TIDMHYNS
RNS Number : 3241S
Haynes Publishing Group PLC
02 October 2017
Haynes Publishing Group P.L.C. ("the Company")
Annual Financial Report
Annual Report and Notice of Annual General Meeting
The Company has posted its Annual Report and Accounts 2017 and
Notice of Annual General Meeting 2017 to shareholders.
The Company announces that in compliance with Listing Rule
9.6.1, copies of the following documents have been submitted to the
National Storage Mechanism and will shortly be available for
inspection at: www.Hemscott.com/nsm.do.
i) Annual Report and Accounts 2017
ii) Notice of Annual General Meeting 2017
iii) Form of proxy for Ordinary Shareholders for
the Annual General Meeting
The Annual Report and Accounts, which were approved by the Board
of Directors on 20 September 2017, constitute the Annual Financial
Report for the purposes of DTR 4.1.
The Company's Annual General Meeting will be held at 1:00pm on
Wednesday 8 November 2017 at the Haynes International Motor Museum,
Sparkford, near Yeovil, Somerset.
Both the Annual Report and Accounts 2017 and Notice of Annual
General Meeting 2017 are also available to view on the Company's
website www.haynes.co.uk/investor.
In compliance with DTR 6.3.5, the following information is
extracted from the Annual Report and Accounts 2017 and should be
read in conjunction with the Company's Results Announcement issued
on 14 September 2017, both of which can be found at
www.haynes.co.uk/investor. Together, these documents constitute the
information required by DTR 6.3.5 to be communicated to the media
in full unedited text through a Regulatory Information Service.
This information is not a substitute for reading the Annual Report
and Accounts 2017 in full and page numbers and cross-references in
the extracted information below refer to page numbers and
cross-references in the Annual Report and Accounts 2017.
Principal risks and uncertainties
The following is an extract from the Strategic Report on page 18
of the Annual Report and Accounts 2017:
In common with most businesses there are risks inherent in the
Group's underlying operations which could impact on the Group's
operating and financial performance. Thus the reporting systems can
only provide reasonable and not absolute assurance against damage
or loss resulting from business activities. Nevertheless, through
its day to day management disciplines and monitoring of systems,
the Group evaluates and mitigates unnecessary risks.
The Board has the primary responsibility for identifying the
major business risks facing the Group and developing appropriate
policies to manage those risks. These policies are used both by the
directors and by senior management to determine the key control
procedures for each area of risk identified by the Board and the
degree of information required to safeguard the business and the
assets used within it. It is accepted that risk is itself prevalent
in any commercial enterprise and that it must be the objective of
the Group's management and staff to be prudent in the acceptance
and control of risk incurring activity, rather than aiming to
eliminate it entirely.
The table below highlights the principal risks and uncertainties
which the Board believes are presently most relevant to the Haynes
Group. Wider scope risks such as macroeconomic conditions which
impact all business but over which the Group has little or no
control have not been included.
Risk Why the Board How the Board mitigate
think this the risk
is important
------------------- ------------------------ ----------------------------------------------------------------
Reducing 60% of the The Board seek to mitigate
DIY activity Group's revenue this risk by :
on cars & is derived * Broadening the Group's revenue generating base.
motorcycles from the sale
in the Group's of printed
core geographic service and * By opening up new geographic sales territories.
markets. repair manuals
originated
in its core * By developing new delivery platforms to deliver the
geographic Group's content through a variety of multi-media
markets. formats.
The publication The Haynes Through the process driven
of inaccurate brand is built methodology the Group
information. on a reputation adopts to capture its
of publishing technical data; the skill
technically and expertise of the staff
accurate information recruited and the level
in a trusted of quality control applied
and easy to to the approval process,
understand the Group takes the necessary
format. steps to minimise this
risk. As a responsible
business the Group has
appropriate global insurance
to cover product indemnity
and multimedia liability.
Lack of investment In both our The Board ensures that
in the core professional the level of ongoing expenditure
products and consumer on product development
and in developing markets it is appropriate to maintain
new product is vital that the Group's reputation
initiatives. vehicle coverage and to retain its market
is kept up-to-date. leading positions in its
respective market sectors.
A failure The business Through the recruitment
in the Group's is dependent of technically competent
information on its information staff and the appropriate
technology technology level of investment in
systems prevents systems to the Group's information
the business run its day-to-day technology infrastructure
from functioning operations the Board takes comfort
and/or fulfilling and in the that the information technology
its contractual case of its systems are appropriate
duties. digital delivery and fit for purpose. Maintaining
platforms adequate back-up procedures
to deliver is a key component of
the technical minimising the risk of
information system downtime.
to its end
users.
An over reliance The loss of The Group aims to establish
on a single a major customer strong and long standing
key customer. could significantly relationships with all
impact on its key customers. However,
the financial the Board recognises that
performance a customer can be lost
of the Group for a variety of reasons
and hamper and therefore, by broadening
the Board's the base of the business
objective and developing new delivery
of delivering platforms, the reliance
sustainable on a single customer is
revenue and reduced. In the current
profit growth. financial year there are
no customers who represents
more than 10% of Group
revenue.
The loss The Group Through the setting of
of key executives has key executives competitive remuneration
and personnel. and employees packages and fulfilling
who have worked employment conditions
in the business the Group helps to mitigate
for a number the loss of a senior Board
of years and executive or key employee.
who have an In the case of Board executives,
in-depth knowledge the responsibility for
of the Group, succession planning and
its processes the recruitment of new
and its culture. Board executives is overseen
by the Remuneration and
Nomination Committee.
The funding A need to The performance of both
position significantly the US and UK pension
on the Group's increase contributions schemes are monitored
two defined into the pension on a regular basis by
benefit schemes schemes could the Company, the Trustees
deteriorates adversely and the Scheme's professional
requiring affect the advisers and the funding
significant Group's ability to the schemes reflects
additional to invest the ongoing investment
funding. in the development requirements of the Group.
of new delivery
platforms,
new product
initiatives
and to fund
both internal
and acquisitive
growth.
------------------- ------------------------ ----------------------------------------------------------------
Risk management
The following is an extract from the Corporate Governance
statement on page 31 of the Annual Report and Accounts 2017:
"The Board has the primary responsibility for identifying the
major business risks facing the Group and developing appropriate
policies to manage those risks. These policies are used both by the
directors and by senior management to determine the key control
procedures for each area of risk identified by the Board and the
degree of information required to safeguard the business and the
assets used within it.
It is accepted that risk is itself prevalent in any commercial
enterprise and that it must be the objective of the Group's
management and staff to be prudent in the acceptance and control of
risk incurring activity, rather than aiming to eliminate it
entirely. Thus the reporting systems can only provide reasonable
and not absolute assurance against damage or loss resulting from
business activities.
Through its day to day management disciplines, face to face
meetings, regular written reports and monitoring systems, the Group
evaluates and mitigates unnecessary risks.
In addition, there are a number of areas of the Group's business
where it is necessary to accept a degree of risk in order to
deliver revenue and profitability growth. The publication of
automotive workshop manuals in both a print and online format and a
range of titles covering non-automotive practical and DIY subject
matters, including a range of light entertainment manuals styled on
the iconic Haynes Manual, engenders commercial and publishing risk
requiring close evaluation by editors and editorial committees with
an in-depth knowledge of their subject and their markets.
For the financial year ended 31 May 2017, the Board is satisfied
that there was in place an ongoing process for identifying,
evaluating, and managing the significant risks faced by the Group
as a whole. This process is formally structured by means of a
written report which is presented annually by the Chief Financial
Officer to the Board. In addition, through discussion with the
heads of the various operating units, an update is provided to the
Board by the Chief Financial Officer at the half year. Risks
identified by this process are regularly reviewed by the Board and
addressed jointly by the Chief Executive Officer and directors
drawing upon the skills of senior management as necessary. The
Board monitors this process and is satisfied that, given the size
of the Group, and the nature of its operations, this process is
sufficient to meet its needs without unduly hampering
entrepreneurial activity, and that (in accordance with the
recommendation of the Audit Committee) a separate internal audit
function is not required."
Statement of Directors' Responsibilities
The following is an extract from page 45 of the Annual Report
and Accounts 2017:
"The directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations.
The directors are required by company law to prepare financial
statements for each financial year. Under that law the directors
are required to prepare financial statements for the Group in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. The directors have chosen to
prepare financial statements for the Company in accordance with UK
Generally Accepted Accounting Practice. Under company law the
directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Group and Company and of the profit or loss for the
Group for that period.
In preparing the Group and Company financial statements, the
directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- for the Group financial statements, state whether they have
been prepared in accordance with IFRS as adopted by the EU, subject
to any material departures disclosed and explained in the financial
statements;
-- for the Company financial statements, state whether
applicable UK Accounting Standards have been followed, subject to
any material departures disclosed and explained in the financial
statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company
will continue in business.
-- prepare a director's report, a strategic report and
director's remuneration report which comply with the requirements
of the Companies Act 2006.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions, disclose with reasonable accuracy at any time the
financial position of the Company, and enable them to ensure that
the financial statements comply with the requirements of the
Companies Act 2006, and as regards the Group financial statements
and Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The directors consider that the Annual Report and Financial
Statements, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess
the Group's performance, business model and strategy.
Website Publication
The directors are responsible for ensuring the annual report and
financial statements are made available on a website. Financial
statements are published on the Group's UK website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Group's UK website is the responsibility of the directors.
The directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Directors' responsibility statement pursuant to DTR4
The directors confirm to the best of their knowledge:
-- The Group financial statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union (IFRSs) and Article 4 of the IAS
Regulation and give a true and fair view of the assets,
liabilities, financial position and profit and loss of the Group
and Parent Company.
-- The annual report includes a fair review of the development
and performance of the business and the financial position of the
Group and the Parent Company, together with a description of the
principal risks and uncertainties that they face."
Financial risk and treasury policy
The following is an extract from Note 21 on pages 78 to 80 of
the Annual Report and Accounts 2017:
"The Group's principal financial instruments during the year
comprised bank loans and overdrafts, cash and short-term deposits
as well as other various items arising from its operations such as
trade receivables and trade payables. The main purpose of these
instruments is to finance the Group's working capital requirements
as well as funding its capital expenditure programmes. From time to
time the Group may enter into derivative transactions such as
interest rate swaps or forward exchange contracts, the main purpose
of such transactions is to manage the interest rate and currency
risks arising from the Group's operations and sources of finance.
There were no such transactions entered into during the current or
preceding financial years.
Foreign currency risk
The Group has investments in subsidiary operations outside of
the UK and also buys and sells goods and services in currencies
other than in the functional currencies of its subsidiary
operations. In light of the above, the Group's non sterling
revenues, profits, assets, liabilities and cash flows can be
affected by movements in exchange rates. The Group is able to take
advantage of certain natural hedge flows within the business
operations which helps to minimise the impact of the fluctuations
in exchange but where appropriate will use forward rates to
minimise the risk. There were no forward exchange contracts entered
into during the current or preceding financial years. It is Group
policy not to engage in any speculative trading in financial
instruments.
Sensitivity analysis
The most significant foreign currency risk to the Group is in
relation to the euro and the US dollar. Management estimate that if
all other variables remained constant the impact on pre-tax
profits/(losses) of a 5% increase in the value of the euro and US
dollar against sterling would have been to reduce profits by GBP0.1
million and GBP0.2 million respectively, with a decrease of 5%
having an equal and opposite effect. The impact on net assets of a
5% increase in the value of the euro and US dollar against sterling
would be GBP0.5 million and GBP0.9 million respectively, with a
decrease of 5% having an equal and opposite effect. These estimates
have been based on an assessment of translating the euro and US
dollar profits into sterling using the average exchange rates for
the year of EUR1.17 and $1.28 and closing rates of EUR1.15 and
$1.29. Apart from balances held in the functional currency of the
various Group trading entities, there were no other significant
balances held by the trading companies in other currencies which
would give rise to a significant foreign exchange exposure at the
end of the financial year.
Credit risk
The Group's credit risk is primarily attributable to its trade
receivables, which are spread over a range of countries and
customers, a factor which helps to dilute the concentration of
risk. The risk associated with such trading is mitigated through
credit control management procedures including the use of credit
worthiness checks, the application of credit limits and
the sale of goods subject to retention of title clauses. The UK
business outsources its distribution which includes customer
invoicing, cash collection and credit control. The external
distributor invoices the customers of the UK business as its agent
but the UK business retains the full credit risk associated with
the sales. In light of this arrangement the UK business has a
secondary risk in relation to the cash collected from its customers
which has yet to be remitted to the UK business by the external
distributor. A provision is made against such balances where there
is an identifiable loss or event, which based on prior experience
provides management with a significant doubt over the recovery of
the balance. Due to the long established relationships with the
majority of the Group's customers and the good standing of the UK
distributor which is part of a large multinational publishing
group, there is not deemed to be a credit quality issue in relation
to the trade receivables balance. The amount of the total exposure
is shown in note 16.
In addition to the above, the UK business has an exposure in
relation to contractual advanced royalty payments to authors.
However, due to the large number of authors there is no significant
concentration of risk. The asset balance in relation to the author
advances is held within other debtors and prepayments (refer to
note 16) and amounted to GBP0.2 million net of
allowances for doubtful recovery (2016: GBP0.2 million).
The credit risk on liquid funds is limited as the funds are held
at banks with high credit ratings assigned by international credit
rating agencies.
Liquidity risk
The principal aim of the Group's liquidity management is to
maintain a balance between continuity of funding and flexibility
through the use of bank overdrafts, bank loans and asset leasing.
As at 31 May 2017 the Group had a GBP5.0 million UK overdraft
facility (2016: GBP3.0 million) which has no fixed renewal date and
is due for review in December 2017, a EUR0.4 million overdraft
facility in Europe (2016: EUR0.4 million) which has no fixed
renewal date and a $1.0 million revolving loan facility in the US
(2016: $5.5 million) which has $1.0 million undrawn as at 31 May
2017 and is due for renewal in July 2018.
Interest rate risk
From time to time the Group companies have overdraft and loan
facilities which are subject to variable rates of interest based on
the respective bank's base rate. As at 31 May 2017 there were bank
loans outstanding of GBPnil (2016: GBP0.2 million) and bank
overdrafts outstanding of GBP3.3 million (2016: GBP2.0 million).
Money market deposits are placed for periods varying between call
and one month and attract variable rates of interest based upon the
banks cost of funds for the relevant currencies.
Sensitivity analysis
As all of the Group's borrowings are subject to variable
interest rates the Group has an exposure to a change in the market
rates of interest. Management have not undertaken a sensitivity
analysis on the impact of movement in the bank base rate as they
deem it would have an immaterial effect on Group results due to a
combination of the low level of borrowing at the year end and the
low current base rates in the UK and US.
Fair value of financial assets and liabilities
There are no material differences between the carrying values
and the fair values of the financial assets and liabilities as
recorded in the Consolidated Balance Sheet. Details of the amounts
of financial assets and liabilities held in foreign currencies can
be found in notes 16, 17, 18, 19 and 20 to the Consolidated
Financial Statements.
Capital management
The primary aim of the Group's capital management is to
safeguard the Group's ability to continue as a going concern, to
support its businesses and to maximise shareholder value. The Group
monitors its capital structure and makes adjustments as and when it
is deemed necessary and appropriate to do so using such methods as
adjusting the dividend payment to shareholders or the issuing of
new shares.
Interest cover
2017 2016
Operating profit before exceptional
items (GBP000) 3,208 2,456
Net finance costs (GBP000) 55 65
Interest cover (ratio) 58 38
Interest cover is calculated by taking the operating profit
before exceptional items from the Consolidated Income Statement
divided by net finance costs (defined as finance costs less finance
income), where finance income is greater than the finance costs,
net finance costs is shown as GBPnil.
Gearing ratio
2017 2016
Net debt (GBP000) - -
Total equity (GBP000) 21,316 24,235
Gearing ratio (%) - -
The net gearing ratio comprises net debt divided by total equity
(net debt being defined as cash and cash equivalents net of bank
loans - see notes 17 and 18)."
Related party transactions
The following is an extract from Note 24 on pages 86 to 87 of
the Annual Report and Accounts 2017:
Identity of related parties
The Group has a related party relationship with its subsidiaries
and with its directors. A list of all the Group's subsidiaries is
shown in note 36.
Transactions with related parties
The interests of the directors in the ordinary share capital of
the Company as at 31 May 2017 are shown in the Board Report on
Remuneration on page 42 as required by the FCA's Disclosure
Transparency rules.
During the year the directors had declarable interests in
contracts with the Company and its subsidiary undertakings as shown
below.
1. A lease dated 28 August 1979 between John H Haynes
Developments Inc, (a company registered in California and
controlled by JH Haynes) and Haynes North America Inc. of the
premises situated at 859 and 861 Lawrence Drive, Newbury Park,
California which was amended on 1 May 2001, runs for a period of 5
years from that date. The tenancy on premises 859 Lawrence Drive is
presently held over pending renewal and the annual rent for the
year ended 31 May 2017 was $103,607 (2016: $103,607) or GBP81,260
(2016: GBP69,549) at the average exchange rate for the year. The
tenancy on premises 861 Lawrence Drive was terminated on 28
February 2017 and the amount paid to Haynes Developments for the
year ended 31 May 2017 was $77,705 (2016: $103,607) or GBP60,952
(2016: GBP69,549) at the average exchange rate for the year.
2. During the year The Haynes Motor Museum Limited, (of which JH
Haynes and Mrs AC Haynes are directors) which is jointly owned by
the Haynes International Motor Museum Charitable Trust and JH
Haynes and Mrs AC Haynes (spouse of JH Haynes), undertook the
following transactions with the Group:
Balance Balance
at at
Transactions 31 May Transactions 31 May
2017 2017 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000
Supply of conference
facilities and
garage workshop
services 5 - 4 -
Purchase of books
and manuals and
storage rental 13 1 15 2
JH Haynes is a Trustees of the Charitable Trust.
3. A tenancy of 12 Ivel Gardens, Ilchester - owned by Mrs. A C
Haynes and let to Haynes Publishing Group P.L.C., with Haynes
Developments Limited acting as agent for lessor. From 1 June 2015
until 25 March 2016 when the tenancy was terminated, the amount
paid to Haynes Developments Limited for the rent and service
charges of 12 Ivel Gardens was GBP8,444. In addition GBP1,200
(2016: GBP100) was paid to Haynes Developments Limited for rent and
service charges relating to Fulton Mews in London. As at 31 May
2017 the balance outstanding to Haynes Developments Limited was
GBP240 (2016: GBP904).
4. During the year the Company continued its engagement for the
services of New Century Media Limited to undertake financial PR on
behalf of the Company. Mr E Bell is a non-executive director of New
Century Media Limited. During the period the Company paid GBP78,243
(2016: GBP84,213) to New Century Media Limited for financial PR
services. As at 31 May 2017 the balance outstanding to New Century
Media Limited was GBPnil (2016: GBP7,843).
Except as stated above, no directors were materially interested
in contracts with the Company or any of its subsidiary
undertakings.
Key management emoluments
The remuneration of the directors, who are the key management
personnel of the Group is set out below in aggregate for each of
the categories specified within IAS 24 'Related Party Disclosures'.
Further information regarding the directors' individual
remuneration packages is provided in the audited part of the Board
Report on Remuneration on pages 35 to 44.
2017 2016
GBP'000 GBP'000
Short term employee benefits 1,214 1,754
Post employee benefits 47 864
------- -------
1,261 2,618
Employer's social security costs 127 51
------- -------
1,388 2,669
------- -------
Contact :
Haynes Publishing Group P.L.C. +44 1963 442009
Richard Barker
Group Company Secretary
Panmure Gordon +44 20 7886 2500
Karri Vuori
Erik Anderson
James Greenwood
This information is provided by RNS
The company news service from the London Stock Exchange
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