Slide 1: Preliminary Results
Preliminary Results 14 October 2015
Slide 2: Highlights
Highlights Mark Cashmore Group Chief Executive
Slide 3: Highlights
Highlights Strong performance with profits ahead of expectations Total revenue: £1,875.1m, +3.7% Adjusted PBT: £56.5m, +13.0% Adjusted EPS: 19.7p, +0.5% Free cash flow: £39.8m, +7.0% DPS: 9.2p, +4.5% Transformational year for the Group Scale acquisition of Tuffnells Parcels Express compl
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 Aug 2015 Aug 2014 Change % News & Media 43.7 45.2 (3.3)% Books 2.6 2.5 4.6% Education & Care 7.8 7.8 (0.2)% Total before acquisitions 54.1 55.5 (2.5)% Parcel Freight 9.7 - - Group operating profit 63.8 55.5 14.9% Net finance charges (7.3) (5.5) (31.8)% Group PBT 56.5 50.0 13.0%
Slide 7: Earnings per share
Earnings per share Aug 2015 Aug 2014 Change % Profit after tax £45.4m £40.7m 11.3% Minority interest £0.1m (£0.2m) Earnings attributable to £45.5m £40.5m 12.3% shareholders Weighted basic shares 230.9m 186.3m 23.9% Basic earnings per share 19.7p 21.7p Bonus factor - 0.9015 Rebased earnings per share
Slide 8: Free cash flow
Free cash flow £m Aug 2015 Aug 2014 Operating profit 63.8 55.5 Depreciation and amortisation 11.6 8.0 EBITDA 75.4 63.5 Working capital (8.0) 1.2 Capital expenditure (9.2) (10.3) Net interest and fees (5.8) (6.1) Taxation (8.7) (9.8) Pension funding (5.4) (4.6) Other 1.5 3.3 Free cash flow 39.8 37.2
Slide 9: Non recurring and other items
Non recurring and other items £m Aug 2015 Aug 2014 Network and reorganisation costs (4.4) (3.0) Property provisions (0.1) 0.5 Acquisition and disposal costs (15.1) (0.9) Amortisation of acquired intangibles (7.9) (3.0) Impairment of acquired intangibles - (0.5) Total before taxation (27.5) (6.9) Tax
Slide 10: Net debt
Net debt £m Aug 2015 Aug 2014 Opening net debt (93.0) (98.5) Free cash flow 39.8 37.2 Dividend (21.4) (17.7) Non recurring items (8.2) (4.4) Acquisitions (119.1) (0.3) Proceeds on issues of shares 52.1 - Other (3.6) (9.3) Closing net debt (153.4) (93.0) Net debt : EBITDA 1.9x 1.4x • Committed Bank f
Slide 11: Future assumptions
Future assumptions Parcel Freight annualisation LTM revenue £162.6m, LTM operating profit £14.3m to Aug 2015 PMP investment £2-3m net P&L investment in FY16 Employee related costs £1m FY16, potential to rise to £3m over the medium term before mitigating actions Capital investment Circa £20m p.a. to
Slide 12: Business update: Connect News & Media
Business update c a Connect News & Media
Slide 13: Connect News & Media
Connect News & Media 2015 YE Total Revenue £1,504.7m -2.9% Operating profit +3.3% excluding the impact of World News Revenue £1,479.3m -3.0% Cup sales in FY14 Media Total Revenue £25.4m +1.0% Total FY15 sales comfortably within strategic forecast of Total Profit £43.7m -3.3% -3 to -5% per annum
Slide 14: Connect News & Media - strategy for growth
Connect News & Media - strategy for growth Launched in October 2014 with Amazon as our first client Successfully accelerated roll out to over 3,000 stores Volumes building through new stores ahead of key peak trading period Over 3,000 stores Plan to achieve national coverage of 5-6,000 sto
Slide 15: Business update: Connect Books
Business update ») Connect Books
Slide 16: Connect Books
Connect Books 2015 YE Good progress in stabilising the business and establishing Total Revenue £190.1m -1.8% a strategy for sustainable growth LFL Revenue +3.1% Profit £2.6m +4.6% Improved H2 performance generating full year profit growth +5% Segmental LFLs ► Wholesale -3.5% ► Direct to Consumer
Slide 17: Connect Books – strategy for growth
Connect Books – strategy for growth Focus on customer offer in four business units Direct to International Wholesale Libraries Consumer Invest in Drive Refocus the Accelerate Academic and efficiency to Wholesale Wordery Digital grow offer investment capability profitability Strengthen warehouse op
Slide 18: Business update: Connect Education & Care
Business update \ Connect y Education & Care ia
Slide 19: Connect Education & Care
Connect Education & Care 2015 YE Core sales +1.8% and gross margin +100 basis points Total Revenue £65.9m +1.7% with continued strength in Primary and Early Years LFL Revenue +1.7% Profit £7.8m -0.2% Solid peak trading given market conditions Improving performance in H2 with operating profit +
Slide 20: Connect Education & Care – strategy for growth
Connect Education & Care – strategy for growth E-commerce Continuously improving website to achieve 50% of orders online Online self-service to build customer loyalty and Easy shopping, order frequency easy buying, Margin faultless services. Provide greater customer choice through a wider
Slide 21: Business update: Connect Parcel Freight
Business update a" Connect y Parcel Freight JP”
Slide 22: Connect Parcel Freight
Connect Parcel Freight 2015 YE Strong profit and revenue performance Total Revenue £114.4m +19.6% LFL Revenue +19.6% Profit £9.7m 10.8% Scale business with unique characteristics in a growing market LTM to 31 August 2015 Total Revenue £162.6m +17.4% Ongoing focus on operational performance Pro
Slide 23: Connect Parcel Freight – strategy for growth
Connect Parcel Freight – strategy for growth The growth story Market and competitive position continues to strengthen £740m addressable market; forecasting growth 4-5% p.a. ► 4,300 customers UK wide Expertise and focus on IDW freight with distinct operational model ► Over 10m deliveries p.a. Opt
Slide 24: Summary & outlook
Summary & outlook
Slide 25: Summary & outlook
Summary & outlook A strong performance in a transformational year Strategy on track with clear growth opportunities across the Group Cost savings continuing to mitigate revenue decline in the short term PMP growth expected to offset core business decline in the medium term Doubling divisional profit
Slide 26: Slide 26