High-yield Connect delivers

While bears continue to fret over the group's exposure to dwindling markets, we've been impressed with management's response. 2014 saw the shrewd acquisitions of several businesses capable of both utilising Connect's massive distribution network and tapping into the changing needs of today's consumers. In the 19-week period to 9 January, these operations helped to deliver 6 per cent revenue growth.

Recently Pass My Parcel, the UK's fastest click-and-collect delivery service, has stolen most of the headlines. Not only did it benefit from robust demand over the Christmas period, it also signed online fashion retailer Asos as its second customer and launched a new service enabling customers to return unwanted deliveries from their mobile phones. Given how fast the click-and-collect market is expected to grow in the coming years, it's hard not to get excited.

Tuffnells Parcel Express, the next-day B2B deliver of parcels of irregular dimensions and weight, has also hit the ground running. Steady market growth and new customer wins triggered a 12 per cent sales increase in the 19 weeks to January. That figure is markedly better than what peers Royal Mail (RMG) and UK Mail (UKM) have mustered, implying that this less commoditised part of the market is thriving.

Business at Jack Beans is progressing nicely, too. In the year to August 2015, management reported that its coffee vending machines were installed across over 300 outlets within its network, with plenty of cups of the black stuff sold as a result.

Meanwhile, performances from historic operations was encouraging given the ongoing long-term decline in end markets. Sales in the core news and magazine distributor business fell less in the last reported trading period, while profitability was supported by cover price inflation and management's ongoing cost-saving programme. So far, cutting costs has sufficiently offset a decline in newspaper volumes, leading to a stable operating margin last year.

Books also put in a robust performance. True, the dwindling spending power of UK libraries and a shift online isn't a favourable backdrop, but the success of Connect's Wordery website, together with a focus on more profitable contracts and efforts to reduce costs, means divisional operating margins are actually widening.

The education and care arm, which provides schools with equipment, also faces tough end markets. But flat like-for-like sales, supported by strong demand from early-years institutions, easily beat competitor Findel (FDL), which reported revenue declines of 8.2 per cent in the 26 weeks to September.