DX..L Regulatory News (DX.)

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The information contained in this announcement is inside information for the purposes of article 7 of Regulation 596/2014.

31 March 2017

Potential combination of DX and John Menzies' Distribution division

The boards of DX (Group) plc ("DX") and John Menzies plc ("John Menzies") today announce that they are in discussions regarding the potential combination of DX and John Menzies' Distribution division ("Menzies Distribution") (the "Transaction" and together the "Enlarged Group").

The boards of DX and John Menzies believe that the combination has strong strategic logic for all stakeholders and represents an opportunity to deliver significant value to both companies' shareholders. The boards of DX and John Menzies believe that the combination would benefit the customers of DX and Menzies Distribution through the creation of a logistics and parcel carrier of enhanced scale and capability operating through a 24 hour UK wide logistics network. Based on a preliminary joint assessment, the boards of DX and John Menzies estimate that the combination would generate cost synergies in the range of £8 million to £12 million per annum.

It is currently envisaged that the Transaction would be effected by DX acquiring Menzies Distribution for consideration, on a cash and debt free basis, comprising £60 million in cash and the issue of new DX ordinary shares (the "New DX Shares") representing 80% of DX's issued share capital as enlarged by the Transaction. The cash consideration will be satisfied by new borrowings by the Enlarged Group.

As part of the Transaction, it is proposed that approximately 17% of John Menzies' defined benefit pension scheme would transfer to the Enlarged Group. John Menzies' pension scheme would receive New DX Shares amounting to up to 5% of DX's issued share capital as enlarged by the Transaction as part of the transfer arrangements agreed with the John Menzies pension trustees.

It is intended that the balance of the New DX Shares would be issued by DX to John Menzies' shareholders pro rata to their holdings of shares in John Menzies at the relevant date. On this basis, current DX shareholders would own, in aggregate, 20% of DX's issued share capital, John Menzies shareholders would own, in aggregate, at least 75% of DX's issued share capital and up to 5% of DX's issued share capital would be owned directly by John Menzies' pension scheme.

The boards of DX and John Menzies believe the proposed Transaction structure enables both DX and John Menzies shareholders to share in the significant value created by the combination of DX and Menzies Distribution, whilst increasing significantly the liquidity of DX's ordinary shares and enabling the divestment of Menzies Distribution into a separately quoted company in line with John Menzies' strategy.

On completion of the Transaction, it is intended that the composition of the board of the Enlarged Group would comprise a new chairman and new independent non-executive directors. Greg Michael and Paul McCourt, currently Managing Director and Finance Director, respectively, of Menzies Distribution, would become Group Chief Executive Officer and Chief Financial Officer of DX. Daljit Basi, currently Finance Director of DX, will become an Executive Director.

The Boards of DX and John Menzies currently anticipate the Transaction will be completed during the summer of 2017. Discussions are ongoing and there can be no certainty that a transaction will occur.

Zeus Capital is acting as financial adviser to DX and Rothschild is acting as financial adviser to John Menzies.

Greg Michael (Managing Director of Menzies Distribution) was appointed Managing Director of Menzies Distribution on 1 January 2017. He has previously held senior positions in DHL and Deutsche Post and has a successful track record in managing and driving companies' growth performance within the logistics sector.

Paul McCourt (Finance Director of Menzies Distribution) joined Menzies Distribution in 2014 from Ingenico Northern Europe and Iberia where he was Finance and Operations Director. Before that Paul spent 10 years with PricewaterhouseCoopers as a senior manager followed by 3 years at Grant Thornton as a Director.

If the Transaction proceeds, it will constitute a reverse takeover by DX in accordance with Rule 14 of the AIM Rules for Companies. Accordingly, ordinary shares in DX are expected to be suspended from trading on AIM as of 7.30am today, pending either publication of an admission document containing detailed information on the proposed transaction in accordance with AIM Rule 14 or the termination of discussions regarding the proposed transaction.

A further announcement will be made when appropriate.

Contacts:

Important notice

N M Rothschild & Sons Limited ("Rothschild"), which is authorised and regulated by the Financial Conduct Authority ("FCA") in the United Kingdom, is acting as sponsor and financial adviser to John Menzies in connection with the Transaction referred to in this announcement. Rothschild is acting exclusively for John Menzies and no one else in connection with the Transaction and save for any responsibilities and liabilities, if any, which may be imposed on Rothschild, in its capacity as sponsor by the Financial Services and Markets Act 2000, as amended, Rothschild will not be responsible to anyone other than John Menzies for providing the protections afforded to clients of Rothschild or for providing advice in relation to the Transaction or the contents of this announcement or any transaction, arrangement or matter referred to herein.

Zeus Capital Limited ("Zeus Capital"), which is authorised and regulated in the United Kingdom by the FCA is acting as nominated adviser and financial adviser to DX in connection with the Transaction referred to in this announcement. Zeus is acting exclusively for DX and no one else in connection with the Transaction and will not be responsible to anyone other than DX for providing the protections afforded to clients of Zeus Capital or for providing advice in relation to the Transaction or the contents of this announcement or any transaction, arrangement or matter referred to herein.

Numis Securities Limited ("Numis") is authorised and regulated by the FCA in the United Kingdom, is acting solely for John Menzies and nobody else in relation to the Transaction and will not be responsible to anyone other than John Menzies for providing the protections afforded to its clients nor for providing advice in relation to the Transaction or any other matter referred to in this.

This announcement has been issued by and is the responsibility of John Menzies.

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities pursuant to this announcement or otherwise. The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

This announcement does not constitute an offer of securities for sale in the United States or an offer to acquire or exchange securities in the United States. No offer to acquire securities or to exchange securities for other securities has been made, or will be made, and no offer of securities has been made, or will be made, directly or indirectly, in or into, or by use of the mails, any means or instrumentality of interstate or foreign commerce or any facilities of a national securities exchange of, the United States of America or any other country in which such offer may not be made other than (i) in accordance with the requirements under the US Securities Exchange Act of 1934, as amended, a registration statement under the US Securities Act of 1933, as amended, or the securities laws of such other country, as the case may be, or (ii) pursuant to an available exemption therefrom. This announcement has been prepared for the purposes of complying with the applicable law and regulation of the United Kingdom (including the Listing Rules and the Disclosure and Transparency Rules) and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom.

CAUTIONARY NOTE REGARDING FORWARD LOOKING INFORMATION

This announcement may include statements that are, or may be deemed to be, "forward looking statements". These forward looking statements may be identified by the use of forward looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward looking statements include all matters that are not historical facts and involve predictions. Forward looking statements may and often do differ materially from actual results. Any forward looking statements reflect John Menzies' and DX's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to John Menzies' or DX's results of operations, financial position, liquidity, prospects, growth or strategies and the industry in which John Menzies and DX operate. Forward looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance. Save as required by law or regulation, John Menzies and DX disclaim any obligation or undertaking to release publicly any updates or revisions to any forward looking statements in this announcement that may occur due to any change in its expectations or to reflect events or circumstances after the date of this announcement. Nothing in this announcement is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings per John Menzies share for the current or future financial years, or those of the enlarged DX, will necessarily match or exceed the historical published earnings per share. Certain figures contained in this announcement have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this announcement may not conform exactly with the total figure given.

Neither the content of John Menzies' nor DX's website, nor any website accessible by hyperlinks on John Menzies' or DX's website is incorporated in, or forms part of, this announcement.