28th Jan 2005 07:00
Haynes Publishing Group PLC28 January 2005 HAYNES PUBLISHING GROUP P.L.C. INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 NOVEMBER 2004 Haynes Publishing Group P.L.C. (Haynes Group) is the worldwide market leader inthe production and sale of Automotive and Motorcycle Repair Manuals. The Haynes Group publishes many other DIY titles as well as an extensive arrayof books about motor sport, vehicles and general transport. Through itssubsidiary Sutton Publishing, the Haynes Group also publishes a range of historybooks and biographies. KEY POINTS - Turnover of £18.4m (2003: £19.7m) - Profit before tax of £3.7m (2003: £3.7m) - Operating profit of £3.8m (2003: £3.8m) - Adjusted earnings per share, before goodwill of 15.2 pence (2003: 14.9 pence) - Basic earnings per share of 13.6 pence (2003: 13.2 pence) - Net debt of £0.5m (2003: £4.8m) - Interim dividend per share of 5.0 pence (2003: 4.0 pence) Contacts: John Haynes OBE, Chairman 01963 440635 Haynes Publishing Group P.L.C. Eric Oakley, Group Chief Executive 01963 442024 Haynes Publishing Group P.L.C. Barrie Newton 0117 9330011 Rowan Dartington INTERIM STATEMENT Overall performance The first six months has seen another solid trading performance from the Group,which has been achieved during a difficult climate. The increasing weakness ofthe US Dollar against Sterling, the pressure on raw material prices and theuncertainty in the retail sector, in both our key geographical markets, continueto challenge growth. Notwithstanding these contrary factors, we have enjoyedoperating profit growth in both our key operating segments during the period. In North America and Australia, segmental profit ended the period 5% ahead ofthe first half of the prior year, helped by strong sales of the Xtreme range ofmodifying titles and from steady sales growth in our Australian market. In the UK & Europe, despite a small decline in turnover, segmental profitincreased by 14% over the same period last year. The main factor in the profitimprovement has been the reduced losses in Sutton Publishing where the newinventory management system, introduced at the end of our last financial year,has allowed slow moving stock to be identified more quickly and, as aconsequence, the stock can be sold for better value and before the need to makeprovisions. Whilst still early in the change process, the signs are encouraging. Nevertheless, as expected, the impact of a weaker Dollar on the translation ofour US results, which reduced turnover by £1.1 million and segmental profits by£0.4 million respectively, coupled with the one-off exchange gains experiencedlast year on the Group's currency borrowings, has meant that Group pre-taxprofit ended the period similar to that of last year. Results For the six months ended 30 November 2004, Group pre-tax profits were £3.7million (2003: £3.7 million) on turnover of £18.4 million (2003: £19.7 million). North American and Australian segmental profits were £3.4 million (2003: £3.2million) on turnover of £10.6 million (2003: £11.5 million). UK and European segmental profits were £0.6 million (2003: £0.5 million) onturnover of £7.8 million (2003: £8.2 million). Adjusted earnings per share, before goodwill amortisation, were 15.2 pence(2003: 14.9 pence). Net debt as at 30 November 2004 was £0.5 million (2003: £4.8 million) giving anet gearing of 2% (2003: 18%) Interim dividend Three years ago, in May 2001, following the then recent acquisitions of SuttonPublishing in the UK and Chilton Manuals in the US, Group net debt stood at£10.6 million giving a net gearing of 44%. In November the Group was able toreport net borrowings of £0.5 million giving a net gearing of 2% whichdemonstrates the ability of the Group's operations to generate cash. In light ofthe above the Board is declaring an interim dividend of 5.0 pence per share, anincrease of 25% over the prior year (2003: 4.0 pence). The payment of the interim dividend will be made on 19 April 2005 toshareholders on the register at the close of business on 18 March 2005. Theshares will be declared ex-dividend on 16 March 2005. Operational Review North America and Australia The first five months of the trading period were difficult, characterised byinventory reduction programmes at all major retailers and a reduction in retailactivity. Growth in consumer spending in the United States in the third quarterof 2004 was the lowest since 2001. However, the US business did benefit fromsome pre price increase ordering late in the period and this, together withstrong sales of Xtreme modifying titles and continued sales growth in Australia,helped increase turnover in local currency to $19.5 million (2003: $19.0million). After translation to Sterling the impact of the weaker US Dollar leftUS turnover down against the prior year by 7%. Likewise, segmental profit,whilst ahead in local currency by 15%, ended the period only 5% ahead aftertranslation into Sterling. UK and Europe Trading in our core automotive markets has been slow, but can be explained, inpart, by our new title release programme which is weighted towards the secondhalf of the year. The first five titles in our new range of task specifictechnical automotive manuals aimed at the DIY consumer, were published inSeptember and have sold well. In addition, the Haynes Max Power series saw salesincrease by more than 25% against the prior year, helped by new title releasesduring the period. In France, sales ended the period marginally ahead of lastyear aided by the launch of a new range of competitively priced generic entrylevel car care guides as well as the publication of the Peugeot 307 manual. Thelatter, although only launched late in the period, quickly became our topselling French manual. Turnover in the Haynes General Publishing division ended the period ahead oflast year aided by a strong publishing programme. New titles released during theperiod included the Official Formula 1(TM) Season Review of 2004, which tracesthe story of the season as told by the drivers and the team personnel involvedand has a foreword written by Bernie Ecclestone; Alex Zanardi 'My Story' whichwas selected by Alan Henry as the Guardian's Motor Sport book of the year; andthe Official MotoGP 2004 Season Review which chronicles news, views and picturesfrom all 16 MotoGP races. Sales by Sutton Publishing ended the period slightly down on the prior year, asthe division concentrated on its internal publishing programme and less on lowermargin third party publishing. The improved mix of sales and the lower levels ofobsolescence provisioning, as a result of the new inventory management system,helped reduce significantly the division's losses compared with the prior year. As a result of the factors outlined above, the segmental profit of the UK &European operations ended the period 14% higher at £0.6 million. Future outlook In North America and Australia, three new Haynes Xtreme titles covering thetruck and sports utility vehicle market were introduced late in the period. Theinitial reaction from customers has been positive. However, continued weaknessin the US Dollar, in the second half, could erode any gains achieved in localcurrency when converted into Sterling. In the UK automotive division we can look forward to a third more new titlereleases during the second half of the year in comparison to titles publishedduring the first half of the year. The focus of the Haynes general publishingdivision will be on new title releases in our Home and Computer Series andFamily Series, where our title "The HGV Manual", on male obesity, is due forrelease shortly before the end of our financial year. In Sutton Publishing, wewill continue to focus on improving the quality of the new title programme, thistogether with further progress with the new inventory management systems shouldsignificantly improve the performance of this division. In common with all fully quoted companies, we are required to produce financialstatements for accounting periods beginning on or after 1 January 2005 inaccordance with International Financial Reporting Standards (IFRS's). For theHaynes Group the new standards will first apply to our audited statements forthe year ended 31 May 2006. The new standards will also have an impact on theGroup this time next year, as our interim report will need to be prepared in aconsistent manner with our full year-end results. The effect of the newstandards on our financial statements is currently being assessed and we expectto be able to provide further detail when we report at the year-end. J H Haynes, OBEChairman27 January 2005 GROUP PROFIT AND LOSS ACCOUNT 6 months ended: Year ended: 30 Nov 2004 30 Nov 2003 31 May 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Turnover - Continuing operations (note 2) 18,426 19,737 39,010Cost of sales (6,986) (7,748) (14,961) Gross profit 11,440 11,989 24,049 Selling and distribution costs (4,832) (5,520) (10,537)Administrative expenses (2,936) (2,768) (5,370)Other operating income 78 78 250 Operating profit - Before goodwill amortisation 4,016 4,066 8,947 - Goodwill amortisation (266) (287) (555) Operating profit - continuing (note 2) 3,750 3,779 8,392 Net interest payable (36) (70) (119) Profit on ordinaryactivities before taxation 3,714 3,709 8,273 Taxation on profits on ordinaryactivities (note 3) (1,494) (1,559) (3,296) Profit on ordinary activities aftertaxation 2,220 2,150 4,977 Dividends (818) (654) (1,962) Retained profit for the period 1,402 1,496 3,015 Earnings per 20p share in pence (note 4) - On basic earnings 13.6 13.2 30.4 - On diluted earnings 13.6 13.2 30.4 - On adjusted earnings 15.2 14.9 33.8 STATEMENT OF GROUP RECOGNISED GAINS AND LOSSES 6 months ended: Year Ended: 30 Nov 2004 30 Nov 2003 31 May 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Profit for the financial period 2,220 2,150 4,977Exchange rate movement (495) (895) (1,806) Total recognised gains relating to theperiod 1,725 1,255 3,171 RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS 6 months ended: Year Ended: 30 Nov 2004 30 Nov 2003 31 May 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Total recognised gains for the period 1,725 1,255 3,171Dividends (818) (654) (1,962) Net movement in equity shareholders' funds 907 601 1,209Equity shareholders' funds at the start ofthe period 27,135 25,926 25,926 Equity shareholders' funds at the end ofthe period 28,042 26,527 27,135 GROUP BALANCE SHEET As at: As at: As at: 30 Nov 2004 30 Nov 2003 31 May 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Fixed assetsIntangible assets: Goodwill 5,701 6,740 6,150Tangible assets 7,255 8,259 7,673Investments 2 2 2 12,958 15,001 13,825 Current assetsStock 11,596 13,100 12,080Debtors 11,825 12,211 11,766Cash at bank and in hand 2,104 785 1,726 25,525 26,096 25,572 Creditors - amounts falling duewithin one year- Borrowings and lease finance (1,337) (3,737) (1,588)- Other creditors (6,920) (7,688) (8,334) (8,257) (11,425) (9,922) Net current assets 17,268 14,671 15,650 Total assets less current liabilities 30,226 29,672 29,475 Creditors - amounts falling due aftermore than one year- Borrowings and lease finance (1,238) (1,806) (1,588)- Other creditors (575) (969) (372) (1,813) (2,775) (1,960) Provisions for liabilities and charges (371) (370) (380) Net assets 28,042 26,527 27,135 Capital and reservesCalled up share capital (note 5) 3,270 3,270 3,270Share premium account 638 638 638Profit and loss account 24,134 22,619 23,227 Equity shareholders' funds 28,042 26,527 27,135 GROUP CASHFLOW STATEMENT 6 months ended: Year ended: 30 Nov 2004 30 Nov 2003 31 May 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Net cash inflow from operating activities 4,973 4,645 11,167(note 6.1)Returns on investment and servicing of (40) (79) (122)finance (note 6.2)Taxation (1,949) (1,882) (2,972) Capital expenditure and financial (231) (405) (669)investment (note 6.2)Acquisitions and disposals (255) (339) (1,111)Equity dividends paid (1,308) (654) (1,308) Cash inflow before management of liquid 1,190 1,286 4,985resources and financing Financing (1,186) (1,039) (2,190) Increase in cash in the period 4 247 2,795 RECONCILIATION OF NET CASHFLOW TO MOVEMENT IN NET FUNDS (Note 6.3) 6 months ended: Year ended: 30 Nov 2004 30 Nov 2003 31 May 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Increase in cash during the period 4 247 2,795Cash inflow from movement in borrowings 1,186 1,039 2,190 Change in net funds resulting from 1,190 1,286 4,985cashflows Exchange rate movements (211) (474) (865) Movement in net funds in the period 979 812 4,120Net funds at the start of the period (1,450) (5,570) (5,570) Net funds at the end of the period (471) (4,758) (1,450) SEGMENTAL ANALYSIS Turnover by geographical destination 6 months ended: 6 months ended: 30 Nov 2004 30 Nov 2003 (unaudited) (unaudited) £'000 £'000 United Kingdom 5,678 6,317Rest of Europe 1,486 1,386United States 9,674 10,488Rest of World 1,588 1,546 Total group turnover 18,426 19,737 Analysis of results by operational segment and origin 6 months ended 6 months ended 30 Nov 2004 30 Nov 2003 (unaudited) (unaudited) Profit before Profit before interest and interest and tax Turnover tax Turnover £000 £000 £000 £000 UK and Europe 7,783 550 8,244 481North America and Australia 10,643 3,378 11,493 3,222 18,426 3,928 19,737 3,703 Group expenses less income 88 363Goodwill amortisation (266) (287) Group profit before interest and 3,750 3,779tax Notes 1. The Interim Report and Accounts were approved by the Directors on 27 January 2005. The Report should be read in conjunction with the 2004 Annual Report and Accounts, which contains the most recent audited financial statements. The results have been prepared using accounting policies consistent with those adopted for the year ended 31 May 2004. The figures for the year ended 31 May 2004 are an extract from the audited accounts which have been delivered to the Registrar of Companies and which carried an unqualified auditors' report. The interim figures for 2003 and 2004 are unaudited. The financial information contained in this report does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. 2. Turnover and operating profit In the profit and loss account all turnover and operating profit during the period has been classified as continuing. 3. Taxation The taxation charge has been calculated on the basis of the estimated effective tax rate for the full year of which £237,000 (2003: £328,000) relates to the UK and £1,257,000 (2003: £1,231,000) to overseas operations. The small reduction in the effective tax rate results from the mix of profits and losses within the UK and European operations. 4. Earnings per share Earnings per share is calculated on the Group profit after taxation of £2,220,000 (2003: £2,150,000), and on the weighted average of 16,351,540 (2003: 16,351,540) shares allotted. The adjusted earnings per share figure excludes goodwill charged through the profit and loss account during the period of £266,000 (2003: £287,000). There were no potentially dilutive shares in issue at 30 November 2004, 31 May 2004 or 30 November 2003 so there is no difference between the basic and diluted earnings per share. 5. Share capital As at : As at : As at : 30 Nov 2004 30 Nov 2003 31 May 2004 £'000 £'000 £'000 Authorised10,000,000 "A" Ordinary shares of 20p 2,000 2,000 2,0008,750,000 Ordinary shares of 20p 1,750 1,750 1,750 3,750 3,750 3,750 Allotted, called up and fully paid9,000,000 "A" Ordinary shares of 20p 1,800 1,800 1,8007,351,540 Ordinary shares of 20p 1,470 1,470 1,470 3,270 3,270 3,270 The "A" Ordinary shares rank equally with the Ordinary shares and areconvertible to Ordinary shares in certain circumstances. 6.1 Reconciliation of operating profit to operating cash flows 6 months ended: Year ended: 30 Nov 2004 30 Nov 2003 31 May 2004 £'000 £'000 £'000 Operating profit 3,750 3,779 8,392Depreciation and goodwill amortisation 814 994 1,891(Profit)/loss on disposal of fixed assets (1) - 5Decrease in stocks 484 552 1,572Increase in debtors (75) (607) (442)Increase/(decrease) in creditors 1 (73) (251)Net cash inflow from operating activities 4,973 4,645 11,167 6.2 Analysis of cash flows for headings netted in the cash flow statement 6 months ended: Year ended: 30 Nov 2004 30 Nov 2003 31 May 2004 £'000 £'000 £'000Returns on investment and servicing offinanceInterest received 5 2 11Bank interest paid (45) (80) (133)Interest on lease rental payments - (1) - Net cash outflow for returns oninvestments and servicing of finance (40) (79) (122) 6 months ended: Year ended: 30 Nov 2004 30 Nov 2003 31 May 2004 £'000 £'000 £'000Capital expenditure and financialinvestment Purchase of tangible fixed assets (239) (405) (677)Proceeds from sale of tangible fixed 8 - 8assets Net cash outflow for capital expenditure (231) (405) (669)and financial investment 6.3 Analysis of the changes in net funds As at : Exchange As at : 1 June 2004 Cashflow movements 30 Nov 2004 £'000 £'000 £'000 £'000 Cash at bank and in hand 1,726 589 (211) 2,104Bank overdrafts (553) (585) (1,138) 4 Amounts due in less than one year:Bank loans (1,035) 836 (199) Amounts due after more than one year :Bank loans (1,588) 350 (1,238) 1,186 (1,450) 1,190 (211) (471) 7. A copy of this half-year report will be distributed to all shareholders and will also be available to members of the public from the Company's registered office at Sparkford, Near Yeovil, Somerset BA22 7JJ. A copy of the interim report will also be available on the UK website at www.haynes.co.uk/investor. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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