TIDMCNCT
RNS Number : 0040A
Connect Group PLC
21 December 2017
Connect Group PLC
('Connect Group' or 'the Group')
Disposal of Books division to Aurelius Equity Opportunities
Connect Group PLC announces that it has signed an agreement to
dispose of its Books division ("Connect Books") with the listed
pan-European mid-market investor Aurelius Equity Opportunities SE
& Co. KGaA ("Aurelius"), for a total cash consideration of up
to GBP11.6m. Under the terms of the agreement, GBP10.6m will become
payable at completion and up to GBP1.05m will be payable on the
successful recovery of certain third party debt receivables and
certain tax refunds from relevant tax authorities. The agreement
with Aurelius is subject to common warranties, indemnities and
limitations.
Connect Books is a multi-channel wholesaler, distributor and
retailer of printed and digital books, with operations in the UK,
the Netherlands, and France. The senior management team of Connect
Books, including Managing Director Justin Adams, will transfer with
the business.
Strategic Highlights
-- The disposal follows Connect Group's announcement at its
preliminary results in October 2017 that Connect Books is no longer
considered to be core to the Group's growth strategy.
-- The disposal allows Connect Group to focus solely on the
integration of its core businesses comprising Smiths News,
Tuffnells Parcels Express and Pass My Parcel and the growth
opportunities that arise from leveraging its scale and leadership
in Early Morning and Mixed Freight distribution.
-- The agreement with Aurelius comprises the sale of all of
Connect Books' trading businesses, including: Bertram Books,
Wordery, Dawson Books and Bertram Library Services in the UK
together with Erasmus, Houtschild and Dawson Books' overseas
subsidiaries.
-- The disposal will complete following anti-trust merger
approval from the German Federal Cartel Office. We do not
anticipate any complications with this and would consequently
expect completion to take place early in the New Year. An
announcement confirming completion will be issued in due
course.
Financial Highlights
-- Consideration of GBP10.6m at completion with up to GBP1.05m
payable on the successful recovery of certain third party debt
receivables and the receipt of, or credit being given for, certain
tax refunds from relevant tax authorities, which are expected to be
collected within 12 months of completion.
-- The net cash proceeds of the disposal will be used to reduce the Group's borrowings.
-- Connect Books' EBIT for the 12 months to 31 August 2017
reported a GBP2.0m loss within the Group's discontinued operations,
which included GBP3.2m of exceptional charges to operating profit
before the decision to treat the division as 'held for sale' on 31
August 2017. Adjusted loss before tax was GBP2.0m and statutory
loss before tax was GBP12.8m, after impairment and amortisation
charges. The value of its gross assets at 31 August 2017 was
GBP64.4m and the Net Book Value was GBP15.0m.
Mark Cashmore, Chief Executive Officer, commented:
"We are pleased to announce the sale of Connect Books to
Aurelius Equity Opportunities. Earlier this year we concluded that
the Books division was no longer core to our future, but this in no
way detracts from its position as leader in the books distribution
markets. We believe the agreement represents a good outcome for all
key stakeholders.
The disposal is consistent with our strategy to focus on
opportunities in Early Morning and Mixed Freight distribution. In
this regard, the integration of the Group's businesses is
proceeding at pace and the disposal will give us greater financial
flexibility as we continue to drive our strategic priorities.
Looking ahead, the Group remains focused on delivering long-term
value for shareholders, focusing and leveraging our capabilities to
deliver sustainable growth, strong cash generation and
dividend."
The Group will announce its trading statement on 23 January 2018
and its interim financial results for the six months ending 28
February 2018 on 1 May 2018.
Enquiries:
Connect Group PLC
Mark Cashmore, Chief Executive Today: 020 7466 5000
Officer Thereafter: 01793
David Bauernfeind, Chief Financial 563641
Officer
www.connectgroupplc.com
Buchanan
Richard Oldworth / Jamie Hooper
connect@buchanan.uk.com
www.buchanan.uk.com 020 7466 5000
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 drop 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:
Early Distribution
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 and density of Smiths News' coverage is
critical to one of the world's fastest physical supply chains.
Pass My Parcel is a wholly owned Click & Collect service
which leverages our combined networks to provide efficient
solutions for online and high street retailers. Its network of
parcelshops provides national consumer reach for deliveries and
returns. Bespoke services for larger clients, serving their early
morning and in-store requirements are a recent development in this
rapidly evolving sector.
Dawson Media Direct 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.
Mixed Freight
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.
This information is provided by RNS
The company news service from the London Stock Exchange
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