Connect Share Discussion Threads

[lord gnome] 14/11/2014 10:08

Thanks to you both for the speedy response. I am tempted to buy back into these at around the current price. Ex-rights but cum-div would do very nicely. Time to squeeze the piggy bank.

[speedsgh] 14/11/2014 09:17

LG - See pg45 (Expected Timetable of Principal Events) of Prospectus and Circular re Rights Issue -

Record Date for entitlements under the Rights Issue - close of business on
27 November 2014

[wjccghcc] 14/11/2014 09:13

It was in the announcement. I think it was record date of 27/11.

[lord gnome] 14/11/2014 09:03

Sorry to ask this on here, but I would like to know the ex-rights date. Has it been announced or are we still waiting for that information. I have had a quick skim through various documents but haven't been able to find it. Apologies in advance if it was in large print on page one!

[18bt] 14/11/2014 08:14

edmund - it's not unusual, particularly in stocks with a high yield.

[edmundshaw] 13/11/2014 14:08

Hm, I don't recall seeing that before, but given the deal and the steep discount, that seems reasonable; after all, raising money then giving it away in an excess dividend would be a bit crazy. Assuming the deal is a decent one, the price will recover to earlier levels and the effective yield will not be worse (given the "cheaper" shares).

[speedsgh] 12/11/2014 21:01

Prospectus and Circular re Rights Issue now available on company website -

Note this excerpt from section C.7 DIVIDEND POLICY on pg17...

"The proposed final dividend of 6.6 pence per Ordinary Share for the year ended 31 August 2014 announced on 15 October 2014 in Connect’s Preliminary Results Announcement will be adjusted to reflect the impact of the Rights Issue in connection with the Acquisition. The proposed final dividend will be adjusted to
6.0 pence per Ordinary Share to reflect the bonus element associated with the Rights Issue and both Existing Ordinary Shares and New Ordinary Shares will be entitled to receive this dividend."

I believe that this is quite normal when Rights Issues occur.

[edmundshaw] 12/11/2014 12:42

I am a bit overweight here, but anyway I intend to take up my rights in full. Cashflow does not look a problem, and I cannot see debt being a major problem at current and prospective interest rates.

At some point intrest rates will have to rise, if only to kill off the over-leveraged, non-performing dross companies that will inevitably appear in the market; but I cannot see that happening anytime soon, and so as long as CNCT debt ratios improve from here on, I am comfortable with things as they are. You have to take your opportunities at the right time...

[emmo1210] 12/11/2014 11:54

Time will certainly tell, it was clear they had to make some sort of move so good luck to them. The overall debt will be too big for me to now consider as an investment at present.

[emmo1210] 12/11/2014 10:43

Obviously up to each of us to value a company as we wish. Personally I prefer to include depreciation and cap ex when considering actual profitability - these are costs and not included on these occasions with the sole purpose of inflating profitability. Have to say I have not seen anyone adjusting out net assets before on their way to a valuation - net cash yes, net assets no. It is after all the assets which create the value, without them the business is nothing so not rational to exclude them from a valuation.

[edmundshaw] 12/11/2014 08:53

Using EBITDA is completely normal in business buys, as it is a proxy for cash flow. Enterprise value looks good, and as they are buying assets of £58m and no debt, the PE after tax adjusted for the assets would be around 10 (if you think of it as half the consideration for the assets and the other for the earnings).

With the expected synergies it makes good business sense to me, and with a good growth in the market segment anticipated, all the better.

[18bt] 12/11/2014 08:41

Well only a muted fall, which given the discount on the RI looks a very strong reaction.

[emmo1210] 12/11/2014 08:28

An attractive multiple? - your forgetting about depreciation and 'non-recurring' adjustments which have happened in at least the last 5 years. When the company touts EBITDA they are willingly forgetting an obvious cost - especially in a capital itensive company like this - Depreciation which is obviously disingenuous.

Price to actual earnings after tax is more like 20

[edmundshaw] 12/11/2014 08:07

Well that will help enable the Amazon deal. Looks a good fit...

£2m synergies sounds excellent. And CNCT have over-delivered on synergies in the past, so no pie-in-sky I'd say.

[cw2000] 12/11/2014 07:28

2 for 7 rights issue to pay for this.
A big company to swallow

[18bt] 12/11/2014 07:12

Didn't see that coming. Personal experience of Tuffnells service is excellent and this looks like an attractive multiple.

[contrarian2investor] 21/10/2014 18:25

Bakunin,

Hopefully the next set of positive news flow, will send CNCT
through £1.90p and then we could easily see the share price
nearer to £2 before year end.

[edmundshaw] 20/10/2014 10:55

TBH pass the parcel is nice add-on business but I cannot see it being a massive game. There are already some similar services, and while I expect CNCT to do it well and theoretically more efficiently, it feels unlikely to be hugely earnings enhancing for a company this size.

What is good is to see CNCT making good (as expected from this management) on their promise to find ways to extract more value from the distribution network.

I still see good potential from the education distribution side. Time will tell if that translates to significant profits..

Very pleased with this company and board over the years.