enables people to travel to work or school, and carry goods or passengers, whilst small scale farmers and traders can reach customers further afield.

The bikes can similarly be an invaluable resource for travelling health workers and provide access to training and employment, helping to improve lives in a sustainable way. However, bikes can be too expensive for the majority in Africa. Additionally, the skills to maintain the bikes might not exist.

As part of our partnership, we have opened our stores to donations from the public through National Bike Trade-In Events, thereby diverting unwanted bikes from landfill/disuse to more constructive and sustainable use. To date over 10,000 bikes have been donated by the public, diverting 150 tonnes from landfill/waste. We are also pleased to be able to share our skills and knowledge to support the charity's growth.

Since 1997, Re~Cycle has sent around 53,000 bikes to Africa, as well as parts and tools. We hope that through our partnership, Re~Cycle will be able to build on the fantastic work it has already achieved and inspire more and more cyclists of every age across Africa.

You can read more about Re~Cycle on their website - www.re-cycle.org/

Raising over £90,000 so far

An additional facet of our Re~Cycle partnership is that all our colleagues connect with their local communities, whilst having fun raising money to cover the cost of sending bikes to Africa. This also provides incidental team building opportunities for our colleagues. Highlights in the last year in our stores and Support Centre include cycle rides, fun days, Snowdon and Ben Nevis challenges, cake sales, raffles, continuous turbo trainer contests and car washes amongst other fun activities, some even in fancy dress!

BEN

Our Autocentres have a long-term partnership with BEN, the dedicated charity for those who work, or have worked, in the automotive and related industries, as well as their dependants. BEN provides practical, emotional or financial support, as well as day, nursing and residential care across the country for older people in the automotive community.

Scouts Association

Building on the success of our Kids' Holiday Bike Clubs, it was a natural progression for us to team up with the Scouts Association to help 2,200 Cubs achieve their Cyclist Activity badge by attending an in-depth workshop at our stores. These give our store colleagues additional opportunities to inspire our future customers and foster closer links with our local communities.

Link to more information: scouts.org.uk/halfords

Scouts Association

Scouts Association

Movember

In 2013, our colleagues formed the biggest company network in Europe for Movember helping to increase the profile of men's health with colleagues and customers across our stores and autocentres in a fun way.

Movember: Europe's Biggest Single Company Network 2014.

Partnership with onley prison

Through the Ministry of Justice, we are starting a partnership with Onley Prison to provide skills training and employment opportunities for ex-offenders.

Colleagues

As we recognise that our Retail colleagues are central to our progress on the Retail Getting into Gear journey, we support them on our 3-Gears training and colleague qualification programme.

Similarly, we invest in our Autocentres colleagues via our training academy apprenticeship programme. This comprises a three-year fully funded technician programme leading to the Institute of Motor Industry NVQ 3 and Diploma. In twenty years of operation, we offered employment to the majority of apprentices who completed the three-year scheme. In addition, we offer a range of technical and management qualification opportunities to our Autocentres colleagues via our IMI accredited Academy of Learning.

We are proud this year to be on The Sunday Times 25 Best Big Companies to Work For list. We continue to aim to be an employer of choice, where our colleagues enjoy equal opportunities to help our customers and prosper within a rewarding and inspiring team.

We recognise that it is the continued trust of our colleagues, customers, suppliers, shareholders and other stakeholders that is central to the ongoing delivery of our strategy. Whether it be their trust in our commitment to our diverse workforce or in the way we do business; maintaining their trust is of paramount importance to us.

Diversity

1. This comprises the individuals in the business who fall into the definition of other senior managers in The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013.
2. On 1 March 2014 Helen Jones was appointed. On 31 May 2014 Keith Harris and Bill Ronald will retire from the Board.

We are an equal opportunities organisation with clear expectations about how we all behave both internally and with customers and other stakeholders, including in relation to diversity and gender. Historically there has been a tendency for more males than females to be attracted to working in our stores and autocentres, however through our recruitment, talent and development programmes we seek to become more reflective of the customers and communities that we serve. Our approach to Diversity is further described in the Corporate Governance Report.

Accessibility

We endeavour to ensure that our stores and autocentres are accessible to both our colleagues and customers, providing a comfortable and convenient environment in which to work and shop.

Health and safety management

We are committed to minimising the risk of injuries and ill health to our colleagues, contractors, customers, visitors and others who come into contact with our business. As such, we are committed to high standards of occupational health and safety. Our overall incident rate remains below the industry benchmarks.

Human rights

We are committed to upholding human rights. The Halfords Code of Conduct on Ethical Trading states our policy on legislation, child labour, conditions of employment, wages and benefits, health and safety and environmental policy.

We undertake all reasonable and practical steps, including factory, warehouse and tied accommodation inspections and audits, to ensure that our standards are being implemented throughout the businesses of our suppliers and that local legislation and regulations are complied with. We will assess any instances of non-compliance on a case-by-case basis and will then tailor remedial action appropriately. We will only trade with those who fully comply with this policy or those who are taking verifiable steps towards compliance.

We oppose the exploitation of children and young people and, in addition to national employment laws, we require of our suppliers that children under the age of 14 years, or those below the age for completion of compulsory schooling, must not be employed full-time.

We oppose the exploitation of workers and we will not tolerate forced labour, or labour which involves physical, verbal or psychological harassment, or intimidation of any kind. We will not permit the exploitation of, or discrimination against, any vulnerable group. Workers must have the right to form and join organisations to facilitate freedom of association and collective bargaining and all workers must have written employment details, which must pay due regard to the welfare of individuals. We support fair and reasonable rewards for workers. Wages should reflect local norms and should meet or exceed any legal minimum wage levels. Wages must be paid in cash, or by cheque or bank transfers. Workers must receive full written details of their pay. While local and cultural differences will be observed, workers must not be expected to work in excess of 60 hours per week on a regular basis, including overtime. Any overtime must be voluntary. Workers will be entitled to at least one day off in seven. Individual workers have the right to choose not to take their days off should they so wish.

We require that appropriate health and safety training, including training in fire safety, be provided for all people in all working areas. All activities must be carried out under conditions that have proper and adequate regard for the health and safety of those involved. Management arrangements must be in place to detect, avoid and respond to potential threats to health and safety.

We promote our own business objectives with those in our supply chain to minimise the environmental impact of our operations and also encourage the consideration of social issues in business.

		2009	2010	2011	2012	2013	2014
	Number of Audits Undertaken1	136	111	113	51	79	75
	Percentage of Suppliers Covered	91	99	99	96	95	95

1. During the year we have continued to rationalise our supplier base, reducing the number of suppliers that we engage with. As a result whilst the number of audits conducted has reduced we have maintained our audited coverage in line with our internal targets.

In addition, we have a company-wide Anti-Bribery & Corruption policy which prohibits payments to public officials. Support Centre colleagues have this year participated in a training programme which seeks to refresh the principles of the policy, and undertaken a compulsory test thereafter. It is planned to undertake this training/testing programme on a yearly basis.

Available here: www.halfordscompany.com/investors/governance/policies/anti-bribery-corruption-policy

A Whistleblowing policy also exists as described in the Audit Committee Report.

The environment

We recognise that in today's marketplace consumers have an increasingly wide choice of retailers from which to make their purchase. This means that as well as reasonable price and the quality of the services they receive, the quality and provenance of the products become ever more relevant to our customers' decision-making process.

Similarly, we seek to better understand the direct and indirect effects of our business activities. In so doing, we are better able to manage not only our impact on the environment but also our operations.

Standards

Our product specifications demand that they are consistent with or are stronger than relevant legislation, international conventions and codes of practice. The upholding of these high standards is scrutinised by our quality control procedures, as well as via our mystery shopper programme. This enables us to respond to any inadequacies identified. We are also monitored by external organisations such as VOSA and Trading Standards.

Additionally, we are pleased to often work alongside trade associations, research institutes, standards authorities, universities and government organisations to improve standards and safety, and develop and influence best practice. For example, we continue to work closely with WHICH Magazine on Child Seat Fitting, and with the IMI for in-car electrical installation.

Number of cycle ranges stocked

		2007	2008	2009	2010	2011	2012	2013	2014
	Total Bikes	150	160	178	170	179	189	177	198
	Child Bikes	50	60	71	73	77	82	82	85

2014 saw us achieve 15% year-on-year growth in our cycle2work business. We also passed the milestone of providing over 500,000 cycle to work bikes to organisations across the public and private sectors since the scheme launched. This success is reflected in the latest cycle to work Alliance data for 2014, which reflects our strong performance and increase in cycle to work market share.

Conscious that the majority of our products are sourced overseas, we limit our use of air freight. Where possible we ship our products which, once landed in the UK, are brought by rail to our Coventry and Redditch Distribution Centres.

This year we have seen an increase in tonnes airfreighted due to improved reporting and certain sales requirements but predominantly as a result of having to airfreight 61.6 tonnes of bikes from Cambodia due to shipment delays caused by strikes immediately before the Chinese New Year shutdowns. This was an exceptional requirement for air freight and we anticipate our levels of air freight returning to normalised levels in subsequent periods.

Tonnes of product airfreighted

Retail1		2007	2008	2009	2010	2011	2012	2013	2014
	Tonnes of Product Airfreighted	187.0	67.6	29.0	89.2	177.0	36.8	11.8	84.72

Number of containers moved by rail

Retail1		2008	2009	2010	2011	2012	2013	2014
	% of Total Containers Moved	41	67	69	61	78	93	90

Our commitment to helping the environment is evidenced by our participation in the CRC Energy Efficiency Scheme³ which is designed to improve energy efficiency and cut emissions in large public and private sector organisations. Other examples of our commitment are a green recycling initiative which will commence in May 2014 and see 24 stores backhaul and recycle plastics, wiper blades and scrap metals at the Distribution Centres. In addition, the Distribution Centres will be establishing a Halfords Lift Share website to promote car sharing as part of their Green Travel Plan. All our Autocentres deliveries are made from local branches in small vans that are route managed.

1 Retail only. All goods supplied for Autocentres are from local branches within England, Scotland and Wales.

2 Includes exceptional air freighting of 61.6 tonnes of bikes from Cambodia due to shipment delays caused by strikes immediately before the Chinese New Year shutdowns.

3 More information available here: www.gov.uk/crc-energy-efficiency-scheme-qualification-and-registration

The following table provides measures for the impact of our operations in the financial year. The mandatory data required by the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 is included here. Data for all material emissions which are within are operational control and therefore our responsibility are included.

Measures of the impact of our operations

Halfords recognises that its business can have a direct, as well as an indirect, effect on the environment and the data given will allow us to monitor this effect and to make improvements where feasible. We are committed to understanding any impact that our products, stores, autocentres, Support Centre and delivery fleet have on the environment and will manage these responsibly.

1. Bulk Flow (picking cage) Equivalent.
2. Mechanical Handling Equipment.
3. Carbon Trust Conversion Factors Energy and Carbon Conversions 2013 update.
4. Average Petrol Car and Diesel Car Carbon Trust Conversion Factors Energy and Carbon Conversions 2013 update. Mileage taken from Expense Claims.