13 Aug 2019 07:00
This announcement contains inside information
13 August 2019
Connect Group PLC
("the Company" or "the Group")
Trading Update and Sale and Leaseback
Trading update
Since the Group's interim financial results on 1 May 2019, overall trading is slightly below market expectations, with a strong performance in Smiths News partially offsetting a slower turnaround performance in Tuffnells, where H2 performance to date has improved on H1 2019 in line with guidance previously given.
The Company will publish its preliminary financial results on 6 November 2019.
Sale and Leaseback
In January 2019, the Group announced that as part of its capital allocation strategy it would take a more prudent and disciplined approach to capital management. An important aspect of this included a potential sale and leaseback of up to 16 freehold and long-lease properties within the Tuffnells estate. The process was expected to raise up to £35m of net proceeds before tax. Since then, the Group has undertaken a thorough tender process. However, due to the current market conditions and outlook, the proposals received did not meet the Board's expectations in respect of value, economic return and timings. Accordingly, it is unlikely that the Group will conclude such a deal before the end of its current financial year and, as a result, net debt is expected to remain flat on HY2019 (net debt at 28 February 2019 was £77.5m, representing a net debt/adjusted EBITDA ratio of 1.95x). The Group continues to target a reduced net debt/EBITDA ratio of 1x by FY2021, with repayment achieved through a combination of surplus free cash from operations as well as proceeds from any future sale and leaseback of Tuffnells properties as and when appropriate.
Enquiries:
Connect Group PLC
Jos Opdeweegh, Chief Executive Officer
Tony Grace, Chief Financial Officer
01793 563641
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 and a leading provider of distribution solutions in complex and fragmented markets. The Group's networks are focused on serving high density early morning deliveries and the demands of mixed and irregular sized freight.
The Group's core businesses are each leading players in their markets:
Smiths News
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 27,000 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 and content to over 80 airlines in 50 countries. Delivering to strict time windows with security accreditation, DMD serves the specialist needs of airlines and travel points in the UK and worldwide with printed and digital media.
Tuffnells
Tuffnells is a leading distributor of mixed and irregular freight, serving approximately 5,000 small and medium sized enterprises across the UK. Its network of 37 depots collects and delivers mixed parcel freight consignments, specialising in items of irregular dimension and weight ("IDW"), examples of which include bulky items, building materials and automotive parts. With a mix of local and national clients, Tuffnells completes up to 70,000 daily deliveries, offering a range of timed services that are responsive to customer demand.