Connect Group – the Tuffnells business

Share On Facebook

In 2014 the big idea at Connect Group (LDSE:CNCT) was to diversify into parcel delivery and at the same time gain synergy with the early morning News Distribution business by buying Tuffnells for £139m. Here are the performance numbers for Tuffnells under Connect’s ownership – not pretty reading for shareholders who forked out £139m now that the market capitalisation of the whole Group is only £90m.

©
£m   2018   2017   2016   Less than year to August 2015
Revenue 175 183 174 114
Adjusted operating profit -5.0 12.0 15.0 9.7
Exceptional items -52.7 -7.7 -8.9 -4.6
Statutory operating profit -57.7 4.3 6.1 5.1
Assets 109 167 176 177
Liabilities -35 -36 -49 -41
Depreciation and amortisation -57.7 -11.2 -10.4 -6.5
Additions to non-current assets 4.4 6.7 11.1

Perhaps we should be grateful that turnover did not decline very much, indicating that there are many thousands of customers who still come Tuffnells despite the hiccup in customer service over the last two years.

The managers sent by Connect into Tuffnells were rubbish at it.  This was public knowledge a year ago as bulletin board writers, working at Tuffnells depots, vented anger at the ignorance and inattention to detail by the team from Connect.  The business quickly lost talented staff and customer service standards dropped.

The 2018 Report, written by the recently appointed directors, is frank about the poor performance:

“With hindsight, the integration of the Group’s operations and sales & marketing functions led to suboptimal service and a weakening of controls at a time when our competitors were more aggressively targeting our customers. The actions we have taken to strengthen management, improving service and accountability were implemented too late in the year to make a meaningful impact on peak trading. Volumes during the third quarter were down by 12.3% with a disproportionate impact on full year operating profits as the seasonal uplift would usually generate an important premium for the business.”

In a recent webcast (http://webcasting.buchanan.uk.com/broadcast/5bb4ae6ec6ec681d9e06bbf5) Gary Kennedy, Chairman, acknowledged that Tuffnells was badly managed. In the same webcast the new CEO, Jos Opdeweegh, a veteran of Americold Logistics and Caterpillar Logistics, and CEO of Premier Farnell, gave his diagnosis:

“We focused insufficiently on standardisation of processes and procedure as well as on principles of continuous improvement.  Also, we still don’t have access to sufficient granular information to allow us to make decisions quickly, e.g. we don’t have (but we’re close to having) a cost-to-serve model; the extent to which adding an incremental customer add

………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

 

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20200226 23:55:18