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Connect weighs options for Tuffnells, ceo resigns and profit falls
Posted on Wednesday, 06 November 2019 14:07
UK-based specialist distributor Connect Group has announced it is reviewing strategic alternatives for struggling logistics unit Tuffnells after the company recorded an 18.3 per cent decline in profit before tax. The exploration of options will consider all aspects of creating and optimising shareholder value. Smiths News is Connect’s other main operation and is billed as the largest news wholesaler in the demand of high-density early morning deliveries. This unit has had a strong performance in the year to 31st August 2019, which has been offset by ongoing challenges at the possible target. Tuffnells was impacted by flow-through of legacy issues, compounded by lower volumes and a difficult final quarter. Connect is looking to drive recovery and assess long term roles and prospects for this business and has appointed an executive chairman to provide additional support for the strategic review. The large, long and heavy parcel delivery platform suffered an impairment of GBP 45.50 million in relation to goodwill, tangible and intangible assets, resulting in a statutory loss before tax of GBP 37.60 million. Gary Kennedy, chairman of Connect, said: “The turnaround of Tuffnells remains our most pressing challenge. The strategic review of that business and the management changes that we have announced today reflects our focus on delivering improvement and removing its drag on overall group performance.” Shares in the London-listed group declined 3.4 per cent to GBP 0.28 at 11:13 today, giving the Swindon-headquartered firm a market capitalisation of GBP 70.34 million. This was following the new of the strategic review, its financial results for the fiscal year to 31st August 2019 and the announcement that chief executive Jozef Opdeweegh stepped down from both his roles as chief executive and director of the board. As a result, Smith News chief executive Jonathan Bunting has been appointed in an interim position at Connect to run the company. The group, billed as a market leader in news wholesaling and mixed freight distribution, makes over 20.00 million annual deliveries from 76 deports and 3,500 delivery rounds. In the year to 31st August 2019, Connect recorded revenue of GBP 1.47 billion, down 3.4 per cent from GBP 1.53 billion in the previous 12 months. Profit before tax fell 18.3 per cent to GBP 23.20 million in FY 2019 (FY 2018: GBP 28.40 million). © Zephus Ltd