Wednesday, May 29, 2019

Turnaround of Logistics and Parcel Freight Group 'Not Affected' by Loss of Passport Contract

After 14 Years Tender Process Sees Prestigious Express Delivery Deal Go Elsewhere
Shipping News Feature
UK – Parcel freight and logistics group, DX, has lost its bid to continue the secure delivery of UK passports, having held the contract for the last 14 years. Accordingly, the Company's contract with Her Majesty's Passport Office (HMPO) is expected to expire in January 2020, after a transition period. Silence reigns supreme at the time of writing with no indication which logistics group is likely to pick up the prestigious contract.

Following the conclusion of the tender process for HMPO’s secure delivery contract, DX announced that its renewal bid, which it says was based on commercially realistic terms, was ultimately unsuccessful. Ronald Series, Chairman of DX, said:

"Having held this contract for 14 years, we are disappointed not to have been successful in our bid, which we believe was based on commercially realistic terms. Over its tenure, DX set new and higher service standards for this important contract, and we are proud of what has been achieved for HMPO.

"DX's turnaround strategy continues to show encouraging progress, and we are comfortably on track to attain market forecasts for the current financial year. We also believe the Company is well-positioned to achieve market forecasts for profitability in the next financial year, even after the non-renewal of the contract. This reflects the significant progress that has been made with DX's turnaround and the momentum in the business. We remain very focused on capturing the growth opportunities ahead of us, and will continue to invest in the long term growth of the business."

DX says that the financial results for the current financial year ending June 30, 2019 will not be affected with the company’s Board stating that DX remains comfortably on track to deliver market forecasts for this financial year. The Board also believes that the Group remains well-positioned to achieve existing market forecasts for EBITDA of £7.7 million and revenue of £328 million in the next financial year ending June 30, 2020.

This view takes into account what the company says is the improving trend in DX's revenue and earnings, in particular DX Freight's increasing run-rate, the slowing rate of attrition of the annuity revenue at Document Exchange and momentum within DX Express's Courier activities, as well as the actions that the Company will be taking following the non-renewal of the contract.

The Board says it remains encouraged by the continuing progress that is being made with the Company's turnaround and by the pipeline of new business opportunities ahead. The Board expects to publish a trading update in mid-July, when it will provide further details on the progress that has been made during the financial year.