Member Info for Frogjumper

DX's depot footprint is hardly comprehensive in comparison to what? Their website says they have 83 depots, which seems a lot to me. The map on the website shows a particularly high concentration of express depots north of London. I'd suggest they should be closing depots rather than opening them on a nett basis.

I wouldn't attach much importance to new depot openings. It's what transport companies do all the time when their leases expire or their needs change. It's BAU stuff.

The separation of the freight and express operations has probably put them back in the position before the Nightfreight acquisition and ready for a demerger.

I think it's very convenient that the freight and express businesses have been separated. There is much more visibility of the positive effect that LD has had on the freight business as the numbers are not being diluted by sluggish performance in express. It wouldn't surprise me if the end game didn't involve freight and express being floated, sold or subject to MBO as separate entities with LD maintaining control of freight.

I meant "Document Exchange" not "Document Express" in the previous post.

ATPM: I don't think "Express" predominantly means Document Express nowadays. I suspect that Document Express revenues have been declining and covid won't have helped them. As I observed in an earlier post, DX has long been a parcels carrier, it's just that its network and operational protocols have given it certain niche attributes such as high security and town centre presence for deliveries. However, the security aspect has probably been diluted by other operators copying DX's protocols and by the loss of secure volume. The loss of the passport delivery contract has perhaps had an undervalued effect on the operating ethos.

ATPM: I don't really know where this talk about expanding into express comes from. DX provided express type services for many years before they expanded into freight and I suspect that what they're actually doing is trying to do is put this express business on a firm footing rather than see it decline. But this has been a theme at DX for many years.

Ports: But their Express strategy isn't based on standard parcels. Their preliminary results presentation for FY21 says their strategy is "centred on security and tracked items". These are not standard parcels. You can't blame them for selling you a standard parcels service if that's what you asked for and they have one in their portfolio but that doesn't mean that such a service is central to their strategy.

Ports: You're probably not seeing the whole picture. Sure, DX might provide some fairly vanilla express services (unsuccessfully) but historically their strong points have been deliveries to high streets (opticians, travel agents etc) and deliveries of items requiring additional security protocols (bank cards, high value items, ID documents etc). I believe they're also involved in the transport of biological samples. If they're trying to expand outside these niches they're on a hiding to nothing because, as you say, they'll never beat the majors on price or service.

Ports: what DX is doing in both Express and Freight is niche. They have less than 2% market share in the parcels/express market and they wouldn't even have this if they weren't offering a service that is different from that provided by other operators. For many years this difference was extremely high levels of security. The document exchange (within Express) is a niche mail business. The Freight business is largely niche IDW stuff. Personally I don't think their level of investment in anything is substantial.

Ports: Some people think that it's never made sense for DX to go solo, starting back in the time when Hays floated it off. I'm sure that lots of potential merger candidates have cast an eye over the business but none have found the prospect tempting. LD has certainly led a turnaround in DX's freight business (formerly Nightfreight) and perhaps this creates an opportunity for a merger with someone who wants to expand into this niche. I'm sure the management would leap at a merger if offered more than they think they can make through an MBO.

As to your comments about being able to compete with the big players: I don't think DX wants to; it's always been a niche operator and has had periods of great success being so.

Yet more excellent analysis from ATPM. It wouldn't surprise me at all if LD and crew thought they could make themselves more money through an MBO than other ownership models. Neither would it surprise me that there are other investors who could be persuaded to provide financing. There are always people looking to put their money somewhere. Although, as I suggested early, perhaps the war has put a dampener on things.

I wonder if an MBO is being delayed because of the effects of the war in Ukraine? It might be the case that DX management had settled on a price before the war and attempted to negotiate it downwards subsequently but are meeting resistance from the IIs.

I suspect ATPM's analysis is right on the money.

"As I've explained in previous posts, as regards disclosure, it makes no difference whether they are listed or unlisted." I guess this might be true but the disclosure could well be less damaging in an unlisted business when the shares are owned by a smaller circle of investors, a large proportion being directors and employees..

I fear that all of the options being considered result in a substantial loss in value of the business and that even the IIs, who almost certainly have a better view of the situation than we do, can only see losses on their investments.

The DX board is stuck between a rock and a hard place.

"The two NED's were in post thought the period all this was going on( 20/21) so effectively they are marking their own homework."

Isn't it more likely that the NEDs submitted their homework to the BOD for marking but the other directors didn't like it and wouldn't apply the NEDs' recommendations? If the NEDs felt strongly about the matter they would probably resign, wouldn't they?

"No, NEDs are *legally obliged* to provide *independent* oversight of the management."

This only applies to the same extent as for any director. The Companies Act does not distinguish between executive and non-executive directors and all directors have a duty to exercise independent judgement.

Everton avoided the drop so perhaps DX can too!