Slide 1: Preliminary Results
Preliminary Results 26 October 2017
Slide 2: Headlines
Headlines Mark Cashmore Chief Executive Officer
Slide 3: Headlines – Continuing Operations
Headlines – Continuing Operations A challenging year ► Total revenue * £1,594m -3.1% ► Adjusted PBT * £48.0m -4.6% ► Adjusted EPS 15.5p -4.3% ► Free cash flow to equity £28.7m -20.7% ► DPS 9.8p +3.2% ► Net debt £82.1m 1.2x EBITDA Decisive action with clear strategic focus ► Sale of Education & Care
Slide 4: Transformation strategy
Transformation strategy An evolving market… …playing to our strengths Early distribution ► Consumer behaviour The news distribution network underpins one of the UK’s fastest daily supply chains, supplying a high density of customers in efficient fixed ► Customer expectations location routes – from c
Slide 5: Transformation strategy
Transformation strategy Connect Group PLC 5
Slide 6: Group Financial Update
Group Financial Update David Bauernfeind Chief Financial Officer
Slide 7: Financial performance – continuing operations
Financial performance – continuing operations £m Adjusted Aug 2017 Aug 2016 Change restated % News & Media 42.7 42.4 0.7% Parcel Freight 12.0 15.0 (19.9%) Operating profit 54.7 57.4 (4.7%) Net finance charges (6.7) (7.0) 5.2% Profit before tax 48.0 50.4 (4.6%) Tax (9.9) (10.8) 8.0% Profit after tax
Slide 8: Free cash flow – continuing operations
Free cash flow – continuing operations £m Aug 2017 Aug 2016 restated Operating profit 54.7 57.4 Depreciation and amortisation 11.7 10.3 EBITDA 66.4 67.7 Working capital 0.4 3.8 Capital expenditure (13.8) (10.7) Finance lease payments (4.2) (3.5) Net interest and fees (4.4) (4.9) Taxation (9.1) (7.6)
Slide 9: Net debt
Net debt £m Aug 2017 August 2016 Opening net debt (141.7) (153.4) Free cash flow to equity 28.7 36.2 Dividend (23.6) (22.7) Finance lease creditor movement 2.2 (1.3) Pension deficit recovery (4.8) (4.8) Acquisitions & Disposals 58.2 - Discontinued operations cash flow (1.1) 4.3 Closing net debt (82.
Slide 10: Adjusted items – continuing operations
Adjusted items – continuing operations £m Aug 2017 Aug 2016 restated Network reorganisation costs (8.1) (3.1) Property provisions (0.6) - Acquisition and disposal costs 2.2 (3.2) Amortisation of acquired intangibles (7.2) (7.3) Pension 0.7 - Interest rate swap (0.8) - Legal provision - (1.5) Total b
Slide 11: Business update
Business update Connect a
Slide 12: Business update
Business update ► Early Distribution ► News Distribution ► Media ► Click & Collect ► Mixed Freight ► Integration ► Opportunity ► Progress to date ► Milestones of success ► Summary and Outlook ► Questions Connect Group PLC 12
Slide 13: Early distribution
Early distribution Smiths News Revenue £1,383.4m -4.2% Operating Profit News distribution £40.4m +0.9% ► Sales within medium term strategic forecast DMD Revenue ► Resilient performance in core newspapers and magazines £28.8m +4.4% Operating Profit ► Hemel Hempstead network rationalisation complete £
Slide 14: Early distribution – Click & Collect
Early distribution Click & Collect ► 1 million units in FY17 – up 100% ► Growth accelerating in second half ► Current run rate of over 2m units pre-peak ► Revenue forecast to grow significantly in FY18 ► Returns driving volume growth ► Complementary propositions ► Parcelshops – outbound and returns
Slide 15: Mixed Freight distribution
Mixed Freight distribution Revenue £183.2m +5.0% ► Strong revenue and customer growth Operating Profit £12.0m -19.9% ► Record volumes handled in peak Total consignments delivered, 13.9m ► Challenging second half ► Peak demand driving incremental costs ► Legacy infrastructure with pinch points in cap
Slide 16: Integration opportunity
Integration opportunity Opportunity for integration is compelling Connect Group PLC 16
Slide 17: Integration progress
Integration progress The integration is moving at pace Focused strategy Executive Leadership Team Senior leadership roles Combined operations management Leveraging expertise of Smiths News in Tuffnells Centralised sales management Consultations to remove circa 340 roles in FY18 £15m cost savings ove
Slide 18: Integration milestones
Integration milestones Complete /in progress FY 2018 - 2019 Leadership • Executive Leadership Team • Integrated business management • Senior leadership roles • Growth focused culture • Operations and sales teams Operations • Leveraging Smiths News experience • Optimised network • Network optimisatio
Slide 19: Summary & outlook
Summary & outlook Summary FY17 ► Tough year with good strategic progress ► Focused strategy, leveraging our strengths. ► Integration delivering tangible benefits ► Dividend growth reflecting future opportunity and confidence Transformation underway ► Substantial and sustainable cost savings ► Platfo
Slide 20: Appendix
Appendix Connect a
Slide 21: Balance Sheet
Balance Sheet £m Aug 2017 Aug 2016 Goodwill, intangibles and other assets 109.9 168.7 Tangible fixed assets and investments 45.9 54.4 Working capital (39.1) (51.0) Net debt (82.1) (141.7) Pension liability, net of deferred tax (9.5) (17.4) Net assets 25.1 13.0 Connect Group PLC 21
Slide 22: Discontinued operations & Adjusted items
Discontinued operations & Adjusted items £m Aug 2017 Aug 2016 Adjusted profit before tax 2.0 10.3 Taxation (1.0) (1.6) Profit from discontinued operations 1.0 8.7 Adjusted items - discontinued Profit on disposal of subsidiary 19.0 - Acquisition & disposal costs - (0.7) Re-organisation/other costs (0
Slide 23: Capital expenditure (continuing)
Capital expenditure (continuing) £m Aug 2017 Aug 2016 Maintenance investment 5.8 4.3 Growth investment 8.1 6.3 Finance lease payments 4.2 3.5 Total capital expenditure 18.1 14.2 ► Major projects in 2017 were: new depots £3.6m, network investments £1.5m, PMP £1.2m, technology and equipment refreshes