Monday, July 17, 2017

Logistics Group Splits into Freight and Express Divisions and Drops Boss

Shareholders Happy with Changes at the Top as Latest Finances Revealed
Shipping News Feature
UK – It would appear peace may be breaking out over the future of the DX Logistics Group following last month's merger news and the announcement last week that the organisation will be split in two, henceforth to be DX Express and DX Freight. Having renewed the contract with HM Passport Office the latest staff changes and financial report have met with the approval of financial group and leading shareholder Gatemore Capital Management. Gatemore CIO Liad Meidar commented:

“We are pleased with today’s announcement from DX Group, and we welcome the organisational changes. We are also pleased that revenue and profit appears to be in line with expectations. Since February we have been publicly calling for the Board to re-focus on the freight business and end the failed OneDX integration programme.

”This announcement makes clear that the Board is taking meaningful steps in that direction. Our working relationship with the Board has become more productive, and we will continue to be supportive of their efforts to unlock the potential of DX Group’s freight business.”

DX Express will comprise the DX Exchange, DX Secure, the Courier operations and Mail activities while DX Freight will comprise Logistics, DX 1-Man, and DX 2-Man. DX Express will be headed by Nick Cullen, DX's existing Chief Operations Officer and DX Freight by Stuart Godman, who is currently Chief Commercial Officer. Both Divisional Managing Directors will report directly to the Board. The reorganisation is expected to provide greater flexibility in managing costs.

DX announced that results for the financial year ended 30 June 2017 are expected to show revenues of approximately £292 million and adjusted profit before tax (before exceptional items) in line with market forecasts. Net debt at the year-end is expected to stand at £19.1 million. In what it describes as ‘an exceptionally challenging year’, as well as renewing the passport deal it signed a number of notable contract wins, including with Avon.

Looking ahead, management has completed a review of the Company's expected performance in the new financial year and, taking into account the re-organisational changes, it now considers that earnings before interest tax, depreciation and amortisation will be broadly flat year-on-year. The Company says it continues to enjoy the support of its bank.

As part of the reorganisation and as we reported last week, Chief Executive Officer, Petar Cvetkovic, and Finance Director, Daljit Basi, will be stepping down from the Board and the Company immediately. James Hayward, FCA, has been appointed as interim Chief Financial Officer (a non-Board appointment). Hayward has spent over 20 years working as an independent restructuring and transformation specialist and has been directly involved with over 40 companies at the Board level, both as an executive and advisor in the quoted and private sector. Bob Holt, Chairman of DX, said:

"The changes we are making both to the Board of Directors and to the Group's operational structure are aimed at supporting business transformation. In particular the reorganisation provides greater flexibility in managing costs and puts the Company in a better position to advance its operational and sales performance and to provide an enhanced service to its customers. In a challenging year, we are pleased to have the support of our bank and remain firmly committed to acting in the best interests of all our shareholders."