Freight group DX narrows losses and puts its faith in turnaround plan

It has already received backing for the plan from its biggest shareholder, investment company Gatemore Capital.

Troubled DX Group, which has replaced its management team over the last year, has also reported narrowing half-year losses and a rise in revenue.

Chairman Ron Series said he was confident the company's turnaround would return it to profitable growth. He was hired with new chief executive Lloyd Dunn in October after a tough year for the business.

The company has also hired a new CFO, David Mulligan, who drove the turnaround at model and toy trains group Hornby.

As well as trading woes, 2017 also saw DX lose out on a bid to build a £36m super-hub at Essington in Staffordshire to replace its existing pair of sites in Willenhall, where around 500 people are based. The plans were rejected by councillors after bitter opposition from local campaigners, despite the promise of new jobs. DX has since scrapped plans to close the Willenhall site.

In its six month figures to the end of December, DX Group saw turnover rise nearly £4m to £146.6m a year ago, while half-year pre-tax losses more than halved to £14.1m from £29.3m.

DX Group – which has reorganised into two divisions, DX Freight and DX Express – said it was already seeing benefits from its turnaround plan, which will see the company devolving accountability to its general and regional managers, giving them greater operational responsibilities and authority.

Mr Series said: "Results in the first half reflect another challenging period for DX. However, the new management team, led by Lloyd Dunn, our CEO, has developed turnaround plans to set the business on the road to recovery and long-term profitable growth."

He added: “Trading conditions remain challenging, but we are already seeing encouraging signs that our turnaround plans are gaining traction and expect this to build through the year and into 2019.”

The mail, parcels and courier services company also said it incurred an impairment charge of £5.3m related to its turnaround plan.

The £4m cash raised by the new share placing will support the opening of new depots, enhanced IT systems and the expansion of DX's sales capabilities.

DX's largest shareholder, Gatemore Capital, has backed the moves to raise more capital. Liad Meidar, Gatemore’s managing partner and chief investment officer, said: "We are fully supportive of the turnaround plan and are confident in the management’s ability to deliver long-term growth.

"The business is already heading in the right direction; and we are pleased to see the clean-up of the balance sheet which will pave the way for future profitability. We look forward to working closely with the management team over the course of the three-year plan and beyond.”