1 Oct 2020 07:00
This announcement contains inside information
1 October 2020
Connect Group PLC
("the Company" or "the Group")
Post Close Trading Update
Trading ahead of expectations
Trading in Smiths News over the last quarter of FY2020 has been stronger than management's revised expectations following the further easing of UK wide lockdown measures since our last update in July 2020. The improvement is a result of a stronger than anticipated sales performance following the return to trading of the larger high street stores, supported by continued robust cost control across the business.
In the fourth quarter ending 29 August 2020, trading EBITDA was £10m with strong cash generation. As a result, the Group expects to deliver Adjusted EBITDA (pre-IFRS16 lease adjustment) for FY2020 of £38.5m to £39.0m, above the top-end of the guidance previously announced in July 2020. The run rate performance in Adjusted EBITDA in the fourth quarter has continued in September trading, in line with the Board's expectations for the year.
Net debt at FY2020 year end is expected to be circa 2X EBITDA prior to the repayment of the Tuffnells working capital loan (see below).
Tuffnells working capital loan repayment
On its disposal of Tuffnells in May 2020, the Company made available a temporary working capital loan of up to £10.5m to the purchaser, of which £6.5m was drawn down. The purchaser has recently informed the Company of their successful refinancing and has repaid the amount plus interest in full. As a result, the remaining part of the loan has been cancelled and we have released the security held over 7 Tuffnells properties in England. The funds received will be used to repay existing debt.
Commenting on today's announcements, Jonathan Bunting, Chief Executive Officer, said:
"Despite the uniquely challenging times Smiths News continues to deliver against all the priorities we set earlier this year. Service and cost control have been first rate, driving a strong result and giving us positive momentum into the first quarter of the current year."
The Company looks forward to publishing its preliminary financial results in November 2020.
Enquiries:
Connect Group PLC
Jonathan Bunting, Chief Executive Officer
Tony Grace, Chief Financial Officer
Investor.relations@connectgroupplc.com
www.connectgroupplc.com
Buchanan (Financial PR)
Richard Oldworth / Jamie Hooper
connect@buchanan.uk.com
www.buchanan.uk.com
Person responsible for arranging release of this announcement:
Stuart Marriner, General Counsel & Company Secretary
Connect Group PLC
Rowan House
Cherry Orchard North
Kembrey Park
Swindon
SN2 8UH
email: cosec@connectgroupplc.com
LEI: 2138004O33ONVOOQXB02
About Connect Group
Connect Group PLC is a UK based specialist distributor. The Group's core businesses are each leading players in their markets:
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 major national and regional publishers, delivering to approximately 25,000 customers across England and Wales on a daily basis. The speed of turnaround in the UK and density of Smiths News' coverage is critical to one of the world's fastest physical supply chains.
Dawson Media Direct (DMD) supplies newspapers, magazines and inflight entertainment technology, to airlines and travel points in the UK and worldwide. Delivering to strict time windows with security accreditation, DMD serves circa 115 airports in 47 countries.