Haymarket records annual profits of £8.3m despite effects of Covid-19

Haymarket Media Group reported annual earnings of more than £8m in the last financial year as a strong performance from its US medical business offset the worst of the coronavirus downturn.

Haymarket, which owns more than 70 brands including What Car?, Autocar, Campaign, GP Online, PR Week, MyCME and Finance Asia, said earnings before interest, tax, depreciation, amortisation and exceptional items (Ebitdae) were £8.3m in the year to June 2020, compared with £9.1m for the prior 12 months.

Annual accounts filed at Companies House show revenues fell 12% to £142.9m from £161.6m – a decline that the company said was caused solely by the Covid-19 slump.

Turnover dropped 29% between March and June during the final four months of the financial year. The UK was among the hardest hit as revenues dropped 40% in that period.

Kevin Costello, Haymarket's chief executive, said the company had shown "resilience" by adopting a three-pronged strategy at the start of the crisis: contain costs, preserve cash and save jobs.

Cost-savings included temporary salary reductions, a hiring freeze and big reductions in freelance expenditure, travel and expenses as employees worked from home and some were furloughed.

Haymarket remained profitable even after the exceptional items, which included a staff restructuring and a reduction in office space as the company terminated some property leases.

However, the company's position was bolstered by a windfall from the sale of Secure Computing in August 2019.

Haymarket had net cash of £24.8m at the end of June 2020, up from £10.3m a year earlier, as the company built up reserves to cope with the crisis – without taking on debt or refinancing.

Costello said: “These results show a business that has reacted swiftly and appropriately in the face of a global crisis and remains in sound financial shape.

“In a year of considerable uncertainty, driven by the global pandemic and the UK exit from the European Union, and with the media industry in transformation, we are fulfilling our strategic goal of building a balanced portfolio of diversified revenues across our core markets: business media, content solutions and automotive technology.

“Over 75% of our revenues now come from digital, data and live activity and, for the first time, the USA is generating more revenue than any other territory.”

Medical – one of Haymarket’s three core specialisms, alongside marketing and motoring – has generated close to 95% of the company’s US revenues in the last financial year.

Being a privately held company, without exposure to the volatility of the stock market, and a financial year that ended in June also helped Haymarket to navigate the “eye of the storm” at the start of the pandemic, according to Costello.

“A major focus over the past few years has been bolstering our balance sheet. Today we are debt-free, with cash on the balance sheet,” he added.

“Ten years ago, our debts stood at more than £150m. This means we have the resources to grow organically and through acquisitions.”

Lord Heseltine, chairman of Haymarket, said: “These results show a business that is financially sound having reacted proportionately in response to the global pandemic. It remains clearly focused and is positioned for sustainable growth.

“Despite the difficult trading environment, there remains opportunity for the business to grow and Haymarket is well placed to take advantage of it. In every market and geography in which we operate we have reacted to the pandemic and are now focused on growth.

“I have complete confidence in the team's ability to ensure that the company reignites its growth strategy and develops in the right way.”

“We are a creative business”

Costello believes that the office and its culture will play an integral role in the future when coronavirus restrictions ease, even though he expects more flexible working – a trend that he said has been under way for the past five years.

“We are a creative business,” Costello said, explaining the continued importance of office working. “Creativity flows through human interaction and spontaneity, so the office is still going to play an important part in how our business and our people grow.”

However, the company will need less space and has already taken the decision to reduce its office footprint in a string of locations, including Twickenham and Feltham in the UK, Chennai and Delhi in India, and Hong Kong.

“In every geography, we’ve reassessed our property and office portfolio and, without exception, we’ve downsized,” Costello said.

He praised staff for coping with disruption and uncertainty at the start of the crisis and said the switch to virtual events had helped to make up for some of the drop in face-to-face events.

“The response from the business was phenomenal. The esprit de corps and the core DNA of the company came to the fore,” he said.

“While sadly we still had to go through a restructuring internationally, it was nowhere near as bad as it could have been or we initially feared.”

Haymarket had been forecasting significant growth for the 2019-20 financial year in February 2020, before Covid-19 went global, and Costello was optimistic the company could soon “bounce back to be on that trajectory again” once vaccines have taken effect.

He added that acquisitions are on the agenda because the company has built up cash. “We want to put the money to work,” he said.