Connect Group´s full year trading in line, despite decline in interim profits

Distribution group Connect Group said trading was on track to meet its full-year expectations, despite a decline in pre-tax profits during the first half.

The London-listed group said its pre-tax profit in the six months to the end of February declined 36.2% year-on-year to £14.1m, as exceptional costs of £10m related to the purchase of Tuffnells Parcels Express Ltd offset a 1.24% rise in revenue to £909.9m.

In December 2014, the company acquired Tuffnells for £113.4m, after conducting a £55m rights issue of shares to partly fund the deal and the business has since been used to generate a new parcel and freight division, which has produced a solid performance, Connect said.

In a statement released on Wednesday, the company said that newspaper and magazines revenues fell less than expected, as they registered a 2% decline compared with a forecast estimating a drop of between 3% and 5%.

Connect said books revenue declined 3%, while revenue in its education and care division rose 0.9%, boosted by a strong performance in its primary and early years products.

"The group has made an encouraging start to the year, making strategic progress across all divisions and successfully completing the major acquisition of Tuffnells,” said group chief executive Mark Cashmore.

“Tuffnells represents a significant step in our growth strategy and we are delighted with its initial performance.”

Connect shares were up 3.12% to 148.50p at 11:46 on Wednesday.