Connect Group delivers better news after changing name from Smiths

23rd Apr 2014 14:21

Connect Group, formerly known as Smiths News, began a new era under its fresh corporate identity with interim results in line with recently reduced expectations, although the market looked askance at flat first-half revenue figures. The company, which on Tuesday changed its from Smith News as it looks "to become a more broadly diversified specialist distribution business", provided some encouraging updates outside of its Books division, where expectations had been lowered at its pre-close statement.Chief Executive Mark Cashmore said: "Our News & Media and Education & Care divisions, which represent 91% of group profits, are performing strongly, with 77% of our News revenue now secured to 2019 or beyond. "We remain focused on growing profits, generating significant levels of free cash and delivering on our ongoing diversification strategy, which targets the group generating 50% of profits outside of newspaper and magazine wholesaling by 2016."At group level, underlying sales fell 0.3% to £898.7m in the six months to February 28th. Underlying profit before tax was up 3% to £24.0m and underlying basic earnings per share up 6.3% to 10.1p. The board pledged an interim dividend per share of 3.1p, up 3.3%.The News business delivered a much improved like-for-like performance, down 2.8%, driven by newspapers, which were only marginally down as cover price increases offset volume declines. Magazines remained challenging but reported a slight improvement in the like-for-like trend, falling 8.1%. Total News revenues were down 1.6%, which was comfortably ahead of management's strategic forecast range of 3% to 5% and was recently boosted by a distribution contract with Metro newspapers. Broker Oriel Securities said results were "straightforward" and added: "There are clear plans afoot to right the wrongs within Books and Smiths News continues on track. The shares are cheap and will be highly attractive to income funds."Shares in Connect were down 3.80% to 162p by 14:35 on Wednesday.OH