TIDMHYNS
RNS Number : 8563C
Haynes Publishing Group PLC
25 January 2018
HAYNES PUBLISHING GROUP P.L.C.
INTERIM RESULTS FOR THE 6 MONTHSED
30 November 2017
Haynes Publishing Group P.L.C. ("Haynes" or "the Group"),
creator and supplier of practical information and data solutions to
drivers, enthusiasts and professional mechanics in print and
digital formats, today announces its results for the 6 months ended
30 November 2017.
Business and Financial Highlights
26 weeks 26 weeks Change
to to YoY
30 Nov 30 Nov (Year-on-Year)
2017 2016
--------------------------- ---------- --------- ----------------
Group revenue GBP16.9m GBP14.0m +21%
--------------------------- ---------- --------- ----------------
Adjusted EBITDA (1) GBP5.3m GBP4.1m +29%
--------------------------- ---------- --------- ----------------
Adjusted operating profit
(1) GBP1.5m GBP0.8m +88%
--------------------------- ---------- --------- ----------------
Adjusted profit before
tax (1) GBP1.1m GBP0.5m +120%
--------------------------- ---------- --------- ----------------
Adjusted basic earnings
per share (1) 5.3p 2.1p +151%
--------------------------- ---------- --------- ----------------
Interim dividend 3.5p 3.5p -
--------------------------- ---------- --------- ----------------
Net cash/(debt) (2,3) (GBP0.3m) GBP0.6m (GBP0.9m)
--------------------------- ---------- --------- ----------------
Operating cash flow GBP6.0m GBP3.8m +58%
--------------------------- ---------- --------- ----------------
-- Highly synergistic acquisition of the E3 Technical business,
a leading UK supplier of vehicle registration look-up and helpdesk
services, for GBP4.72 million.
-- Like-for-like Group revenue, excluding acquisitions and
exchange rate movements, up 8% to GBP15.2 million (2016: GBP14.0
million).
-- Adjusted EBITDA up 29% to GBP5.3 million (2016: GBP4.1
million) with GBP6.0 million (2016: GBP3.8 million) converted into
operating cash flow, representing a conversion ratio of 113%.
-- Revenue from the Group's digital product ranges of GBP7.7
million (2016: GBP5.1 million), a YoY increase of 51%, now
representing 46% of total Group revenue (2016: 36%).
-- UK & European revenue up 34% YoY; segmental operating
profit before interest up 55% at GBP1.7 million (2016: GBP1.1
million).
-- North America & Australian revenue up 2% YoY; segmental
operating profit before interest of GBP0.4 million (2016: loss of
GBP0.2 million).
-- Like-for-like YoY increase in new product development
excluding acquisitions of 2%. Total new product development up 24%
at GBP4.1 million (2016: GBP3.3 million).
-- Practical lifestyle publishing programme strengthened
following addition of worldwide publishing rights to the Bluffer's
Guides.
-- Sale of US freehold property, post period end, for $5.4 million (GBP4.0 million).
Eddie Bell, Chairman of Haynes Group, commented:
"I am pleased to report that this is the third consecutive set
of results where Haynes has demonstrated strong underlying revenue
and profit growth since we implemented our global operational, cost
and structure review in 2015/16.
"These interim results confirm that Haynes is making clear
progress in its turnaround and is on its way to becoming an
integrated multi-media content provider. Our UK and US operations
have returned to profit during the first half of 2017/18, HaynesPro
has once again delivered double digit growth in Europe and I am
encouraged to see the contribution that our recent acquisitions,
OATS and E3 Technical, have made to the Group. I would like to
thank all of our staff for the commitment they have shown to
growing our business."
"I am delighted to congratulate James Bunkum on his promotion to
Chief Operating Officer and Jeremy Yates-Round on his promotion to
Managing Director of Haynes Consumer. I welcome Peter van der
Galiën and Richard Barker onto the Board. These new appointments
will strengthen our board and our executive team and help to
deliver long-term growth for the Haynes Group."
Notes to the Financial Highlights:
1. Adjusted to exclude GBP0.2 million of exceptional costs
(2016: nil). Reported EBITDA of GBP5.1 million, reported operating
profit of GBP1.3 million, reported profit before tax of GBP1.0
million and reported basic earnings per share of 4.3 pence.
2. Net cash defined as cash at bank net of overdrafts and
loans.
3. The Company has 1.2 million ordinary shares held in
treasury.
Enquiries :
Haynes Publishing Group P.L.C. +44 1963 442009
Eddie Bell, Chairman
J Haynes, Chief Executive Officer
Investor Contact: Panmure Gordon (UK) Limited +44 20 7886 2500
Karri Vuori
Erik Anderson
Media Contact: New Century Media +44 20 7930 8033
Richard Hill
Cautionary Statement :
This report contains certain forward-looking statements with
regard to the financial condition and results of the operations of
Haynes Publishing Group P.L.C. These statements and forecasts
involve risk factors which are associated with, but are not
exclusive to, the economic and business circumstances occurring
from time to time in the countries and sectors in which the Group
operates. 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, Haynes
Publishing Group P.L.C., has no obligation to update the
forward-looking statements or to correct any inaccuracies
therein.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
INTERIM STATEMENT
Business overview
Through a combination of restructuring, re-organising and
investing in new content and delivery platforms, the Group has been
placed on a stronger operational and financial foothold and is
transitioning towards becoming an integrated content business.
46% of Group revenues are now digital and Haynes is committed to
growing its data business in both its professional and consumer
markets. In particular, recent acquisitions have added to the
breadth of the Group's automotive repair and maintenance content.
Following the acquisition of OATS in December 2016, Haynes now has
lubricant data covering 98% of the European car market. Moreover,
the acquisition of the E3 Technical business widens the Group's
professional offering to include vehicle registration look-up and
customer helpdesk services covering the UK automotive aftermarket
adding to both the breadth and quality of our digital professional
and consumer products.
The Group also continues to strengthen the range of its print
titles and, in September 2017, we attained the worldwide print and
digital publishing rights to the Bluffer's Guides, which will be
re-launched in 2018 with a fresh look and new line-up.
Operational review
UK & Europe
In Europe, HaynesPro has experienced another strong six months
of trading and, in September 2017, it successfully released the
second phase of a major website and data overhaul for a major
global automotive aftermarket parts supplier.
An important driver for HaynesPro's growth following the
acquisition of OATS in December 2016 has been the expansion of the
OATS lubricants data matching coverage. It was encouraging to see
that, towards the end of the period, OATS won their first new
global contract under Haynes ownership.
Meanwhile, in the UK, for the second year in a row, the Haynes
Explains series has sold well in the run up to Christmas, with over
200,000 copies sold into retail since the beginning of September
2017. Haynes further secured another deal with Disney to publish
the next four 'Star Wars' themed Haynes manuals. Since first
publication, the Star Wars titles have sold over 250,000 copies
internationally.
North America and Australia
Over the last six months, US management have been working with
key retail customers on introducing new in-store programmes to
improve the stock turn of print manuals. Alongside these
programmes, and to coincide with the launch of the Haynes OnDemand
platform in June 2017, management launched a range of sales and
marketing initiatives to promote the growing range of consumer
digital products.
In Australia, management recently implemented initiatives with
retail partners to grow sales while addressing excess inventory and
range availability issues. The outcome of these initiatives will
become clearer by the end of the financial year.
Financial review
Overall Group revenue during the six-month period to 30 November
2017 increased by 21% to GBP16.9 million (2016: GBP14.0 million),
boosted by a full period of revenue from the OATS acquisition in
December 2016 and two months of trading from the newly acquired E3
Technical business which, in combination, contributed GBP1.6
million to Group revenue. The impact of foreign exchange rate
movements increased half year revenues by GBP0.1 million. Like for
like, excluding acquisitions and exchange rate movements, overall
Group revenue increased by 8%.
In the UK and Europe, revenue was up 34% at GBP11.0 million
(2016: GBP8.2 million) with like-for-like local currency revenue
from HaynesPro up 15%. In the UK, revenue ended the period 8% ahead
of last year with higher sales of practical lifestyle titles (up
24%) offsetting a softening in the sales of UK automotive print
manuals which ended the period down 6%. The higher revenue in the
UK and Europe has helped increase segmental operating profit before
interest in the UK and European business by 55% to GBP1.7 million
(2016: GBP1.1 million).
In North America and Australia local currency revenue ended the
six-month period up 3% at $7.7 million (2016: $7.5 million). After
translation to Sterling, the increase was 2%, yielding revenue for
the period of GBP5.9 million (2016: GBP5.8 million). Segmental
operating profit before interest in this part of the business
returned to profit over the first half of the year ending the
period at GBP0.4 million (2016: loss of GBP0.2 million). The
improved performance was driven, in part, by a higher mix of US
consumer digital revenue.
Overall Group gross profit increased by 24% to GBP10.2 million
(2016: GBP8.2 million). The Group's gross margin increased by 1.6
percentage points to 60.2% (2016: 58.6%), helped by higher revenue
from our higher margin professional operations in Europe.
Group overheads increased by 16% during the period to GBP8.7
million (2016: GBP7.5 million). This rise was largely due to the
first-time inclusion of OATS, two months of overheads from the E3
acquisition, increased marketing and trade show costs and the costs
of the new Senior Executive long-term incentive plan. Like-for-like
excluding acquisitions and exchange, the increase in overheads was
6%.
Exceptional costs of GBP0.2 million were incurred during the
period in relation to professional fees on the E3 acquisition.
Adjusted Group operating profit before tax and exceptional items
was up 88% to GBP1.5 million (2016: GBP0.8 million).
Net finance costs ended the period in line with the prior year
at GBP0.3 million (2016: GBP0.3 million).
Adjusted Group profit before tax before exceptional items ended
the period up 120% at GBP1.1 million (2016: GBP0.5 million).
The Group's effective tax rate for the period was 32% (2016:
34%).
Adjusted earnings per share before exceptional items increased
to 5.3 pence (2016: 2.1 pence).
Balance sheet and cash flow
Expenditure on product development grew during the six months to
30 November 2017 by 24% to GBP4.1 million (2016: GBP3.3 million),
marking the fifth consecutive year of increased investment in the
Group's platforms and product ranges.
The remaining US freehold property in Nashville was sold on 15
December 2017 for $5.35 million (GBP4.0 million), giving rise to an
estimated profit on disposal of GBP2.6 million. As the sale did not
occur until after 30 November 2017, it is not reflected in these
interim results but will be included in the final year results to
31 May 2018.
The net IAS 19 pensions deficit on the Group's two defined
benefit retirement schemes as at 30 November 2017 was 3% lower at
GBP22.4 million (31 May 2017: GBP23.0 million). The combined assets
of the schemes were GBP33.3 million (31 May 2017: GBP34.2 million)
and the combined scheme liabilities were GBP55.7 million (31 May
2017: GBP57.2 million).
The net cash generated from operations before tax increased
during the six-month period to GBP6.1 million (2016: GBP3.9
million).
The Group's net debt position on 30 November 2017 was GBP0.3
million (31 May 2017: net cash of GBP3.7 million) reflecting the
acquisition of the E3 Technical business in September 2017 for
GBP4.72 million financed through a combination of internal cash and
an increase in the UK overdraft.
Interim dividend
Despite the encouraging results Haynes remains a company in
turnaround, and given the content and platform investment
requirements needed to grow the business, the Board feels it is
appropriate to declare an unchanged interim dividend of 3.5 pence
per share. The interim dividend will be paid on 11 April 2018 to
shareholders on the register at the close of business on 16 March
2018 (with an ex-dividend date of 15 March 2018).
Group Auditors
In line with Board policy and good corporate governance, the
services offered by the Group's auditors were competitively
reviewed by the Audit Committee in November 2017. Following this
review, PricewaterhouseCoopers LLP (PwC) were appointed as the new
Haynes Group Auditors. On behalf of the Board, I would like to
thank our outgoing auditors, BDO LLP for their services since they
took office in 2003. I would also like to welcome PwC as our new
Group auditors.
Board
I am pleased to announce that the following Board changes will
take effect from 1 February 2018.
James Bunkum is promoted to Chief Operating Officer and will
step down from his position as Chief Financial Officer.
Jeremy Yates-Round, currently Managing Director Consumer
Publishing, will take on additional responsibility and oversee the
commercial activities of the Group's consumer digital initiatives
as Managing Director of Haynes Consumer.
Peter van der Galiën and Richard Barker will be appointed to the
Board as Executive Directors.
Peter has been Managing Director of HaynesPro since 2016 and has
played a key role in overseeing the growth in this part of the
Group. Peter will now take on overall responsibility for the
Group's professional operations.
Richard Barker will be promoted to the role of Group Finance
Director. Richard is currently the Group's UK and European Finance
Director. Richard will also retain his role as Group Company
Secretary.
Future outlook
We are encouraged that in each part of our business, we are
implementing new projects and initiatives to drive future revenue
and profit growth.
We are committed to providing a broad range of practical content
and solutions to end-users, whether drivers, hobbyists or
professional mechanics. The re-positioning of Haynes requires
significant investment in new products and platforms. We will
continue to carefully manage our costs and cash flows during this
turnaround to ensure we maintain focus on our end goal: the
transition of the Group to being an integrated multi-media content
and data solutions provider.
J Haynes
Chief Executive Officer
24 January 2018
Responsibility statement
Pages 22 and 23 of the Annual Report 2017 provide details of the
serving Executive and Non-Executive Directors. A statement of the
Directors' responsibilities is contained on page 45 of the Annual
Report 2017. A copy of the Annual Report 2017 can be found on the
Haynes website www.haynes.com/investor.
The Board confirms that to the best of its knowledge the
condensed set of financial statements gives a true and fair view of
the assets and liabilities, financial position and profit of the
Group and has been prepared in accordance with IAS 34 'Interim
Financial Reporting', as adopted by the European Union and that the
interim management report includes a fair review of the information
required by the Disclosure and Transparency Rules as issued by the
Financial Conduct Authority, namely:
-- DTR 4.2.7: An indication of important events that have
occurred during the first six months of the financial year, and
their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the
remaining six months of the financial year.
-- DTR 4.2.8: Details of related party transactions that have
taken place in the first six months of the current financial year
and that have materially affected the financial position or
performance of the enterprise during that period. Together with any
changes in the related parties' transactions described in the last
annual report that could have a material effect on the enterprise
in the first six months of the current financial year.
INTERIM FINANCIAL STATEMENTS FOR THE 6 MONTHSED 30 NOVEMBER
2017
Consolidated Income Statement
Unaudited Unaudited Audited
6 months 6 months
to 30 Nov to 30
30 Nov 2017 Nov Year ended 31 May
30 Nov 2017 2017 2016 31 May 2017 31 May 2017 2017
Exceptional
Before Items Exceptional
Exceptional (note Total Before exceptional items
items 4) Total items (note 4) Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Continuing
operations
Revenue (note
2) 16,882 - 16,882 14,032 29,774 - 29,774
Cost of sales (6,725) - (6,725) (5,812) (11,694) (1,282) (12,976)
----------- ---------
Gross profit 10,157 - 10,157 8,220 18,080 (1,282) 16,798
Other operating
income 5 - 5 15 31 - 31
Distribution
costs (4,292) - (4,292) (4,129) (8,039) (209) (8,248)
Administrative
expenses (4,417) (171) (4,588) (3,329) (6,864) (88) (6,952)
Gain on disposal
of property - - - - - 1,608 1,608
----------- ---------
Operating profit 1,453 (171) 1,282 777 3,208 29 3,237
Finance income 3 - 3 2 5 - 5
Finance costs (49) - (49) (30) (60) - (60)
Other finance
costs - retirement
benefits (270) - (270) (258) (518) - (518)
------------ ----------- --------- ---------
Profit before
taxation 1,137 (171) 966 491 2,635 29 2,664
Taxation (note
5) (340) 31 (309) (167) (1,211) (79) (1,290)
Profit for the
period 797 (140) 657 324 1,424 (50) 1,374
============ =========== ========= ========= ================== ============ ========
Earnings per
20p share - Pence
(note 6) Pence Pence Pence Pence
From continuing
operations
- Basic 5.3 4.3 2.1 9.4 9.1
- Diluted 5.2 4.3 2.1 9.4 9.1
------------ ----------- --------- ------------------ ------------ --------
Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months 6 months
to to Year ended
30 Nov 30 Nov 31 May
2017 2016 2017
GBP000 GBP000 GBP000
Profit for the period 657 324 1,374
Other comprehensive income
Items that will not be reclassified
to profit or loss in subsequent
periods:
Actuarial gains/(losses) on
retirement benefit obligation
- UK Scheme 1,644 (4,233) (8,392)
- US Scheme (1,002) (1,464) 451
Deferred tax on retirement benefit
obligation
- UK Scheme (279) 720 1,427
- US Scheme 400 586 (180)
Deferred tax arising on change
in UK corporation tax rate - (143) (144)
763 (4,534) (6,838)
Items that will or maybe reclassified
to profit or loss in subsequent
periods:
Exchange differences on translation
of foreign operations (652) 3,864 3,678
Other comprehensive income/(expense)
recognised directly in equity 111 (670) (3,160)
Total comprehensive income/(expense)
for the financial period 768 (346) (1,786)
========= ========= ==========
Consolidated Balance Sheet
Unaudited Unaudited Audited
30 Nov 30 Nov 31 May
2017 2016 2017
GBP000 GBP000 GBP000
Non-current assets
Property, plant and equipment
(note 11) 4,023 8,854 4,011
Intangible assets (note 12) 32,806 24,783 27,696
Deferred tax assets 7,630 9,086 7,669
Total non-current assets 44,459 42,723 39,376
Current assets
Inventories 3,511 4,908 3,965
Trade and other receivables 7,750 7,718 7,806
Tax recoverable - 1,228 130
Cash and short-term deposits 4,260 3,538 7,036
Total current assets 15,521 17,392 18,937
Assets held for sale (note
13) 1,416 - 1,483
Total assets 61,396 60,115 59,796
--------- --------- --------
Current liabilities
Trade and other payables (8,553) (5,283) (7,674)
Current tax liabilities (51) (364) -
Borrowings (4,570) (2,915) (3,331)
Provisions (885) (3,678) (1,164)
Total current liabilities (14,059) (12,240) (12,169)
Non-current liabilities
Deferred tax liabilities (3,335) (3,541) (3,287)
Retirement benefit obligation
(note 9) (22,364) (21,049) (23,024)
Total non-current liabilities (25,699) (24,590) (26,311)
Total liabilities (39,758) (36,830) (38,480)
--------- --------- --------
Net assets 21,638 23,285 21,316
========= ========= ========
Equity
Share capital 3,270 3,270 3,270
Share premium 638 638 638
Treasury shares (2,447) (2,447) (2,447)
Retained earnings 12,576 13,385 11,602
Foreign currency translation
reserve 7,601 8,439 8,253
--------- --------- --------
Total equity 21,638 23,285 21,316
========= ========= ========
Consolidated Statement of Changes in Equity
Foreign
currency
Share Share Treasury translation Retained
capital premium shares reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Unaudited
Current interim
period :
Balance at 1 June
2017 3,270 638 (2,447) 8,253 11,602 21,316
Profit for the period - - - - 657 657
Other comprehensive
income:
Currency translation
adjustments - - - (652) - (652)
Actuarial gains/(losses)
on defined benefit
plans (net of tax) - - - - 763 763
------- ------- -------- ----------- -------- -------
Total other comprehensive
income / (expense) - - - (652) 763 111
------- ------- -------- ----------- -------- -------
Total comprehensive
income / (expense) - - - (652) 1,420 768
Performance share
plan - - - - 158 158
Dividends (note
7) - - - - (604) (604)
------- ------- -------- ----------- -------- -------
Balance at 30 November
2017 3,270 638 (2,447) 7,601 12,576 21,638
-------------------------- ------- ------- -------- ----------- -------- -------
Unaudited
Prior interim period
:
Balance at 1 June
2016 3,270 638 (2,447) 4,575 18,199 24,235
Profit for the period - - - - 324 324
Other comprehensive
income:
Currency translation
adjustments - - - 3,864 - 3,864
Actuarial losses
on defined benefit
plans (net of tax) - - - - (4,534) (4,534)
------- ------- -------- ----------- -------- -------
Total other comprehensive
income / (expense) - - - 3,864 (4,534) (670)
------- ------- -------- ----------- -------- -------
Total comprehensive
income / (expense) - - - 3,864 (4,210) (346)
Dividends (note
7) - - - - (604) (604)
------- ------- -------- ----------- -------- -------
Balance at 30 November
2016 3,270 638 (2,447) 8,439 13,385 23,285
------- ------- -------- ----------- -------- -------
Audited
Prior year :
Balance at 1 June
2016 3,270 638 (2,447) 4,575 18,199 24,235
Profit for the period - - - - 1,374 1,374
Other comprehensive
income:
Currency translation
adjustments - - - 3,678 - 3,678
Actuarial gains/(losses)
on defined benefit
plans (net of tax) - - - - (6,838) (6,838)
------- ------- -------- ----------- -------- -------
Total other comprehensive
income / (expense) - - - 3,678 (6,838) (3,160)
------- ------- -------- ----------- -------- -------
Total comprehensive
income / (expense) - - - 3,678 (5,464) (1,786)
Dividends (note
7) - - - - (1,133) (1,133)
Balance at 31 May
2017 3,270 638 (2,447) 8,253 11,602 21,316
-------------------------- ------- ------- -------- ----------- -------- -------
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
6 months 6 months
to to Year ended
30 Nov 30 Nov 31 May
2017 2016 2017
GBP000 GBP000 GBP000
Cash flows from operating activities
- continuing
Profit after tax 657 324 1,374
Adjusted for :
Income tax expense 309 167 1,290
Interest payable and similar
charges 49 30 60
Interest receivable (3) (2) (5)
Retirement benefit finance cost 270 258 518
--------- --------- ----------
Operating profit 1,282 777 3,237
Depreciation on property, plant
and equipment 258 363 782
Amortisation of intangible assets 3,620 2,983 6,421
Impairment of intangible assets - - 1,249
Performance share plan 158 - -
IAS 19 pensions current service
cost net of contributions paid (254) (179) (636)
Movement in provisions (234) (571) (2,492)
Loss/(gain) on disposal of property,
plant and equipment 2 68 (963)
--------- --------- ----------
4,832 3,441 7,598
Changes in working capital :
Decrease in inventories 338 262 1,111
(Increase)/decrease in receivables (49) 508 724
Increase/(decrease) in payables 947 (336) 285
---------
Net cash generated from operations 6,068 3,875 9,718
Tax (paid)/received (79) (111) 159
---------
Net cash generated by operating
activities 5,989 3,764 9,877
---------
Investing activities
Acquisition - business combinations (4,720) - (1,729)
Disposal proceeds on disposal
of property, plant and equipment - 214 4,329
Purchases of property, plant
and equipment (356) (164) (415)
Expenditure on development costs
included in intangible assets (4,100) (3,346) (7,922)
Interest received 3 2 5
---------
Net cash used in investing activities (9,173) (3,294) (5,732)
---------
Financing activities
Repayments of borrowings - (155) (177)
Dividends paid (604) (604) (1,133)
Interest paid (49) (30) (60)
Net cash used in financing activities (653) (789) (1,370)
Net (decrease)/increase in cash
and cash equivalents (3,837) (319) 2,775
Cash and cash equivalents at
beginning of period 3,705 540 540
Effect of foreign exchange rate
changes (178) 402 390
Cash and cash equivalents at
end of period (note 8) (310) 623 3,705
========= ========= ==========
Notes to the Interim Results
1. Accounting policies - Basis of preparation
a) General information
The interim financial statements for the six months ended 30
November 2017 and 30 November 2016 and for the twelve months ended
31 May 2017 do not constitute statutory accounts for the purposes
of Section 434 of the Companies Act 2006. The Annual Report and
Financial Statements for the year ended 31 May 2017 have been filed
with the Registrar of Companies. The Independent Auditors' Report
on the Annual Report and Financial Statements for the year ended 31
May 2017 was unqualified, did not draw attention to any matters by
way of emphasis, and did not contain a statement under sections
498(2) or 498(3) of the Companies Act 2006. The 30 November 2017
statements were approved by the Board of Directors on 24 January
2018 and although not audited are subject to a review by the
Group's auditors. These condensed interim financial statements have
been reviewed, not audited.
The financial information has been prepared in accordance with
the Disclosure and Transparency rules of the Financial Conduct
Authority and in compliance with International Accounting Standard
(IAS) 34 'Interim Financial Reporting (Revised)' as endorsed by the
European Union.
b) Estimates and judgements
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these condensed interim financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key source of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the year ended 31 May 2017, with the exception of
changes in estimates that are required in determining the provision
for income taxes.
These interim financial statements have been prepared on the
going concern basis, as the directors have a reasonable expectation
that the Group has adequate resources to continue to operate for a
period of at least 12 months from the date of this report. In
forming this view the directors have considered the Group's recent
trading performance and its future outlook, its cash flow forecasts
for the next 12 months and any known financial commitments.
c) New standards and interpretations
The interim financial statements have been prepared on a
consistent basis with the accounting policies set out in the Annual
Report 2017 and should be read in conjunction with that Annual
Report. The Group's annual financial statements are prepared in
accordance with International Financial Reporting Standards
(IFRS's) and International Financial Reporting Interpretations
Committee (IFRIC) pronouncements as adopted by the European Union
and the Annual Report 2017 provides details of other new standards,
amendments and interpretations which come into effect for the first
time during the current financial year. The new standards,
amendments to standards and interpretations which apply to the
Group for the first time in this financial year have been reviewed
by management who do not believe that the new standards, amendments
to standards or interpretations will have a material impact on the
Group's financial statements for the financial year ended 31 May
2018. Management are currently assessing the impact of the new
standards, interpretations and amendments which are effective for
accounting periods beginning on or after 1 January 2018 and which
have not been adopted early, including the following:
- IFRS 15 Revenue from contracts with customers (with an effective date of 1 January 2018)
- IFRS 16 Leases (with an effective date of 1 January 2019)
- IFRS 9 Financial instruments (with an effective date of 1 January 2018)
2. Revenue
6 months to Year ended
30 Nov 30 Nov 31 May
2017 2016 2017
GBP000 GBP000 GBP000
Revenue by geographical destination
on continuing operations :
United Kingdom 4,259 2,989 6,873
Rest of Europe 6,285 5,047 10,527
United States of America 5,201 5,010 10,490
Australasia 870 773 1,322
Rest of World 267 213 562
------ ------ ----------
Total consolidated revenue
* 16,882 14,032 29,774
====== ====== ==========
* Analysed as follows :
Revenue from sales of printed
products 8,907 8,831 17,533
Revenue from sales of digital
data 7,742 5,089 11,853
Revenue from royalty and licensing
arrangements 233 112 388
16,882 14,032 29,774
====== ====== ==========
3. Segmental analysis
For management and internal reporting purposes, the Group is
organised into two geographical operating segments as follows:
- UK and Europe
- North America and Australia
The UK and European business with headquarters in Sparkford,
Somerset has subsidiaries in the Netherlands, Italy, Spain,
Romania, Germany and Sweden. Its core business is the publication
and supply of automotive repair and technical information to the
professional automotive and DIY aftermarkets in both a printed and
digital format.
The North American and Australian business with headquarters
near Los Angeles, California publishes DIY repair manuals for cars
and motorcycles in both a printed and digital format. The business
publishes titles under the Haynes, Chilton, Clymer and Intertec
brands. The operation in Sydney, Australia publishes similar
products under both the Haynes and Gregory's brands.
The above two operating segments are each organised and managed
separately and are treated as distinct operating and reportable
segments in line with the provisions of IFRS 8. The identification
of the two operating segments is based on the reports reviewed by
the chief operating decision maker, which form the basis for
operational decision making. The segments reflect the geographical
location and management of the operating units rather than the
delivery channel through which the Group's content is delivered, as
this is deemed to be more relevant for reporting purposes.
Inter-segmental revenue is charged at the prevailing market rates
in a manner similar to transactions with third parties.
The adjustments below have been made in the segmental tables
which follow to reconcile the internal reports as reviewed by the
chief operating decision maker to the financial information as
reported under IFRS in the Group Financial Statements:
-- In the segmental reporting the excess of the consideration
over net assets acquired on a business combination is shown as
goodwill - under IAS 38 specific intangible assets are created and
adjusted for deferred tax arising on acquisition.
-- The unallocated head office assets primarily relate to
freehold property, deferred tax assets and amounts owed by
subsidiary undertakings. The unallocated head office liabilities
primarily relate to the deficit on the UK's multi-employer defined
benefit pension scheme and tax liabilities.
3. Segmental analysis (continued)
Analysis of geographic operating segments
Revenue and results: UK North America
& Europe & Australia Consolidated
6 months 6 months 6 months
to to to
30 Nov 30 Nov 30 Nov
2017 2017 2017
GBP000 GBP000 GBP000
Segmental revenue
Total segmental revenue 11,109 5,965 17,074
Inter-segment revenue (92) (100) (192)
-------- ------------- ------------
Total external revenue 11,017 5,865 16,882
-------- ------------- ------------
Segment result
Segment operating profit
before interest 1,710 422 2,132
Interest receivable 2 1 3
Interest payable (38) - (38)
-------- -------------
Segment profit after and
interest 1,674 423 2,097
Unallocated head office
income less expenses (including
exceptional costs of GBP171,000) (1,131)
Consolidated profit before
tax 966
Taxation (309)
------------
Consolidated profit after
tax 657
============
UK & North America
Europe & Australia Eliminations Consolidated
30 Nov 30 Nov 30 Nov 30 Nov
2017 2017 2017 2017
GBP000 GBP000 GBP000 GBP000
Segment assets:
Property, plant and
equipment 890 465 - 1,355
Intangible assets 19,195 5,280 - 24,475
Working capital assets 7,942 9,112 (149) 16,905
------ ------------- ------------ ------------
Segment total assets 28,027 14,857 (149) 42,735
Unallocated head office
assets and eliminations 18,661
Consolidated total
assets 61,396
Segment liabilities:
Segment working capital
liabilities 8,327 4,402 (500) 12,229
Unallocated head office liabilities
and eliminations 27,529
Consolidated total liabilities 39,758
============
3. Segmental analysis (continued)
Revenue and results: UK & North America
Europe & Australia Consolidated
6 months 6 months 6 months
to to to
30 Nov 30 Nov 30 Nov
2016 2016 2016
GBP000 GBP000 GBP000
Segmental revenue
Total segmental revenue 8,448 6,346 14,794
Inter-segment revenue (239) (523) (762)
-------- ------------- ------------
Total external revenue 8,209 5,823 14,032
-------- ------------- ------------
Segment result
Segment operating profit/(loss)
before interest 1,118 (235) 883
Interest receivable 1 1 2
Interest payable (29) - (29)
-------- -------------
Segment profit/(loss)
after exceptional items
and interest 1,090 (234) 856
Unallocated head office income
less expenses (365)
Consolidated profit before
tax 491
Taxation (167)
------------
Consolidated profit after
tax 324
============
UK & North America
Europe & Australia Eliminations Consolidated
30 Nov 30 Nov 30 Nov 30 Nov
2016 2016 2016 2016
GBP000 GBP000 GBP000 GBP000
Segment assets:
Property, plant and
equipment 774 5,408 - 6,182
Intangible assets 11,765 6,229 - 17,994
Working capital assets 7,168 10,906 (844) 17,230
------ ------------- ------------ ------------
Segment total assets 19,707 22,543 (844) 41,406
Unallocated head office
assets and eliminations 18,709
Consolidated total
assets 60,115
============
Segment liabilities:
Segment working capital
liabilities 7,291 7,834 (1,330) 13,795
Unallocated head office
liabilities and eliminations 23,035
Consolidated total
liabilities 36,830
============
The above tables have been updated to allocate items previously
classified as reconciling from internal reporting into the
appropriate segment.
3. Segmental analysis (continued)
Revenue and results: UK & North America
Europe & Australia Consolidated
Year ended Year ended Year ended
31 May 31 May 31 May
2017 2017 2017
GBP000 GBP000 GBP000
Segmental revenue
Total segmental revenue 18,129 12,543 30,672
Inter-segment revenue (342) (556) (898)
---------- ------------- ------------
Total external revenue 17,787 11,987 29,774
---------- ------------- ------------
Segment result
Underlying segment operating
profit before exceptional
items and interest 2,704 643 3,347
Exceptional items (213) 1,285 1,072
Interest receivable 2 3 5
Interest payable (50) (2) (52)
---------- -------------
Segment profit after exceptional
items and interest 2,443 1,929 4,372
Unallocated head office
income less expenses (including
exceptional costs of GBP1,043,000) (1,708)
Consolidated profit before
tax 2,664
Taxation (1,290)
------------
Consolidated profit after
tax 1,374
============
UK & North America
Europe & Australia Eliminations Consolidated
31 May 31 May 31 May 31 May
2017 2017 2017 2017
GBP000 GBP000 GBP000 GBP000
Segment assets:
Property, plant and
equipment 715 1,087 - 1,802
Intangible assets 13,945 5,567 - 19,512
Working capital assets 9,388 12,440 (1,718) 20,110
------ ------------- ------------ ------------
Segment total assets 24,048 19,094 (1,718) 41,424
Unallocated head office assets and
eliminations 18,372
Consolidated total
assets 59,796
============
Segment liabilities:
Segment working capital
liabilities 9,312 3,430 (1,254) 11,488
Unallocated head office liabilities
and eliminations 26,992
Consolidated total
liabilities 38,480
============
The above tables have been updated to allocate items previously
classified as reconciling from internal reporting into the
appropriate segment.
4. Exceptional items
6 months to Year ended
30 Nov 30 Nov 31 May
2017 2016 2017
GBP000 GBP000 GBP000
Exceptional items included in
cost of sales :
* Write down of intangible assets - - 1,282
Exceptional items included in
selling and distribution expenses
:
* Restructuring costs - - 209
Exceptional items included in
administrative expenses :
* Acquisition expenses 171 - 88
Exceptional items included in
gain on disposal of property:
* Gain on sale of property - - (1,608)
171 - (29)
====== ====== ==========
Exceptional items are those significant items which warrant
separate disclosure by virtue of their scale and nature to enable a
full understanding of the Group's financial performance.
5. Taxation
The tax charge in the Consolidated Income Statement is
calculated using the tax rates which each of the Group's operating
entities expects to adopt for the financial year ended 31 May 2018.
The Group continues to expect its effective corporation tax rate to
be higher than the standard UK rate due to the trading profits it
generates in overseas subsidiaries where the tax rates are higher
than the UK.
The deferred tax asset relates to obligations under the defined
benefit pension scheme and other temporary differences. The
elements of the asset will be recovered in the UK and USA
respectively.
On 22 December 2017, the US Senate substantively enacted the Tax
Cuts and Jobs Act of 2017 (TCJA) which included, amongst other
changes, a reduction in the federal tax rate in the US from 35% to
21%. As the announcement was not made until after the Balance Sheet
date the Haynes North America Inc, deferred tax assets and
liabilities have been valued using the federal tax rate in force as
at 30 November 2017. Management estimate the impact of the change
would have reduced the US deferred tax assets and deferred tax
liabilities held on the balances held at 30 November 2017 by GBP1.3
million and GBP0.1 million respectively. An adjustment to reflect
this tax change on the deferred tax balances will be made in the
full year results to 31 May 2018.
6. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following:-
Before After Before After exceptional
exceptional exceptional exceptional items
items items items
6 months 6 months 6 months Year
to to to ended Year ended
30 Nov 30 Nov 31 May
2017 2017 30 Nov 2016 2017 31 May 2017
GBP000 GBP000 GBP000 GBP000 GBP000
Earnings :
Profit after tax attributable
to equity holders of
the Company - continuing
operations 797 657 324 1,424 1,374
------------ ------------ ----------- ------------ -----------------
No. No. No. No. No.
Number of shares
Weighted average for
basic earnings per
share ([a]) 15,111,540 15,111,540 15,111,540 15,111,540 15,111,540
Adjusted weighted average
for diluted earnings
per share ([a]) 15,272,540 15,272,540 15,111,540 15,111,540 15,111,540
------------ ------------ ----------- ------------ -----------------
Basic earnings per
share (pence) 5.3 4.3 2.1 9.4 9.1
Diluted earnings per
share (pence) 5.2 4.3 2.1 9.4 9.1
------------ ------------ ----------- ------------ -----------------
([a]) During the period the Company held 1,240,000 of its
ordinary shares in treasury and have not been included in the
calculation.
As at 30 November 2017, there were outstanding options on the
Company's Ordinary shares. For diluted earnings per share, the
weighted average number of ordinary shares in issue is adjusted to
assume conversion of all potential ordinary shares, such as share
options granted to directors and employees.
As at 31 May 2017 and 30 November 2016 there were no outstanding
options on either of the Company's two classes of shares and there
was no difference between the earnings used in the basic and
diluted earnings per share calculation.
7. Dividends
6 months to Year ended
30 Nov 30 Nov 31 May
2017 2016 2017
GBP000 GBP000 GBP000
Amounts recognised as distributions
to equity holders :
Final dividend of 4.0p per share
(2016: 4.0p) 604 604 604
Interim dividend of 3.5p per
share - - 529
604 604 1,133
====== ====== ==========
The directors have decided to pay an interim dividend of 3.5p
per share (2016: 3.5p) amounting to GBP528,904 (2016: GBP528,904)
on 11 April 2018 to shareholders on the register at the close of
business on 16 March 2018. Accordingly, this dividend is not
recognised in the interim accounts.
8. Analysis of the changes in cash and cash equivalents
As at Exchange As at
1 June 30 Nov
2017 Cash flow movements 2017
GBP000 GBP000 GBP000 GBP000
Cash at bank and
in hand 7,036 (2,598) (178) 4,260
Bank overdrafts (3,331) (1,239) - (4,570)
------- --------- --------- -------
3,705 (3,837) (178) (310)
======= ========= ========= =======
9. Retirement benefit obligation
The Group operates a number of different retirement programmes
in the countries within which it operates. The principal pension
programmes are a contributory defined benefit scheme in the UK and
a non-contributory defined benefit plan in the US. The assets of
all schemes are held independently of the Group and its
subsidiaries.
During the period, the financial position of the above pension
arrangements have been updated in line with the anticipated annual
cost for current service, the interest on scheme liabilities and
cash contributions made to the schemes.
The last full IAS 19 actuarial valuation was carried out by a
qualified independent actuary as at 31 May 2017. This valuation has
been updated by the scheme's actuaries on an approximate basis for
the six month period ending 30 November 2017.
The movements in the retirement benefit obligation were as
follows:
6 months
6 months to to Year ended
30 Nov 31 May
30 Nov 2017 2016 2017
GBP000 GBP000 GBP000
Retirement benefit obligation
at beginning of period (23,024) (15,101) (15,101)
Movement in the period :
- Total expenses charged
in the income statement (677) (600) (1,397)
- Contributions paid 661 520 1,515
- Actuarial (losses)/gains
taken directly to reserves 642 (5,697) (7,941)
- Foreign currency exchange
rates 34 (171) (100)
Retirement benefit obligation
at end of period (22,364) (21,049) (23,024)
=========== ======== ==========
10. Exchange rates
The foreign exchange rates used in the financial statements to
consolidate the overseas subsidiaries are as follows (local
currency equivalent to GBP1):
Period end rate Average rate
30 30 31 30 31
Nov Nov May 30 Nov Nov May
2017 2016 2017 2017 2016 2017
US dollar 1.35 1.25 1.29 1.32 1.29 1.28
Euro 1.13 1.18 1.15 1.12 1.17 1.17
Australian dollar 1.78 1.69 1.74 1.70 1.71 1.70
11. Property, plant and equipment
Total
GBP000
Net book value at 1 June 2016 8,434
Exchange rate movements 901
Additions 164
Disposals (282)
Depreciation (363)
Net book value at 30 November 2016 8,854
======
GBP000
Net book value at 1 June 2017 4,011
Exchange rate movements (84)
Additions 356
Disposals (2)
Depreciation (258)
Net book value at 30 November 2017 4,023
======
The Group had no capital expenditure which had been contracted
but had not been provided for as at 30 November 2017 (2016:
GBPnil).
12. Intangible assets
Total
GBP000
Carrying value at 1 June 2016 22,381
Exchange rate movements 2,039
Additions 3,346
Amortisation (2,983)
Carrying value at 30 November 2016 24,783
=======
GBP000
Carrying value at 1 June 2017 27,696
Exchange rate movements (90)
Additions 4,100
Additions through business combinations (note
14) 4,720
Amortisation (3,620)
Carrying value at 30 November 2017 32,806
=======
13. Asset held for sale
A freehold property in Nashville, US has been reclassified as an
Asset held for sale. At the Balance Sheet date the property was
under offer and was subsequently sold on 15 December 2017 for a
gross cash consideration of $5.35 million (GBP4.0 million) with a
subsequent estimated tax charge of $1.6 million (GBP1.2 million).
The disposal will generate an estimated pre-tax profit on sale of
$3.5 million (GBP2.6 million).
14. Acquisition
On 30 September 2017, Haynes Publishing Group P.L.C. acquired
the E3 Technical business from Carweb, a UK subsidiary of Solera
Holdings Inc for a cash consideration of GBP4.72 million. The E3
Technical business consists of repair and maintenance information
("RMI"), vehicle registration mark look-up ("VRM") and associated
helpdesk services. The transaction included the acquisition of
certain customer contracts, and the transfer of employees from
Carweb. Immediately after acquisition Haynes Publishing Group
P.L.C. assigned the assets acquired to its wholly owned subsidiary,
HaynesPro (UK) Limited.
The table below shows the fair values of the assets and
liabilities arising on the acquisition. The fair values are
provisional pending the completion of the fair value exercise in
respect of each class of asset which will be finalised during the
second half of the financial year :
Recognised
on
acquisition
GBP'000
Assets Acquired
Intangible assets 4,720
Trade receivables 390
Other payables (390)
Fair value of net assets and Total consideration 4,720
Cash consideration 4,720
Total consideration 4,720
============
The net cash outflows arising on the acquisition
were as follows :
Cash consideration 4,720
Costs of acquisition (included in cash
flows from operating activities)(A) 171
Net cash outflow 4,891
============
(A) The costs of acquisition of GBP171,000 were expensed as
incurred in the period and have been included as an exceptional
item within administrative expenses (note 4).
During the two month period since acquisition, the E3 Technical
business contributed GBP0.5 million of revenue and GBP0.2 million
of profit before tax. If the acquisition had been made at the start
of the financial period the revenue from the acquired business
would have been GBP1.5 million. However, as prior to the
acquisition the E3 Technical business was an integral part of the
wider Carweb business utilising shared overhead services, it is not
practical to quantify the associated profit contribution during
this period.
15. Related party transactions
During the six months to 30 November 2017 there were no material
related party transactions or material changes to the arrangements
with related parties as reported in the Annual Report 2017.
16. Principal risks and uncertainties
The principal risks and uncertainties facing the Group during
the second half of the financial year are outlined in the Interim
Statement and summarised below :
- The UK and Global economic outlook and in particular, the
consequential impact on consumer confidence and businesses.
- Movements in the exchange rate of the US Dollar and Euro against Sterling.
- The impact of movements in interest rates, inflation and
investment performance on the Group's retirement benefit
schemes.
The Board considers that the above, along with the principal
risks and uncertainties which were discussed at more length in the
Annual Report 2017 under the following headings and page
references, continue to be the major risks and uncertainties facing
the Group :
-- The Group's principal operational risks and uncertainties (page 18)
-- The processes adopted by the Board to identify and monitor risk (page 31)
-- The Group's principal financial risks and uncertainties (pages 78 - 80)
A copy of the Annual Report 2017 can be found on the Group's
corporate website www.haynes.com/investor.
A copy of this half-year report will be distributed to all
shareholders and will also be available to members of the public
from the Company's registered office at Sparkford, Near Yeovil,
Somerset BA22 7JJ. A copy of the interim report will also be
available on the Group's corporate website at
www.haynes.com/investor.
INDEPENT REVIEW REPORT TO HAYNES PUBLISHING GROUP P.L.C.
Report on the Interim Financial Statements
Our conclusion
We have reviewed Haynes Publishing Group P.L.C.'s Interim
Financial Statements (the "Interim Financial Statements") in the
interim results of Haynes Publishing Group P.L.C. for the 6 month
period ended 30 November 2017. Based on our review, nothing has
come to our attention that causes us to believe that the Interim
Financial Statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
What we have reviewed
The Interim Financial Statements comprise:
-- the Consolidated Balance Sheet as at 30 November 2017;
-- the Consolidated Income Statement and Consolidated Statement
of Comprehensive Income for the period then ended;
-- the Consolidated Cash Flow Statement for the period then ended;
-- the Consolidated Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The Interim Financial Statements included in the interim results
have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1 to the Interim Financial Statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the Interim Financial Statements and the
review
Our responsibilities and those of the directors
The interim results, including the Interim Financial Statements,
is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the interim results in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the Interim
Financial Statements in the interim results based on our review.
This report, including the conclusion, has been prepared for and
only for the Company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
INDEPENDENT REVIEW REPORT TO HAYNES PUBLISHING GROUP P.L.C.
Responsibilities for the interim financial statements and the
review (continued)
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the Interim Financial Statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Bristol
24 January 2018
a) The maintenance and integrity of the Haynes Publishing Group
P.L.C. website is the responsibility of the directors; the work
carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for
any changes that may have occurred to the Interim Financial
Statements since they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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