Link to Old company thread

Connect Group operates a diverse portfolio of businesses leading distribution specialists in carefully chosen markets. With a combined revenue of £1.8bn, we employ 4,500 staff and operate in the UK and worldwide.

Company Website

Financial Calendar

Recent Broker notes

BarChart Indicators

Recent Market news

Connect Group Fundamentals

Unaudited Interim Results for 6mths ended 29/2/16

Highlights:

· Group performance in line with management expectations

· Adjusted revenue up 4.2%
· Adjusted profit before tax up 13.0%, driven by post acquisition profits and growth in Parcel Freight
· Adjusted EPS of 8.9p, up 3.5%
· Strong free cash flow generating £18.0m, up 12.5%

· The Group continues to make good progress on its strategic priorities
- Impressive revenue and profit growth in Parcel Freight
- Continued resilience in core News business
- Pass My Parcel growing customers, services and brand awareness
- E-commerce initiatives in Books and Education helping to offset currently challenging markets

· Ongoing confidence in Group prospects reflected in DPS of 3.0p up 3.4%

5yr contract extension with Northern & Shell

Regrets, I’ve got a few, but . . .

Trading Update

Connect Group PLC, a leading specialist distributor operating in four divisions; News & Media, Parcel Freight, Education & Care and Books, is today issuing its Trading Update covering the 20 week period to 21 January 2017.

Total Group revenues increased 0.2% compared to the same period last year, whilst total Group like for like revenues increased 0.6%.

The performance of each division was as follows:

· Connect News & Media: News total revenues decreased by 2.6%, and like for like revenues decreased by 2.3%. Newspaper and magazine revenues were both in line with our medium term expectations. Our ongoing cost efficiency programme facilitates continued investment in Pass My Parcel. Media total revenues increased by 8.7% while like for like revenues increased by 6.0%.

· Connect Parcel Freight: total and like for like revenues both increased by 5.2% in the period. The Group continues to make a sizeable investment in the Parcel Freight division, to establish a platform for growth through sales leadership, customer service and operational excellence. We anticipate a greater percentage of Tuffnells' full year profit to be generated in the second half than was the case last year.

· Connect Education & Care: total and like for like revenues both decreased by 4.6%. Core revenues decreased by 4.4% with increased revenues in Early Years being offset by difficult trading conditions in our other markets.

· Connect Books: total revenues increased by 14.3%, while like for like revenues increased by 15.1%. Strong growth in Wholesale and Wordery was offset by continued difficult trading conditions in our higher margin library markets.

The Group will announce its interim results for the six months ending 28 February 2017 on 25 April 2017.

26 Jan Peel Hunt Add 143.88 167.00 167.00 Reiterates

26 Jan finnCap Buy 143.88 196.00 196.00 Reiterates

26 Jan Liberum Capital Buy 143.88 170.00 170.00 Reiterates

Unaudited Interim Results for the six months ended 28 February 2017

Highlights:

· Proposed sale of Education & Care, a significant milestone in the Group's strategy
· Robust continuing Adjusted profit, driven by a resilient performance in News distribution
· News distribution, on track to achieve £10m of efficiencies by FY2018
· Pass My Parcel - new returns services with Amazon and French Connection, and a contract with UK Mail for returns and 'failed household deliveries', expected to go live in the second half
· Parcel Freight revenue growth of 5.1%, helping support £1.5m of planned investment
· Good free cash flow generation after allowing for increased capital expenditure
· Leverage reduced to 1.8x with a further reduction to circa 1.2x on completion of the sale of Education & Care
· Interim dividend of 3.1p reflects confidence in the ongoing strength of the Group
· No change in management expectations for the full year performance

Peel Hunt Add 130.88 167.00 167.00 Reiterates

Berenberg Buy 130.88 185.00 185.00 Reiterates

finnCap Buy 130.88 200.00 200.00 Reiterates

Liberum Capital Buy 130.88 170.00 170.00 Reiterates

Peel Hunt Add 131.25 167.00 135.00 Reiterates

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 £1,497.5m (2016: £1,517.6m) 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 £56.5m, 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 £1,125.8m (2016: £1,173.7m) decreased by 4.1% with newspapers continuing to perform more strongly than magazines. Media total revenue of £24.7m (2016: £23.2m) has increased by 6.1%. Planned efficiencies of £5m 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 £157.3m (2016: £151.3m) 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 £189.7m (2016: £169.4m) 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.

finnCap Buy 105.50 187.00 187.00 Reiterates

Peel Hunt Add 106.00 135.00 135.00 Reiterates

JP Morgan Cazenove Overweight 116.25 152.00 144.00 Reiterates

Notification of Change in Director's Role and Responsibilities

Connect Group PLC is pleased to announce that Jonathan Bunting, previously Managing Director of the Group's News & Media division, will assume the role of Chief Operating Officer, with responsibility for operations across the Smiths News and Tuffnells businesses. This announcement follows the Group's recent confirmation of its strategy to bring together its News & Media and Parcel Freight divisions, together with supporting Group functions, into one integrated structure. The change will take effect from 1 September 2017.

finnCap Buy 111.88 187.00 154.00 Reiterates

Unaudited Preliminary Results Announcement for the year ended 31 August 2017

STRATEGIC HIGHLIGHTS:

· Focused strategy continues, concentrating on opportunities in Early Distribution and Mixed Freight
· Adjusted continuing PBT £48.0m down £2.4m, due to weaker performance in Mixed Freight
· Resilient trading in News offset by higher costs in Pass My Parcel
· Step change in the integration of Smiths News and Tuffnells
· Plans to deliver an initial £15m of savings over two years
· Sale of Education & Care for an enterprise value of £64.4m and net cash proceeds of £58.2m
· Books planned disposal expected in FY18
· Leverage (4) reduces to 1.2x and bank facilities renewed in October 2017 until January 2021
· Final dividend of 6.7p up 3.1%, making a full year dividend of 9.8p, up 3.2%

Mark Cashmore, Chief Executive Officer, commented:

"In what has been a challenging year, we have concurrently managed a period of tough trading while refocusing our strategy, restructuring our leadership, and disposing of the Education & Care division.

A two-year transformation programme is underway, centred on a comprehensive integration of our core businesses, extending from leadership and central services through to the network and frontline delivery.

We are now wholly focused on opportunities in Early Distribution and Mixed Freight - and we are moving at pace with a transformation programme, to deliver a combination of efficiencies, service and organic sales that will underpin growth."

26 Oct finnCap Buy 99.00 154.00 154.00 Reiterates

Turned out nice :-)

JP Morgan Cazenove Overweight 107.88 144.00 145.00 Reiterates

Director buys a few.

(Better than selling a lot.)
27/10/2017

b)

Nature of the transaction

Purchase of 20,000 ordinary shares by a custodian on behalf of the administrator of Mr Bauernfeind's SIPP

Trading Update

Overview

Total Group revenue for continuing operations of £564.5m (FY2017: £584.9m) has decreased by 3.5% year to date, with the anticipated decline of newspaper and magazine sales more than offsetting revenue growth in Mixed Freight and Pass My Parcel (PMP). While overall revenue performance has been in line with our expectations, a combination of delays to contracts in PMP, weaker margins and market uncertainty in Mixed Freight, and slower than anticipated realisation of cost reductions from the Group's integration strategy in order to preserve current service levels, mean that we now expect full year adjusted profit before tax for the continuing operations to be in the range of £42m to £45m, with current dividend expectations underpinned by a continued good cash performance.

Early Distribution

Total revenue in News Distribution and Media (comprising Smiths News, PMP and DMD) was £500.4m, a decrease of 4.1% (FY2017: £521.7m), in line with our expectations.

Newspapers and Magazines

The overall sales decline of newspapers and magazines remains within our medium term forecasts, with newspapers continuing to perform more strongly than magazines. We do expect stronger magazine and sticker sales as we approach the FIFA World Cup in June 2018, enhancing margin in the second half of the year. The overall profit and cash from newspaper and magazine sales is performing in line with our expectations.

Pass My Parcel

Volumes in Pass My Parcel of 1.3 million units have grown 347% year to date, and we start the new calendar year with a run rate up 740% on January 2017. Overall, volume growth is in line with our plans and we are pleased with this aspect of progress, which demonstrates an increasing consumer awareness of PMP, and the range and availability of its services. Year to date revenue of £2.5m is up 222%, representing strong growth.

Despite these positive indicators, forecasted margins and costs have been adversely impacted because the primary driver of growth has been a rapid increase in lower margin customer returns through parcel shops, with further acceleration over the Christmas peak. Ongoing delays to the implementation of new contracts and the roll out of new B2B services means that the margin mix is unlikely to improve in the near term. As a consequence, we do not now expect full year losses from PMP to reduce from those incurred in FY2017.


Media

DMD media distribution to airlines and travel points continues to perform in line with our expectations.

Mixed Freight

External revenue of £63.9m (FY2017: £63.1m) increased by 1.3% with the volume of consignments up by 3.6% on last year.

Our desire to protect service levels in what remains a highly competitive market has required some of our forecasted cost reduction plans to be re-phased, and the national shortage of LGV drivers has also added cost and impacted efficiency of operations. Overall, the combination of cost headwinds and the increasing market uncertainty towards the end of the calendar year has had an adverse impact on profitability to date.

Actions to address performance shortfalls are underway, including the introduction of new organisational structures that will improve efficiency of operations and depot management. We are also restructuring our commercial functions and making investments in additional experienced sales capability to drive profitable growth and enable opportunities arising from the Group's integrated capability.

In January 2018, we appointed Stuart Godman to the Executive Leadership Team as Commercial Director. Stuart joins from DX (Group) plc, bringing a wealth of experience in Mixed Freight to the Group. He will play a key role in the commercial development of the integrated business, focussing in the first instance on driving margin growth in Mixed Freight and PMP.

Looking ahead, we are confident that our profit recovery actions are gaining traction, however demand remains uncertain. As a result, the medium-term outlook continues to reflect both risk and opportunity in the wider market.

Integration and business transformation

The Group continues to make good progress with its integration and business transformation strategy.

In light of market conditions, we have determined that the new structures and ways of working associated with the business integration require careful introduction so as to ensure that there is no impact in the quality of our service. As a consequence, we have revisited the time frames for realising initial savings; while we remain confident of achieving our £15m targeted efficiencies over two years, we now expect the weighting to be greater in year two of the plan.

Work on reviewing the Group's longer term network and operating model is continuing. The next phase of the review will determine the optimum network for greater efficiency and growth, providing a clear picture of additional savings and business opportunities of a fully integrated operation. We expect to have completed this work before the end of the current financial year.

There has been no change in the underlying financial condition of the Group since the Preliminary financial results announcement on 26 October 2017.

The Group will announce its interim results for the six months ending 28 February 2018 on 1 May 2018.

We refer to our announcement of 21 December 2017 that we had signed an agreement ("SPA") to dispose of our Books Division to the listed pan-European mid-market investor Aurelius Equity Opportunities SE & Co. KGaA (together with its subsidiaries and affiliates, "Aurelius").

The disposal was conditional only on anti-trust merger approval from the German Federal Cartel Office which was subsequently received (as expected) on 17 January 2018. As a result, the SPA is now unconditional and under its terms completion is obliged to occur by 31 January 2018 at the latest.

Despite this, Connect Group has been notified by a letter received on Sunday 21 January 2018 stating, inter alia, that Aurelius Omega Ltd (the purchasing vehicle) "can no longer complete on the current terms (as we, the Directors of Aurelius Omega Ltd, can see no way of financing this transaction)". Connect Group has sought urgently to clarify Aurelius' position , including the legal basis, if any, upon which it purports not to complete on the transaction and we have reiterated in writing that Aurelius is legally obliged to complete the transaction on or before 31 January 2018. Further, Connect Group has reserved its right to pursue legal redress against Aurelius in light of this development.

Connect Group will make a further announcement in due course when appropriate.

This stock was on my possible list of buys for dividend yield. I'll have to think a litle harder now.