TIDMHYNS
RNS Number : 6847Q
Haynes Publishing Group PLC
14 September 2017
HAYNES PUBLISHING GROUP P.L.C.
PRELIMINARY UNAUDITED RESULTS FOR THE YEARED
31 May 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 12 months
ended 31 May 2017.
Business and Financial Highlights
12 months 12 months Change
to to YoY
31 May 2017 31 May 2016 (Year-on-Year)
-------------------------- ------------- ------------- ----------------
Group revenue(1) GBP29.8m GBP25.7m +16%
-------------------------- ------------- ------------- ----------------
Adjusted EBITDA(2) GBP10.4m GBP8.4m +24%
-------------------------- ------------- ------------- ----------------
Adjusted group operating
profit(2) GBP3.2m GBP2.5m +28%
-------------------------- ------------- ------------- ----------------
Adjusted group profit
before tax(2) GBP2.6m GBP1.9m +37%
-------------------------- ------------- ------------- ----------------
Adjusted basic earnings
per share(2) 9.4p 7.6p +24%
-------------------------- ------------- ------------- ----------------
Total dividend 7.5p 7.5p -
-------------------------- ------------- ------------- ----------------
Net cash (3/4) GBP3.7m GBP0.4m +GBP3.3m
-------------------------- ------------- ------------- ----------------
-- Acquisition of OATS Limited in December 2016, a leading
global equipment and lubricants database, adding GBP1.0 million to
Group revenue and GBP0.1 million to Group profit before tax.
-- Revenue from the Group's digital products increase YoY by 51%
to GBP11.9 million (2016: GBP7.9 million) representing 40% of total
Group revenue (2016: 31%).
-- UK & European revenue up 35% YoY driven by HaynesPro
growth in Europe and strong sales of UK non-automotive titles.
-- Local currency North American & Australian revenue down 18% YoY.
-- Group investment in new product development up 23% to GBP7.9
million (2016: GBP6.4 million).
-- Property disposals in the US and Australia, and
decommissioned US plant & equipment generate GBP4.3 million of
cash inflow.
-- Group net cash increased to GBP3.7 million (2016: GBP0.4 million).
-- Net cash generated from operating activities (after tax) of
GBP9.9 million, up 27% YoY (2016: GBP7.8 million).
Eddie Bell, Chairman of Haynes Group, commented:
"2016/17 has been a very encouraging year for Haynes. We have
implemented a major restructuring programme that has significantly
lowered the Group's fixed cost base. The new Executive Management
Team has delivered on their financial targets and the Group has
realised strong underlying revenue and profit growth.
"Following the acquisition of OATS, a leading global lubricants
database, we have strengthened and broadened our professional
product offering, whilst our considerable investment in consumer
digital initiatives has established a clear path for future
growth.
"I would like to thank our staff for all their hard work and
dedication during the year. Their considerable efforts have been a
major driving force behind the changes we have been able to
implement over the past twelve months."
Notes to the financial highlights :
(1) Group revenue excluding exchange rate movements of GBP26.6
million.
(2) Adjusted to exclude a credit of GBP29,000 for exceptional
items (2016: costs of GBP4.4 million). Reported operating profit of
GBP3.2 million (2016: loss of GBP2.0 million). Reported earnings
per share were 9.1 pence (2016: loss per share of 11.8 pence).
EBITDA including exceptional items was GBP10.4 million (2016:
GBP4.0 million).
(3) Net cash defined as cash at bank net of bank overdrafts and
bank loans.
(4) 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
Karri Vuori
Erik Anderson
Will Wickham
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.
Chairman's Statement
In my Chairman's Statement last year, I outlined the extensive
global Operational and Cost Restructuring ("OCR") programme that
the Group would be implementing during its 2016/2017 financial
year. I am pleased to be able to report that the operational
aspects of this exercise are now complete and that the Group has
significantly reduced its fixed cost base.
At the start of the 2016/17 financial year, I further set out
clear operational and financial objectives for the Group to be
achieved over the 12 month period ahead. I can confirm that the
Group has delivered a strong set of results during this period of
transformation. For the first time in many years, Haynes has set an
internal budget showing revenue and profit growth and been able to
deliver on both targets. I am confident that the operational,
financial and cultural turnaround of the Group is progressing to
plan and I thank the Board and the Executive Management Team for
their efforts in making this possible.
Financial highlights
Haynes has experienced mixed trading from Group operations
during 2016/17. The Group's UK and European operations have
delivered healthy revenue and profit growth. In the UK, following a
restructuring in 2013/14, a reinvigorated and re-focussed practical
enthusiast publishing programme has helped to boost sales. In
mainland Europe, the Group's range of professional data solutions,
branded HaynesPro, has enjoyed another excellent year of revenue
and profit growth. In the US, trading has been more difficult and
Haynes continues to experience a softening of sales with certain of
its large retail customers. However, the major cost reduction
programme that Haynes implemented during the year in response to
this trend has helped mitigate the impact of lower US revenue on
Group profits.
With a large proportion of the Group's operations located in
Europe and the US, Haynes has benefitted from a weaker Sterling
against the Euro and US Dollar during the year. Overall, the impact
of the currency movements has increased Group revenue by GBP3.1
million and profit before tax by GBP0.6 million. Notwithstanding
these currency benefits, the Group has delivered a strong
performance over the past 12 months, with overall revenue
(including OATS) up 16% at GBP29.8 million (2016: GBP25.7 million)
and profit before tax and exceptional items up 37% at GBP2.6
million (2016: GBP1.9 million).
Exceptional Items
A key recommendation of the OCR was to relocate the Group's
Australian employees to new premises. In June 2016, Haynes
exchanged contracts on the former Sydney office and, in November
2016, the Australian team moved into more modern leasehold premises
on the outskirts of Sydney. In December 2016, the Group completed
on the sale of the former freehold property for A$3.8 million
(GBP2.2 million), which led to a gain on the disposal of A$1.7
million (GBP1.0 million).
Following the successful outsourcing of the Group's US
production and distribution operations, the two Nashville freehold
sites were decommissioned and marketed for sale. The smaller of the
two properties was sold in May 2017 for $1.5 million (GBP1.2
million) giving rise to a profit on disposal of $0.8million (GBP0.6
million).
As mentioned in previous Annual Reports, the Group has been
investing heavily in the development of digital platforms for its
global consumer markets. The benefits of this investment have
started to be realised during 2016/17 with the launch of new UK and
US websites, the release of our redesigned and responsive online
manuals and the recent launch of the Haynes OnDemand platform,
which contains nearly 2,000 task specific videos on the top selling
vehicles in both the US and UK markets. As part of the Group's
digital development programme it has been necessary to replace a
large part of its existing digital platform, where it would have
been inefficient from a time and cost perspective to integrate with
newer technologies going forward. The total write-down of these
costs during the year was GBP1.3 million.
When added to the GBP0.3 million of professional and
restructuring costs associated with the OATS acquisition, the net
impact of these events has led to a total exceptional credit in the
Income Statement during the year of less than GBP0.1 million.
Acquisition
A key objective of the Board is to build a business capable of
generating long-term sustainable revenue and profit growth. Whilst
there are excellent opportunities to achieve this through organic
channels, the Board views acquisitions as an important and
complementary component of this growth strategy. The first
acquisition for the new Management Team was completed in December
2016 with the acquisition of OATS Ltd for GBP2.4 million.
As reported in July, the Group has been in discussions with
Solera Holdings Inc ("Solera") regarding a proposal to acquire the
E3 Technical business from Carweb, a UK subsidiary of Solera. These
discussions remain ongoing and further announcements in relation to
this proposed acquisition will be made as appropriate.
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 2017, maintains the total dividend for the year at 7.5 pence
(2016: 7.5 pence). Subject to approval by shareholders, the final
dividend will be paid on 16 November 2017 to shareholders on the
register at the close of business on 27 October 2017 (with an
ex-dividend date of 26 October 2017).
Board
During the year, the Board was strengthened with the appointment
of two dynamic non-executive directors, both of whom have
considerable experience of working in digital businesses. Steve
Daykin has taken on the role as Senior Independent Director and
chairs the Audit Committee, while Nina Wright has taken over as
Chair of the Remuneration and Nominations Committee. Jim Nicholson,
Senior Vice President of Haynes North America Inc, joined the Board
on 1 June this year after working for Group for over 25 years and
successfully leading the recent restructuring of the US
business.
On 18 July 2017, Haynes gained shareholder approval to implement
a long term incentive plan ("LTIP") for the senior members of the
Executive and Management Team. The Group will benefit from the LTIP
which will both recognise the achievement of the Executive and
Management Team in turning around the Group and more closely align
the long term interests of senior executives to those of
shareholders.
Group employees
The past 12 months have presented a number of challenges for
employees throughout the Group. In the US and Australia, the
businesses have undergone major transformations which will have
been disruptive at times. In the UK, the business turnaround
continues and, whilst still not yet profitable, significant
progress has been made towards restoring profitability. In Europe,
employees in the Netherlands, Romania, Spain, Italy and Germany
have once again risen to the challenges raised by the rapid growth
experienced by HaynesPro.
An important recommendation of the OCR was to roll-out a group
wide employee appraisal scheme and discretionary profit share
arrangement. Both schemes have now been implemented for all Group
employees.
Outlook
The Group's transition from a vertically integrated print
publisher to a focussed multi-media content provider is firmly on
course.
The way in which Haynes captures, stores and delivers content is
at the core of its business model. Haynes is embarking on a major
programme of integrating the data capturing, storage and delivery
processes across the Group. This exciting initiative will take up
to two years to complete and, once in place, will enable the Group
to deliver its unique range of content in fresh and dynamic
ways.
With a technically skilled and enthusiastic Management Team
being supported by a Board that combines youth and sector
experience, I believe the Group is well placed to deliver on its
growth plans over the next 3 years and beyond.
Eddie Bell
Chairman
13 September 2017
Chief Executive's Review
Overall operational review
The Group has made significant progress towards achieving its
objective of becoming a multi-media provider of specialist
practical content. The extensive restructuring programme initiated
18 months ago has reduced costs, allowing the Group to invest in
new initiatives to improve the experiences of our customers. The
restructuring has enabled our team to focus on enhancing our
professional datasets and services, increase our practical
enthusiasts publishing programme, and develop new digital
initiatives for consumers alongside our print manual programme.
The increase in underlying revenue and profit during 2016/17
together with improved earnings per share gives reassurance that we
are on the right track.
The Group will continue to pursue growth organically and through
strategic acquisitions. The purchase of OATS in December 2016 was a
major development for the Group; the addition of a global
lubricants dataset provides essential technical data for our
professional automotive customers. OATS existing customers realised
an immediate benefit through the integration of the HaynesPro
vehicle database, which increased the Group's European vehicle
coverage to over 98%. During 2017/18, OATS lubricants information
will also add value to the Group's consumer-facing offering.
As a result of the Group pivoting from being a vertically
integrated print publisher, cost efficiencies have been realised
and opened up new publishing opportunities. The highly successful
gift manual range "Haynes Explains" illustrates the opportunities
that have been created by combining editorial creativity with lower
outsourced production costs. As outlined in last year's Annual
Report, the full benefit of production savings for the manual range
will continue to be realised as inventory is replenished during our
year end to 31 May 2018.
Since we put the Group's digital development team in place in
2015/16, we have benefited from an enhanced digital capacity that
now includes copywriting, video production and design skills. In
2016/17, Haynes launched new UK and US websites and released an
improved responsive online manual which works seamlessly across
mobile, tablet and desktop devices.
At the very end of the financial year, the Group completed
development work on Haynes OnDemand, a video service that enhances
our written and photographic content and presents it through HD
video. This information is offered in a task specific format,
allowing car owners to access the precise content they need to
successfully complete a given activity. The Group's editorial team
has created nearly two thousand specific videos covering the top
selling US and UK vehicles. These videos will populate the Haynes
OnDemand offering.
First Quarter Trading
Through the first quarter of 2017/18, Group trading on a
like-for-like basis (excluding exchange rate movements and OATS) is
tracking 7% ahead of last year. At an entity level, apart from
Australia, where revenue is below last year but following the
structural changes made in 2015/16 is ahead of target, all parts of
the Group in their local currencies are trading ahead of last
year.
Review of operations
Overall Group revenue ended the year up 16% at GBP29.8 million
(2016: GBP25.7 million). With the cost savings achieved through the
OCR restructuring, coupled with favourable exchange rates, the
higher revenue helped to increase profit before tax and exceptional
items by 37% to GBP2.6 million (2016: GBP1.9 million).
North America and Australia
In North American and Australian markets, the main focus has
been on implementing the recommendations in last year's OCR review
and working closely with retail partners to address excess
inventory concerns.
In October 2016, all US manual inventory was relocated to our
third party distributor in Chicago. In December 2016, printing
ceased at Nashville. Within 6 months, US management decommissioned
the Nashville site, sold the plant and machinery for $1.2 million
(exceeding target value) and sold one of our two freehold buildings
in Nashville for $1.5 million. Shortly after the year-end, Haynes
accepted an offer on the second building which should complete in
the next few weeks.
On the trading front, the US business was affected by the
continuing inventory reduction programmes of two key retailers
which has led to a drop in year-on-year revenues; these two retail
customers accounted for over 70% of the US revenue shortfall
against the prior year. In both cases, it is encouraging to note
that new manuals have been ranged in-store and that out of store
sales exceeded replenishment purchases of our manuals during the
year.
In Australia, we relocated our business in November 2016 and a
month later completed on the sale of the former freehold property
for A$3.8 million. From a trading perspective, the retail
challenges we face in the Australian market are very similar to
those in the US with high retail pricing and key retailers holding
excess inventory. Australian management continues to work closely
with key retailers to address these issues and we are beginning to
make progress in this respect.
UK and Europe
The turnaround of Haynes' UK operations is progressing according
to plan. Revenue from the sales of automotive manuals through
online retailers has continued to grow, and this is now the largest
distribution channel for UK automotive print manuals. Sales of UK
motorcycle titles had a particularly strong year, with volume sales
of motorcycle manuals higher than they were 10 years ago. Last
year, the Group took the decision to combine the automotive and
non-automotive sales functions. This re-alignment combined with a
strong publishing programme, has boosted sales growth from our
non-automotive division and helped secure presence in the
independent book market. The Group has widened the distribution of
our practical enthusiasts' titles, and now sells through an
increasing number of supermarket chains and online retailers.
In the Group's professional markets in Europe, Haynes' upgraded
electronics module 'VESA MKII', which helps mechanics diagnose and
repair complex electronic issues in vehicles, was launched at the
Automechanika trade show in Germany in September 2016 and is now
firmly established as a market leading product in Europe. The
Group's commitment to the highest quality standards was confirmed
in October 2016, when HaynesPro was awarded ISO9001 and ISO14001
certifications covering its data departments in the Netherlands and
Romania.
People
Since becoming CEO in June 2016, I have spent time with Haynes
teams in the UK, US, Australia, the Netherlands and Romania. The
opportunity to engage with all Group talent has been highly
rewarding and provided insight into further growth opportunities
and business ideas. Haynes has talented, dedicated and loyal people
around the world, and I wish to thank everyone for their individual
and collective achievements during a period of considerable
change.
Outlook and future developments
At a Group level, the creation of a global content centre has a
clear objective; the integration of our data capturing, storage and
delivery processes across all our businesses. By aggregating
Haynes' considerable data, the Group will be able to offer
customers information that is unique, complete and highly valuable.
Managing this integration process will be a priority project over
the next two years.
Haynes believes it is important to offer vehicle owners a choice
on how they access and use our content. The Group will increase
print manual ranges during the year and continue to develop digital
content. This will let people access trustworthy, reliable and
accurate information in a convenient format of their choosing. Much
improved Online Manuals are already fully functional, and have been
designed to enable full access and sales opportunities on retail
and e-commerce customers' websites.
Haynes OnDemand will be made available for distribution through
retail and e-commerce channels later in the year. The video based
instructions will help build drivers' confidence in their ability
to service, maintain and repair cars.
In the professional market, the integration of OATS will be a
key focus as Haynes develops and integrates its enlarged
professional offering. HaynesPro will continue to work in close
partnership with our distribution and diagnostic equipment partners
to help them provide solutions for their end users. The focus will
remain on providing excellent technical datasets and diagnostic
solutions and services that enable partners to build lasting
relationships with their customers and the independent garage
trade.
We recognise that challenges remain in our important vehicle
print manual business. However, the steps taken to reduce our cost
base, continuing investment in new products and services across the
consumer and professional businesses, and steady growth in digital
revenues gives me confidence about the Group's future
prospects.
As a business we have the talent, ambition and clarity of
purpose to grow by continuing to offer reliable, accurate and
innovative data and information solutions to our customers around
the world.
J Haynes
Chief Executive Officer
13 September 2017
Chief Financial Officer's Review
The 2017 financial year represents the 52 weeks to 31 May 2017
("the financial year") and the comparative period represents the 52
weeks to 31 May 2016 ("prior year").
Group revenue
2017 2016 Movement
GBPm GBPm %
============= ====== ====== =========
Total Group
revenue 29.8 25.7 +16%
============= ====== ====== =========
Boosted by strong revenue growth from the professional product
ranges in mainland Europe and a strong first six months of trading
from non-automotive titles in the UK, Group revenue ended the year
up 16% at GBP29.8 million (2016: GBP25.7 million).
The weakness of Sterling since June 2016 against the US Dollar
and the Euro, led to an average exchange rate for the year of $1.28
(2016: $1.49) and EUR1.17 (2016: EUR1.35) respectively and helped
increase Group revenue by GBP3.1 million. The benefit from exchange
rate movements helped to offset softer US revenue which, in local
currency, ended the year down 20%.
This is the first set of Group results to include OATS, which
added GBP1.0 million of revenue for the five months since
acquisition.
Last year we reported that revenue from the Group's digital
product ranges had increased to GBP7.9 million. This year, total
revenue from our digital product ranges has increased to GBP11.9
million and now represents 40% of total Group revenue (2016:
31%).
Group gross profit
Movement
2017(1) 2016(1) %
======================= ========== ========== =========
Adjusted gross
profit GBPm 18.1 15.5 +17%
Adjusted gross
margin % 60.7 60.3 +40 bps
================ ====== ========== ========== =========
(1) Adjusted to exclude exceptional items. Reported gross profit
was GBP16.8 million (2016: GBP13.8 million) with a gross margin of
56.4% (2016: 53.6%)
In monetary terms, overall adjusted Group gross profit ended the
12 month period up 17% at GBP18.1 million (2016: GBP15.5 million)
with a gross margin of 60.7% (2016: 60.3%). The higher margin from
our professional products in mainland Europe was partly offset by
softer trading in consumer automotive print manuals in the US.
Group operating profit
Movement
2017(1) 2016(1) %
======= ========== ========== =========
Adjusted Group operating
profit (1) GBPm 3.2 2.5 +28%
Adjusted Group +120
operating margin % 10.8 9.6 bps
========================== ======= ========== ========== =========
(1) Adjusted to exclude exceptional items. Reported Group
operating profit was GBP3.2 million (2016: loss of GBP2.0 million)
with a Group operating margin of 10.9% (2016: negative 7.6%)
Group operating profit before exceptional costs was 28% ahead of
the prior year at GBP3.2 million (2016: GBP2.5 million). The
movement in the US and Euro average exchange rates against Sterling
during the year has inflated Group overheads, with overheads before
exceptional items up 13%. However, excluding currency movements and
OATS, overheads before exceptional items were in line with the
prior year at GBP13.1 million (2016: GBP13.1 million).
Group net finance costs ended the year in line with the prior
year at GBP0.1 million (2016: GBP0.1 million) and primarily relate
to interest on servicing the UK overdraft. Other finance costs,
which relate to the interest charge on the pension schemes'
liabilities net of interest on the pension schemes' assets, also
ended the year in line with the prior period at GBP0.5 million
(2016: GBP0.5 million).
Group earnings and earnings per share
2017 2016 Movement
(1) (1) %
GBPm GBPm
========================= === ====== ====== =========
Adjusted profit
before tax 2.6 1.9 +37%
Adjusted taxation
(2) 1.2 0.7 +71%
Adjusted profit for the
period (2) 1.4 1.2 +17%
Pence Pence
Adjusted basic
EPS (2) 9.4 7.6 +24%
============================== ====== ====== =========
(1) Adjusted to exclude exceptional items. Reported profit
before tax was GBP2.7 million (2016: loss of GBP2.5 million),
taxation was GBP1.3 million (2016: credit of GBP0.8 million) and
the reported loss for the period was GBP1.4 million (2016: loss of
GBP1.8 million). Reported earnings per share were 9.1 pence (2016:
loss per share of 11.8 pence).
Group pre-tax profit before exceptional items ended the year up
37% at GBP2.6 million (2016: GBP1.9 million). The Group tax charge
for the year before exceptional items was GBP1.2 million (2016:
GBP0.7 million) giving an effective tax rate before exceptional
items of 46.0% (2016: 38.6%). The higher effective tax rate being
due to the mix of profits from the US and the Netherlands, where
the tax rates are higher than in the UK and an unrecognised
deferred tax asset in relation to UK losses. Earnings per share
before exceptional items increased to 9.4 pence (2016: 7.6
pence).
North America and Australia segmental review
2017 2016
$m $m Movement
=============================== ==================== ===== ==========
Segmental revenue 15.3 18.6 (18%)
Segmental operating profit
before exceptional items and
interest 0.6 0.5 +20%
=============================== ==================== ===== ==========
2017 2016
GBPm GBPm Movement
=============================== ==================== ====== ===========
Segmental revenue 12.0 12.5 (4%)
Segmental operating profit
before exceptional items and
interest 0.5 0.3 +67%
=============================== ==================== ====== ===========
North American and Australian segmental revenue ended the year
down 18% at $15.3 million (2016: $18.6 million) with local currency
US revenue down 20% and Australian local currency revenue up 4%.
Lower ordering from two key US retailers accounted for over
two-thirds of the US revenue shortfall. However, management take
comfort that out of store sales in both these US retailers have
been tracking ahead of replenishment orders. After translation to
Sterling, the movement in the average exchange rate during the year
increased the North American and Australia revenue by GBP1.7
million and left overall segmental revenue for the North American
and Australian business down 4% at GBP12.0 million (2016: GBP12.5
million).
Despite the decline in US revenue, the cost saving measures
implemented during the year have helped to protect the impact on
segmental operating profit before exceptional items and interest
which, in local currency, ended the year up 20% at $0.6 million
(2016: $0.5 million). After translation to Sterling, segmental
operating profit before exceptional items and interest was up 67%
at GBP0.5 million (2016: GBP0.3 million) which included an exchange
rate movement related benefit of GBP0.1 million. Including
exceptional costs and interest the segmental profit for the year
was GBP1.8 million (2016: loss of GBP3.4 million).
UK and Europe segmental review
2017 2016
GBPm GBPm Movement
=============================== ====== ====== ===========
Segmental revenue 17.8 13.2 +35%
Segmental operating profit
before exceptional items and
interest 2.7 1.5 +80%
=============================== ====== ====== ===========
Segmental revenue from UK and European operations ended the year
up 35% at GBP17.8 million (2016: GBP13.2 million). UK consumer
revenue was up 13% driven by strong sales of the non-automotive
titles. In particular the 'Haynes Explains' titles aimed at the UK
gift market helped increase non-automotive title revenue by 36%. UK
automotive manual revenue ended the year up 1%. Local currency
European revenue was up 18% and revenue from the OATS lubricants
data business acquired in December 2016 contributed GBP1.0 million
to overall UK and European revenue. On a like-for-like basis,
excluding the impact of exchange movements and excluding the
revenue from OATS, UK and European revenue was up 17% at GBP15.4
million (2016: GBP13.2 million).
UK and European segmental operating profit before exceptional
items and interest was up 80% at GBP2.7 million (2016: GBP1.5
million) which includes a benefit from exchange rate movements of
GBP0.5 million. Including exceptional costs and interest, the
segmental profit for the year was up 108% at GBP2.5 million (2016:
GBP1.2 million).
Exceptional items
2017 2016
GBPm GBPm
================================= ================== ======
Write-down of intangible assets 1.3 -
Restructuring costs 0.2 4.4
Acquisition expenses 0.1 -
Gain on property disposals (1.6) -
--------------------------------- ------------------ ------
- 4.4
--------------------------------- ------------------ ------
Following the sale of the freehold properties in the US and
Australia during the financial year, the Group realised gains on
the disposals of GBP1.6 million which have been shown as
exceptional gains in the Income Statement. Netting against these
exceptional gains are costs of writing down our digital consumer
platform amounting to GBP1.3 million, where the platform is being
superseded by newer technology to allow for greater integration and
functionality. The exceptional items also include the costs
associated with the OATS acquisition of GBP0.3 million. Overall the
net exceptional credit to the Income Statement was GBP29,000.
Balance sheet
2017 2016
GBPm GBPm Movement
================================ ======= ======= ===========
Non-current assets 39.4 38.0 +1.4
Working capital 5.6 6.9 (1.3)
Net cash 3.7 0.4 +3.3
Retirement benefit obligation (23.0) (15.1) (7.9)
Net other assets/(liabilities) (4.4) (6.0) +1.6
-------------------------------- ------- ------- -----------
Net assets 21.3 24.2 (2.9)
-------------------------------- ------- ------- -----------
During the year, the Group increased its investment in new
product development by 23% to GBP7.9 million (2016: GBP6.4 million)
which included GBP2.6 million on new consumer content, GBP1.1
million on new consumer digital platforms and GBP4.2 million in
relation to the Group's professional product ranges.
In December 2016, the Australian business disposed of its
freehold property in Sydney for A$3.8 million (GBP2.2 million) and
in May 2017, the US operations sold the smaller of the two
Nashville freehold properties for $1.5 million (GBP1.2 million).
The second of the Nashville properties is currently under offer and
is due to be sold early in our second quarter. During the year the
Group obtained outline planning permission to change the use of its
UK Sparkford freehold site for residential development and the site
is currently being marketed for sale.
Group net cash ended the year up GBP3.3 million at GBP3.7
million (2016: GBP0.4 million) benefitting from the GBP4.3 million
of property and decommissioned US plant and equipment disposals
during the year.
At 31 May 2017, the net deficit, as reported in accordance with
IAS 19, on the Group's two defined benefit retirement schemes
increased by GBP7.9 million to GBP23.0 million (2016: GBP15.1
million) with the UK scheme deficit increasing to GBP22.7 million
(2016: GBP14.4 million) and the US deficit reducing to GBP0.3
million (2016: GBP0.7 million). The combined total assets of the
schemes increased to GBP34.2 million (2016: GBP31.4 million) while
the total liabilities increased to GBP57.2 million (2016: GBP46.5
million). Lower UK bond yields during the year have had a knock on
impact on the UK discount rate which fell to 2.4% (2016: 3.4%) and
with each 0.25% reduction in the UK discount rate adding
approximating to GBP2.5 million to the UK liabilities this has had
been the major contributing factor in the increase of the overall
Group IAS 19 pensions deficit.
Cash flow
2017 2016
GBPm GBPm
==================================== ====== ========
Net cash generated from operations
before tax 9.7 8.4
Tax paid 0.2 (0.7)
Investing activities (5.7) (6.4)
Financing activities (1.4) (2.5)
------------------------------------ ------ ------
Net movement in cash during the
year 2.8 (1.2)
Cash and cash equivalents at the
beginning of the year 0.5 1.5
Effect of foreign exchange rates 0.4 0.2
------------------------------------ ------ ------
Cash and cash equivalents at the
end of the period 3.7 0.5
------------------------------------ ------ ------
The Group's net cash generated from operations before tax for
the year was up 15% at GBP9.7 million (2016: GBP8.4 million) which
represented 303% of adjusted Group operating profit (2016:
344%).
James Bunkum
Chief Financial Officer
13 September 2017
Consolidated Income Statement
31 May 2017 31 May 2016
----------------------------------- -----------------------------------
Exceptional Exceptional
Before items Before items
exceptional (note exceptional (note
items 2) Total items 2) Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Continuing
operations
Revenue 3 29,774 - 29,774 25,710 - 25,710
Cost of sales (11,694) (1,282) (12,976) (10,201) (1,716) (11,917)
------------ -----------
Gross profit 18,080 (1,282) 16,798 15,509 (1,716) 13,793
Other operating
income 31 - 31 82 - 82
Distribution
costs (8,039) (209) (8,248) (7,008) (1,563) (8,571)
Administrative
expenses (6,864) 1,520 (5,344) (6,127) (1,143) (7,270)
------------ -----------
Operating
profit/(loss) 3,208 29 3,237 2,456 (4,422) (1,966)
Finance income 5 5 - 5 8 - 8
Finance costs 6 (60) - (60) (73) - (73)
Other finance
costs - retirement
benefits (518) - (518) (518) - (518)
Profit/(loss)
before taxation 2,635 29 2,664 1,873 (4,422) (2,549)
Taxation 7 (1,211) (79) (1,290) (723) 1,493 770
Profit/(loss)
for the period 1,424 (50) 1,374 1,150 (2,929) (1,779)
============ =========== ============ =========== ========
Earnings/(loss) Pence Pence Pence Pence
per 20p share 8
From continuing
operations
- Basic 9.4 9.1 7.6 (11.8)
- Diluted 9.4 9.1 7.6 (11.8)
Consolidated Statement of Comprehensive Income
Year Ended Year Ended
31 May 2017 31 May 2016
GBP'000 GBP'000
Profit/(loss) for the period 1,374 (1,779)
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 (8,392) (727)
- US Scheme 451 36
Deferred tax on retirement benefit
obligation
- UK Scheme 1,427 131
- US Scheme (180) (14)
Deferred tax arising on change
in UK corporation tax rate (144) (268)
----------- -----------
(6,838) (842)
Items that will or maybe reclassified
to profit or loss in subsequent
periods:
Exchange differences on translation
of foreign operations 3,678 1,477
----------- -----------
Other comprehensive (expense)/income
recognised directly in equity (3,160) 635
Total comprehensive expense
for the financial period (1,786) (1,144)
=========== ===========
Consolidated Balance Sheet
Year Ended Year Ended
31 May 2017 31 May 2016
Note GBP'000 GBP'000
Non-current assets
Property, plant and equipment 4,011 8,434
Intangible assets 27,696 22,381
Deferred tax assets 7,669 7,196
Total non-current assets 39,376 38,011
Current assets
Inventories 3,965 4,614
Trade and other receivables 7,806 7,499
Tax recoverable 130 926
Cash and short-term deposits 7,036 2,548
----------- -----------
Total current assets 18,937 15,587
Non-current assets classified
as held for sale 1,483 -
Total assets 59,796 53,598
Current liabilities
Trade and other payables (7,674) (5,188)
Borrowings (3,331) (2,163)
Provisions (1,164) (3,656)
Total current liabilities (12,169) (11,007)
Non-current liabilities
Deferred tax liabilities (3,287) (3,255)
Retirement benefit obligation 11 (23,024) (15,101)
Total non-current liabilities (26,311) (18,356)
Total liabilities (38,480) (29,363)
Net assets 21,316 24,235
=========== ===========
Equity
Share capital 3,270 3,270
Share premium 638 638
Treasury shares (2,447) (2,447)
Retained earnings 11,602 18,199
Foreign currency translation
reserve 8,253 4,575
Total equity 21,316 24,235
=========== ===========
Consolidated Statement of Changes in Equity
Foreign
currency Non-
Share Share Treasury translation Retained Sub controlling
capital premium shares reserve earnings total interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31
May 2015 3,270 638 (2,447) 3,098 21,947 26,506 70 26,576
Loss for the period - - - - (1,779) (1,779) - (1,779)
------- ------- -------- ----------- -------- ------- ----------- -------
Other comprehensive
income :
Currency translation
adjustments - - - 1,477 - 1,477 - 1,477
Actuarial gains/(losses)
on defined benefit
plans (net of
tax) - - - - (842) (842) - (842)
------- ------- -------- ----------- -------- ------- ----------- -------
Total other comprehensive
income - - - 1,477 (842) 635 - 635
------- ------- -------- ----------- -------- ------- ----------- -------
Total comprehensive
income - - - 1,477 (2,621) (1,144) - (1,144)
Dividends (note
9) - - - - (1,133) (1,133) - (1,133)
Increase in subsidiary
shareholding - - - - 6 6 (70) (64)
Balance at 31
May 2016 3,270 638 (2,447) 4,575 18,199 24,235 - 24,235
Profit for the
period - - - - 1,374 1,374 - 1,374
------- ------- -------- ----------- -------- ------- ----------- -------
Other comprehensive
income :
Currency translation
adjustments - - - 3,678 - 3,678 - 3,678
Actuarial gains/(losses)
on defined benefit
plans (net of
tax) - - - - (6,838) (6,838) - (6,838)
------- ------- -------- ----------- -------- ------- ----------- -------
Total other comprehensive
income - - - 3,678 (6,838) (3,160) - (3,160)
------- ------- -------- ----------- -------- ------- ----------- -------
Total comprehensive
income - - - 3,678 (5,464) (1,786) - (1,786)
Dividends (note
9) - - - - (1,133) (1,133) - (1,133)
Balance at 31
May 2017 3,270 638 (2,447) 8,253 11,602 21,316 - 21,316
------- ------- -------- ----------- -------- ------- ----------- -------
Consolidated Cash Flow Statement
Year Ended Year Ended
31 May 31 May
2017 2016
GBP'000 GBP'000
Cash flows from operating
activities - continuing
Profit / (loss) after tax 1,374 (1,779)
Adjusted for :
Income tax expense 1,290 (770)
Interest payable and similar
charges 60 73
Interest receivable (5) (8)
Retirement benefits finance
costs 518 518
----------
Operating profit / (loss) 3,237 (1,966)
Depreciation on property,
plant and equipment 782 866
Amortisation of intangible
assets 6,421 5,061
Impairment of intangible assets 1,249 -
IAS 19 pensions current service
cost net of contributions
paid (636) (501)
Movement in provisions (2,492) 3,656
Gain on disposal of property,
plant and equipment (963) (119)
----------
7,598 6,997
Changes in working capital
:
Decrease in inventories 1,111 149
Decrease in receivables 724 699
Increase in payables 285 604
Net cash generated from operations 9,718 8,449
Tax paid 159 (692)
Net cash generated by operating
activities 9,877 7,757
Investing activities
Acquisition costs - business combinations,
net of cash acquired (1,729) (125)
Proceeds on disposal of property,
plant and equipment 4,329 340
Purchases of property, plant
and equipment (415) (264)
Expenditure on product development (7,922) (6,389)
Increase in subsidiary shareholding - (64)
Interest received 5 8
Net cash used in investing
activities (5,732) (6,494)
Financing activities
Repayment of borrowings (177) (1,292)
Dividends paid (1,133) (1,133)
Interest paid (60) (73)
Net cash used in financing
activities (1,370) (2,498)
---------- ----------
Net increase/(decrease) in
cash and cash equivalents 2,775 (1,235)
Cash and cash equivalents
at beginning of year 540 1,547
Effect of foreign exchange
rate changes 390 228
Cash and cash equivalents
at end of year (net funds) 3,705 540
========== ==========
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 2017 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 2017 or for the year ended 31 May 2016. Statutory accounts for
the years ended 31 May 2016 have 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 2016 have been filed with the Registrar of Companies.
The 2017 figures are based on unaudited accounts for the year
ended 31 May 2017. Statutory accounts for the year ended 31 May
2017 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 2017 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 13 September 2017. The Annual
Report 2017 will be approved by the Board of Directors and
authorised for issue on 20 September 2017.
Basis of accounting
The accounting policies used to prepare this results
announcement are consistent with those applied in the 2016
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 2017 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
2017 2016 2017 2016
US dollar 1.29 1.45 1.28 1.49
Euro 1.15 1.31 1.17 1.35
Australian
dollar 1.74 2.01 1.70 2.04
2. Exceptional items
31 May 31 May
2017 2016
GBP000 GBP'000
Exceptional costs included in cost
of sales:
* Write down of intangible assets 1,282 -
* Restructuring costs - 1,716
Exceptional costs included in selling
and distribution expenses:
* Restructuring costs 209 1,563
Exceptional (gains)/costs included
in administrative expenses:
* Gain on sale of property (1,608) -
* Restructuring costs - 1,143
* Acquisition expenses 88 -
Exceptional (gains)/losses (29) 4,422
======= =======
The gain from the sale of properties have arisen following the
implementation of the global operational, cost and structure review
undertaken during the prior year and relates to the sale of
properties in the US and Australia.
The 31 May 2017 acquisition expenses and restructuring costs
relate to the successful acquisition of OATS Limited in December
2016.
The write down of intangible assets relates to consumer digital
platform costs previously capitalised which are now in the process
of being superseded.
Exceptional 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 31 May
2017 2016
GBP'000 GBP'000
Revenue by geographical destination
on continuing operations :
United Kingdom 6,873 4,918
Rest of Europe 10,527 7,971
United States of America 10,490 11,021
Australasia 1,322 1,093
Rest of World 562 707
------- -------
Total consolidated revenue 29,774 25,710
======= =======
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. Following the acquisition of OATS Limited in
December 2016, the UK and European business has expanded its
operations to include a global lubricants database business.
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. Up to and including 31 May 2017, it also
has a branch operation in Sydney, Australia which publishes similar
products under both the Haynes and Gregory's brands. From 1 June
2017, the Australian branch incorporated as a separate legal entity
(Haynes Australia Pty Limited) and became a 100% subsidiary of
Haynes Publishing Group P.L.C.
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 : 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
Underlying segment operating
profit before exceptional
items and interest 2,748 477 3,225
Exceptional items ([5]) (213) 1,285 1,072
Interest receivable 2 3 5
Interest payable (50) (2) (52)
---------- ------------- ---------------
Segment profit after exceptional
items and interest 2,487 1,763 4,250
Unallocated head office income
less expenses (1,729)
---------------
Segment operating profit
before tax and adjustments 2,521
Reconciliation to consolidated
profit before tax :
IAS 16 Property, plant and
equipment ([2]) 9
IAS 19 Employee benefits
([3]) 134
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] In the segmental reporting freehold buildings are
depreciated over 40 years - under IAS 16 the residual value of
buildings reflect the expected value at the end of their useful
life resulting in an adjustment to depreciation.
[3] In the segmental reporting, pension contributions are
expensed and the assets and liabilities of a defined benefit
pension scheme are held separately from the Group - under IAS 19
the Income Statement and Statement of Comprehensive Income are
adjusted to reflect the annual current service cost and actuarial
gains and losses arising on a defined benefit pension scheme and
the net surplus/(deficit) on the scheme is included in the balance
sheet.
[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] Details of the exceptional items are shown in note 2 of this
Results Announcement.
4. Segmental analysis (continued)
North
UK America
& Europe & Australia Consolidated
Revenue and results : 2016 2016 2016
GBP'000 GBP'000 GBP'000
Segmental revenue
Total segmental revenue 13,508 14,236 27,744
Inter-segmental sales ([1]) (277) (1,757) (2,034)
---------- ------------- ---------------
Total external revenue 13,231 12,479 25,710
---------- ------------- ---------------
Segment result
Underlying segment operating
profit before exceptional
items and interest 1,471 340 1,811
Exceptional items ([5]) (268) (3,710) (3,978)
Interest receivable 1 7 8
Interest payable (38) (30) (68)
---------- ------------- ---------------
Segment profit/(loss) after
exceptional items and interest 1,166 (3,393) (2,227)
Unallocated head office income
less expenses (644)
---------------
Segment operating loss before
tax and adjustments (2,871)
Reconciliation to consolidated
loss before tax :
IAS 16 Property, plant and
equipment ([2]) 61
IAS 19 Employee benefits
([3]) 261
Consolidated loss before
tax (2,549)
Taxation ([4]) 770
---------------
Consolidated loss after tax (1,779)
===============
[1] Inter-segment sales are charged at the prevailing market
rates.
[2] In the segmental reporting freehold buildings are
depreciated over 40 years - under IAS 16 the residual value of
buildings reflect the expected value at the end of their useful
life resulting in an adjustment to depreciation.
[3] In the segmental reporting, pension contributions are
expensed and the assets and liabilities of a defined benefit
pension scheme are held separately from the Group - under IAS 19
the Income Statement and Statement of Comprehensive Income are
adjusted to reflect the annual current service cost and actuarial
gains and losses arising on a defined benefit pension scheme and
the net surplus/(deficit) on the scheme is included in the balance
sheet.
[4] The charge to taxation relates to the consolidated Group.
Included within the charge to taxation is GBP257,000 which relates
to the UK & European operations and GBP960,000 credit which
relates to the North American & Australian operations.
[5] Details of the exceptional items are shown in note 2 of this
Results Announcement.
5. Finance income
31 May 31 May
2017 2016
GBP'000 GBP'000
Interest receivable on bank deposits 5 8
======= =======
6. Finance costs
31 May 31 May
2017 2016
GBP'000 GBP'000
Interest payable on bank loans
and overdrafts 60 73
======= =======
7. Taxation
31 May 31 May
2017 2016
GBP'000 GBP'000
Analysis of charge during the period
:
Current tax
- UK corporation tax on profits - -
for the period
- Foreign tax 847 (616)
- Adjustments in respect of prior
periods 32 (117)
------- -------
879 (733)
Deferred tax
- Origination and reversal of
temporary differences 411 (37)
Total taxation in the Consolidated
Income Statement 1,290 (770)
======= =======
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 GBP456,000
giving an overall effective tax rate of 31.3% for the year.
In April 2017, the rate of UK corporation tax was reduced from
20% to 19% giving an effective rate of 19.8% for the financial year
ended 31 May 2017. In the Summer Budget 2015, the UK government
announced legislation setting the main rate of corporation tax at
18% for the year beginning 1 April 2020. In March 2016, the
government announced a further reduction to the main rate of
corporation tax for the year starting 1 April 2020 to 17%. The
relevant UK deferred tax balances have been re-measured
accordingly.
8. 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
2017 2017 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000
Earnings/(loss) :
Profit/(loss) after tax
attributable to equity
holders of the Company-
continuing operations 1,424 1,374 1,150 (1,779)
------------ ------------ ------------ ------------
No. No. No. No.
Number of shares :
Weighted average number
of shares ([a]) 15,111,540 15,111,540 15,111,540 15,111,540
------------ ------------ ------------ ------------
Basic earnings/(loss)
per share (pence) 9.4 9.1 7.6 (11.8)
============ ============ ============ ============
([a]) During the year the Company held 1,240,000 of its ordinary shares in treasury.
As at 31 May 2017 and 31 May 2016 there were no potentially
dilutive shares in issue on either of the Company's two classes of
shares. Accordingly, there is no difference between the weighted
average number of shares used in the basic and diluted earnings per
share calculations.
9. Dividends
31 May 31 May
2017 2016
GBP'000 GBP'000
Amounts recognised as distributions
to equity holders :
Final dividend for the year ended
31 May 2016 of 4.0p per share
(2015: 4.0p per share) 604 604
Interim dividend for the year ended
31 May 2017 of 3.5p per share (2016:
3.5p per share) 529 529
1,133 1,133
=======
Proposed final dividend for the
year ended 31 May 2017 of 4.0p
per share (2016: 4.0p per share) 604 604
As at 31 May 2017, 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
2017 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 16 November 2017 to shareholders on the register at
the close of business on 27 October 2017.
10. Analysis of the changes in net funds
As at Exchange As at
1 June 31 May
2016 Cash flow movements 2017
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in
hand 2,548 4,098 390 7,036
Bank overdrafts (2,008) (1,323) - (3,331)
540 2,775 390 3,705
======= ========= ========= =======
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. The assets of
all schemes are held independently of the Group and its
subsidiaries.
As at 31 May 2017 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:
31 May 31 May
2017 2016
GBP'000 GBP'000
Consolidated retirement benefit
obligation at beginning of period (15,101) (14,348)
Movement in the period :
- Total expenses charged in the
income statement (1,397) (1,662)
- Contributions paid 1,515 1,645
- Actuarial losses taken directly
to reserves (7,941) (691)
- Foreign currency exchange rate
movements (100) (45)
Consolidated retirement benefit
obligation at end of period (23,024) (15,101)
======== ========
12. Acquisition
On 15 December 2016, Haynes Publishing Group P.L.C., acquired
100% of the share capital of OATS Limited ("OATS"), a UK based
private limited business for a total consideration of GBP2.4
million. OATS is a niche technology business that provides
information and productivity solutions for the lubricants sector of
the oil industry. OATS has developed a world leading comprehensive
equipment and lubricants database that supports customers from
across the lubricants marketing and supply chain. OATS' customers
have access to an unrivalled source of information about lubricants
that enables them to recommend the most appropriate oil to their
end users. The acquisition of OATS complements Haynes' professional
offering by providing HaynesPro customers with comprehensive
information on lubricants as part of its technical database. It
will further strengthen the relationship between Haynes, parts
distributors and oil companies.
Recognised
Carrying on
value acquisition
GBP'000 GBP'000
Assets Acquired
Property, plant and equipment 6 6
Intangible assets ([1]) 233 2,472
Trade and other receivables 351 351
Taxation recoverable 163 163
Cash at bank and in hand 241 241
Trade and other payables ([2]) (791) (827)
Deferred tax arising on acquisition
of intangible assets - (403)
Fair value of net assets 203 2,003
========
Goodwill arising on acquisition
([3]) 397
------------
Total consideration 2,400
============
Cash consideration 1,845
Liabilities assumed on acquisition 555
Total consideration 2,400
============
The net cash outflows arising on
the acquisition were as follows
:
Cash consideration 1,845
Liabilities assumed on acquisition 555
Costs of acquisition (included
in cash flows from operating activities)
([4]) 88
Net cash outflow 2,488
============
([1]) Prior to completion, the intangible asset valuation was
based on the external cost of translations and a multiple of
subscription revenue. Applying a multiple of subscription revenue
is not a compliant methodology under IAS 38 Intangible Assets and
therefore, the intangible asset was revalued at the carrying value
of the external cost of translations only. A fair value adjustment
of GBP2,239,000 was applied to the OATS Limited intangible asset to
bring the valuation methodology into line with IAS 38 and to accord
with Haynes group policy on development costs.
([2]) Other payables has been increased by GBP41,000 to reflect
a fair value adjustment to the property lease. Prior to
acquisition, the lease was expensed on a cash paid basis however,
in line with IAS 17 the expense has been re-calculated over the
entire length of the lease on a straight-line basis.
([3]) Intangible assets amounting to GBP397,000 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 OATS standing in its
particular market place and anticipated synergies following its
acquisition by the Haynes Group.
([4]) The acquisition costs of GBP88,000 were expensed as
incurred and were included as an exceptional item within
administrative expenses (note 2).
In the period from acquisition to 31 May 2017, OATS contributed
GBP1,000,000 to Group revenue and GBP88,000 to consolidated
operating profit before exceptional items. If the acquisition
occurred at the start of the financial period the revenue from the
acquired business would have been GBP2,300,000. It is not practical
to quantify the associated profit contribution during this period
during the change in accounting policy in relation to
capitalisation and amortisation of development costs.
13. Other information
The Directors Report and audited Report & Accounts for the
financial year ended 31 May 2017 will be posted to shareholders on
29 September 2017 and delivered to the Registrar of Companies
following the Annual General Meeting which will be held on 8
November 2017. 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 30 September.
This results announcement is not being posted to shareholders,
but is available on the UK website
http://www.haynes.co.uk/investor.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LJMFTMBBBBIR
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