Connect Group PLC Trading Update (8721S)
14 July 2020 - 4:00PM
UK Regulatory
TIDMCNCT
RNS Number : 8721S
Connect Group PLC
14 July 2020
This announcement contains inside information
14 July 2020
Connect Group PLC
("the Company" or "the Group")
Trading Update
Connect Group is pleased to present a year-to-date trading
update for the 44 week period to 4 July 2020.
Trading Update
Core trading remains resilient despite the considerable
disruption to the UK economy at present. Thanks to the outstanding
efforts of our colleagues we have successfully maintained service
levels to our customers and to the general public, whilst
continuing at all times to safeguard the health, safety and
wellbeing of colleagues and customers.
As previously reported in our interim financial results
published on 13 May 2020, during the first six weeks following the
UK Government's introduction of restrictions on social movement on
23 March 2020, demand for newspapers and magazines was adversely
impacted by 25%, as a consequence of restrictions on movement and
the temporary closure of approximately 10% of the retailers we
supply (including high street and travel outlets).
Since then, with the consistent and gradual reduction in the
Covid-19 lockdown restrictions and as consumer shopping behaviours
have adjusted, we have seen a marked increase in retail store
outlets re-opening, such that, at this time, less than 5% of our
customers' stores, predominantly travel and leisure locations,
remain closed. As a result, newspaper sales in the 15 week period
to 4 July 2020 have been 12% lower than the equivalent period
pre-lockdown. Magazine sales have similarly recovered, albeit more
gradually, due in part to the continuing closure until mid-June
2020 of the majority of our largest magazine retailer's stores.
Magazine sales in the same 15 week period to 4 July 2020
consequently are 18% lower to the equivalent period pre lockdown.
We expect continued improvement in magazine sales during July and
August 2020 as retailers re-stock to current content and copy.
Sales at Smiths News for the period 1 September 2019 to 4 July
2020 were GBP927m (2019: GBP1,012m) a decrease of 8.4%. During the
same period, Smiths News has continued to deliver operational cost
reductions with planned cost savings expected to be in excess of
GBP5m in the financial year and further operational cost savings
delivered in response to the reduction in volumes during the
Covid-19 lockdown period. Additionally, the Company has identified
a further GBP4m per annum of savings from the re-organisation of
the operating structure of the business.
As previously reported, the Company has a GBP175m committed bank
facility, comprising a GBP50m term facility and a GBP125m revolving
credit facility. Despite the impact of the Covid-19 lockdown on
trading, the Company has continued to operate well within the
headroom under its current banking facilities. The facility is due
to expire on 31 January 2021 and we continue to expect to complete
the refinancing during the autumn of 2020.
Full Year Expectations
During the Covid-19 lockdown the Company has continued to run a
range of scenarios for full year trading for the purposes of
monitoring financial performance and business planning. Given the
performance of the business during lockdown and the improved
performance as a result of the gradual easing of restrictions, the
Board now expects full year Continuing Adjusted EBITDA of between
GBP35m to GBP37.5m (pre-IFRS16 lease adjustments) and Continuing
Adjusted Profit Before Tax of between GBP26m and GBP28m (pre-IFRS16
lease adjustments) for FY2020. Financial guidance within this
statement assumes no further material COVID-19 lockdown measures
introduced in the UK prior to the Company's 52 week year end to 29
August 2020.
Jonathan Bunting, Chief Executive Officer, commented:
"In what has been unprecedented times for everyone, I am
overwhelmed by the dedication and unstinting support of our
colleagues which, together with the hard work of our supply chain
partners, has ensured that we have continued to provide Newspapers
and Magazines to every community, every day. Our trading
performance is a pleasingly resilient one, and we have also taken
the right action to prepare the business for the year ahead. I look
forward to presenting our full year results in November 2020."
Enquiries:
Connect Group PLC
Jonathan Bunting, Chief Executive Officer
Tony Grace, Chief Financial Officer
Investor.relations@connectgroupplc.com
www.connectgroupplc.com
Buchanan (Financial PR)
Richard Oldworth / Jamie Hooper
connect@buchanan.uk.com
www.buchanan.uk.com
Person responsible for arranging release of this
announcement:
Stuart Marriner, General Counsel & Company Secretary
Connect Group PLC
Rowan House
Cherry Orchard North
Kembrey Park
Swindon
SN2 8UH
email: cosec@connectgroupplc.com
LEI: 2138004O33ONVOOQXB02
About the Company
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
25,000 customers across England and Wales on a daily basis. The
speed of turnaround in the UK and density of Smiths News' coverage
is critical to one of the world's fastest physical supply
chains.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTUOANRRNUBAAR
(END) Dow Jones Newswires
July 14, 2020 02:00 ET (06:00 GMT)
Smiths News (LSE:SNWS)
Historical Stock Chart
From Apr 2024 to May 2024
Smiths News (LSE:SNWS)
Historical Stock Chart
From May 2023 to May 2024