After a slowdown in FY17, the Group behind Smiths News and Tufnells will undergo some significant changes.
Companies: Connect Group
Connect Group's (LON: CNCT) preliminary results for FY17 have been announced today, which show a modest slowdown in figures whilst it undergoes a "comprehensive" transformation of its core businesses.
The Group reported Revenues down 3% to £1.59bn and Adjusted PBT down almost 5% to £48m. Adjusted EPS is also down 4% to 15.5p.
Connect owns Smiths News, the UK's largest newspaper and magazine wholesaling business, as well as freight movers Tufnells, which is acquired in 2014 from Caird Capital for £113m. The integration of the two core businesses, which was announced in July is "moving at pace" and is set to save the company "£15m over two years".
Also helping the Group's Net Debt position was the sale of its Education and Care business for £64.4m during the period.
To make the savings announced, 340 employees across the business are set to lose their jobs. This equates to 6% of its current workforce.
The integration of the business is a reaction to the changes in the deliveries market, including changes in consumer expectations including the growth of click & collect and home delivery alternatives.
Management said it expects to return to growth in FY18, and has announced a 3% increase in its final dividend of 6.7p.
Shares in CNCT jumped almost 6% to 96p on Thursday morning, albeit off a relatively low base with the share price on a downward spiral for the majority of 2017. Currently, CNCT has a Market Cap of £225m and trades at an earnings multiple of c. 7x against the industry median of 13x.
