CNCT.L Regulatory News (CNCT)

21 December 2016

Connect Group PLC

("Connect Group" or "the Company")

Payment of deferred consideration pursuant to the acquisition of Tuffnells Parcels Express

Pursuant to the Connect Group announcement dated 19 December 2014 in respect of the acquisition of the entire issued share capital of The Big Green Parcel Holding Company Limited, whose principal subsidiary trades as Tuffnells Parcels Express ("Tuffnells"), the Company today announces the payment of the applicable deferred consideration for the second year of the three-year earn-out period to the Tuffnells Management Sellers and Option Sellers, in light of Tuffnells' financial performance in FY2016.

Accordingly, pursuant to the acquisition terms, the Group will pay further deferred consideration of approximately £1,666,646 to the Tuffnells Management Sellers and Option Sellers by means of (i) the payment of £983,324 in cash; and (ii) the allotment and issue of a total of 394,007 new ordinary shares in the Company (the "New Ordinary Shares") together with a separate payment of £71,709 in cash representing the value of dividend equivalents that would otherwise have been payable in the relevant earn-out period on the number of New Ordinary Shares being issued. The New Ordinary Shares will rank pari passu with the existing ordinary shares of the Company. The maximum amount of the deferred consideration payable to Tuffnells Management Sellers and Option Sellers over the three-year earn-out period is £15.3 million. Due to changes within the composition of the original Tuffnells management team, the Company currently anticipates that the proportion of the deferred consideration to be received by the Tuffnells Management Sellers and Option Sellers through the issue of new ordinary shares in the Company will be approximately 38 per cent. of this amount. 

The Financial Conduct Authority (the "FCA") has approved the admission of the New Ordinary Shares to the Official List and the London Stock Exchange has granted permission for the New Ordinary Shares to be admitted to trading ("Admission"). It is expected that Admission will become effective on 22 December 2016.

The New Ordinary Shares represent approximately 0.16 per cent. of the enlarged issued share capital of the Company immediately after the issue of the New Ordinary Shares and, as a result, the Company's capital will now consist of 247,559,274 shares of 5 pence each with voting rights. The Company does not hold any shares in Treasury at the date of this announcement and, therefore, the total number of voting rights in the Company will now be 247,559,274.

The above figure can be used by shareholders as the denominator for calculations by which to determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure and Transparency Rules.

The capitalised terms not otherwise defined in this announcement have the meanings given to them set out in Part XXII of the Company's prospectus dated 12 November 2014.

Enquiries

About Connect Group

Connect Group PLC is a leading specialist distributor operating in large and diverse markets. The Group has four separate divisions, connecting 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 the majority of the major national publishers as well as a large number of regional publishers serving approximately 30,000 customers across England and Wales on a daily basis, including 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 delivery of 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 Education & Care - A leading independent supplier of consumable products to the Education and Care markets through The Consortium and West Mercia Supplies. The division currently holds an approximate 5 per cent. market share of the estimated addressable market, and serves over 30,000 customers with an extensive range of over 40,000 products across a branded, own-brand and value range, including stationery, arts and craft and cleaning.

· Connect Books - Combining a number of recognised brands in print and digital bookselling, including Bertrams, Dawson Books and Wordery. A leading distributor of printed and digital books, the division supplies a mix of traditional and online booksellers, academic and public libraries and direct to consumer through Wordery.