Haynes Publishing : Interim Results Announcement 30 Nov 2016

HAYNES PUBLISHING GROUP P.L.C.

INTERIM RESULTS FOR THE 6 MONTHS ENDED

30 November 2016

Haynes Publishing Group P.L.C. ("Haynes" or "the Group"), creator and supplier of practical information to consumers and professional mechanics in print and digital formats, today announces its results for the

6 months ended 30 November 2016.

Business and Financial Highlights

26 weeks to 30 Nov 2016	26 weeks to 30 Nov 2015	Change YoY (Year-on-Year)
Group revenue	£14.0m	£12.2m	15%
Like-for-like Group revenue (excluding the impact of exchange)	£12.3m	£12.2m	1%
EBITDA	£4.1m	£3.4m	21%
Group operating profit	£0.8m	£0.6m	33%
Group profit before tax	£0.5m	£0.3m	67%
Basic earnings per share	2.1p	1.2p	75%
Interim dividend	3.5p	3.5p	-
Net cash/(debt) *	£0.6m	(£0.5m)	£1.1m

* In addition the Group holds 1.2 million ordinary shares held in treasury.

• Digital products 36% of overall Group revenue (2016: £5.1 million), an increase of 50% YoY (2015:

  £3.4 million)

• UK revenue growth up 17% YoY, "Haynes Explains" manuals helping increase sales of non- automotive titles by 47%

• Strong HaynesPro growth helped increase European local currency revenue by 25% YoY

• North America & Australian local currency revenue down 20% YoY

• Outsourcing of Group production and US distribution successfully completed

• HaynesPro's second generation electronics diagnostic solution 'VESA Mk II' successfully launched at the Automechanika trade show in Germany

• The Group invested £3.3 million in new content, platforms and services development for its professional & consumer product ranges

• Net cash generated from operating activities (after tax) of £3.8 million (2015: £3.0 million)

• Post period end, Haynes acquired OATS Limited, a leading global comprehensive equipment and lubricants database, for £2.4 million on 14 December 2016

Eddie Bell, Chairman of Haynes Group, commented:

"I am pleased to report that Haynes has significantly improved its financial outlook and trading performance in recent months and experienced like-for-like revenue and profit growth over the six month period to 30 November 2016. Whilst we have partly benefited from exchange rates, these results indicate a strong organic performance.

"During the period, we have continued to see good growth across our digital product ranges which now represent 36% of Group revenue, in part facilitated through the update and launch of VESA Mk II, our market leading electronics diagnostic solution. We have also completed the outsourcing of Group printing and order fulfilment in the US, which has allowed us to cut significant costs from the business.

"Through our recent acquisition of OATS Limited, we have helped to broaden the base of the Haynes Group. The addition of the OATS' comprehensive lubricants database not only complements HaynesPro's professional offering but will also help to strengthen the relationship between Haynes, the parts distributors and global oil companies."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

Enquiries : Haynes Publishing Group P.L.C. [phone] Eddie Bell, Chairman

J Haynes, Chief Executive Officer

Investor Contact: Panmure Gordon (UK) Limited [phone] Karri Vuori

Erik Anderson Will Wickham

Media Contact: New Century Media [phone] Richard Hill Cautionary Statement :

This report contains certain forward-looking statements with regard to the financial condition and results of the operations of Haynes Publishing Group P.L.C. These statements and forecasts involve risk factors which are associated with, but are not exclusive to, the economic and business circumstances occurring from time to time in the countries and sectors in which the Group operates. These forward-looking statements are made only as at the date of this announcement. Nothing in this announcement should be construed as a profit forecast. Except as required by law, Haynes Publishing Group P.L.C., has no obligation to update the forward-looking statements or to correct any inaccuracies therein.

INTERIM STATEMENT Business overview

Haynes' transformation is proceeding apace and we are pleased to report that our restructuring programme is progressing according to plan. The outsourcing of Group production and US distribution fulfilment is now complete, the decommissioning of the redundant plant and equipment in our Nashville facility is underway and the two empty properties are being marketed for sale.

Our commitment to provide independent, accurate and practical information remains paramount and we continue to focus on delivering the highest quality content through print and digital channels. The clarity of our business model enables us to supply this information to all elements of the automotive service and parts industry.

Trading during the first six months of the financial year has been encouraging, if somewhat mixed. Another excellent performance from HaynesPro in Europe and a strong UK non-automotive publishing programme helped boost the performance of our UK and European business. In North America and Australia, the high inventory levels and slow stock turns for our print manuals with key retailers has impacted the performance of both these operations in recent years and this was a key driver for the restructuring programme announced in 2015/16. Following the restructuring, we have significantly reduced the cost base of these operations and through the new sales and marketing initiatives we are undertaking, we are starting to make headway in these markets. Nevertheless, sales in both these territories continued to track behind last year during the six month period.

In June, we evaluated the potential impact of the UK vote to leave the EU on the Group. As a multi-national group with significant parts of our business based in Europe and the US, our main exposure is linked to the movement in exchange rates. We have benefited from the fall in Sterling that followed the vote to leave the EU and are well placed to take further advantage of the increased competitiveness in Sterling going forward.

Financial review

Boosted by the higher sales of our professional products range in Europe and positive exchange rate movements, Group revenue ended the six-month period 15% ahead of last year at £14.0 million (2015: £12.2 million). Excluding foreign exchange rate movements, Group revenue was 1% ahead of last year.

In the UK and Europe, revenue ended the six month period 34% ahead of last year. New customer gains in HaynesPro in the first half of calendar year 2016 and expanding relationships with existing customers, particularly in Northern Europe, helped increase European local currency revenue by 25% over the prior period. In the UK, strong sales of our non-automotive titles, most notably in the run up to Christmas, helped to lift revenue in this part of the business by 17% against the prior year.

In the US, the ongoing sales issues with the print manuals led to a 5% reduction in US revenue to £5.8 million (2015: £6.1 million). In local currency terms, US revenue ended the period 21% down on the prior year. In Australia, similar market conditions resulted in a local currency revenue decline of 16%.

The Group's gross profit was up 15% at £8.2 million (2015: £7.1 million) while the gross margin remained in line with last year at 58.6% (2015: 58.7%).

Following the implementation of the Group's operational, cost and structure review, operational overheads in the US and Australia have been reduced by 20% and 25% respectively. Nevertheless, the impact of the weaker Sterling against the Euro, US Dollar and Australian Dollar increased reported group overheads by

£0.8 million and has meant reported group overheads ended the period 14% higher at £7.5 million (2015:

£6.6 million).

Boosted by the higher revenue, Group operating profit ended the period up 33% at £0.8 million (2015: £0.6 million).

With net finance costs in line with the prior year at £0.3 million (2015: £0.3 million), Group profit before tax ended the period up 67% at £0.5 million (2015: £0.3 million). Like-for-like profit before tax, excluding the impact of foreign exchange, was up 12%. The Group's effective tax rate for the period was 34% (2015: 35%) and the Group's earnings per share increased to 2.1 pence (2015: 1.2 pence).

Operational review

North America & Australia

During the past six months, management have been implementing the recommendations of the operational, cost and structure review. Faced with declining sales in recent years through key retailers holding excess inventory and experiencing low turns on our manuals, the Group needed to re-align the structure and cost base of this part of the business. With this part of the restructuring now complete, the focus is now on implementing new sales and marketing initiatives which will help to address the display and pricing of the Group's manuals in store. Whilst local management are fully aware of the extent of the task to realign inventory levels and improve the range and display of our manuals in-store, they are nevertheless encouraged by the early signs of progress being made in this respect.

Overall North American and Australian revenue, in local currency, ended the six-month period down 20% at

$7.5 million (2015: $9.4 million). After translation to Sterling, the revenue shortfall from this area of the business was 5% lower at £5.8 million (2015: £6.1 million). The reduction in revenue has led to a small segmental operating loss before interest of £0.3 million (2015: profit of £0.1 million).

UK & Europe

Overall UK and European revenue ended the six-month period up 34% at £8.2 million (2015: £6.1 million) or up 22% adjusted for exchange rate movements.

In the UK, sales of automotive and motorcycle repair manuals ended the first six months in line with last year while the non-automotive titles experienced strong demand in our second quarter. Sales of the new humorous 'Haynes Explains,' series performed particularly well and helped lift sales in this part of the UK business by 47% over the prior year. Overall, UK revenue ended the period 17% up on the prior year.

In Europe, the strong growth experienced by HaynesPro in recent years continued into the current financial year and helped increase local currency revenue from the Group's European business by 25%. Management are also encouraged by the positive feedback from the recently launched VESA Mk II electronics diagnostic solution at the Automechanika trade show in Germany. This market leading electronics solution is an important component of the HaynesPro product offering and a key driver for future growth in this part of our business.

Higher revenue in the UK and Europe, coupled with the exchange translation benefit from the Group's European businesses, has helped increase UK and European segmental operating profit before interest to

£1.1 million (2015: £0.3 million).

Balance sheet and cash flow

During the six months to 30 November 2016, the Group invested £3.3 million in new content, platforms and services development for its professional & consumer product ranges (2015: £2.9 million) and £0.2 million on tangible fixed assets (2015: £0.2 million). In December 2016, after the period end, the Group completed on the sale of a freehold property in Australia for A$3.8 million (£2.2 million) giving rise to a profit on disposal of

£0.9 million. £2.0 million of the proceeds have been used to reduce the UK overdraft.

As at 30 November 2016, the net IAS 19 deficit on the Group's two defined benefit retirement schemes increased by £5.9 million to £21.0 million (31 May 2016: £15.1 million). The increase was driven by a lower UK discount rate assumption on the back of falling UK bond yields.

In June 2016, the Group paid down the final £0.2 million of US borrowings, taken out in September 2013 to part fund the Clymer acquisition. As at 30 November 2016, net cash was up £1.1 million at £0.6 million (2015: net debt of £0.5 million). The Group still holds 1.2 million shares in treasury.

Post balance sheet event - OATS Acquisition

On 14 December 2016, the Group acquired 100% of the issued share capital of OATS Limited ("OATS"), a company located in Swindon, UK. The consideration was £2.4 million, with £1.85 million payable on completion and £0.55 million of additional liabilities assumed as part of the transaction.

The OATS global lubricants database will enhance HaynesPro's digital data solutions to the professional automotive aftermarket in Europe, and, by leveraging the Group's European commercial network, Haynes expects to drive new business leads for OATS. This acquisition clearly demonstrates the Group's commitment to remaining a data focussed business that supports and provides solutions to the entire independent automotive repair industry.