HYNS.L Regulatory News (HYNS)

17 Aug 2006 07:01

Haynes Publishing Group PLC17 August 2006 HAYNES PUBLISHING GROUP P.L.C. PRELIMINARY UNAUDITED RESULTS FOR THE YEAR ENDED 31 May 2006 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. Financial Highlights * - Turnover of £34.2m (2005: £36.4m) - Profit before tax of £8.3m (2005: £9.2m) - Operating profit of £8.7m (2005: £9.4m) - Basic earnings per share of 34.0 pence (2005: 36.4 pence) - Net cash of £3.1m (2005: £1.8m) - Total dividend per share of 15.5 pence per share (2005: 14.5 pence) * From 1 June 2005 the Group is required to prepare its consolidated financialstatements in accordance with International Financial Reporting Standards(IFRS). Comparative information has been restated in accordance with thetransitional rules governing the change from UK Generally Accepted AccountingPractice (UK GAAP) to IFRS and a full reconciliation of the changes impactingthe comparative figures was included as part of our Interim Statement and willbe included in our full year Annual Report and Accounts. Enquiries : Haynes Publishing Group P.L.C.John Haynes OBE, Chairman 01963 442009Eric Oakley, Group Chief Executive 01963 442009 Rowan Dartington & Co. LimitedBarrie Newton 0117 9330011 Cautionary Statement : This report contains certain forward-looking statements with regards thefinancial condition and results of the operations of Haynes Publishing GroupP.L.C. These statements and forecasts involve risk factors which are associatedwith, but are not exclusive to, the economic and business circumstancesoccurring from time to time in the countries and sectors in which the Groupoperates. These forward-looking statements are made only as at the date of thisannouncement. Nothing in this announcement should be construed as a profitforecast. Except as required by law, Haynes Publishing Group P.L.C. has noobligation to update the forward-looking statements or to correct anyinaccuracies therein. Chairman's Statement Whilst trading during our financial year ended 31 May 2006 has been challengingwe are, nevertheless, still reporting the third highest profit in our Group'shistory, a factor which clearly demonstrates the underlying financial strengthof the Haynes business. At the half year stage, the Group had experienced asmall decline in profit over the prior period. The global impact of rising fuelprices was affecting consumer spending, leading to tighter inventory control byour key customers and there was increasing upward pressure on the cost of ourraw materials and utility overheads. Market indicators and feedback from ourcustomers suggest that, as anticipated, the unhelpful market conditionscontinued into the second half of the year. Attempting to protect our margins,we implemented price increases in our North American and Australian businessesat the beginning of the third quarter and this was shortly followed by similarincreases in the UK market mid-way through the fourth quarter. Whilst the priceincreases will help to ease pressure on margins during the coming months, theabove factors have had an adverse impact on profitability in the year we arereporting. Results summary For the reasons outlined above and discussed further in the following GroupChief Executive's Review, Group revenue ended the year at £34.2 million, areduction of 6% against the prior year (2005: £36.4 million) as lower consumerspending led to tighter inventory control by retailers. Correspondingly, Groupoperating profit was £8.7 million, 7% lower than the previous year (2005: £9.4million) and with an effective tax rate of 33%, earnings per share amounted to34.0 pence (2005: 36.4 pence). Strategy & structure Over the past five years, management has concentrated on developing the Group'sbusinesses following the significant acquisition activity in the early part ofthis decade, namely the share purchase of Sutton Publishing in the UK in 2000and the trade and asset purchases of Chilton in the US and Gregory's inAustralia in 2001 and 2002, respectively. Increasingly, the concentration hasbeen on those parts of the business which have been under performing againstmanagement expectations and strategic reviews in these areas are expected toconclude shortly. We will continue the development of new product initiatives using the technicalinformation derived from our unique Haynes database. In addition, managementwill continue to identify new geographical markets for which Haynes products canbe produced, using a similar approach to that which currently operates in ourkey territories. It is my firm belief that the Group's growth strategy offers prospects forfuture profit improvement and, when coupled with our strong cash generation andhealthy balance sheet, provides the Group with a range of options from which toachieve further growth, whether through business development or acquisition. Dividends Although Group earnings are marginally down on last year, the Group hasperformed in line with management's expectations during the second half of theyear. The balance sheet is healthy and cash generation remains strong with cashand cash equivalents increasing by £1.3 million to £3.1 million (2005: £1.8million). In the light of these factors, the Board is recommending a finaldividend of 10.0p per share, giving a total dividend for the year of 15.5p(2005: 14.5p) an increase of 7%. Subject to final approval by shareholders, thefinal dividend will be paid on 27 October 2006 to shareholders on the registerat the close of business on 29 September 2006. The shares will be declaredex-dividend on 27 September 2006. Corporate governance The Haynes Group Board is committed to maintaining a governance framework whichsupports the vision and values of our business and which protects and enhancesthe interests of all our stakeholders. This is an area of corporate activitywhich is constantly under review and we will continue to monitor all newguidance to ensure that the principles that apply to our business are embracedin a timely and appropriate manner. Staff On behalf of the Haynes Board and indeed personally, I would like to thank allour employees for their hard work and dedication during the current reportingyear. The past twelve months have seen some challenging market conditions andthis is a position we can expect to continue for a while longer. The financialposition of the Group, however, is strong and with the continued commitment ofour staff, managers and directors along with the continuing support of ourshareholders and customers, the future prospects, for all those with an interestin the Haynes Group remains extremely positive. Future prospects During the coming year those areas of the business which are under performingwill be restructured and the development of new products from our core technicaldatabase will continue. The Group is well placed to fund and develop newbusiness opportunities as they arise. In summary, your Board has everyconfidence in the Group's ability to deliver future profit growth. John H Haynes, OBEExecutive Chairman16 August 2006 Group Chief Executive's Review Business overview The Haynes Group is the worldwide market leader in the supply of automotive andmotorcycle repair manuals. Each manual is based on a complete vehiclestrip-down and rebuild in one of our workshops, so that the written andphotographic instructions for our customers are inherently practical and easy tofollow. It is this attention to detail and uncompromising approach toindependent and trustworthy instructional advice that has led to the Groupachieving its global market leading position. As well as our extensive range of automotive and motorcycle repair manuals, theGroup publishes an impressive list of practical, instructional and easy readingtitles aimed at those with an interest in more general leisure and DIY relatedactivities, motor sport and other transport related topics. Through its UKsubsidiary, Sutton Publishing, the Group also publishes a wide range of history,biographical and military titles as well as an extensive collection of localhistory titles recording village, town and city life in bygone days. The Group has two primary geographical business segments. Firstly, the UK andEuropean markets, which are serviced from its head offices in Sparkford,Somerset. Secondly, North America and Australia, which is responsible for theUS, Latin American and Pacific Rim and operates from headquarters near LosAngeles, California. The US business has its production and principaldistribution operations in Nashville, Tennessee. It also has a branch operationin Melbourne, Australia which is strategically located to distribute product toAustralian and Pacific Rim markets. Each business segment has its ownmanagement structure and has full vehicle workshop and editorial resources, bookmanufacturing facilities and sales and distribution capabilities. In addition to its core automotive and motorcycle repair manual activities, theUK and European operation publishes a range of general interest titles, andprints for external customers. Operating results overview For the Group as a whole, trading has been difficult in both our primarygeographical business segments. Despite a slightly stronger US Dollar againstSterling for the majority of the period, Group revenue ended the period at £34.2million, 6% down on the prior year (2005: £36.4 million). Our closerelationship with our customer base provides the Group with a valuable insightinto our core market place and the feedback we are receiving from our customershighlights a marked consumer slow down. The significant increases innon-discretionary spending caused by such factors as increased utility bills andthe much publicised rise in fuel costs is having a marked impact on High Streetspending. In the US, billions of Dollars in discretionary spending has beenremoved from the retail economy solely as a result of increased gasoline pricesand retailers have acknowledged that their customers have been deferring repairand maintenance projects. The current decline in consumer DIY has also beenexperienced by home DIY stores, who have reported significant falls in consumerspending in recent months. Tightening in inventory controls, as retailers seekto address lower like-for-like sales in their core DIY related activities, hashad an impact in all markets. During the year, we have also seen steady pressure on the cost of our rawmaterials, especially paper, and have experienced similar upward pressure on ourutility overheads. In an effort to minimise the impact of the increasing costbase, management has been tasked with reducing costs and, while every effort hasbeen made to defer such cost increases for as long as possible, with a depressedsales channel over which to spread the additional costs, there has been littlealternative other than to increase our prices to customers. The price increaseswere phased during the financial year with North American and Australiancustomers receiving an increase in our third quarter and UK customers mid-waythrough the fourth quarter. It is anticipated that the increases in sellingprices introduced this year will help to combat the increased cost of goods asthey work their way through inventory in the coming months. With further costincreases anticipated, the potential need for additional price increases remainsa possibility. As a result of the above factors, operating profit ended the year at £8.7million, a reduction of 7% against the prior year (2005: £9.4 million). Segmental overview North America and Australia At the half year, we pointed to the fact that hurricanes in America and risingfuel prices, had adversely affected consumer spending. Our customers respondedwith tighter inventory controls and this, in turn, had an adverse impact on oursales. As a result, sales revenue, in local currency, ended the financial yeardown 11% at $34.5 million (2005: $38.8 million). At the same time that we wereexperiencing softer trading, our cost base was coming under intense pressurefrom suppliers and affected second half performance. In Australia, market conditions have followed a similar pattern, with increasingfuel prices leading to a slow down in consumer spending. This, in turn,resulted in tighter customer inventory monitoring and more frequent rangereviews which had an adverse impact on key customer purchasing. The net impact of the above factors left the North American and Australiansegmental profit at $12.5 million which after translation to Sterling amountedto £7.0 million (2005: £7.5 million), a reduction of 7%. United Kingdom and Europe • Automotive Despite excellent stock availability in our customer base, the shortfall insales we experienced in all our key geographical markets during the first halfof the year, continued into the second six months. In the UK, the impact ofweaker High Street spending has led to a tightening of inventory levels. Theautomotive DIY aftermarket is currently experiencing challenging economicconditions as end users defer activities. In France, trading continues todisappoint with sales of French manuals performing below last year's levels. Inparticular, we have experienced a marked decline in the trend among youngerconsumers towards modifying their vehicles which has had a knock on influence onsales of our vehicle modifying titles. In our Scandinavian markets, sales endedthe year marginally ahead of last year with a small reduction in Swedishlanguage manuals being more than offset by higher sales of our English languagetitles. The latest RAC 'cost of motoring index', issued in January 2006, highlights thatthe average annual cost of running a vehicle grew to nearly £5,000 or £14 a day;whilst during the six month period to January 2006, fuel prices increased by11%, raising the average annual spend on fuel to £1,154. These factors, coupledwith increasing utility bills go someway to explain the lower discretionaryspending, particularly amongst those consumers with properties to maintain andhousehold vehicles to run. For our part, we continue to publish service andrepair manuals for the most widely driven vehicles and through our extensivecustomer base ensure that the manuals are readily available to end users. 'Doit Yourselfers' can increasingly save a great deal of money by undertaking workthemselves and difficult economic periods tend to lead to increases in DIYactivities. • General Publishing Sales in both of our general publishing operations finished the year marginallydown on the prior period. In the Haynes Book Division, lower sales ofexternally bought-in-titles and fewer title releases in our popular FamilySeries led to a shortfall in revenue of 7% against the prior year.Nevertheless, on a positive note, sales of our in-house originated titles endedthe year 4% ahead of the previous year, while co-edition sales, boosted byoverseas sales of the Official Formula 1(TM) Season Review, ended the year aheadby over 50%. At Sutton Publishing, sales ended the year 2% down on 2004/05, largely due tolower sales of Military titles following last year's 60th anniversary of theending of World War II, which had resulted in an additional title outputprogramme in this category. Sales of core history and biographical titles,however, increased by 2%, the second consecutive year of growth from thiscategory. It has been particularly encouraging in both of the general publishing divisionsto see the development of the title publishing programme, which can be evidencedby increasing volume sales of the top selling titles. In the Haynes BookDivision, volume sales of the top 10 selling titles increased by 24% over theprior year, whilst in Sutton Publishing, the increase was 26%. • Book Manufacturing Sales of third party printing services to external customers increased by 17%during the year, a third consecutive year of double digit growth. Whilst notsignificant in a Group context, this revenue stream does provide an importantcontribution to the UK and European business and the continued growth in thisarea, particularly from repeat business, helps to demonstrate the ability ofHaynes to deliver quality printing to tight deadlines. Taxation The charge to taxation for the year was £2.8 million (2005: £3.3 million). Asan international business with over 80% of the consolidated profits being earnedin the US, where the rate of corporate tax is higher than that in the UK, thereis a corresponding impact on our effective rate of tax, which for the financialyear ended 31 May 2006 was 33% (2005: 35%). Net debt and cash flows During the year, the cash generated from operations was £7.6 million (2005: £9.7million) and represented 87% of Group operating profit (2005: 102%). Thereduction in cash generated by operations can be partly explained by the 7%reduction in Group operating profit. In addition, there was a 9% increase ininventories, as the operating entities increased their holdings of raw materialsand products in light of the increasing cost of materials, coupled with lowerlevels of obsolescence provisioning in both our general publishing divisions.With a reduction in tax paid to Revenue authorities and lower finance costs, thenet cash generated from operating activities was £5.1 million (2005: £6.2million). Capital expenditure on new equipment of £0.7 million (2005: £0.6 million)remained in line with last year, while the deferred Chilton acquisition costsfell by £0.1 million to £0.3 million. Distributions to shareholders increasedby 15% to £2.5 million (2005: £2.1 million) and with the final pay down of thebank loans shortly before the end of 2004/05, the net movement in cash and cashequivalents was £1.7 million, an increase of £1.2 million (2005: £0.5 million). The net impact of the above factors left the Group with cash and cashequivalents of £3.1 million (2005: £1.8 million), an increase of £1.3 millionover the prior year. Treasury management & procedures The Group's treasury policies seek to reduce and minimise financial risk andensure sufficient liquidity for the Group's future needs. The Group operatesstrict controls over all treasury transactions including dual signatories andappropriate authorisation limits. The Group's principal financial instrumentscomprise bank loans and overdrafts, lease financing arrangements and cash. Themain purpose of these instruments is to finance the Group's working capitalrequirements as well as funding its capital expenditure programmes. No tradingin financial instruments is undertaken. The main currency exposure results from trading transactions between ouroperating businesses and with our global customer base. Approximately 52% ofour revenue streams are derived in US Dollars, 37% in sterling, 2% in Euro's andthe balance is a mix of currencies across our operating entities. Pensions The Group has a number of different retirement programmes in the countrieswithin which it operates. The principal pension programmes are a contributorydefined benefit scheme and a smaller contributory money purchase scheme in theUK and a non-contributory defined benefit plan in the US. It has been evident over the past couple of years that deficits in definedbenefit schemes have been adversely affected by a number of factors that haveincreased scheme liabilities including, increasing life expectancy and areduction in bond yields. The impact of these factors has been most acutelyfelt in the UK scheme. Following the outcome of the latest triennial valuationon the UK scheme, which highlighted a scheme deficit of £3.5 million against theprevious triennial valuation deficit of £2.1 million, the UK trustees, on advicefrom the scheme's financial advisers, have reduced their holdings inindex-linked securities in favour of property based assets which should helpimprove the return on assets over the period of the next triennial valuation.As a result of the increase in the deficit, the company has agreed to increaseits contributions into the UK scheme from 1 July 2006, by approximately £120,000per annum. The Group recognises the importance of the work undertaken by its staff and alsoof the importance placed on the Group's pension arrangements by its employees.It is, therefore, keen to maintain such arrangements provided that it remainscommercially viable to do so. Accounting standards The Annual Report and Accounts for the financial year ended 31 May 2006 are thefirst the Group has reported in accordance with International FinancialReporting Standards (IFRS). As a result of the move to IFRS the consolidatedprofit before tax has increased by £0.7 million (2005: £0.8 million) principallyas a result of the non-amortisation of goodwill (IFRS 3) which increased profitby £0.5 million (2005: £0.5 million) and the inclusion of a residual value whendepreciating freehold property (IAS 16) which increased profit by £0.3 million(2005: £0.3 million). In addition, following the introduction of IAS 19, thestandard covering defined benefit pension schemes, the current year profit hasbeen reduced by £0.2m in comparison with the prior year. Group Outlook The current year has been challenging and the message coming through from ourcustomers around the world is that this is a situation that is likely tocontinue into the coming months. Furthermore, although we benefited from astronger US Dollar against Sterling during the early and mid part of ourfinancial year, the US Dollar weakened significantly in the latter part of ourfinancial year and current forecasts expect the US Dollar to remain weak duringthe first half of the next financial year. Despite this note of caution,management enters the new financial year with a degree of optimism. In the UK, the focus will continue on those areas of the business where tradinghas remained consistently below management expectations and strategic reviewsinto these areas should be concluded before the half year. In the core activityinitiatives, already underway to utilise our technical information in adjacentmarket segments and new formats, will continue. While not anticipated to besignificant in the next financial year, management believe the potential existsfor the generation of significant revenue streams from these activities infuture years. Also, in the UK, the focus will continue on driving value from the strength ofthe Haynes brand. In March of this year we were delighted to be appointed by theMinistry of Defence as official publisher for the RAF and the first titles inthis exciting new partnership are due for publication in the autumn of 2007.This is a prestigious appointment for Haynes and sits alongside our officialpublisher status for the Formula 1(TM) and MotoGP season reviews. In addition,a new licensing arrangement covering a range of gift and stationery products waslaunched into certain leading High Street stores shortly after the end of ourfinancial year. The "Haynes Classic" range includes leisure bags, belts andwallets as well as other gift and stationery products and will help to raise theawareness of the brand, particularly amongst the younger consumer. Early signsare encouraging and indeed, the range recently won the prestigious "LicensedGift of the Year Award" which is awarded by the Gift Association. In the UK, the previously mentioned plan to introduce new IT systems isprogressing well and management hope to commence implementation during thelatter part of our second quarter. Whilst such things are extremely difficultto quantify, we do anticipate efficiencies of some magnitude. In the US, despite disappointing sales during our current financial year, we areoptimistic in respect of the opportunities for growth. The average age ofpassenger vehicles on the road is now 9.5 years, a figure that is increasing andstatistics show that Americans are now driving longer distances and own morevehicles per household than ever before. While consumers are currentlydeferring essential repair and maintenance work, as the global economy adjuststo higher energy prices, we expect that much of this work will have to beundertaken and as a result, sales will return to more normal levels. Whilst the last financial year has been difficult, the results, to a certaindegree, hide the measured progress that is being made to drive the businessforward. The current global economic and political environment does not breedconfident predictions and the duration of these difficult times is far fromclear, however, with the completion of restructuring projects due to commence inthe second half of the year, I am confident that the outlook for future revenueand profit growth from existing business operations is encouraging. Eric OakleyGroup Chief Executive16 August 2006 Consolidated Income Statement (unaudited) Year ended Year ended 31 May 2006 31 May 2005 £'000 £'000 Revenue (note 2) 34,177 36,370Cost of sales (11,844) (12,808) Gross profit 22,333 23,562Other operating income 40 25Distribution costs (8,454) (9,645)Administrative expenses (5,250) (4,498) Operating profit 8,669 9,444Finance income (note 4) 804 760Finance costs (note 5) (1,137) (996) Profit before taxation 8,336 9,208Taxation (note 6) (2,772) (3,264) Profit for the period and attributable to equity shareholders 5,564 5,944 Earnings per 20p share - pence (note 7) - On basic earnings 34.0 36.4 - On diluted earnings 34.0 36.4 Consolidated Statement of Recognised Income and Expense (unaudited) Year ended Year ended 31 May 31 May 2006 2005 £000 £000 Exchange differences on translation of foreign operations (569) 167Actuarial gains/(losses) on retirement benefit obligation 1,048 (3,695)Deferred tax on retirement benefit obligation (327) 1,172 Net income/(expense) recognised directly in equity 152 (2,356) Profit for the financial year 5,564 5,944 Total recognised income for the financial year 5,716 3,588 Consolidated Balance Sheet (unaudited) 31 May 2006 31 May 2005 £'000 £'000Non-current assetsProperty, plant and equipment 7,209 7,426Goodwill 6,055 6,178Available for sale investments - 2Deferred tax assets 3,482 3,473 16,746 17,079Current assets Inventories 13,371 12,224Trade and other receivables 10,961 10,897Cash and cash equivalents 4,854 2,741 29,186 25,862 Total assets 45,932 42,941 Current liabilitiesTrade and other payables (4,248) (4,862)Tax liabilities (1,486) (878)Bank overdrafts (1,777) (969) Total current liabilities (7,511) (6,709) Non-current liabilitiesOther creditors (214) (424)Deferred tax liabilities (472) (415)Retirement benefit obligation (8,517) (9,438) Total non-current liabilities (9,203) (10,277) Total liabilities (16,714) (16,986) Net assets 29,218 25,955 Equity (note 10)Share capital 3,270 3,270Share premium reserve 638 638Retained earnings 25,712 21,880Foreign currency translation reserve (402) 167Total equity 29,218 25,955 Consolidated Cash Flow Statement (unaudited) Year ended Year ended 31 May 2006 31 May 2005 £'000 £'000Net cash from operating activitiesProfit before tax 8,336 9,208Adjusted for :Depreciation on property, plant and equipment 806 810Gain on disposal of property, plant and equipment - (22)Finance income (804) (760)Finance costs 1,137 996Retirement benefit obligations (164) (196) Adjusted profit from operations 9,311 10,036(Increase)/decrease in inventories (1,147) (144)(Increase)/decrease in trade and other receivables (64) 437Increase/(decrease) in trade and other payables (517) (659) Cash generated by operations 7,583 9,670Interest paid (14) (60)Taxation paid (2,485) (3,445) Net cash inflow from operating activities 5,084 6,165 Investing activitiesInterest received 33 16Disposal proceeds on property, plant and equipment 9 39Purchases of property, plant and equipment (671) (561)Acquisition costs - deferred consideration (307) (441)Sale of investments 2 - Net cash used in investing activities (934) (947) Financing activitiesDividends paid (2,453) (2,126)Repayment of borrowings - (2,639) Net cash used in financing activities (2,453) (4,765) Net increase in cash and cash equivalents (note 9) 1,697 453Cash and cash equivalents at beginning of period 1,772 1,173Effect of foreign exchange rate changes (392) 146 Cash and cash equivalents at end of period 3,077 1,772 Notes to the Preliminary Unaudited Results 1. Basis of accounting As from 1 June 2005, the Group is required under European Union regulation 1606/2002 to prepare its annual financial statements in accordance with InternationalFinancial Reporting Standards (IFRS), as endorsed by the European Union andimplemented in the UK and where relevant, comparative figures have been restatedfrom UK Generally Accepted Accounting Practice (UK GAAP) to comply with the newIFRS. The Group financial statements have been prepared under the historical costconvention and are presented in sterling, with all values rounded to the nearestthousand pounds (£'000) except as indicated otherwise. The group has, as permitted under IFRS 1 'First Time Adoption of InternationalFinancial Reporting Standards' elected to apply the following exemptions :- • In relation to the treatment of brought forward goodwill amortisation, the group has elected to treat the net book value of goodwill as measured under UK GAAP as at 31 May 2004 as the deemed cost of goodwill under IFRS 3 as at 1 June 2004. • In relation to the cumulative exchange translation differences in reserves, the group has elected that the cumulative translation differences for all foreign operations are deemed to be £nil at the date of transition to IFRS. A full reconciliation between previously reported financial statements preparedunder UK GAAP and on the basis as stated above will be included in our AnnualReport and Accounts. 2. Revenue 31 May 31 May 2006 2005 £000 £000Turnover by geographical destination :United Kingdom 11,559 12,254Rest of Europe 2,723 2,909United States of America 17,125 18,165Rest of World 2,770 3,042Total consolidated turnover 34,177 36,370 3. Segmental analysis For management purposes, the Group is currently organised into two geographicaloperating segments. These geographical segments are the basis on which theGroup reports its primary segment information. The principal activities of the two primary segments are as follows:- • The origination, production and sale of automotive repair manuals in the UK and Europe • The origination, production and sale of automotive repair manuals in North America and Australia Analysis of results by geographical segment : UK & North America Europe & Australia Eliminations Consolidated 31 May 31 May 31 May 31 May 2006 2006 2006 2006 £000 £000 £000 £000RevenueExternal sales 14,746 19,431 - 34,177Inter-segmental sales 1,669 878 (2,547) - Total revenue 16,415 20,309 (2,547) 34,177 Inter-segmental sales are charged at the prevailing market rates ResultSegmental result 1,407 7,017 8,424 Unallocated head office income less expenses 245Finance income 804Finance costs (1,137) Consolidated profit before tax 8,336 UK & North America Europe & Australia Eliminations Consolidated 31 May 31 May 31 May 31 May 2005 2005 2005 2005 £000 £000 £000 £000RevenueExternal sales 15,461 20,909 - 36,370Inter-segmental sales 2,031 954 (2,985) - Total revenue 17,492 21,863 (2,985) 36,370 Inter-segmental sales are charged at the prevailing market rates ResultSegmental result 1,394 7,506 8,900 Unallocated head office income less expenses 544Finance income 760Finance costs (996) Consolidated profit before tax 9,208 4. Finance income 31 May 31 May 2006 2005 £000 £000 Interest receivable on bank deposits 33 16Expected return on pension scheme assets 771 744 804 760 5. Finance costs 31 May 31 May 2006 2005 £000 £000 Interest payable on bank loans and overdrafts 14 55Interest charge on pension scheme liabilities 1,123 941 1,137 996 6. Taxation 31 May 31 May 2006 2005 £000 £000Analysis of charge during the period :Current tax - UK corporation tax on profits for the period 1,412 1,340 - Foreign tax 2,645 2,730 - Double tax relief (961) (862) - Adjustments in respect of prior periods (2) - 3,094 3,208 Deferred tax - Origination and reversal of timing differences (322) 56 2,772 3,264 7. Earnings per share The calculation of the basic and diluted earnings per share is based on thefollowing :- 31 May 31 May 2006 2005 £000 £000Earnings :Consolidated profit after tax 5,564 5,944 No. No.Number of shares :Weighted average number of shares 16,351,540 16,351,540 As at 31 May 2006 there were no potentially dilutive shares in issue on eitherof the Company's two classes of shares. Accordingly, there is no differencebetween the weighted average number of shares used in the basic and dilutedearnings per share calculation. 8. Dividends 31 May 31 May 2006 2005 £000 £000Amounts recognised as distributions to equity holders in the period : Final dividend for the year-ended 31 May 2005 of 9.5p per share 1,553 1,308(2004: 8.0p per share) Interim dividend for the year-ended 31 May 2006 of 5.5p per share 900 818(2005: 5.0p per share) 2,453 2,126 Proposed final dividend for the year-ended 31 May 2006 of 10.0p per share 1,635 The proposed final dividend is subject to approval by shareholders at the AnnualGeneral Meeting to be held on 19 October 2006 and has not been included as aliability in these financial statements. Subject to final approval by shareholders the final dividend will paid on 27October 2006 to shareholders on the register at the close of business on 29September 2006. The shares will be declared ex-dividend on 27 September 2006. 9. Analysis of the changes in net funds As at As at 1 June Exchange 31 May 2005 Cashflow movements 2006 £'000 £'000 £'000 £'000 Cash at bank and in hand 2,741 2,505 (392) 4,854Bank overdrafts (969) (808) - (1,777) 1,772 1,697 (392) 3,077 10. Consolidated Statement of Changes in Equity (unaudited) Foreign exchange Share Share translation Retained capital premium reserve earnings Total £'000 £'000 £'000 £'000 £'000 Balance at 1 June 2004 (restated) 3,270 638 - 20,585 24,493 Profit for the period - - - 5,944 5,944 Currency translation adjustments - - 167 - 167 Retirement benefit obligations, net of tax - - - (2,523) (2,523) Dividends - - - (2,126) (2,126) Balance at 1 June 2005 3,270 638 167 21,880 25,955 Profit for the period - - - 5,564 5,564 Currency translation adjustments - - (569) - (569) Retirement benefit obligations, net of tax - - - 721 721 Dividends - - - (2,453) (2,453) Balance at 31 May 2006 3,270 638 (402) 25,712 29,218 11. Other information The financial information included in this document is unaudited and does notcomprise statutory accounts within the meaning of section 240 of the CompaniesAct 1985. The comparative figures for the financial year ended 31 May 2005 arenot the Group's statutory accounts for that financial year. Those accounts,which were prepared under UK GAAP, have been reported on by the Group's auditorsand delivered to the Registrar of Companies. The report of the auditors wasunqualified and did not contain statements under section 237(2) or (3) of theCompanies Act 1985. The Directors Report and audited accounts for 31 May 2006will be posted to shareholders on 18 September 2006 and delivered to theRegistrar of Companies following the Annual General Meeting which will be heldon 19 October 2006. This preliminary announcement is not being posted toshareholders, but is available on the UK web site http://www.haynes.co.uk/investor. Copies of the Directors' report and audited accounts can be obtained from: TheGroup Company Secretary, Haynes Publishing Group P.L.C., Sparkford, Near Yeovil,Somerset BA22 7JJ (telephone 01963 440635). This information is provided by RNS The company news service from the London Stock Exchange