This still looks like a massive uphill challenge. In the next 2-3 years assuming Exchange continues to reduce by £1-2m per annum, likely to reduce op profit in this area by the same amount, must be getting close to this bit no longer being viable. At this point likely to be some exit costs, how much ? Bigger concern though would be the cash impact, currently sitting with circa £15m in advanced subscriptions, so a gaping cash hole at this point, not sure how and who will fund this, rights issue ? Or Gatemore farthing diluting PI’s ?
If not successful with passport renewal in April this will create more pressure.
Whilst turnaround shows some signs of improving underlying business it needs to happen a lot faster
They never owned the land at the proposed super hub, they had an option to buy it if planning permission was granted, as per RNS 28th May 2015
If you type in CEO email into google it will take you to website for CEO email, that has email address for guy wakeley, go straight to the top
H-hi, the last thing Menzies want is a distribution company, hence why they want to offload theirs and pay DX a premium for taking it, Gatemore understood this and therefore pushed for more. This is no longer straight forward for Menzies directors though, given issues around DX and the police investigation, if the New DX business failed then Menzies would have the pension regulators all over them, I suspect they will need to give their pension trustees cash rather than shares in DX. Also Stobart Group are an Infrastructure asset owner, they own Southend Airport and Biomass fuel distribution facilities, they only own 49% of the 'Eddie Stobart' business and account for this using the Equity accounting method, therefore there is no revenue included in their accounts just their share of profits from this JV. As for Wincanton they are a pure play B2B Logistics provider, whereas DX are effectively a B2C courier, they are like apples and pears.
Menzies are desperate to offload their distribution business as it is diluting shareholder value, so they have no interest in buying DX, quite the opposite, they obviously can't find a buyer so are backing it into DX. For DX this transaction is about survival and gives an exit route to current CEO and his city link team, with a pay off. Suspect the clue to the deal is in the last DX statement, here they talked about using factoring rather than renewing banking facilities in Sep 17 (guess banks did not want exposure to them). Given Menzies distribution is £1.2bn revenue per annum, this suggests monthly turnover of £100m , this could be factored and cash raised to pay Menzies. Either way nothing to get excited about, this still all feels like a busted flush, it feels like doing a merger between Betamax and blockbusters.
H-hi, the only one being disgusting is you. You have been on here for weeks spouting rubbish. For your information this site was, is and always will be green belt, that is why it has been rejected twice. The site has a derelict appearance purely because it has been made to look this way, this was green fields 10 years ago. For the avoidance of doubt the unemployment rate in our small village is less than 0.5%, we have a handful of people receiving benefits and earnings on average are about 50% more than what dx pay and that is not for working nights. No loss to the people of Essington.
I think the issue is that it is a green belt site without planning consents. I don't think DX own the site they have an option to purchase it if planning is granted
Takeover may be a challenge, annual report, note 29 shows £53m of future operating lease commitments, not sure someone will want to take those on and any exit liabilities of any unwanted parts of the business.
Surprised by the level of optimism on here. This company has no real liquid assets to dispose of quickly, they say trade debtors are best in class so no way to generate cash here. Debt expected at £20m at June, total banking facilities are just short of £30m as per note 22 in Annual report AND THESE MATURE IN 2017. The future of DX and its long term survival does not rest in the hands of the company or its board of directors, the future will be determined by the credit committee of HSBC and if they are willing to renew facilities.
I can only see negatives in DX. Key issue is what is the fixed cost base of DX Exchange ? Is it £40m or £50m, we do not know. What we do know from results presentation is revenue is £60m. Therefore, if the cost base is for example £40m then we know profit would unwind by a further £20m as volume declines and it also tells us that the rest of the business is losing money! If the cost base is say £55m it tells us profit will only decline by £5m but on current rate of decline this will hit break even in the next financial year ? One would imagine it is then closed down, when this happens 2 things happen, they will have an immediate unwind of cash £22m in deferred income and they will have to deal with the cost and cash impact, this cash unwind would take them way past their current banking facilities. So they will need to raise finance, will banks give them money ? Seems unlikely as they may have been the ones who got cold feet with funding the new hub, so they pulled this. Perversely the exchange business may already be in the red but the cash downside of exiting is too great for them to deal with now. Even if they retain HMPO contract the terms may be far less favourable than previously with more competition around and Royal Mail in much better shape, interestingly the current Director General of HMPO who took up his post in April 15 had spent all his working life at Royal Mail. Moving on to corporate governance, DX have stated for a while they are seeking to recruit another Non Exec director, but still nobody in post ? The current chairman has a number of other non exec roles and recently became the Executive (not non exec) chairman of Lakehouse on an incredibly lucrative package to turn this business around, it may leave one to question where his focus is likely to be at present especially as he only attended 75% of board meetings last year. It is probably possible to ask him as the latest RNS announcement contains his mobile phone number. Moving on to the second non exec, at Target Express he was the boss of the current CEO and may lead one to question his independence ? Moving on to the management team. The outgoing CFO purchased 1.5m shares in March and then stands down in May ? Obviously not his choice so what happened here ? The new CFO announced at the end of September was in employment in this business in May but was not appointed then, a cynic may suggest they went to the market for a new CFO but like the non exec role had no takers ? Also in May the company secretary departed the company and then in September the HR Director left also. if you go to companies house website you will see in September there were a raft of new statutory directors added to DX Network Services Ltd the primary trading entity of this group. If you then look at their biographies on the DX website nearly all of the DX operations team are ex City Link ?
Just looked at balance sheet at HY (Dec 15) Non current Assets £132m (of which £110m are intangibles) No cash, net debt was £12m Negative current assets of £18m ((ie Current Assets less Current liabilites) after stripping cash and debt out of these figures) Not great really
The application should never have been made. The site is a 44 acre Green Belt site, the vast majority of which had never been previously developed. As someone who was involved locally with opposing this site there was what you may describe as arrogance on the part of DX and their advisers. There are plenty of other sites within a 10 mile radius that are more suitable, but unsure that DX have the covenant strength to support a 25 year lease on what would be a more expensive developed site.
Hi P3T3R Amazed what some people write on here, i think some were expecting piles of cash (which of course they don't have). If share price holds at this level until June with a market capitalisation of £40m they may struggle to justify reduced goodwill of £100m, so may go through this again in 6 months time. Lots of conspiracy theories on why share price is low, it might just be a dud that could go pop anytime now. Bankers didn't fancy backing management team with cash for proposed new hub, if it ever gets built. Good luck to you all, but would not be putting my hard earned money here
Sorry ian150159, I meant the response that suggested dx had a pile of cash to give away.
Apologies iana150159, no offence my question was aimed at the original post.
Sorry, was this meant to be a serious comment