TIDMHYNS
RNS Number : 7604Z
Haynes Publishing Group PLC
05 September 2018
HAYNES PUBLISHING GROUP P.L.C.
PRELIMINARY UNAUDITED RESULTS FOR THE YEARED 31 May 2018
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 12 months
ended 31 May 2018.
Business and Financial Highlights
Adjusted Adjusted Statutory Statutory
12 months 12 months 12 months 12 months
to to Change to to Change
31 May 31 May YoY 31 May 31 May YoY
2018 2017 (Year-on-Year) 2018 2017 (Year-on-Year)
Group revenue GBP33.8m GBP29.8m +13% GBP33.8m GBP29.8m +13%
----------- ----------- ---------------- ----------- ----------- ----------------
EBITDA(1) GBP11.5m GBP10.4m +11% GBP12.9m GBP10.4m +24%
----------- ----------- ---------------- ----------- ----------- ----------------
Group operating
profit(1) GBP3.5m GBP3.2m +9% GBP4.2m GBP3.2m +31%
----------- ----------- ---------------- ----------- ----------- ----------------
Group profit
before tax(1) GBP2.9m GBP2.6m +12% GBP3.6m GBP2.7m +33%
----------- ----------- ---------------- ----------- ----------- ----------------
Basic earnings
per share(1) 13.2p 9.4p +40% 9.9p 9.1p +9%
----------- ----------- ---------------- ----------- ----------- ----------------
Total dividend 7.5p 7.5p - 7.5p 7.5p -
----------- ----------- ---------------- ----------- ----------- ----------------
Net cash(2/3) GBP2.5m GBP3.7m (GBP1.2m) GBP2.5m GBP3.7m (GBP1.2m)
----------- ----------- ---------------- ----------- ----------- ----------------
-- Acquisition of the E3 Technical business in September 2017,
which provides repair and maintenance information and vehicle
registration mark look-up, adding an incremental GBP1.9 million to
Group revenue.
-- Revenue from the Group's digital products increased YoY by
42% to GBP16.9 million (2017: GBP11.9 million) representing 50% of
total Group revenue (2017: 40%).
-- UK & European segmental YoY revenue up 28% driven by
HaynesPro growth in Europe and strong sales of UK practical
lifestyle titles.
-- Like-for-like North American & Australian segmental revenue down 3% YoY.
-- Group investment in new content, products and platforms up 6%
to GBP8.4 million (2017: GBP7.9 million).
-- Net cash generated from operating activities (after tax) of
GBP10.1 million, up 2% YoY (2017: GBP9.9 million).
-- Group net cash of GBP2.5 million (2017: GBP3.7 million) after
acquisition of GBP4.7 million and net of US property disposal of
GBP3.8 million.
Eddie Bell, Chairman of Haynes Publishing Group, commented:
"2017/18 has been a strong year for the Haynes Group as we
continue to build, develop and expand our global automotive
content, data and solutions business.
"Our unique breadth of content and data combined with our
specialist automotive technological knowhow allows us to supply our
partners with high quality, innovative and commercial solutions to
improve work flow and business efficiency.
"Through a programme of continuing investment in people, content
and platforms we can help to ensure the Haynes Group is well placed
to take advantage of the growth opportunities which lie ahead."
Notes to the financial highlights:
(1) Adjusted to exclude GBP0.7 million of exceptional gains and
other items (2017: GBP0.03 million).
(2) Net cash defined as cash at bank net of bank overdrafts and
bank loans.
(3) In addition the Group 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
James Stearns
Media Contact: New Century Media +44 20 7930 8033
Catherine Hems
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.
Chairman's Statement
This has been another strong year for the Group as we continue
to build, develop and expand our global automotive content, data
and solutions business.
In Europe, our professional automotive and lubricant data
businesses have delivered solid growth over the last 12 months. A
high quality and innovative product range coupled with technically
skilled and experienced teams has helped to win new business and
expand relationships with existing customers. Through the
acquisition of the E3 Technical business in September 2017, we have
taken control of our HaynesPro UK distribution channel. The
acquisition has also expanded the Group's technical offering to
include high quality Vehicle Registration Mark (VRM) look-up
capability. In our UK consumer markets, our practical lifestyle
titles have performed well and the addition of the 'Bluffers
Guides' to the Haynes range of titles during the year should help
support this momentum.
In the US, we continue to face headwinds in our consumer print
manuals in our key retail channels. The cost saving initiatives
reported and implemented in prior years in North America have
helped to shelter profits this year. Nevertheless, the development
of new growth initiatives in this important market for the Group
remains a key priority.
Financial highlights
Group revenue increased by 13% to GBP33.8 million (2017: GBP29.8
million) supported by the acquisition of E3 Technical and a full
year of trading from OATS. Like-for-like, excluding acquisitions
and impact of exchange, Group revenue was ahead 3%
year-on-year.
The growth in professional digital revenues helped increase
adjusted profit before tax, exceptional items and acquired
intangible amortisation by 12% to GBP2.9 million (2017: GBP2.6
million).
Exceptional Items
The Group profit before tax has been impacted by items which due
to their significance and one-off nature have been treated as
adjusting items in our financial statements. The major items
include a gain on disposal of GBP2.6 million following the sale of
the final freehold property at our former print and distribution
facility in Nashville, USA; restructuring costs of GBP1.0 million,
primarily in the US and Australia, as we continue to focus our
operations and a write-down of GBP0.5 million in the carrying value
of the Sparkford freehold property.
In December 2017, the US Senate enacted a reduction in the US
federal tax rate from 35% to 21% which required our US business to
re-measure the value of its deferred tax assets and liabilities and
has led to an increase in the Group tax expense of GBP0.8 million.
Due the size and one-off nature of this charge, it has
correspondingly been treated as an adjusting item.
Dividend
The Board is recommending an unchanged final dividend for the
year of 4.0 pence which, together with the interim dividend paid in
April 2018, maintains the total dividend for the year at 7.5 pence
(2017: 7.5 pence). Subject to approval by shareholders, the final
dividend will be paid on 15 November 2018 to shareholders on the
register at the close of business on 26 October 2018 (with an
ex-dividend date of 25 October 2018).
Board
On 1 February 2018, I was pleased to welcome Peter van der
Galiēn and Richard Barker to the Group Board. Peter, who is
resident in the Netherlands, assumed overall responsibility for the
Group's professional operations having been a key driving force
behind the growth in HaynesPro, since taking on the role of
HaynesPro Managing Director in April 2016. Richard, who was our UK
& European Finance Director and Group Company Secretary has
taken on the role of Group Finance Director, following the
promotion of James Bunkum (formerly Chief Financial Officer) to
Chief Operating Officer. Jeremy Yates-Round, who has been on the
Board since 2010, was also promoted to Managing Director, Haynes
Consumer.
In June 2018, Jim Nicholson who joined the Board in June 2017
and was Senior Vice President of Haynes North America Inc. stepped
down from his roles in the Group to pursue new opportunities. Jim
had been with the Haynes Group for over 25 years and on behalf of
the Board I would like to thank him for his long service to the
Haynes Group and wish him well for the future.
Group employees
This is an exciting time to be involved with the Group. We have
a clear strategic focus and through the retention and recruitment
of talented and enthusiastic employees I am confident we will
deliver on our key objectives. In March this year, the Board held
their first Group Board meeting outside of the UK, when we visited
the HaynesPro head offices in Leusden, the Netherlands. The visit
allowed the Board to meet and thank the Leusden based employees
personally for their valuable contribution to the Group and on
behalf of the Board I would like to extend gratitude to all our
worldwide employees for their hard work and dedication over the
past 12 months.
Outlook
I opened my Chairman's statement commenting that this had been
another strong year for Haynes as we build the Group into a leading
global automotive content, data and solutions business. Our unique
breadth of content and data combined with our specialist automotive
technological knowhow allows us to supply our partners with high
quality, innovative and commercial solutions to improve work flow
and business efficiency.
Through a programme of continuing investment in people, content
and platforms we can help to ensure that the Haynes Group remains
well placed to take advantage of the growth opportunities which lie
ahead.
Eddie Bell
Chairman
4 September 2018
Chief Executive's Review
Over the past 12 months we have made further progress in
positioning Haynes as a leading global supplier of automotive
content, data and solutions. The symbiotic relationships we have
with many of our customers allows us to develop collaborative
partnerships which build over time. We are committed to these
relationships and will continue to invest in people, content, data
and technology to ensure we offer our partners products which
deliver reliable accurate data, value adding solutions and work
flow and cost efficiencies.
In 2017/18 we invested a further GBP8.4 million (2017: GBP7.9
million) in sourcing new global content, developing delivery
platforms and commissioning and publishing new Haynes Manuals. This
substantial investment demonstrates our commitment to our customers
which today include international oil companies, multinational
parts distributors and diagnostic equipment manufacturers, fast-fit
outlets, major retail stores, fleet operators and garage
chains.
We live in a world where vehicle electrical systems and advanced
in-car technologies are the norm and specialised electronics
knowledge has become an essential requirement for workshop
technicians. Haynes have been and remain innovators in this area
and it is no coincidence that HaynesPro's electronics module
"VESA", with its 3.5 million component links, sits at the heart of
our professional offering. VESA enables workshops to improve
workflow efficiency, reducing diagnostic times and helping
independent operators to be competitive. In addition, the
technology that drives VESA can be embedded into diagnostic tools.
This has been an important area of growth for the HaynesPro
business and in 2017/18 resulted in a further two major global
diagnostic tool manufacturers integrating VESA Mk II into their new
generation diagnostic tools.
The integration of our data capturing, storage and delivery
processes allows us to offer customers information that is unique,
complete and highly valuable. Our partnerships are built on trust,
integrity and the delivery of innovative and relevant propositions,
helping to elevate Haynes from the status of valued supplier to
trusted partner. The mix of automotive and IT knowledge means we
are well placed to offer our partners valued added consultancy
services. This was demonstrated when the HaynesPro technology team
successfully launched the second phase of a major website and data
overhaul for a global OE parts supplier.
The E3 Technical business, acquired from Solera Holdings Inc. in
September 2017, continues to deliver high quality and accurate data
via real time web services. Rebranded HaynesPro UK, the business
not only accelerates and broadens our foothold in the UK automotive
service, maintenance and repair markets, but also provides the
Group with a complementary vehicle look-up service. The integration
of the people, and their skills and knowledge within this business
is progressing to plan.
The benefits of the data and skillsets that have been added
through the E3 Technical and OATS acquisitions, have already been a
key driver in winning new customers and helped to secure
significant contract renewals.
In consumer markets, sales of our automotive print manuals
continue to face challenges. Over the past three years we have been
working closely with our key retail partners to manage excess
inventory levels and improve the stock turn of our manuals
in-store. During this same timeframe we have experienced a growth
in sales to customers who sell online. The growth in free to view
content is a challenge for both our bricks and mortar and online
retail partners alike. Whilst we acknowledge that some of this
information can be helpful, we are also very cognisant that
elements of this information are often inaccurate and, in some
instances, dangerously so. To help address these issues we are
increasing the number of videos within our online manuals to
provide motorists with reliable, accurate, trustworthy and easy to
use repair and service information. It is interesting to note that
sales of online manuals via our US website, now exceed those of
print manuals. During our third quarter we launched our new 'Haynes
Manuals AllAccess' product which enables B2B partners to access all
our online consumer manuals. This product will initially be aimed
at the education, library and independent workshop markets but over
time we also see potential for this product across a broader
spectrum of distribution channels.
Our practical lifestyle range of manuals had another year of
solid sales growth, ending the 12-month period 6% ahead of the
prior year. This success is a reflection of the continued ability
of our team to create entertaining and inherently informative and
useful manuals covering all manner of subjects. New titles included
Robot Wars, Tabletop Gaming, the Soviet T-34 Tank and Upgrading
Your Kitchen. Of particular note was the successful conclusion of a
deal with Disney to publish a further four 'Star Wars' manuals over
the next few years. Previous titles in this range have sold well in
both the UK and US.
First Quarter Trading
Overall Group revenue during the first quarter of 2018/19 was
tracking 6% ahead of the prior year. Like-for-like revenue
(excluding exchange rate movements and incremental revenue from the
E3 Technical acquisition) was in line with the prior year. At a
segmental level, both the UK & Europe and North America &
Australia segments were performing in line or ahead of expectations
through the first 13 weeks of 2018/19.
People
After a period of restructuring, rationalisation and
re-organisation it is pleasing to report that our business growth,
as well as future commercial opportunities, have resulted in the
Group growing its employee base.
In addition to our colleagues added through the recent
acquisitions of OATS and E3 Technical, we have also recruited
additional staff in our data and technology teams in the
Netherlands and Romania and our consumer digital teams in the UK
and US.
In the Netherlands, we have doubled the capacity of our European
headquarters of HaynesPro Netherlands and now occupy the whole of
our leasehold building in Leusden. In February 2018, the staff of
HaynesPro UK moved into new leasehold premises in Maidstone, Kent.
During 2018/19 we are once again planning to increase employee
numbers to support the growth areas of our business.
The sourcing of new content and data creation will be the
primary areas of focus for the business over the next 12 months.
The mix of automotive and technology skillsets possessed by our
people together with our rich breadth of content is helping to
provide the Haynes Group with new growth opportunities. I would
like to thank everyone at Haynes for their valuable contribution,
and I look forward to driving the Group's future success
together.
Outlook and future developments
The automotive industry has been continuously evolving over the
last 130 years and it is no different today. Whether this comes in
the form of the advancements in electric vehicles, the development
of driverless vehicle technology or the introduction of new
legislation to regulate and oversee the flow of information from
manufacturers to the independent workshop mechanic, the automotive
sector landscape continues to change.
The aftermarket sector is also changing and in the last two
years, nine of HaynesPro's top twenty customers have experienced a
change in ownership.
Mindful of these developments and opportunities, the Haynes
Group remains focused on delivering the technical information, data
solutions and commercial insights our customers need today, and in
the future. We are increasingly working with partners who operate
in global markets and need suppliers who can deliver data in
territories across the world. Over the next 12 months we will
increase our investment to expand the coverage of our worldwide
datasets.
The Group will be adding resource to develop new products
utilising our aggregated global content. As Haynes expands its
geographic horizons and develops new commercial opportunities
through leveraging and combining our global datasets, we need to
ensure that the way we collect, store, catalogue and link our
content is standardised where possible. This will provide workflow
and cost efficiency and enable future investment and innovation.
[we have already said that sourcing of new content and data
creation will be the key focus]
We have a strong balance sheet, identified opportunities for
growth and a clear sense of direction. Through new innovation and
enhancements to the products and solutions we provide our
customers, I believe we are well placed to develop our business and
continue to deliver revenue and profit growth.
J Haynes
Chief Executive Officer
4 September 2018
Chief Operating Officer's Review
Review of operations
The improvement in the Group's top line performance during the
year, up 13% at GBP33.8 million (2017: GBP29.8 million), has come
from a combination of a full year of trading from OATS (2017: 5
months), the acquisition of E3 Technical in September 2017, another
strong year of growth from HaynesPro in Europe and improved
year-on-year sales in our UK and Australian businesses.
North America and Australia
Since implementing the major Operational and Cost Restructuring
(OCR) programme in the US in 2015/16, we have significantly reduced
the cost base of our Haynes North American ("HNA") operations and
improved the financial platform of the business. At the revenue
line we still face challenges, with year-on-year sales of our
automotive print manuals down 2% and a slow take-up of our in-store
online manual retail card programme. We also continue to face
pressure over retail pricing of our manuals and in-store range
availability. Despite these challenges we are starting to make
progress in our online presence. Sales of print manuals through the
haynes.com website have shown healthy year-on-year increases with
sales of our Haynes titles up 7%, Chilton titles up 24% and Clymer
titles up 34%, while sales of our online manuals ended the year 13%
ahead of 2016/17.
Our US editorial databases hold a rich pool of content covering
vehicles and motorcycles which includes an extensive archive of
instructional photos, written procedures and a growing database of
step-by-step videos. Local management are currently evaluating new
growth opportunities arising from this content as we look to
transition the Haynes Group into a multi-media content and data
solutions business. The print manual remains an important part of
our product offering, a situation we do not foresee changing soon.
Nevertheless, we recognise the data that we hold can be reformatted
and potentially combined with other datasets to create new revenue
opportunities and this is very much the focus of the management
going forward.
In June 2018, the head of our HNA operations stood down from the
Haynes Group and this part of our business is being managed on an
interim basis by Jeremy Yates-Round, Managing Director of the
Group's consumer operations. Jeremy is working closely with local
US management to evaluate the growth opportunities in the US market
and to assist the Board in recruiting a replacement leader for the
business.
In Australia, new range reviews were secured with our two
largest retail customers during the 2017/18 which has helped to
ensure that our latest and most popular titles are available to
purchase in-store in over 600 retail outlets. The range reviews
were an important factor in helping sales of our Australian print
manuals end the year 8% ahead of the prior year.
In the second half of 2017/18 we initiated a restructuring
programme in our Australian operation re-focusing the business on
our consumer manuals and professional automotive product lines. As
part of this restructuring we exited some small third-party
distribution agreements and third-party digital print service
arrangements. The Australian operation has been loss making in
recent years and although relatively small, through the actions
taken during 2017/18 and the implementation of new growth
initiatives in this territory, management are confident that this
part of the Haynes Group can return to profit in the near
future.
During the second quarter of 2017/18 we launched a new
Australian website as part of the Haynes global website rollout
programme. Whilst small in absolute terms, the revenue generated
through the website more than doubled during the year and early
into 2018/19 we continue to see website sales out-perform the prior
year.
UK and Europe
In the UK, following a similar trend experienced in prior years,
weaker ordering by our key high street retail customers left
revenue for our automotive print manuals 3% down on the prior year,
whilst revenue from our online retailers ended the year 5% up. Over
the past 12 months, we have enjoyed particularly strong growth in
our export markets where a weaker pound has helped to improve the
competitive pricing position of our manuals outside of the UK.
As we reported at the half year, sales of our practical
lifestyle manuals performed strongly during the first six months of
the year boosted by our new title publishing programme and strong
sales of our 'Haynes Explains' parody titles. During the second six
months, challenging conditions for our high street retailers led to
higher than expected returns but overall, revenue from our
practical lifestyle titles still ended the year 6% ahead of the
prior period. Like the US and Australia, sales of our print and
online manuals through haynes.com website have performed well
during the year, with print manual revenue ending the year up 33%
and digital manual sales up 28%. Whilst in monetary terms the
revenue impact is still low, we are encouraged by the improving
performance of our channels connecting us directly to the
consumer.
This was the first full 12 months of trading in OATS, our
lubricants and data solutions business, which we acquired in
December 2016. Towards the end of the financial year, OATS secured
its first new global oil contract under Haynes Group ownership.
This was a major gain for the OATS team and reflects the
significant time and financial investment in growing their global
lubricants datasets and the benefits of a combined data offering
with HaynesPro. During the year, OATS recruited a new US sales
consultant to support the growing market for lubricants data in in
the US. Indeed, OATS are now the leading supplier of lubricants
data to the North American agricultural sector and in excess of 30%
of total OATS revenue now originates in the US.
HaynesPro, our professional automotive data and solutions
business headquartered in the Netherlands, had another strong 12
months of trading. The acquisition of E3 Technical in September
2017 saw HaynesPro taking on all E3 Technical's direct and indirect
business from Carweb Ltd, a subsidiary of Solera Holdings Inc. This
includes: Repair and Maintenance Information; Vehicle Registration
Mark (VRM) look-up software and associated helpdesks. The
acquisition deepens HaynesPro's relationships with UK automotive
professionals and through the acquired support desk and VRM
services, has allowed HaynesPro to enhance the services to its UK
partners and customers. HaynesPro data is used by over 60,000 users
throughout Europe and contains comprehensive multilingual
automotive OEM based data for cars, light commercial vehicles and
heavy trucks. The multilingual aspect of WorkshopData(TM) has been
an important factor in the success of the HaynesPro business and
during the year four new languages were added and the data is now
available in 27 different languages.
James Bunkum
Chief Operating Officer
4 September 2018
Group Finance Director's Review
The 2018 financial year represents the 52 weeks to 31 May 2018
("the financial year") and the comparative period represents the 52
weeks to 31 May 2017 ("prior year").
Group revenue
2018 2017 Movement
GBPm GBPm %
===================== ====== ====== =========
Total Group revenue 33.8 29.8 +13%
===================== ====== ====== =========
Overall Group revenue ended the year up 13% against last year at
GBP33.8 million (2017: GBP29.8 million) through a combination of
underlying growth in our professional product ranges and practical
lifestyle titles and incremental revenue from acquisitions.
This is the first set of Group results to include a full 12
months of OATS revenue, which added GBP1.4 million of incremental
revenue in comparison to 2016/17 and 8 months of the E3 Technical
business, which added an incremental GBP1.9 million of revenue to
the Group.
Sterling strengthened against the US and Australian dollars
leading to average exchange rates of $1.35 (2017: $1.28) and A$1.74
(2017: A$1.70) respectively, whilst sterling weakened against the
euro, driving a lower average exchange rate of EUR1.13 (2017:
EUR1.17). The net effect of these movements reduced Group revenue
by GBP0.1 million leaving like-for-like Group revenue up 14% at
GBP33.9 million in constant currency.
Boosted by the performance from the professional product ranges
and acquisitions, revenue from the Group's digital products ended
the year up 42% or GBP5.0 million in monetary terms at GBP16.9
million (2017: GBP11.9 million) and now represents 50% of total
Group revenue (2017: 40%).
Adjusted gross profit
Movement
2018(1) 2017(1) %
======================= ========== ========== =========
Adjusted gross
profit GBPm 20.1 18.1 +11%
Adjusted gross
margin % 59.5 60.7 (1.2bps)
================ ====== ========== ========== =========
(1) Excluding adjusting items. Reported gross profit was GBP20.1
million (2017: GBP16.8 million) with a gross margin of 59.5% (2017:
56.4%).
In monetary terms, overall adjusted gross profit ended the 12
month period up 11% at GBP20.1 million (2017: GBP18.1 million) with
a gross margin of 59.5% (2017: 60.7%). The margin percentage has
reduced in 2017/18 as this is the first year of expensing the
Group's consumer digital development costs (GBP0.6 million)
following the launch of the new consumer platforms at the beginning
of the financial year.
Adjusted operating profit
Movement
2018(1) 2017(1) %
======= ========== ========== =========
Adjusted operating profit GBPm 3.5 3.2 +9%
Adjusted operating margin % 10.4 10.8 (0.4bps)
=========================== ======= ========== ========== =========
(1) Excluding adjusting items. Reported Group operating profit
was GBP4.2 million (2017: GBP3.2 million) with a Group operating
margin of 12.3% (2017: 10.9%)
Adjusted operating profit was 9% ahead of the prior year at
GBP3.5 million (2017: GBP3.2 million). Following the acquisition of
E3 Technical and a full year of OATS, adjusted overheads were up
12%. Excluding OATS, E3 Technical and the impact of currency
movements, like-for-like overheads were up 4% against the prior
year as the Group invested in new staff, new employee reward
schemes and expanding the Group's leasehold facilities.
Group finance costs ended the year in line with the prior year
at GBP0.6 million (2017: GBP0.6 million) and primarily relate to
the interest charge on the pension schemes' liabilities net of
interest on the pension schemes' assets.
Adjusted earnings and earnings per share
2018 (1) 2017 Movement
GBPm (1) %
GBPm
================================ ==== ========= ====== =========
Adjusted profit
before tax 2.9 2.6 +12%
Adjusted taxation (0.9) (1.2) +25%
-------------------------------------- --------- ------ ---------
Adjusted profit for the period 2.0 1.4 +43%
Pence Pence
Adjusted basic EPS 13.2 9.4 +40%
====================================== ========= ====== =========
(1) Excluding adjusting items. Reported profit before tax was
GBP3.6 million (2017: GBP2.7 million), taxation was GBP2.1million
(2017: GBP1.3 million) and the reported profit for the period was
GBP1.5 million (2017: GBP1.4 million). Reported earnings per share
were 9.9 pence (2017: 9.1 pence).
Adjusted pre-tax profit ended the year up 12% at GBP2.9 million
(2017: GBP2.6 million). The adjusted tax charge was GBP0.9 million
(2017: GBP1.2 million) giving an effective tax rate of 31.2 %
(2017: 46.0%). The lower effective tax rate is primarily driven by
the reduction in the headline rate of federal tax in the US.
Earnings per share increased to 13.2 pence (2017: 9.4 pence).
UK and Europe segmental review
2018 2017
GBPm GBPm Movement
===================================== ====== ====== ===========
Segmental revenue 22.7 17.8 +28%
Segmental adjusted operating profit 4.8 2.7 +78%
===================================== ====== ====== ===========
Segmental revenue from UK and European operations ended the year
up 28% at GBP22.7 million (2017: GBP17.8 million) which includes a
full period of revenue from the OATS acquisition and 8 months of
trading from the E3 Technical business which, in combination,
contributed GBP3.3 million to revenue. Local currency European
revenue was up 12% and UK consumer revenue was up 3% driven by
another strong trading performance from the Group's practical
lifestyle titles which ended the year up 6% and helped to offset
the UK automotive manual revenue which ended the year down 3%. On a
like-for-like basis, excluding the impact of exchange movements and
incremental increases from acquisitions, UK and European revenue
was up 7% at GBP19.0 million (2017: GBP17.8 million).
The impact of the stronger trading led UK and European segmental
adjusted operating profit ending the year up 78% at GBP4.8 million
(2017: GBP2.7 million). After adjustments and interest, segmental
profit for the year was up 83% at GBP4.4 million (2017: GBP2.4
million).
North America and Australia segmental review
2018 2017
GBPm GBPm Movement
===================================== ====== ====== ===========
Segmental revenue 11.1 12.0 (8%)
Segmental adjusted operating profit 0.4 0.6 (33%)
===================================== ====== ====== ===========
North American and Australian segmental revenue ended the year
8% down at GBP11.1 million (2017: GBP12.0 million). Local currency
US revenue was down 5% due to the ongoing retail challenges we face
with our print manuals in relation to pricing and in-store range
availability. Australian local currency revenue was up 18%, boosted
by range reviews with the two largest retail customers during the
year and higher low margin third-party print services income.
During the year, sterling strengthened against both the US and
Australian dollars decreasing North American and Australian
segmental revenue by GBP0.6 million. Like-for-like revenue,
excluding the impact of exchange, ended the year down GBP0.3
million at GBP11.7 million (2017: GBP12.0 million).
The reduced US cost base helped to minimise the impact of the
lower revenue on segmental adjusted operating profit which ended
the year down 33% at GBP0.4 million (2017: GBP0.6 million). After
adjustments and interest, segmental profit for the year was up 33%
at GBP2.4 million (2017: GBP1.8 million).
Adjusting items
2018 2017
GBPm GBPm
========================================= =========== ======
Write-down of intangible assets - (1.3)
Write-down of assets held for sale (0.4) -
Acquired intangible amortisation charge (0.3) -
Restructuring costs (1.0) (0.2)
Acquisition expenses (0.2) (0.1)
Gain on property disposals 2.6 1.6
----------------------------------------- ----------- ------
Total adjusting items effecting profit 0.7 -
before tax
Adjustments to tax (1.2) (0.1)
----------------------------------------- ----------- ------
Total adjusting items (0.5) (0.1)
----------------------------------------- ----------- ------
Following the sale of a freehold property in the US during the
financial year, the Group realised a gain on disposal of GBP2.6
million which has been shown as an adjusting item in the Income
Statement. Netting against this gain are restructuring costs in
relation to the Australian operation, employee severance costs and
past pension service costs of GBP1.0 million and an adjustment to
the UK freehold property between its net book value and its
recoverable amount of GBP0.4 million. Adjusting items also include
the amortisation of acquired intangible assets of GBP0.3 million
and the costs associated with the E3 Technical trade and asset
acquisition of GBP0.2 million. The adjustment to tax is primarily
due to the reduction in the US deferred tax assets following a
reduction in the US federal tax rate from 35% to 21%.
Balance sheet
Restated
(1)
2018 2017 Movement
GBPm GBPm
================================ ======= ========= ==========
Non-current assets 40.5 39.5 +1.0
Working capital 1.8 4.1 (2.3)
Net cash 2.5 3.7 (1.2)
Retirement benefit obligation (18.7) (23.8) +5.1
Net other assets/(liabilities) (1.1) (2.8) +1.7
-------------------------------- ------- --------- ----------
Net assets 25.0 20.7 +4.3
-------------------------------- ------- --------- ----------
(1) See Note 1 - Restatement of prior years
During the year, the Group increased its investment in new
product development by 6% to GBP8.4 million (2017: GBP7.9 million)
which included GBP2.8 million on new consumer content, GBP0.3
million on new consumer digital platforms and GBP5.3 million in
relation to the Group's professional product ranges. The Group also
acquired the trade and assets of the E3 Technical business, which
added GBP4.9m of intangible fixed assets in the form of knowhow,
customer lists and goodwill. Netting against the above was a
reclassification of a UK property to net other assets/(liabilities)
following its transfer to Assets held for sale and an increase in
product development amortisation.
In December 2017, the US operation sold a second Nashville
freehold property for $5.1 million (GBP3.8 million) generating a
profit on disposal of GBP2.6 million.
Group working capital has decreased during the year due to the
benefits of lower outsourced print prices, which has reduced
inventory values on similar volumes and higher deferred revenue
following the acquisition of E3 Technical and growth in revenue
from our professional businesses.
Group net cash ended the year down GBP1.2 million at GBP2.5
million (2017: GBP3.7 million) as the GBP4.7 million trade and
asset acquisition of E3 Technical was funded entirely from internal
cash.
At 31 May 2018, the net deficit, as reported in accordance with
IAS 19, on the Group's two defined benefit retirement schemes
decreased by GBP5.1 million to GBP18.7 million (2017: GBP23.8
million) with the UK scheme deficit decreasing to GBP17.4 million
(2017: GBP22.7 million) and the US deficit increasing to GBP1.3
million (2017: GBP1.1 million as restated - see note 1). The
combined total assets of the schemes were maintained at GBP34.1
million (2017: GBP34.1 million) while the total liabilities
decreased to GBP52.8 million (2017: GBP57.9 million). The primary
factor contributing to the lower liabilities was an increase in the
UK discount rate from 2.40% to 2.85%.
Cash flow
2018 2017
GBPm GBPm
=============================================== ====== ======
Net cash generated from operations before tax 11.6 9.7
Tax paid / (received) (1.5) 0.2
Investing activities (9.8) (5.7)
Financing activities (1.2) (1.4)
----------------------------------------------- ------ ------
Net movement in cash during the year (0.9) 2.8
Cash and cash equivalents at the beginning
of the year 3.7 0.5
Effect of foreign exchange rates (0.3) 0.4
----------------------------------------------- ------ ------
Cash and cash equivalents at the end of the
period 2.5 3.7
----------------------------------------------- ------ ------
The Group's net cash generated from operations before tax for
the year was up 20% at GBP11.6 million (2017: GBP9.7 million) which
represented 331% of adjusted Group operating profit (2017:
303%).
Richard Barker
Group Finance Director
4 September 2018
Consolidated Income Statement
Year ended 31 May 2018 Year ended 31 May 2017
------------------------------ ------------------------------
Adjusting
items Adjusting
(note items
Adjusted 2) Statutory Adjusted (note 2) Statutory
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 3 33,788 - 33,788 29,774 - 29,774
Cost of sales (13,641) - (13,641) (11,694) (1,282) (12,976)
-------- ---------
Gross profit 20,147 - 20,147 18,080 (1,282) 16,798
Other income 17 - 17 31 - 31
Distribution costs (8,151) (337) (8,488) (8,039) (209) (8,248)
Administrative
expenses (8,511) (1,591) (10,102) (6,864) (87) (6,951)
Gain on disposal
of property - 2,588 2,588 - 1,607 1,607
-------- ---------
Operating profit 3,502 660 4,162 3,208 29 3,237
Finance income 5 11 - 11 5 - 5
Finance costs 6 (57) - (57) (60) - (60)
Other finance costs
- retirement benefits (554) - (554) (518) - (518)
Profit before taxation 2,902 660 3,562 2,635 29 2,664
Taxation 7 (904) (1,164) (2,068) (1,211) (79) (1,290)
Profit/(loss) for
the period 1,998 (504) 1,494 1,424 (50) 1,374
======== ========= ======== ========= =========
Earnings per 20p Pence Pence Pence Pence
share 8
From continuing
operations
- Basic 13.2 9.9 9.4 9.1
- Diluted 13.1 9.8 9.4 9.1
Consolidated Statement of Comprehensive Income
Year Ended Year Ended
31 May 2018 31 May 2017
GBP'000 GBP'000
Profit for the period 1,494 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 5,718 (8,392)
- US Scheme (458) 451
Deferred tax on retirement benefit obligation
- UK Scheme (972) 1,427
- US Scheme 103 (180)
Deferred tax arising on change in corporation
tax rates (53) (144)
----------- -----------
4,338 (6,838)
Items that will or may be reclassified
to profit or loss in subsequent periods:
Exchange differences on translation of
foreign operations (530) 3,678
----------- -----------
Other comprehensive income/(expense) 3,808 (3,160)
Total comprehensive income/(expense)
for the financial period 5,302 (1,786)
=========== ===========
Consolidated Balance Sheet
Restated Restated
(1) (1) Year
Year Ended Year Ended Ended
31 May 2018 31 May 2017 31 May 2016
Note GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 1,525 4,011 8,434
Intangible assets 33,244 27,696 22,381
Deferred tax assets 5,693 7,839 7,366
Total non-current assets 40,462 39,546 38,181
Current assets
Inventories 3,084 3,965 4,614
Trade and other receivables 8,484 7,806 7,499
Tax recoverable 124 130 926
Cash and cash equivalents 4,809 7,036 2,548
----------- ----------- -----------
16,501 18,937 15,587
Assets held for sale 2,195 1,483 -
----------- ----------- -----------
Total current assets 18,696 20,420 15,587
Total assets 59,158 59,966 53,768
Current liabilities
Trade and other payables (9,813) (7,674) (5,188)
Borrowings (2,276) (3,331) (2,163)
Provisions (332) (1,164) (3,656)
Total current liabilities (12,421) (12,169) (11,007)
Non-current liabilities
Deferred tax liabilities (3,038) (3,287) (3,255)
Retirement benefit obligation 11 (18,712) (23,778) (15,855)
Total non-current liabilities (21,750) (27,065) (19,110)
Total liabilities (34,171) (39,234) (30,117)
Net assets 24,987 20,732 23,651
=========== =========== ===========
Equity
Share capital 3,270 3,270 3,270
Share premium 638 638 638
Treasury shares (2,447) (2,447) (2,447)
Retained earnings 15,803 11,018 17,615
Foreign currency translation
reserve 7,723 8,253 4,575
Total equity 24,987 20,732 23,651
=========== =========== ===========
(1) See Note 1 - Restatement of prior years
Consolidated Statement of Changes in Equity
Foreign
currency
Share Share Treasury translation Retained
capital premium shares reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 May 2016 3,270 638 (2,447) 4,575 18,199 24,235
Prior year restatement
(1) - - - - (584) (584)
------- ------- -------- ----------- -------- -------
Balance at 31 May 2016
restated (1) 3,270 638 (2,447) 4,575 17,615 23,651
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 - - - 3,678 (6,838) (3,160)
------- ------- -------- ----------- -------- -------
Total comprehensive
income - - - 3,678 (5,464) (1,786)
Dividends (note 9) - - - - (1,133) (1,133)
Balance at 31 May 2017
restated (1) 3,270 638 (2,447) 8,253 11,018 20,732
Profit for the period - - - - 1,494 1,494
------- ------- -------- ----------- -------- -------
Other comprehensive
income :
Currency translation
adjustments - - - (530) - (530)
Actuarial gains/(losses)
on defined benefit
plans (net of tax) - - - - 4,338 4,338
------- ------- -------- ----------- -------- -------
Total other comprehensive
income - - - (530) 4,338 3,808
------- ------- -------- ----------- -------- -------
Total comprehensive
income - - - (530) 5,832 5,302
Performance share plan - - - - 86 86
Dividends (note 9) - - - - (1,133) (1,133)
Balance at 31 May 2018 3,270 638 (2,447) 7,723 15,803 24,987
------- ------- -------- ----------- -------- -------
(1) See Note 1 - Restatement of prior years
Consolidated Cash Flow Statement
Year Ended Year Ended
31 May 2018 31 May 2017
GBP'000 GBP'000
Cash flows from operating activities
Profit after tax 1,494 1,374
Adjusted for :
Income tax expense 2,068 1,290
Interest payable and similar charges 57 60
Interest receivable (11) (5)
Retirement benefits finance costs 554 518
-----------
Operating profit 4,162 3,237
Depreciation on property, plant and
equipment 504 782
Impairment of assets held for sale 467 -
Amortisation of intangible assets 7,779 6,421
Impairment of intangible assets - 1,249
IAS 19 pensions current service cost net
of contributions paid (333) (636)
Movement in provisions (832) (2,492)
Performance share plan 86 -
Gain on disposal of asset held for
sale (2,588) -
Loss/(gain) on disposal of property,
plant and equipment 125 (963)
-----------
9,370 7,598
Changes in working capital :
Decrease in inventories 793 1,111
(Increase)/decrease in receivables (753) 724
Increase in payables 2,206 285
Net cash generated from operations 11,616 9,718
Tax (paid)/received (1,479) 159
Net cash generated by operating activities 10,137 9,877
Investing activities
Acquisition costs - business combinations,
net of cash acquired (4,720) (1,729)
Proceeds on disposal of property, plant
and equipment 3,798 4,329
Purchases of property, plant and equipment (499) (415)
Expenditure on product development (8,446) (7,922)
Interest received 11 5
Net cash used in investing activities (9,856) (5,732)
Financing activities
Repayment of borrowings - (177)
Dividends paid (1,133) (1,133)
Interest paid (57) (60)
Net cash used in financing activities (1,190) (1,370)
----------- -----------
Net (decrease)/increase in cash and
cash equivalents (909) 2,775
Cash and cash equivalents at beginning
of year 3,705 540
Effect of foreign exchange rate changes (263) 390
Cash and cash equivalents at end of
year 2,533 3,705
=========== ===========
Notes to the Results Announcement
1. Accounting policies
Basis of preparation
Haynes Publishing Group P.L.C. (the "Company") is a company
domiciled in the United Kingdom. The consolidated financial
statements of the Company for the year ended 31 May 2018 comprise
the Company and its subsidiaries (together referred to as the
"Group"). The Group financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union and the Companies Act 2006
applicable to companies reporting under IFRS. The Group financial
statements have been prepared on the historical cost basis except
for the treatment of certain financial instruments and are
presented in sterling, with all values rounded to the nearest
thousand pounds (GBP'000) except as indicated otherwise.
The financial information contained in this report does not
constitute the Company's statutory accounts for the year ended 31
May 2018 or for the year ended 31 May 2017. Statutory accounts for
the year ended 31 May 2017 has been reported on by the Independent
Auditors and the Independent Auditors' Report was unqualified, did
not draw attention to any matters by way of emphasis and did not
contain a statement under 498(2) or 498(3) of the Companies Act
2006. The statutory accounts for the year ended 31 May 2017 have
been filed with the Registrar of Companies.
The 2018 figures are based on unaudited accounts for the year
ended 31 May 2018. Statutory accounts for the year ended 31 May
2018 will be finalised based on the information presented in this
announcement and the auditors will report on those accounts once
they are finalised. The statutory accounts for the year ended 31
May 2018 will be delivered to the Registrar in due course.
The preliminary announcement has been approved by the Board of
Directors and authorised for issue on 4 September 2018. The Annual
Report 2018 will be approved by the Board of Directors and
authorised for issue on 19 September 2018.
Restatement of prior years
During the year, the methodology for calculating the discount
rate on the US defined benefit pension plan was amended to use an
appropriate yield curve basis as prescribed under IAS 19. The
impact of this change has been to increase the US retirement
benefit obligation by GBP754,000 in both the 31 May 2017 and 31 May
2016 balance sheets. Accordingly, the Consolidated Balance Sheet,
Consolidated Statement of Changes in Equity and affected notes have
been restated. The impact of this restatement on the 31 May 2016
and 31 May 2017 Consolidated Balance Sheets has been to increase
the US defined benefit pension plan liability by GBP754,000 and to
increase deferred tax assets by GBP170,000.
Basis of accounting
The accounting policies used to prepare this results
announcement are consistent with those applied in the 2017
consolidated financial statements. The International Accounting
Standards Board (IASB) and International Financial Reporting
Interpretations Committee (IFRIC) have issued standards, amendments
and interpretations with an effective date falling after the
Company's financial year-end.
These standards, amendments and interpretations will be adopted
in accordance with their effective dates and have not been adopted
in these financial statements. The directors are currently
assessing the impact of the new standards, amendments and
interpretations which are effective for periods beginning after 1
January 2018 and which have not been adopted early.
Foreign exchange rates
The foreign exchange rates used in the financial statements to
consolidate the overseas subsidiaries are as follows (local
currency equivalent to GBP1):
Year-end rate Average rate
2018 2017 2018 2017
US dollar 1.33 1.29 1.35 1.28
Euro 1.14 1.15 1.13 1.17
Australian dollar 1.76 1.74 1.74 1.70
2. Adjusting items
31 May 2018 31 May 2017
GBP'000 GBP'000
Adjusting costs included in cost of sales:
* Write down of intangible assets - (1,282)
Adjusting gains included in gain on disposal
of property:
* Gain on sale of property 2,588 1,608
Adjusting costs included in selling and distribution
expenses:
* Restructuring costs (337) (209)
Adjusting costs included in administrative
expenses:
* Write down of assets held for sale (467) -
* Restructuring costs (635) -
* Acquired intangible amortisation charge (318) -
* Acquisition expenses (171) (88)
----------- -----------
Total adjusting gains effecting profit 660 29
Adjustments to tax (1,164) (79)
----------- -----------
Total adjusting charge to income statement (504) 50
=========== ===========
The adjustment to selling and distribution costs during the year
relate to the implementation of the restructuring programme in the
Australian operation and the adjustment to administration costs
relate to one-off employee severance packages and past service
pension costs.
The gain from the sale of property has arisen following the
implementation of the global operational, cost and structure review
undertaken during a prior year and relates to the sale of a
property in the US.
The write down of assets held for sale in the current year
relates to a UK freehold property with the net book value being
adjusted to its recoverable amount.
Amortisation of acquired intangible assets are treated as an
adjusting item to provide stakeholders with additional useful
information to assess the trading performance of the Group on a
consistent basis.
The 31 May 2018 acquisition expenses relate to the successful
acquisition of the trade and assets of E3 Technical on 30 September
2017.
The adjustment to tax relates to the reduction in the US
deferred tax balances as a result of the cut in the federal tax
rate from 35% to 21% as well including the tax effect on the
adjusting profit items.
Adjusting items are those items which warrant separate
disclosure by virtue of their scale and nature to enable a full
understanding of the Groups financial performance.
3. Revenue
31 May 2018 31 May 2017
GBP'000 GBP'000
Revenue by geographical destination on continuing
operations:
United Kingdom 8,733 6,873
Rest of Europe 12,804 10,527
United States of America 10,145 10,490
Australasia 1,525 1,322
Rest of World 581 562
----------- -----------
Total consolidated revenue 33,788 29,774
=========== ===========
4. Segmental analysis
For management and internal reporting purposes, the Group is
organised into two geographical operating segments:
- UK and Europe
- North America and Australia
The UK and European business with headquarters in Sparkford,
Somerset has subsidiaries in the UK, Netherlands, Italy, Spain,
Romania and Germany. Its core business is the publication and
supply of automotive repair and technical information to the DIY
and professional automotive aftermarkets in both a print and
digital format. Through OATS, the UK and European business also
supplies lubricants data to European and global oil companies .
The North American and Australian business with headquarters
near Los Angeles, California publishes DIY repair manuals for cars
and motorcycles in both a print and digital format. The business
publishes titles under the Haynes, Chilton and Clymer brands, in
both English and Spanish. On 1 June 2017, the Australian branch
operation based in Sydney, incorporated as a separate legal entity
(Haynes Australia Pty Limited) and became a 100% subsidiary of
Haynes Publishing Group P.L.C.. The Australian company publishes
print manuals under both the Haynes and Gregory's brands.
For the year under review the above two operating segments were
each organised and managed separately and treated as distinct
operating and reportable segments in line with the provisions of
IFRS 8. The identification of the two operating segments has been
based on the reports reviewed by the chief operating decision
maker, which form the basis for operational decision making.
Analysis of geographic operating segments
North
UK & America
Europe & Australia Consolidated
Revenue and results : 2018 2018 2018
GBP'000 GBP'000 GBP'000
Segmental revenue
Total segmental revenue 22,873 11,358 34,231
Inter-segmental sales ([1]) (176) (267) (443)
-------- ------------- ---------------
Total external revenue 22,697 11,091 33,788
-------- ------------- ---------------
Segment result
Adjusted operating profit 4,805 399 5,204
Adjusting items ([2]) (368) 1,963 1,595
Interest receivable 9 1 10
Interest payable (46) - (46)
-------- ------------- ---------------
Segment profit after adjustments
and interest 4,400 2,363 6,763
Unallocated head office income less
expenses ([3]) (3,201)
Consolidated profit before tax 3,562
Taxation ([4]) (2,068)
---------------
Consolidated profit after tax 1,494
===============
[1] Inter-segment sales are charged at the prevailing market
rates.
[2] Details of the adjusting items are shown in note 2 of this
Results Announcement.
[3] Unallocated head office income less expenses includes
GBP935,000 of adjusting items.
[4] The charge to taxation relates to the consolidated Group.
Included within the charge to taxation is GBP752,000 which relates
to the UK & European operations and GBP1,501,000 which relates
to the North American & Australian operations.
4. Segmental analysis (continued)
North
UK & America
Europe & Australia Consolidated
Revenue and results : 2017 2017 2017
GBP'000 GBP'000 GBP'000
Segmental revenue
Total segmental revenue 18,129 12,543 30,672
Inter-segmental sales ([1]) (342) (556) (898)
-------- ------------- ---------------
Total external revenue 17,787 11,987 29,774
-------- ------------- ---------------
Segment result
Adjusted operating profit 2,704 643 3,347
Adjusting items ([2]) (213) 1,180 967
Interest receivable 2 3 5
Interest payable (50) (2) (52)
-------- ------------- ---------------
Segment profit after adjustments and
interest 2,443 1,824 4,267
Unallocated head office income less
expenses ([3]) (1,603)
Consolidated profit before tax 2,664
Taxation ([4]) (1,290)
---------------
Consolidated profit after tax 1,374
===============
[1] Inter-segment sales are charged at the prevailing market
rates.
[2] Details of the adjusting items are shown in note 2 of this
Results Announcement.
[3] Unallocated head office income less expenses includes
GBP938,000 of adjusting items.
[4] The charge to taxation relates to the consolidated Group.
Included within the charge to taxation is GBP659,000 which relates
to the UK & European operations and GBP614,000 which relates to
the North American & Australian operations.
5. Finance income
31 May 2018 31 May 2017
GBP'000 GBP'000
Interest receivable on bank deposits 11 5
=========== ===========
6. Finance costs
31 May 2018 31 May 2017
GBP'000 GBP'000
Interest payable on bank loans and overdrafts 57 60
=========== ===========
7. Taxation
31 May 2018 31 May 2017
GBP'000 GBP'000
Analysis of charge during the period :
Current tax
- UK corporation tax on profits for the period - -
- Foreign tax 1,415 847
- Adjustments in respect of prior periods (3) 32
----------- -----------
1,412 879
Deferred tax
- Origination and reversal of temporary differences 656 411
Total taxation in the Consolidated Income
Statement 2,068 1,290
=========== ===========
The effective rate of tax is higher than the standard rate of UK
corporation tax due to the mix of profits from overseas operations
where the tax rates are higher than in the UK. There is an
unrecognised deferred tax asset for temporary timing differences
associated with the Group's UK entities. Had the asset been
recognised it would have reduced the tax charge by GBP970,000
giving an overall effective tax rate of 30.8% for the year.
In 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%. In calculation of the current year US tax charge a hybrid rate
has been used for the year at 28.5%. The US deferred tax balances
have been revalued at a rate of 22.5% as a combination of the
federal and state tax rates substantively enacted at 31 May
2018.
8. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following:-
Adjusted Statutory Adjusted Statutory
2018 2018 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000
Earnings :
Profit after tax attributable
to equity holders of the Company-
continuing operations 1,998 1,494 1,424 1,374
---------- ---------- ---------- ----------
No. No. No. No.
Number of shares :
Weighted average number of
shares for basic earnings per
share ([a]) 15,111,540 15,111,540 15,111,540 15,111,540
---------- ---------- ---------- ----------
Adjusted weighted average for
diluted earnings per share
([a]) 15,261,207 15,261,207 15,111,540 15,111,540
---------- ---------- ---------- ----------
Basic earnings per share (pence) 13.2 9.9 9.4 9.1
---------- ---------- ---------- ----------
Diluted earnings per share
(pence) 13.1 9.8 9.4 9.1
---------- ---------- ---------- ----------
([a]) During the year the Company held 1,240,000 of its ordinary shares in treasury.
As at 31 May 2018 there were 149,667 outstanding options on the
Company's 'Ordinary' shares.
As at 31 May 2017 there were no outstanding options on either of
the Company's two classes of shares and there is no difference
between the earnings used in the basic and diluted earnings per
share calculation.
9. Dividends
31 May 2018 31 May 2017
GBP'000 GBP'000
Amounts recognised as distributions to equity
holders :
Final dividend for the year ended 31 May 2017
of 4.0p per share
(2016: 4.0p per share) 604 604
Interim dividend for the year ended 31 May
2018 of 3.5p per share (2017: 3.5p per share) 529 529
1,133 1,133
===========
Proposed final dividend for the year ended
31 May 2018 of 4.0p per share (2017: 4.0p
per share) 604 604
As at 31 May 2018, the Company holds 1,240,000 Ordinary shares
in treasury which represents 16.9% of the Ordinary share capital
and 7.6% of the Company's total share capital. The Company is not
able to vote on the treasury shares and the treasury shares carry
no right to receive any dividend or other distribution of assets
other than in relation to an issue of bonus shares.
The proposed final dividend is subject to approval by
shareholders at the Annual General Meeting to be held on 8 November
2018 and has not been included as a liability in these financial
statements.
Subject to final approval by shareholders the final dividend
will be paid on 15 November 2018 to shareholders on the register at
the close of business on 26 October 2018.
10. Analysis of the changes in cash and cash equivalents
As at Exchange As at
1 June 2017 Cash flow movements 31 May 2018
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 7,036 (1,964) (263) 4,809
Bank overdrafts (3,331) 1,055 - (2,276)
3,705 (909) (263) 2,533
=========== ========= ========= ===========
11. Retirement benefit obligation
The Group has 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. All scheme
assets are held independently of the Group and its
subsidiaries.
As at 31 May 2018 the financial position of the two defined
benefit schemes have been updated by qualified independent
actuaries in line with the requirements of IAS 19 and the combined
movements on the two schemes are shown below:
Restated
(1)
31 May 2018 31 May 2017
GBP'000 GBP'000
Consolidated retirement benefit obligation
at beginning of period (23,778) (15,885)
Movement in the period :
- Total expenses charged in the income statement (1,571) (1,397)
- Contributions paid 1,350 1,515
- Actuarial gains/(losses) taken directly
to reserves 5,260 (7,941)
- Foreign currency exchange rate movements 27 (100)
Consolidated retirement benefit obligation
at end of period (18,712) (23,778)
============ ============
(1) See Note 1 - Restatement of prior years
12. 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:
Fair value Recognised
Book on
value acquisition
GBP'000 GBP'000 GBP'000
Assets Acquired
Intangible assets - 4,671 4,671
Trade and other receivables 390 - 390
Other payables (390) - (390)
Deferred tax liability - (215) (215)
Fair value of net assets - 4,456 4,456
======= ==========
Goodwill arising on acquisition ([1]) 264
------------
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) ([2]) 171
Net cash outflow 4,891
============
([1]) Intangible assets amounting to GBP264,000 could not be
individually separated and reliably measured and accordingly, have
been included as goodwill (the costs are deductible for income tax
purposes). The goodwill assets include the E3 Technical business
standing in its particular market place and anticipated synergies
following is acquisition by the Haynes Group.
([2]) The costs of acquisition of GBP171,000 were expensed as
incurred in the period and have been included as an adjusting item
within administrative expenses.
During the eight month period since acquisition, the E3
Technical business contributed GBP1.9 million of incremental
revenue to the Group. If the acquisition had been made at the start
of the financial period, the incremental revenue from the acquired
business would have been GBP2.8 million. During the period since
acquisition, the E3 Technical business operated under a
Transitional Services Arrangement utilising shared overhead and IT
services and as such it is not practical to quantify the associated
profit contribution during this period.
13. Other information
The Directors Report and audited Report & Accounts for the
financial year ended 31 May 2018 will be posted to shareholders on
24 September 2018 and delivered to the Registrar of Companies
following the Annual General Meeting which will be held on 8
November 2018. Copies of the Directors' report and audited Report
& Accounts will be available from the Group Company Secretary,
Haynes Publishing Group P.L.C., Sparkford, Near Yeovil, Somerset,
BA22 7JJ (telephone 01963 440635) after 25 September 2018.
This results announcement is not being posted to shareholders,
but is available on the UK website
http://www.haynes.com/investor.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR BLGDCLGGBGIS
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