Connect Group - Media DMD and Books

PUBLISHED: Oct 03 2017 @ 04:13 | Comments (0) |

Connect Group (LSE:CNCT) in addition to distributing newspapers, magazines and parcels, has a business supplying airlines, trains and travel points with video, newspapers, TV and digital games called DMD.

It also has a large business supplying books wholesale, selling them retail online and selling to libraries, called Connect Books.

DMD’s main numbers

£m	2 x half –year to February 2017	2016	2015	2014	2013
Revenue	28.4	27.6	25.4	25.1	25.9
Adjusted operating profit	2.2	2.4	2.3	2.3	1.8
Less Exceptional items	na	-0.4	-0.4	na	na
Statutory operating profit	na	2.0	1.9	na	na
Assets	na	20.5	18.9	18.8	16.0
Liabilities	na	-7.6	-7.2	-7.2	-7.3
Depreciation and amortisation		-0.5	-0.5	-0.4	-0.4
Additions to non-current assets		0.3	0.2	0	0

Not a bad return on net assets at around 15%.

The trading update for the 45 weeks to 15^th July stated at 6.1% climb in revenue to £24.7m. That is, £28.5m on an annualised basis.

Additional demand has come from in-flight digital media growth, new contracts, and from UK newspaper publishers targeting promotional distribution to international airline and travel point customers.

In 2016 new or extended agreements were made with Eurostar, Virgin Trains and Cathay Pacific.

But there are set backs: a few months ago two major airlines stopped supplying on-board newspapers which will impact DMD revenues in the second half to August 2017.

Despite the difficulties, the directors still see “opportunity to expand in the UK and internationally” (2016 Report)

In conclusion, DMD is a nice little business chugging along producing around £1.6m for shareholders after tax.

Connect Books

The first thing to note is that the books division is no longer referred to as the core of the Connect Group (which is Smiths News, PMP and Tuffnells). There are few synergies with the core, so I’ll analyse this as a stand-alone business, with potential for sale to another company.

Book division’s main numbers………………………………..To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

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