Slide 1: Interim Results
Interim Results 22 April 2015
Slide 2: Highlights
Highlights Mark Cashmore Group Chief Executive
Slide 3: Highlights – On track to deliver Full Year expectations
Highlights – On track to deliver Full Year expectations Group revenue: £909.9m, +1.2% Underlying PBT: £24.1m, +0.2%, Operating Profit: £27.7m, +3.3% Free cash flow: £16.0m, +34.2% Underlying EPS: 8.6p, -5.5% : DPS: 2.9p, +3.6% News & Media: • Continued resilience of newspaper and magazine markets •
Slide 4: Group Financial Update
Group Financial Update Nick Gresham Chief Financial Officer
Slide 5: Cautionary statement
Cautionary statement This document contains certain forward-looking statements with respect to Connect Group PLC’s financial condition, its results of operations and businesses, strategy, plans, objectives and performance. Words such as ‘anticipates’, ‘expects’, ‘intends’, ‘plans’, ‘believes’, ‘seek
Slide 6: Group performance
Group performance £m Feb 2015 Feb 2014 Change % News & Media 21.5 21.5 - Books 1.9 2.3 (18.2) Education & Care 2.8 3.0 (6.7) Total before acquisitions 26.1 26.8 (2.5) Parcel Freight 1.5 - - Group operating profit 27.7 26.8 3.3 Net finance charges (3.6) (2.8) (29.9) Group PBT 24.1 24.0 0.2 Tax (4.9)
Slide 7: Earnings per share
Earnings per share £m Feb Feb 2014 Change 2015 % Operating Profit 27.7 26.8 +3.3% Profit after tax 19.2 18.8 +2.1% Weighted basic shares 221.0m 184.9m +19.5% Basic earnings per share 8.6 10.1 - Bonus factor - 0.9015 - Rebased earnings per share (p) 8.6 9.1 -5.5% Basic dividend per share 2.9 3.1 - Bo
Slide 8: Non recurring and other items
Non recurring and other items £m Feb 2015 Feb 2014 Integration costs (0.2) - Network reorganisation costs (0.8) (0.3) Release of property provisions - 0.6 Acquisition and disposal costs (6.3) (0.4) Amortisation of acquired intangibles (2.7) (1.3) Impairment of acquired intangibles - (0.5) Finance co
Slide 9: Free cash flow
Free cash flow £m Feb 2015 Feb 2014 Operating profit 27.7 26.8 Depreciation and amortisation 4.8 3.7 EBITDA 32.5 30.5 Working capital (3.9) (2.8) Capital expenditure (4.0) (4.5) Net interest and fees (3.3) (4.2) Taxation (3.4) (5.2) Pension funding (2.3) (2.1) Other 0.4 0.2 Free cash flow 16.0 11.9
Slide 10: Net debt
Net debt £m Feb 2015 August Feb 2014 2014 Opening net debt (93.0) (98.5) (98.5) Free cash flow 16.0 37.2 11.9 Dividend (14.4) (17.7) (11.7) Non recurring items (4.8) (4.4) (1.9) Acquisitions (53.0) (0.3) (0.3) Other (8.7) (9.3) (4.5) Closing net debt (157.9) (93.0) (105.0) Net debt : EBITDA 1.9x 1.4
Slide 11: Business update
Business update Connect’) ; News & Med
Slide 12: Connect News & Media
Connect News & Media 2015 H1 Total sales ahead of medium term strategic forecast Total Revenue £733.9m -2.0% LFL Revenue -3.3% Resilient newspaper sales despite lower cover price inflation Profit £20.5m +0.1% LFLs Improving trend in magazine sales ► Newspapers -3.4% ► Magazines -5.1% £5m ful
Slide 13: Business update
Business update Comect’ y Books a
Slide 14: Connect Books
Connect Books 2015 H1 Performance stabilised and improving trend from H2 Total Revenue £103.4m -3.0% 2014 LFL Revenue +1.1% Profit £1.9m -18.2% Market continues to evolve with tough trading conditions across some segments Segmental LFLs Wordery continuing impressive growth from both market ► T
Slide 15: Business update
Business update \ Connect y Education & Care ia
Slide 16: Connect Education & Care
Connect Education & Care 2015 H1 Core sales +3.0% with strength in Primary and Early Total Revenue £31.5m 0.9% Years LFL Revenue 0.5% Profit £2.8m -6.7% Continued scope for growth in competitive environment Segmental LFLs Investing in range and classroom partnership to ► Education 2.8% enhance
Slide 17: Business update
Business update Connect Y Parcel Freight
Slide 18: Connect Parcel Freight
Connect Parcel Freight 2015 H1 Acquisition of Tuffnells completed 19 December 2014 Total Revenue £28.4m 16.9% LFL Revenue 16.9% Clear market position with unique characteristics Profit £1.5m 11.5% Strong sales and profit growth since acquisition Network expansion continuing to support increa
Slide 19: The parcels and freight market
The parcels and freight market • Overall parcels market worth over £5bn • Tuffnells differentiates through specialist service provision focusing on IDW items • Many standard parcel carriers focused on B2C growth • Tuffnells core addressable market estimated at £740m, 3-4% per annum forecast growth •
Slide 20: Summary & outlook
Summary & outlook
Slide 21: Summary & outlook
Summary & outlook A resilient performance in H1 and on track to deliver full year expectations Pleased with the acquisition of Tuffnells and its strong early performance Clear plans in place to address market challenges and opportunities across all divisions Group diversification strategy an
Slide 22: Appendices
Appendices
Slide 23: Reported Sales Performance
Reported Sales Performance FY15 FY14 FY13 Jan July H1 FY July IMS H1 Jan IMS FY H1 Jan IMS IMS IMS News News (3.4%) - (0.7%) - (0.5%) - (2.7%) - (3.9%) - Magazines (5.1%) - (6.4%) - (8.1%) - (9.9%) - (7.7%) - LFL (3.3%) (2.8%) (2.1%) (2.1%) (2.8%) (2.8%) (4.6%) (4.6%) (5.0%) (4.7%) Total (2.0%) (1.8
Slide 24: Financial KPIs
Financial KPIs £m HY 2015 FY 2014 FY 2013 FY 2012 FY 2011 Revenue 909.9 1,808.5 1,806.9 1,803.9 1,734.4 Profit before tax 24.1 50.0 49.9 47.5 38.6 Profit after tax 19.2 40.7 38.9 36.1 28.2 EPS – reported 8.6p 21.7p 21.1p 19.9p 15.5p EPS - rebased* 8.6p 19.6p 19.0p 17.9p 14.0 p Free cash flow 16.0 37
Slide 25: Income Statement
Income Statement £m HY 2015 FY 2014 FY 2013 FY 2012 FY 2011 Revenue 909.9 1,808.5 1,806.9 1,803.9 1,734.4 Underlying operating profit 27.7 55.5 56.4 51.2 41.7 Non recurring items (10.0) (6.9) (10.8) (10.9) (6.5) Statutory operating profit 17.7 48.6 45.6 40.3 35.2 Net finance charges (3.6) (5.9) (6.7
Slide 26: Balance Sheet
Balance Sheet £m HY 2015 FY 2014 FY 2013 FY 2012* FY 2011* Intangible assets 172.9 65.7 68.2 67.1 36.9 Property, plant & equipment 47.5 29.0 26.6 24.5 18.7 Other non current assets 12.8 12.4 12.8 14.5 16.1 Total non current assets 233.2 107.1 107.6 106.1 71.7 Cash 12.7 20.4 10.1 5.1 4.2 Other curren
Slide 27: Cash flow
Cash flow £m HY 2015 FY 2014 FY 2013 FY 2012 FY 2011 Operating profit 27.7 55.5 56.5 51.2 41.7 Depreciation and amortisation 4.8 8.0 7.6 6.9 6.8 EBITDA 32.5 63.5 64.1 58.1 48.5 Working capital (3.9) 1.2 (5.0) (9.1) (10.3) Capital expenditure (4.0) (10.3) (7.9) (5.1) (3.1) Net interest (3.3) (6.1) (4
Slide 28: Net debt
Net debt £m HY 2015 FY 2014 FY 2013 FY 2012 FY 2011 Opening net debt (93.0) (98.5) (100.5) (63.3) (48.0) Free cash flow 16.0 37.2 32.6 27.2 22.5 Dividend (14.4) (17.7) (16.0) (14.9) (13.8) Non recurring items (4.8) (4.4) (5.9) (10.3) (5.2) Net acquisition financing (53.0) (0.3) (5.1) (38.1) (17.9) O
Slide 29: Non-recurring and other items
Non-recurring and other items £m HY 2015 FY 2014 FY 2013 FY 2012 FY 2011 Integration costs (0.2) - (1.1) (2.7) - Network re-organisation costs (0.8) (3.0) (3.3) (2.0) (2.7) Acquisition costs (6.3) (0.9) (3.7) (4.6) (2.4) Property provisions - 0.5 - - (0.5) Amortisation of acquired intangibles (2.7)
Slide 30: Taxation
Taxation £m HY 2015 FY 2014 FY 2013 FY 2012 FY 2011 Current tax 5.5 12.3 15.7 13.6 11.3 Adj in respect of prior year UK (0.4) (2.4) (2.6) (1.6) (0.5) corporation tax Total current tax charge 5.1 9.9 13.1 12.0 10.8 Deferred tax – current year (0.2) (0.4) (0.7) (0.6) (0.4) Deferred tax – prior year -
Slide 31: Defined benefit schemes
Defined benefit schemes HY 2015 FY FY FY FY 2014 2013 2012 2011 Scheme assets 566.6 522.6 469.6 433.1 375.1 Scheme liabilities (487.9) (450.6) (419.2) (395.3) (348.3) Accounting Surplus 78.7 72.0 50.4 37.8 26.8 Additional liability – IFRIC 14 (15.6) (17.3) (20.3) (33.5) (36.3) Liability on balance s
Slide 32: Post-rights issue EPS, number of shares, bonus factor
Post-rights issue EPS, number of shares, bonus factor Bonus-adjusted underlying 2013/14 EPS¹ Illustrative bonus-adjusted August 2014/15 EPS¹ Expected no. of shares from Underlying EPS for year to 21.7p 1 September 2014 to 16 December 2014 189.5m 31 August 2014 (a) (e) Expected no. of shares from 1 S
Slide 33: Post-rights issue DPS, number of shares, bonus factor
Post-rights issue DPS, number of shares, bonus factor Treatment of Connect Group’s proposed Illustrative bonus-adjusted August final 2013/14 dividend payment¹ 2014/15 DPS¹ Expected no. of shares from Proposed final dividend for year to 6.6p 1 September 2014 to 16 December 2014 189.5m 31 August 2014
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