29th Sep 2014 11:31
LONDON (Alliance News) - DX Group PLC said Monday that its maiden full-year results were in line with market expectations after its admission to AIM in February "substantially strengthened" its balance sheet, and that the company continues to make progress, as it declared a final dividend for the year.
The parcels, mail and logistics network operator posted a pretax loss of GBP55.7 million for the year to June 30, compared to a GBP1.9 million loss the year previous while revenue rose 2.1% to GBP312 million from GBP305.7 million.
DX Group said its pretax loss widened on exceptional costs of GBP13.6 million, compared to GBP2.2 million in 2013, and mainly related to impairment charges, and non-recurring costs of GBP49.2 million, which largely related to the pre-admission repayment of a debt instrument.
The company listed on AIM at the end of February. Chief Executive Petar Cvetkovic told Alliance News that the floatation was agreed following strategic discussions about the future of the company with its venture capital partner, "Before then, we hadn't really considered floating the business. While we are still a little way from where we want to be, the IPO gave us access to capital markets and exciting board members."
DX Group has Monday proposed a final dividend of 2 pence per share, as part of its progressive dividend policy, said Chief Financial Officer, Ian Pain. As the company was only listed for four of the 12 months to June 30, this represents a pro forma, post-admission equivalent full-year dividend of 6 pence per share.
For the eight months to June 30 the company traded with a debt structure which has now been replaced. This included high coupon shareholder debt, all of which has now been eliminated. Pretax profit before this shareholder-related interest increased by 31% to GBP21.9 million from GBP16.7 million, said DX Group.
Before exceptional items the company reported a pretax profit of GBP7.1 million for the year, up from a GB300,000 profit the year before.
Earnings before interest, tax, depreciation and amortisation came in at GBP34.4 million, in line with the GBP34.4 million reported last year, and in line with market forecasts. During the year, the company implemented a change in the way that it finances its vehicle fleet at DX Freight - an underpinning delivery business that it acquired in 2012 - and, taking account of this, on a pro forma basis, EBITDA increased by GBP0.8 million after all finance and operating lease costs year-on-year, a rise of 2.4%.
While a significant decision to take, CFO Pain told Alliance News that reorganising the fleet financing was worth taking the hit, "not only did we improve our operating leases, we were also able to upgrade the quality of them."
Operating revenue from ongoing activities rose 4% during the year to GBP304.2 million from GBP292.5 million last year, a performance the firm said is encouraging amid a challenging market background. "We saw encouraging levels of new business wins, helped by our expanded range of services. The full benefits of these new contracts will be felt in the new financial year," said the company.
On a divisional basis Parcels & Freight - DX's biggest revenue source, accounting for 52% of total revenue - saw revenue come in at GBP163.6 million, broadly similar to the GBP162.6 million reported last year. The results reflect strong growth in parcels, especially tracked parcels, said the company, "However, there was an adverse impact to revenue from our decision to withdraw from lower margin freight business and untracked courier services."
More positively, DX Group said it won a "significant number of new contracts" in the second-half of the financial year, the benefits of which will be felt more fully in the new financial year.
The Mail & Packets division, the company's core offering, saw revenue decline by 3% to GBP116.1 million from GBP119.2 million the prior year, as anticipated. "Our core Document Exchange service which principally supports the legal sector but is also used by the financial and healthcare sectors, continues to see sales attrition, reflecting electronic substitution," said DX.
Cvetkovic told Alliance News that the group was satisfied with the division's results and is hopeful for the future as it continued to develop value-add services and innovations. DX is currently working on a spate of developments for the business, including Sunday deliveries, manned and unmanned collection points. The company recently launched a secure email offering, eDX, and a secure paper shredding service exclusively for its Document Exchange Customers.
Revenue from the Logistics arm rose by 35% to GBP32.3 million from GBP23.9 million, with strong growth principally reflecting the growth of DX Group's services with existing customers in the retail sector, said the AIM-listed company.
DX Group said its maiden results were in line with market expectations and that it has made encouraging progress during the reporting year, including implementation of a turnaround plan and new operational initiative, with its admission to AIM "substantially strengthening" its balance sheet. The company adopts a positive outlook, and said that it is now operating from a strengthened platform that will help it pursue its growth strategy.
"Our recapitalisation and admission to AIM in February has marked an important point in DX's development. We are now very well placed financially and operationally to pursue our long term growth strategy, underpinned by a strong balance sheet and good cash flows," said CEO Cvetkovic.
"We have accomplished much in the year. Trading in the new financial year is in line with management expectations and we continue to view prospects for the new financial year positively as we implement our turnaround and efficiency programmes," Cvetkovic added.
Pain told Alliance News that the business is ready for the typically weighted second-half, after ending its financial year on plan, and that current trading is already supporting expectations.
Looking ahead the company is currently working on streamlining and developing its distribution network and aims to create a 'OneDX' culture and service offering, underpinned by enhanced technology and unified systems.
But the biggest challenge the independent mail, courier and logistics operator is facing is controlling top line growth, DX Group's CEO told Alliance News, as the company works to integrate the DX Freight business "from the ground up" ahead of further expansion. "Good progress is being made," he added.
Shares in DX Group were trading 1.12% higher at 112.75 pence per share Monday afternoon.
By Alice Attwood; [email protected]; @AliceAtAlliance
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