TIDMCNCT
RNS Number : 8212L
Connect Group PLC
24 July 2017
Connect Group PLC
("Connect Group" or "the Group")
TRADING UPDATE
Connect Group PLC is today issuing its Trading Update covering
the 45 week period to 15 July 2017.
Overall performance continues to be in line with expectations
with a stronger second half from News & Media offsetting softer
trading in Parcel Freight.
Total Group revenue for continuing operations of GBP1,497.5m
(2016: GBP1,517.6m) has decreased by 1.3% year to date, a
consequence of the anticipated decline of newspaper and magazine
sales, offsetting revenue growth in our other markets.
The sale of the Group's Education & Care division to RM plc
completed on 30 June 2017, for a cash consideration of GBP56.5m,
delivering an Internal Rate of Return of 10% over the lifetime of
our ownership. The disposal is a milestone in the Group's strategy
to focus future investment on core operations, facilitating the
transition to becoming an integrated specialist distribution
business.
The Group has also maintained progress with key initiatives in
its core markets:
News & Media
Sales in Smiths News remain in line with our strategic forecast;
total revenue of GBP1,125.8m (2016: GBP1,173.7m) decreased by 4.1%
with newspapers continuing to perform more strongly than magazines.
Media total revenue of GBP24.7m (2016: GBP23.2m) has increased by
6.1%. Planned efficiencies of GBP5m in the year will be fully
delivered, and a robust operational performance with ongoing cost
control, is contributing to a strong second half. The new regional
hub at Hemel Hempstead is operational and making good progress.
Parcel Freight
Total revenue of GBP157.3m (2016: GBP151.3m) has increased by
4.0% driven largely by price increases. Despite a successful spring
peak for consignment volumes, market competition is limiting
revenue growth, and the efficiency benefits from our investments in
the business are coming through more slowly than anticipated. As a
consequence, overall performance has followed the same trend as the
first half of the year.
Pass My Parcel
Pass My Parcel's volume run rate has continued to increase,
driven by a combination of core growth, new client partnerships and
the development of additional services. Total parcels handled in
June 2017 averaged 23,400 per week, up 149% on the same period last
year. Customer service and operational performance has remained
strong throughout.
Good progress is being made in leveraging the Group's
capabilities in B2B final mile and early-morning delivery,
attracting a growing client pipeline with a range of service
propositions. We expect our contract with UK Mail to handle returns
and failed household deliveries to commence in 2018, following the
implementation of supporting IT.
Books
Total revenue of GBP189.7m (2016: GBP169.4m) has increased 12.0%
with continued strong sales in UK Wholesale and Wordery, offset by
weaker sales in Libraries. The recent announcement of the Joint
National Consortia framework agreement saw Dawson Books re-listed
as a leading supplier, a strong result reflecting the quality of
our offer; the framework agreement takes effect from 1 August 2017
for a minimum of two years. The first phase of new automated
packing technology is now installed at the Norwich hub and
contributing to efficiency savings that will help to mitigate
future increases in the National Living Wage.
Integration
The Group's strategy for integration is focused on the delivery
of cost synergies between News & Media and Parcel Freight,
group overhead and structure, as well as providing a broader
customer proposition leveraging the combined strengths of our two
specialist distribution networks, creating additional growth
opportunities. We will update the market on progress at the
preliminary results.
There has been no change in the underlying financial condition
of the Group since the interim financial results announcement on 25
April 2017.
The Group will announce its preliminary results for the full
year ending 31 August on 26 October 2017.
Enquiries:
Connect Group PLC
Mark Cashmore, Group Chief Executive Tel: 01793 563641
David Bauernfeind, Chief Financial Officer
Buchanan
Richard Oldworth Tel: 020 7466 5000
About Connect Group
Connect Group PLC is a leading specialist distributor operating
in large and diverse markets. The Group has three divisions which
connect suppliers to customers in an efficient, knowledgeable and
service oriented way:
Connect News & Media - Encompassing: Smiths News, Dawson
Media Direct and Pass My Parcel. Smiths News is the UK's largest
newspaper and magazine wholesaling business with an approximate 55
per cent. market share. It distributes newspapers and magazines on
behalf of major national and regional publishers, serving
approximately 30,000 customers across England and Wales on a daily
basis. Customers include large general retailers as well as smaller
independent newsagents with approximately 40 million newspapers
supplied weekly. Dawson Media Direct is an international media
direct business supplying newspapers, magazines and inflight
entertainment technology and content to over 80 airlines in 50
countries. Pass My Parcel, a wholly-owned 'click and collect'
delivery service, operated by the Smiths News business, has a
network of over 3,000 parcel shops and clients which include Amazon
and ASOS.
Connect Parcel Freight - Tuffnells is a leading provider of
next-day B2B mixed parcel freight consignments, specialising in
items of irregular dimension and weight ("IDW"), examples of which
include bulky furnishings, building materials and automotive parts.
Tuffnells offers distribution coverage throughout the UK through a
network of 37 depots and operates a largely depot-to-depot
operational model, delivering over 13 million consignments per
annum, through a wide range of services to over 4,500 customers
focusing on SMEs.
Connect Books - A leading distributor of printed and digital
books, combining a number of recognised brands, including Bertrams,
Dawson Books, Houtschild, Erasmus and Wordery. The division
supplies a mix of traditional and online booksellers, academic and
public libraries and direct to consumer through Wordery.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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