TIDMHYNS
RNS Number : 5403S
Haynes Publishing Group PLC
25 September 2014
HAYNES PUBLISHING GROUP P.L.C.
RESULTS FOR THE YEAR ENDED
31 May 2014
Haynes Publishing Group P.L.C. ("the Group") is the worldwide
market leader in the production and sale of automotive and
motorcycle repair manuals. Every Haynes manual is based on a
complete vehicle strip-down and rebuild in our workshops, so that
the instructions and photographs are inherently practical, accurate
and easy to follow.
Through HaynesPro the Group is a leading European supplier of
digital technical information to the professional motor trade.
The Group also publishes an extensive range of practical and DIY
titles covering a wide variety of subjects, as well as a range of
light entertainment manuals styled on the iconic Haynes Manual. Its
customers are primarily made up of both professionals and DIY
mechanics and enthusiasts.
Group financial highlights
- Despite a challenging year, revenue, adjusted EBITDA(1) and
adjusted basic EPS(1) were ahead of market expectations
- Revenue up 6% at GBP29.3 million (2013: GBP27.6 million),
includes GBP1.5 million of revenue from the Clymer and Intertec
acquisition
- Adjusted EBITDA(1) of GBP8.1 million, up 27% (2013: GBP6.4 million(2) )
- Adjusted operating profit(1) of GBP4.8 million, up 33% (2013: GBP3.6 million(2) )
- Adjusted profit before tax(1) in line with market expectations
at GBP4.2 million, up 31% (2013: GBP3.2 million(2) )
- Adjusted basic earnings per share(1) of 18.7 pence (2013: 14.2 pence(2) ), up 32%
- Final dividend declared of 4.0 pence per share, giving a total
dividend of 7.5 pence per share (2013: 7.5 pence)
- Revenue from the Group's digital product ranges up 17% at
GBP6.1 million (2013: GBP5.2 million)
- Local currency North American & Australian revenue up 17%
at $25.8 million (2013: $22.0 million)
- Exceptional costs of GBP2.2 million incurred on restructuring
of the UK business and the Group's acquisition activity during the
year (2013: GBPnil)
- Special contribution of GBP0.5 million to UK pension scheme in November 2013
- Following the acquisition of Clymer & Intertec manuals,
the restructuring of the UK business and the special UK pension
contribution the Group had net debt of GBP1.1 million (2013: net
funds(3) of GBP6.1 million) giving Group gearing of 3% (1.2 million
shares still held in treasury)
Business highlights
- Successful completion of UK restructuring programme including
consolidation of UK editorial departments and outsourcing of UK
distribution to established provider
- UK focus on most profitable higher margin Haynes manual style titles
- Acquisition of Clymer and Intertec manuals in the US for
GBP5.9 million ($9.3 million) cementing Group's position as global
market leader for publication and sale of motorcycle service and
repair manuals
- Major re-merchandising programmes with key US customers,
giving display space in over 15,000 US retail outlets and enhanced
sales opportunities
- Development of new Touch interface for Group's professional
product range using Workshop Connect(TM) feature for easier access
on smartphones and tablets
Notes to the financial highlights :
(1) Adjusted to exclude GBP2.2 million of exceptional items (UK
restructuring costs of GBP1.9 million and acquisition costs of
GBP0.3 million). Reported operating profit and profit before tax
were GBP2.6 million (2013: GBP3.6 million) and GBP2.0 million
(2013: GBP3.2 million) respectively. Reported earnings per share
were 7.4 pence (2013: 14.2 pence). EBITDA including exceptional
items was GBP5.9 million (2013: GBP6.4 million).
(2) The 2013 figures have been restated to reflect the IAS 19
adjustment to pension costs (refer to note 1 Restatement of prior
years).
(3) Net funds defined as cash at bank net of bank
overdrafts.
Enquiries :
Haynes Publishing Group P.L.C. +44 1963 442009
J HC Haynes, Group Chairman
Eric Oakley, Group Chief Executive
Investor Contact: Charles Stanley Securities +44 20 7149 6000
Dugald J Carlean
Karri Vuori
Media Contact: New Century Media +44 20 7930 8033
Nicola Krafft
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.
Chairman's Statement
During our 2013/14 financial year we have taken significant
steps forward with our plans to refocus the Haynes Group and return
to delivering sustainable revenue and profit growth.
In September 2013, the acquisition of the Clymer and Intertec
manuals business cemented our position as the global market leader
of motorcycle service and repair manuals. In the same month, we
announced the restructuring of the UK business, a programme which
was completed during the year. In November 2013, we made a special
one-off contribution to the UK pension scheme of GBP0.5 million
that will help to accelerate the pay down of the UK past service
deficit. In January 2014, the US business implemented major
re-merchandising programmes with key customers, which has
significantly improved the in-store display of our manuals. In
February 2014, our Netherlands' based staff relocated to larger
offices in Leusden, near Utrecht, consolidating them into one
location with the associated work flow benefits this provides.
These positive changes were implemented with minimal impact on
underlying trading and I am pleased to report that over the last
twelve months Group revenue grew by 6% and adjusted pre-tax profits
were up 31% at GBP4.2 million. It is particularly encouraging that
digital sales increased by 17% year-on-year to GBP6.1 million.
During the year the Group has incurred one-off costs of GBP2.2
million associated with the UK restructuring and the Group's
acquisition activity. After deducting these exceptional costs the
reported profit ended the year at GBP2.0 million (2013: GBP3.2
million). Adjusted earnings per share were up 32% at 18.7
pence.
Following the payment of the interim dividend of 3.5 pence in
April 2014, the Board is recommending a final dividend for the year
of 4.0 pence which, together with the interim dividend, maintains
the total dividend for the year at 7.5 pence (2013: 7.5 pence).
Subject to approval by shareholders the final dividend will be paid
on 13 November 2014 to shareholders on the register at the close of
business on 24 October 2014. The shares will be declared
ex-dividend on 22 October 2014.
The Group couldn't have achieved the success it has over the
past year without the dedication and positive approach of our
staff. On behalf of the Board I would like to thank all our
employees for their hard work and support over the past twelve
months.
Although trading in the consumer market remains challenging the
Board believes the recent refocusing of the business will create
long-term organic growth opportunities. Haynes is a global business
and senior management are actively evaluating further geographical
expansion options for our consumer and professional products,
including through acquisitions.
Since its inception, Haynes Publishing's core business has been
the creation of useful practical information, initially for DIY
consumers and more recently also for professional mechanics. The
positive steps the Group has taken over the last year demonstrates
our focus is firmly on creating content for both our consumer and
professional end users. We remain committed to the creation of our
iconic manuals, and will evaluate the commercial opportunity to
deliver our unique content through platform agnostic digital
channels. We will also continue to invest in HaynesPro to ensure
our digital content offering to professional mechanics remains
world class.
J HC Haynes
Group Chairman
24 September 2014
The Haynes business model
The Haynes Group comprises two geographical business segments
:
-- UK & Europe
-- North America & Australia
The UK & European business has headquarters in Somerset,
England and subsidiaries in the Netherlands, Italy, Spain, Romania
and Sweden. The core business of the UK and European operations is
the supply of digital automotive repair and technical information
to the professional automotive markets in twenty three different
languages as well as to the DIY aftermarkets in both a printed and
digital format. There are currently in excess of 40,000 subscribers
to the HaynesPro professional data throughout Europe and over 600
automotive printed titles in publication. The business also
publishes approximately 300 titles which are practical,
instructional, easy to read and aimed at those with an interest in
more general DIY related activities.
The North American & Australian business has headquarters
near Los Angeles, California and publishes DIY repair manuals for
cars and motorcycles in both a printed and digital format. The US
business publishes titles under the Haynes, Chilton, Clymer and
Intertec brands and in both the English and Spanish languages. It
has a branch operation in Sydney, Australia which publishes similar
products under both the Haynes and Gregory brands. The Australian
business also publishes information for the professional automotive
market. The North American and Australian business currently
publishes in excess of 1,300 titles. Through its print facility in
Nashville, Tennessee, the North American business is the central
print facility for the Group's print products.
The success of the Haynes business is underpinned by an
attention to detail and a passionate dedication to providing
independent and trustworthy instructional advice. This simple but
important philosophy lies at the heart of what we do. The fact that
all Haynes Manuals are based on a complete vehicle strip-down and
rebuild in one of our workshops, so that the written and
photographic instructions for our customers are inherently
practical and easy to follow, can sometimes come as a surprise to
those new to the Group but for those accustomed to Haynes, this
renowned attention to detail will be a familiar concept. With over
50 years of experience in this market sector, we have deeply
embedded processes, inbuilt expertise and procedure driven
efficiencies which help to give Haynes its unique identity.
For our professional product ranges the data collection process
is slightly different but the uncompromising Haynes approach to
detail remains unchanged. The technical and maintenance data
produced by HaynesPro is of necessity based on the Original
Equipment Manufacturers (OEM's) information and servicing
schedules. Under European regulations independent garages are
legally entitled to carry out normal maintenance and repairs during
a vehicle's warranty period, without invalidating the warranty
conditions, provided such work is carried out in accordance with
the OEM's servicing schedules. It is therefore essential that the
same level of detail also applies to our range of professional
products to ensure the technical data is clear, concise, accurate
and conforming to the relevant OEM's instructions.
Operational and financial review
Operational overview
This time last year we set ourselves some challenging goals for
the year ahead. I believe that over the past twelve months we have
made considerable progress in achieving these and put in place some
important building blocks which will help to drive future revenue
and profit growth for the Group.
In the UK and Europe, the re-focus of the UK's general
publishing programme onto the Haynes manual style non-automotive
titles, the outsourcing of the UK warehousing and distribution
operation and the consolidation of the automotive and
non-automotive UK editorial departments was successfully completed
during the year. We have also reviewed and rationalised our global
automotive editorial teams to improve workflow of projects and to
optimise Group resources.
In the second half of the year we completed the development of a
new Touch interface for our professional product range and have
merged our WorkshopData ATI(TM) and TruckData ATI(TM) modules into
a single database. The consolidation of the two modules will allow
easier integration with other online applications such as
distributor parts catalogues and will help accelerate the
introduction of new topics for both our car and truck
customers.
In the US, the Clymer motorcycle business which had been a long
standing acquisition target for the Group, is now under the Haynes
umbrella and perfectly complements our existing Haynes motorcycle
business. Not only will the editorial, print production,
distribution and sales synergies which flow from this acquisition
be revenue and profit enhancing for the Group going forward but the
acquisition has also opened up new markets for the Group including
inboard and outboard marine engines and farm equipment. Also during
the year, after a great deal of negotiation with key customers in
the US, we were able to install new display racking into over 5,000
retail stores which has significantly improved the in-store display
of our manuals and allowed 21 previously unlisted titles to be
included in these retail outlets which should be revenue enhancing
for the business going forward.
In many ways this has been a challenging year for the Group. In
the UK, the overall headcount has been reduced by approximately one
third following the restructuring, with a high proportion of those
leaving the Company having served with the business for many years.
In the US, the acquisition of Clymer presented its own challenges,
with over 0.5 million units of inventory being relocated to our
warehouse in Tennessee with shipping and invoicing beginning within
3 weeks of completion. Yet with the hard work and dedication of our
staff and management teams we have been able to work our way
through these challenges and move forward as a Group.
Overall Group revenue ended the year up 6% at GBP29.3 million
(2013: GBP27.6 million). In North America and Australia revenue was
14% ahead of last year including the Clymer and Intertec
acquisition (up 3% like-for-like) while in the UK revenue ended the
year down 13% but another strong year of sales from our
professional products range, up 16% for the year, left overall UK
and European revenue down 2% on the prior year.
Revenue from the Group's digital product ranges was up 17% at
GBP6.1 million (2013: GBP5.2 million).
The Group's adjusted gross profit (adjusted to add back GBP1.5
million of exceptional costs) was up 3% against the prior year but
with higher like-for-like development cost amortisation on the
Group's professional product range of GBP0.5 million and the higher
cost of inventory on the Clymer revenue, following the fair value
treatment under International Accounting Standards, the overall
adjusted gross margin percentage was down 1.5 percentage points at
58.1% (2013: 59.6%).
The higher revenue from our North American and Australian
operations and strong sales from our professional products range
were the major contributing factors to an increase in adjusted
Group operating profit, which ended the year up 33% at GBP4.8
million (2013 restated: GBP3.6 million).
During the year the Group incurred exceptional items of GBP2.2
million (2013: GBPnil) from the restructuring of the UK business
and the Group's acquisition activities. The UK restructuring costs
of GBP1.9 million primarily relate to editorial origination, author
royalty and inventory write-downs on the discontinued general
publishing titles, employee costs and professional fees. The
acquisition fees of GBP0.3 million relate to the costs associated
with the successful acquisition of the Clymer and Intertec manuals
business in September 2013 as well as one-off costs relating to the
Group's other acquisition investigations and due diligence work.
Given the significance of the costs and their non-recurring nature
and to avoid distorting the underlying performance of the Group,
these costs have been shown separately in the Consolidated Income
Statement.
Excluding the impact of the exceptional items, Group overheads
ended the year 5% lower at GBP12.3 million (2013: GBP12.9 million)
with UK overheads down GBP0.5 million on the prior year.
This is the first full year for the Group reporting under IAS 19
Employee Benefits (Revised). The new Standard restricts the rate
used to calculate the return on a defined benefit pension scheme's
assets to its discount rate, rather than using a rate of return
which is more appropriate to the various classes of asset. In
addition, the costs of administering our pension schemes are now
charged against operating profit in the Income Statement. In line
with the new reporting requirements, the prior periods have been
restated to present the figures as if the change had occurred at
the beginning of the reporting period. The impact of the change has
been to increase Administrative expenses in the prior year by
GBP0.1 million and other finance costs by GBP0.3 million.
Finance costs were higher by GBP0.1 million reflecting the
interest on the bank borrowings to fund the Clymer acquisition in
September 2013 while other finance costs which relate to the
interest charge on the pension schemes' liabilities net of the
expected return on the pension schemes' assets ended the year in
line with the prior period at GBP0.5 million (2013 restated: GBP0.5
million).
Pre-tax profit before exceptional costs ended the year up 31% at
GBP4.2 million (2013 restated: GBP3.2 million). The Group's
adjusted tax charge for the year of GBP1.4 million (2013 restated:
GBP1.0 million) gives an effective tax rate of 32.7% on adjusted
profit before tax (2013 restated: 32.5%). The effective rate of tax
for the Group is a mixed rate which reflects the eight countries
where the Group pays tax and also the mix of profits within those
tax jurisdictions. The increase in the effective rate during the
year reflects the higher mix of profits generated by the Group's US
operations. Adjusted EPS was 18.7 pence (2013 restated: 14.2
pence).
North America and Australia segmental review
Overall segmental revenue from the North American and Australian
operations ended the year 17% up at $25.8 million (2013: $22.0
million). Following negotiations with key customers in the US, we
were able to install new display racking into over 5,000 retail
stores, the majority of which happened in January 2014. As a result
of these re-merchandising programmes, the US business has been able
to include 21 previously unlisted titles in these retail outlets
and also add 5 new Spanish language manuals into a large number of
Hispanic outlets. The Haynes business now has display space in over
15,000 retail locations in the US.
At the half year, we reported strong like-for-like sales up 12%
against the prior year but following the returns from the key
customer re-merchandising programme during the second half of the
year, like-for-like sales ended the year up 6%. Sales of Haynes
branded manuals ended the year 4% ahead of the prior period. In
Australia, revenue was 6% ahead of the prior year, while revenue
from the Chilton branded manuals had a difficult year down 10%, as
key Chilton manual retailers tightened controls over inventory.
Whilst not large in the context of the North American and
Australian overall sales, year-on-year revenue from the sale of US
and Australian digital manuals increased by 13%. The integration of
the Clymer and Intertec manuals business has performed to plan with
revenue in line with management expectations, adding $2.5 million
to revenue since the acquisition in September 2013.
Over the past six months, Sterling has strengthened against the
US Dollar leading to an average exchange rate for the year up 3% at
$1.62 (2013: $1.57), lowering reportable US revenue by GBP0.5
million. After translation to Sterling, reportable segmental
revenue for the North American and Australian business was GBP15.9
million, up 14% against the prior year (2013: GBP14.0 million).
The impact of the higher North American and Australian revenue
coupled with the editorial origination amortisation, which is fixed
and does not increase as revenue grows led to segmental operating
profit before exceptional items and interest ending the year up 56%
at $4.2 million (2013: $2.7 million) which after translation to
Sterling was up 53% at GBP2.6 million (2013: GBP1.7 million).
UK and Europe segmental review
At the half year we reported revenue from the Group's UK and
European operations was 5% ahead of the prior period with revenue
from our European businesses up 16% and revenue from our UK
operation down 4%. During the second half of the year sales of our
professional products in Europe continued to perform well ending
the year up 14%. In the UK, a combination of weaker third quarter
trading and a reduced but more focussed non-automotive publishing
programme left revenue for the year down 13%. On a like-for-like
basis, excluding the sales of the discontinued general publishing
titles, the shortfall was 7%. Overall UK and European segmental
revenue ended the year down 2% at GBP13.4 million (2013: GBP13.7
million).
During the second half of the year, the outsourcing of the UK
warehousing, distribution, invoicing, customer services and cash
collection to Grantham Book Services was successfully completed
with close to 1.0 million units of inventory physically moved
between sites during the handover period. In Europe, HaynesPro
completed the development of a new Touch interface which has been
specifically designed for use on tablets and smartphones. The new
interface utilises the Workshop Connect(TM) feature, which links
the information to a user's account in the cloud, making it
accessible from any device. HaynesPro also merged their
WorkshopData ATI(TM) and TruckData ATI(TM) modules into one single
database which will provide significant end user benefits going
forward.
The impact of the lower UK sales and a like-for-like increase in
development cost amortisation in relation to our professional range
of products of GBP0.5 million left the UK and European segmental
operating profit before exceptional items and interest in line with
the prior year at GBP0.9 million (2013: GBP0.9 million).
Balance sheet and cash flow
Following the acquisition of Clymer and Intertec manuals during
the year, the Group's intangible assets increased by GBP2.9
million. As at 31 May 2014 the Group had net debt of GBP1.1 million
(2013: Net funds of GBP6.1 million). The major factors contributing
to the reduction in the Group's net funds/debt position were the
acquisition of the Clymer and Intertec Manuals business in
September 2013 at a cost of GBP5.9 million ($9.3 million) with
GBP3.4 million funded through internal cash and GBP2.5 million
through a drawdown on the US banking facility, the cash impact of
the UK restructuring programme, where approximately 57% of the
GBP1.9 million exceptional restructuring costs were non cash
write-downs, and the additional contribution to the UK pension
scheme in November 2013 of GBP0.5 million.
At 31 May 2014 the net deficit on the Group's two defined
benefit retirement schemes, as reported in accordance with IAS 19,
was GBP11.2 million (2013: GBP12.1 million). The combined total
assets of the schemes increased to GBP29.6 million (2013: GBP28.5
million) and the total liabilities increased to GBP40.9 million
(2013: GBP40.6 million).
The net cash generated from operations before tax for the year
was lower at GBP5.0 million (2013: GBP6.9 million) which
represented 104% of adjusted Group operating profit (2013: 190%)
and reflects the cash impact of the exceptional costs during the
year of GBP1.1 million, a special one-off contribution to the UK
Scheme of GBP0.5 million and higher funding of the US pension
scheme due to timing of GBP0.4 million. The higher spend on the
Group's investing activities reflects the consideration paid for
the Clymer acquisition of GBP5.9 million while the cash net inflow
on the Group's financing activities of GBP1.0 million (2013: cash
outflow of GBP2.0 million) results from the associated increased
bank borrowing to part fund the Clymer acquisition of GBP2.2
million and a reduction in dividend paid during the year of GBP0.8
million. As a result, cash and cash equivalents ended the year at
GBP1.1 million (2013: GBP6.1 million).
Outlook and future developments
Trading in the early months of the 2014/15 financial year for
the Group's consumer products has been soft, with a noticeable
trend of inventory reduction by key automotive retailers in our
main geographical markets. This is a realignment which we are
addressing and do not expect to have a material long term impact on
the business. Sales of our professional product ranges in Europe
continue to perform ahead of the prior year.
Over the next twelve months the Group will continue to move
forward with its plans to deliver new digital platforms which will
allow for greater interaction with its global end users. We
continue to research new areas for geographic expansion of our
professional product ranges. Over the past eighteen months we have
been reviewing opportunities for expansion into the South American
market, with our research showing that it is not likely to be a
commercially viable market for the Group in the short to medium
term. The Group will therefore continue to explore alternative
markets outside of Europe which may offer us greater expansion
prospects over a shorter timeframe. We have commenced research into
identifying potential products for North America.
We will continue to invest in new product initiatives and expand
the breadth and profile of our core vehicle titles to ensure that
both our automotive and non-automotive customers have the full
range of relevant and trustworthy technical and instructional
information they need. Our print products remain an important part
of our business and whilst we are investing heavily in new digital
platforms and new product initiatives we also continue our
significant investment in new content for our consumer products. In
the coming year we are planning to invest close to GBP3.0 million
in updating and expanding our professional range of products and
over GBP2.5 million on our consumer product ranges.
Eric Oakley
Group Chief Executive
24 September 2014
Consolidated Income Statement
Restated
(1)
31 May 2014 31 May 2013
------------------ ----------- --------
Exceptional
Before exceptional items
items (note 4) Total Total
Note GBP'000 GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 2 29,284 - 29,284 27,632
Cost of sales (12,264) (1,519) (13,783) (11,163)
------------------ -----------
Gross profit 17,020 (1,519) 15,501 16,469
Other operating income 67 - 67 59
Distribution costs (6,308) - (6,308) (6,922)
Administrative expenses (5,961) (671) (6,632) (5,977)
------------------ -----------
Operating profit 4,818 (2,190) 2,628 3,629
Finance income 5 7 - 7 14
Finance costs 6 (76) - (76) (2)
Other finance costs
- retirement benefits (533) - (533) (450)
Profit before taxation 4,216 (2,190) 2,026 3,191
Taxation 7 (1,379) 489 (890) (1,036)
Profit for the period 2,837 (1,701) 1,136 2,155
================== =========== ===========
Attributable to :
Equity holders of
the Company 2,819 (1,701) 1,118 2,145
Non-controlling interests 18 - 18 10
2,837 (1,701) 1,136 2,155
================== ===========
Earnings per 20p share 8 Pence Pence Pence
From continuing operations
- Basic 18.7 7.4 14.2
- Diluted 18.7 7.4 14.2
(1) See Note 1 Restatement of prior years
Consolidated Statement of Comprehensive Income
Restated
(1)
Year Ended Year Ended
31 May 2014 31 May 2013
GBP'000 GBP'000
Profit for the period 1,136 2,155
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 (627) (1,518)
- US Scheme 191 (718)
Deferred tax on retirement benefit obligation
- UK Scheme 125 349
- US Scheme (76) 287
Deferred tax arising on change in UK corporation
tax rate (336) (98)
----------- -----------
(723) (1,698)
Items that will or maybe reclassified to
profit or loss in subsequent periods:
Exchange differences on translation of foreign
operations (3,082) 874
----------- -----------
Other comprehensive income recognised directly
in equity (3,805) (824)
Total comprehensive (expense)/income for
the financial period (2,669) 1,331
=========== ===========
Attributable to:
Equity holders of the Company (2,687) 1,321
Non-controlling interests 18 10
(2,669) 1,331
=========== ===========
(1) See Note 1 Restatement of prior years
Consolidated Balance Sheet
Year Ended Year Ended
31 May 2014 31 May 2013
Note GBP'000 GBP'000
Non-current assets
Property, plant and equipment 9,265 10,082
Intangible assets 21,219 18,336
Deferred tax assets 4,141 4,997
Total non-current assets 34,625 33,415
Current assets
Inventories 12,281 13,335
Trade and other receivables 9,347 8,018
Cash and short-term deposits 2,348 6,178
Total current assets 23,976 27,531
Total assets 58,601 60,946
Current liabilities
Trade and other payables (4,536) (4,472)
Current tax liabilities (757) (932)
Borrowings (1,234) (73)
Total current liabilities (6,527) (5,477)
Non-current liabilities
Borrowings (2,178) -
Deferred tax liabilities (3,307) (4,244)
Retirement benefit obligation 12 (11,245) (12,079)
Total non-current liabilities (16,730) (16,323)
Total liabilities (23,257) (21,800)
Net assets 35,344 39,146
=========== ===========
Equity
Share capital 3,270 3,270
Share premium 638 638
Treasury shares (2,447) (2,447)
Retained earnings 31,538 32,276
Foreign currency translation reserve 2,288 5,370
Capital and reserves attributable
to equity shareholders 35,287 39,107
Equity attributable to non-controlling
interests 57 39
Total equity 35,344 39,146
=========== ===========
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 1 June 2012 3,270 638 (2,447) 4,496 33,794 39,751 29 39,780
Profit for the period
restated (1) - - - - 2,145 2,145 10 2,155
------- ------- -------- ----------- -------- ------- ----------- -------
Other comprehensive
income :
Currency translation
adjustments - - - 874 - 874 - 874
Actuarial losses on
defined benefit plans
(net of tax) restated
(1) - - - - (1,698) (1,698) - (1,698)
------- ------- -------- ----------- -------- ------- ----------- -------
Total other comprehensive
income restated (1) - - - 874 (1,698) (824) - (824)
------- ------- -------- ----------- -------- ------- ----------- -------
Total comprehensive
income - - - 874 447 1,321 10 1,331
Dividends (note 9) - - - - (1,965) (1,965) - (1,965)
Balance at 31 May 2013 3,270 638 (2,447) 5,370 32,276 39,107 39 39,146
Profit for the period - - - - 1,118 1,118 18 1,136
------- ------- -------- ----------- -------- ------- ----------- -------
Other comprehensive
income :
Currency translation
adjustments - - - (3,082) - (3,082) - (3,082)
Actuarial losses on
defined benefit plans
(net of tax) - - - - (723) (723) - (723)
------- ------- -------- ----------- -------- ------- ----------- -------
Total other comprehensive
income - - - (3,082) (723) (3,805) - (3,805)
------- ------- -------- ----------- -------- ------- ----------- -------
Total comprehensive
income - - - (3,082) 395 (2,687) 18 (2,669)
Dividends (note 9) - - - - (1,133) (1,133) - (1,133)
Balance at 31 May 2014 3,270 638 (2,447) 2,288 31,538 35,287 57 35,344
------- ------- -------- ----------- -------- ------- ----------- -------
(1) See Note 1 Restatement of prior years
Consolidated Cash Flow Statement
Restated
(1)
Year Ended Year Ended
31 May 2014 31 May 2013
GBP'000 GBP'000
Cash flows from operating activities
- continuing
Profit after tax 1,136 2,155
Adjusted for :
Income tax expense 890 1,036
Interest payable and similar charges 76 2
Interest receivable (7) (14)
Interest charges on pension liabilities
less expected returns on pension assets 533 450
-----------
Operating profit 2,628 3,629
Depreciation on property, plant and
equipment 882 843
Amortisation of intangible assets 2,377 1,963
IAS 19 pensions current service cost
net of contributions paid (1,750) (612)
Gain on disposal of property, plant
and equipment (19) (7)
-----------
4,118 5,816
Changes in working capital :
Decrease in inventories 2,084 133
(Increase)/decrease in receivables (1,481) 854
Increase in payables 279 103
Net cash generated from operations 5,000 6,906
Tax paid (1,311) (433)
Net cash generated by operating activities 3,689 6,473
Investing activities
Acquisition costs - business combinations (5,854) -
Proceeds on disposal of property, plant
and equipment 38 10
Purchases of property, plant and equipment (718) (963)
Expenditure on development costs (2,813) (2,389)
Interest received 7 14
Net cash used in investing activities (9,340) (3,328)
Financing activities
Proceeds of new borrowings 2,394 -
Repayment of borrowings (216) -
Dividends paid (1,133) (1,965)
Interest paid (76) (2)
Net cash used in financing activities 969 (1,967)
----------- -----------
Net (decrease)/increase in cash and
cash equivalents (4,682) 1,178
Cash and cash equivalents at beginning
of year 6,105 4,775
Effect of foreign exchange rate changes (309) 152
Cash and cash equivalents at end of
year (net funds) 1,114 6,105
=========== ===========
(1) See Note 1 Restatement of prior years
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 2014 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 2014 or for the year ended 31 May 2013. Statutory accounts for
the years ended 31 May 2014 and 31 May 2013 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 2013 have been filed with the Registrar of Companies and the
statutory accounts for the year ended 31 May 2014 will be filed
with the Registrar of Companies following the AGM on 5 November
2014.
The Annual Report 2014 was approved by the Board of Directors
and authorised for issue on 24 September 2014 and signed on its
behalf by J Haynes and E Oakley.
Basis of accounting
The accounting policies used to prepare this results
announcement are consistent with those applied in the 2013
consolidated financial statements, apart from the following new
standards and amendments to standards which became effective for
the first time during the year :
-- IFRS 7 (amendment): 'Financial Instruments: Disclosures', has
been introduced to help investors and other financial statement
users to better assess the effect or potential effect of offsetting
arrangements on a company's financial position.
-- IFRS 13: 'Fair Value Measurement', establishes a single
source of guidance under IFRS for all fair value measurements. IFRS
13 provides guidance on how to measure fair value under IFRS when
it is required or permitted
-- IAS 19 (revised): 'Employee Benefits', requires a schemes'
discount rate to calculate the return on assets rather than using a
rate of return appropriate to the various asset classes. The
amended Standard also requires administration costs to be
recognised separately from the current service cost in the income
statement as they are incurred.
In addition to the above, amendments resulting from the Annual
Improvements 2009-2011 Cycle was issued in May 2012 with an
effective date for periods commencing 1 January 2013. This was a
collection of amendments to five standards including; IFRS 1
'First-time adoption of International Financial Reporting
Standards', IAS 1 'Presentation of Financial Statements', IAS 16
'Property, Plant and Equipment', IAS 32 'Financial Instruments:
Presentation' and IAS 34 'Interim Financial Reporting'.
With the exception of IAS 19 (revised) and IAS 1 (amendment),
the above new standards and amendments to standards were either not
relevant or did not have a material impact on the Financial
Statements of the Group.
IAS 19 (revised) 'Employee Benefits' has been adopted in the
year and comparatives for the year ended 31 May 2013 have been
restated accordingly, further details are provided in this note
under the heading 'Restatement of prior years'. IAS 1 (amendment)
has been adopted and the presentation of the Consolidated Statement
of Comprehensive Income updated accordingly.
Issued standards, amendments to standards and interpretations
which become applicable for the Group after the year-end will be
adopted in accordance with their effective dates. The directors do
not anticipate that the adoption of these standards and
interpretations will have a material impact on the financial
statements of the Group in the period of initial application.
1. Accounting policies (continued)
Restatement of prior years
As reported in our Annual Report 2013, the amendments to IAS 19
Employee Benefits (revised) impact the Group for the first time in
the current financial year. The main impact on the Group has been
to restrict the rate used to calculate the return on the Group's
defined benefit pension schemes' assets to the schemes' discount
rate, rather than using a rate of return which is more appropriate
to the various classes of asset.
The Consolidated Income Statement, the Consolidated Statement of
Comprehensive Income, the Consolidated Statement of Changes in
Equity and affected Notes have been restated for the period ending
31 May 2013. The impact of the restatement on the 31 May 2013
figures are as shown below:
-- To increase administrative expenses in the Consolidated Income Statement by GBP124,000.
-- To reduce other finance costs in the Consolidated Income Statement by GBP306,000.
-- To reduce the amount of taxation in the Consolidated Income Statement by GBP99,000.
The above restatements have been reflected in the Consolidated
Statement of Comprehensive Income and there was no impact on the
disclosed defined benefit obligation at 31 May 2013.
A Consolidated Balance Sheet as at the beginning of the earliest
comparative period presented would ordinarily be required by IAS 1,
'Presentation of financial statements', for a restatement. However,
given that details of the restatement have been fully disclosed and
the restatement had no impact on the Consolidated Balance Sheet as
at 1 June 2012, the Directors do not believe that the inclusion of
an additional consolidated balance sheet as at 31 May 2012 would
provide any additional useful information. Accordingly, no third
consolidated balance sheet has been presented in these financial
statements.
During the year the Group reviewed the way it reports the costs
of maintaining its UK site. Previously the costs were apportioned
between cost of sales and administration expenses however, this
year all costs have been reported as administration expenses.
Accordingly, in the prior year figures GBP327,000 has been
reclassified from cost of sales to administration expenses.
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
2014 2013 2014 2013
US dollar 1.68 1.52 1.62 1.57
Euro 1.23 1.17 1.20 1.22
Swedish krona 11.21 10.06 10.58 10.38
Australian dollar 1.80 1.58 1.78 1.53
2. Revenue
31 May 2014 31 May 2013
GBP'000 GBP'000
Revenue by geographical destination on continuing
operations :
United Kingdom 5,950 6,808
Rest of Europe 6,591 6,106
United States of America 12,685 11,164
Australia 2,751 2,553
Rest of World 1,307 1,001
----------- -----------
Total consolidated revenue 29,284 27,632
=========== ===========
3. 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 Netherlands, Italy, Spain, Romania
and Sweden. Its core business is the publication and supply of
automotive repair and technical information to the DIY and
professional automotive aftermarkets in both a printed and digital
format.
The North American and Australian business with headquarters
near Los Angeles, California publishes DIY repair manuals for cars
and motorcycles in both a printed and digital format. The business
publishes titles under the Haynes, Chilton and Clymer brands, in
both the English and Spanish languages. It also has a branch
operation in Sydney, Australia which publishes similar products
under both the Haynes and Gregory's brands.
The above two operating segments are each organised and managed
separately and are treated as distinct operating and reportable
segments in line with the provisions of IFRS 8. The identification
of the two operating segments is based on the reports reviewed by
the chief operating decision maker, which form the basis for
operational decision making.
Analysis of geographic operating segments
North
UK & America
Europe & Australia Consolidated
Revenue and results : 2014 2014 2014
GBP'000 GBP'000 GBP'000
Segmental revenue
Total segmental revenue 13,664 17,645 31,309
Inter-segmental sales ([1]) (314) (1,711) (2,025)
-------- ------------- ---------------
Total external revenue 13,350 15,934 29,284
-------- ------------- ---------------
Segment result
Underlying segment operating profit
before exceptional items and interest 949 2,612 3,561
Exceptional items ([6]) (2,433) (257) (2,690)
Interest receivable 3 4 7
Interest payable (19) (56) (75)
-------- ------------- ---------------
Segment (loss)/profit after exceptional
items and interest (1,500) 2,303 803
Unallocated head office income less
expenses (22)
---------------
Segment operating profit before tax
and adjustments 781
Reconciliation to consolidated profit
before tax :
IAS 16 Property, plant and equipment
([2]) 43
IAS 19 Employee benefits ([3]) 987
IFRS 3 Business combinations ([4]) 215
---------------
Consolidated profit before tax 2,026
Taxation ([5]) (890)
---------------
Consolidated profit after tax 1,136
===============
[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] In the segmental reporting goodwill is amortised over a
period not exceeding 20 years - under IFRS 3 goodwill is reviewed
annually for impairment but not amortised.
[5] The charge to taxation relates to the consolidated Group.
Included within the charge to taxation is a credit of GBP330,000
which relates to the UK & European operations and GBP804,000
which relates to the North American & Australian
operations.
[6] Details of the exceptional items are shown in note 4 of this
Results Announcement. The UK & European segmental exceptional
costs include an additional GBP500,000 which is removed from the
Consolidated Income Statement through the IAS 19 adjustments
referred to in sub note 3 above.
3. Segmental analysis (continued)
North
UK & America
Europe & Australia Consolidated
Revenue and results : 2013 2013 2013
GBP'000 GBP'000 GBP'000
Segmental revenue
Total segmental revenue 14,022 16,162 30,184
Inter-segmental sales ([1]) (356) (2,196) (2,552)
-------- ------------- ---------------
Total external revenue 13,666 13,966 27,632
-------- ------------- ---------------
Segment result
Segment operating profit before interest 885 1,746 2,631
Interest receivable 5 9 14
Interest payable - - -
-------- ------------- ---------------
Segment profit after interest 890 1,755 2,645
Unallocated head office income less
expenses (152)
---------------
Segment operating profit before tax
and adjustments 2,493
Reconciliation to consolidated profit
before tax :
IAS 16 Property, plant and equipment
([2]) 70
IAS 19 Employee benefits ([3]) restated
(*) 406
IFRS 3 Business combinations ([4]) 222
---------------
3,191
Taxation ([5]) restated (*) (1,036)
---------------
Consolidated profit after tax restated
(*) 2,155
===============
* See Note 1 Restatement of prior years
[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] In the segmental reporting goodwill is amortised over a
period not exceeding 20 years - under IFRS 3 goodwill is reviewed
annually for impairment but not amortised.
[5] The charge to taxation relates to the consolidated Group.
Included within the charge to taxation is GBP106,000 which relates
to the UK & European operations and GBP780,000 which relates to
the North American & Australian operations.
4. Exceptional items
31 May 2014 31 May 2013
GBP000 GBP'000
Exceptional costs included in cost of sales
:
* UK restructuring costs 1,519 -
Exceptional costs included in administrative
expenses :
* UK restructuring costs 344 -
* Acquisition expenses 327 -
2,190 -
=========== ===========
The acquisition expenses relate to the successful acquisition of
the Clymer and Intertec manuals business in the US as well as
one-off costs relating to the Group's other acquisition
investigations and due diligence work which did not move forward
during the year.
Exceptional items are those significant items which warrant
separate disclosure by virtue of their scale and nature to enable a
full understanding of the Groups financial performance.
5. Finance income
31 May 2014 31 May 2013
GBP'000 GBP'000
Interest receivable on bank deposits 7 14
=========== ===========
6. Finance costs
31 May 2014 31 May 2013
GBP'000 GBP'000
Interest payable on bank loans and overdrafts 76 2
=========== ===========
7. Taxation
Restated
(1)
31 May 2014 31 May 2013
GBP'000 GBP'000
Analysis of charge during the period :
Current tax
- UK corporation tax on profits for the period - (70)
- Foreign tax 1,202 1,083
- Adjustments in respect of prior periods (1) 8
----------- -----------
1,201 1,021
Deferred tax
- Origination and reversal of temporary differences (311) 15
Total taxation in the Consolidated Income
Statement 890 1,036
=========== ===========
(1) See Note 1 Restatement of prior years
The effective rate of tax is higher than the standard rate of UK
tax due to the impact of the UK restructuring and the mix of
profits from overseas operations where the tax rates are higher
than the UK.
In April 2014 the rate of UK corporation tax was reduced from
23% to 21% giving an effective tax rate of 22.7% for the financial
year ended 31 May 2014. A further reduction in the UK corporation
tax rate from 21% to 20% was substantively enacted at the balance
sheet date and will take effect from 1 April 2015. The relevant
deferred tax balances have been re-measured accordingly. Included
in the deferred tax charge above is an amount of GBP26,000 arising
from the change in the UK tax rate.
8. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following :-
Before exceptional After exceptional Restated
items items (1)
2014 2014 2013
GBP'000 GBP'000 GBP'000
Earnings :
Profit after tax - continuing operations
([a]) 2,819 1,118 2,145
------------------ ----------------- ----------
No. No. No.
Number of shares :
Weighted average number of shares
([b]) 15,111,540 15,111,540 15,111,540
------------------ ----------------- ----------
Basic earnings per share (pence) 18.7 7.4 14.2
================== ================= ==========
([a]) Figure has been adjusted for a profit of GBP18,000 (2013:
GBP10,000) attributable to non-controlling interests.
([b]) During the year the Company held 1,240,000 of its ordinary shares in treasury.
As at 31 May 2014 and 31 May 2013 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.
(1) See Note 1 Restatement of prior years
9. Dividends
31 May 2014 31 May 2013
GBP'000 GBP'000
Amounts recognised as distributions to equity
holders :
Final dividend for the year ended 31 May 2013
of 4.0p per share (2012: 9.5p per share) 604 1,436
Interim dividend for the year ended 31 May
2014 of 3.5p per share (2013: 3.5p per share) 529 529
1,133 1,965
===========
Proposed final dividend for the year ended
31 May 2014 of 4.0p per share (2013: 4.0p
per share) 604 604
As at 31 May 2014, 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 5 November
2014 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 13 November 2014 to shareholders on the register at
the close of business on 24 October 2014. The shares will be
declared ex-dividend on 22 October 2014.
10. Analysis of the changes in net funds
As at Exchange As at
1 June 2013 Cash flow movements 31 May 2014
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 6,178 (3,521) (309) 2,348
Bank overdrafts (73) (1,161) - (1,234)
6,105 (4,682) (309) 1,114
=========== ========= ========= ===========
11. Acquisition
On 17 September 2013, Haynes North America Inc, a 100%
subsidiary of the Group, acquired the trade and certain assets and
liabilities including intellectual property, trade receivables and
finished goods inventory marketed and sold under the Clymer and
Intertec brands from Penton Media, Inc in the USA. Clymer is the
world leader in the sales of motorcycle and ATV repair manuals as
well as producing a range of titles on marine and outdoor garden
equipment, personal watercraft, snowmobiles and tractors. The cash
consideration for the acquisition was GBP5.85 million ($9.25
million).
The table below shows the fair values of the assets and
liabilities arising on the acquisition.
Recognised
Carrying on
value acquisition
GBP'000 GBP'000
Assets Acquired
Property, plant and equipment 98 23
Intangible assets - 2,960
Trade receivables ([1]) 451 428
Inventories 1,382 1,783
Other payables (75) (75)
Fair value of net assets 1,856 5,119
========
Goodwill arising on acquisition ([2]) 735
------------
Total consideration 5,854
============
Cash consideration 5,854
Total consideration 5,854
============
The net cash outflows arising on the acquisition
were as follows :
Cash consideration 5,854
Costs of acquisition (included in cash flows
from operating activities) ([3]) 172
Net cash outflow 6,026
============
([1]) The gross amount of trade receivables at the date of
acquisition was GBP463,000. Management estimate that GBP12,000 of
this amount will not be recoverable.
([2]) There are certain intangible assets included in the
Goodwill arising on acquisition of GBP735,000 (which is deductible
for income tax purposes) that cannot be individually separated and
reliably measured due to their nature. These items include Clymer's
strong position and profitability in its market and anticipated
synergies after its acquisition by the Group.
([3]) The costs of acquisition of GBP172,000 were expensed as
incurred in the period and were included as an exceptional item
within administrative expenses (note 4).
The acquisition of the Clymer and Intertec brands contributed
GBP1.5 million of revenue during the period. However as the trade
and assets have been amalgamated with the US business it is not
possible to quantify the amount of profit contribution from the
acquired business during the period. If the acquisition had been
made at the start of the financial period the revenue from the
acquired business would have been GBP2.2 million but for the
reasons outlined above it is not possible to quantify the
associated profit contribution during this period.
12. 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 2014 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 2014 31 May 2013
GBP'000 GBP'000
Consolidated retirement benefit obligation
at beginning of period (12,079) (9,980)
Movement in the period :
- Total expenses charged in the income statement (1,043) (1,145)
- Contributions paid 2,260 1,308
- Actuarial loss taken directly to reserves (436) (2,236)
- Foreign currency exchange rate movements 53 (26)
Consolidated retirement benefit obligation
at end of period (11,245) (12,079)
=========== ===========
(1) See Note 1 Restatement of prior years
13. Other information
The Directors Report and audited Report & Accounts for the
financial year ended 31 May 2014 will be posted to shareholders on
29 September 2014 and delivered to the Registrar of Companies
following the Annual General Meeting which will be held on 5
November 2014. 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 29 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
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