LONDON (Alliance News) - Shares in Connect Group PLC dropped sharply Tuesday after it axed its final dividend due to sharp losses and weaker revenue, as all divisions suffered challenges amid a continued restructuring.
Shares in Connect were 8.0% lower at 34.35 pence on Tuesday, down more than 70% over the past 12 months.
For the financial year ended August, the logistics firm sank to a pretax loss of GBP35.5 million from a profit of GBP34.2 million the year prior. This was as revenue slipped 3.8% to GBP1.53 billion from GBP1.59 billion the year before.
Profit performance was hurt by GBP63.9 million in exceptional charges, up from GBP13.8 million the year prior. These were primarily related to a GBP46.1 million goodwill impairment at the Tuffnells business and a GBP6.7 million charge associated with Connect's exit from its Pass My Parcel business.
In June, Connect set about winding up its Pass My Parcel delivery business. Its Tuffnells parcel delivery business had seen its business "materially" hurt by service shortfalls brought about "operational integration" combined with a "more competitive" market.
Excluding these exceptional costs, adjusted pretax profit still dropped 41% to GBP28.4 million from GBP48.0 million the year prior.
Connect's core newspaper and magazine wholesaling business Smiths News - which generates around 88% of total revenue - also experienced "weaker" trading and failed to achieve its cost-reduction targets in the recent year.
"A year of significant challenge exposed weaknesses in our strategy and its execution, with a consequent impact on results," Connect Chairman Gary Kennedy said.
Connect axed its final dividend, compared to a 6.7 pence per share payment the year prior. For the full year, the dividend was down 68% as a result, to 3.1p from 9.8p the year before.
"While it is disappointing not to succeed, we have taken decisive action to address underperformance and respond to the lessons learned," Kennedy added. "I am confident that under the new leadership of Jos Opdeweegh, and a return to more focused operations, we can reenergise the business, restoring stability and confidence."
In early September, Opdeweegh joined the firm as chief executive officer. This followed former CEO Mark Cashmore and former Chief Financial Officer David Bauernfeind leaving the firm in June after it was forced to cut it interim dividend following an "extremely disappointing" first half of the year.
On Tuesday, Connect confirmed that interim CFO Tony Grace had been appointed to the role on a permanent basis.
Kennedy explained he was "delighted" to appoint Grace to the role permanently: "His financial and transformational expertise will further enhance the executive team's knowledge and capability. His experience in the logistics sector is particularly relevant to the action we have underway for profit recovery at Tuffnells and our broader strategic turnaround."
