DX, the independent parcels, mail and logistics operator, which is planning to merge with the distribution division of fellow UK group, John Menzies, has announced the reorganisation of its business into two new divisions, DX Express and DX Freight as well as changes to the Board with CEO, Petar Cvetkovic and Finance Director, Daljit Basi, relinquishing their posts.
In a statement, DX said the restructuring measures formed part of a previously announced, “wide-ranging review of its operations.”
DX Express will comprise the DX Exchange, DX Secure, the courier operations and mail activities while DX Freight will comprise Logistics, DX 1-Man, and DX 2-Man.
DX Express will be headed by Nick Cullen, DX's existing Chief Operations Officer and DX Freight by Stuart Godman, who is currently Chief Commercial Officer. Both Divisional Managing Directors will report directly to the Board.
“The reorganisation is expected to provide greater flexibility in managing costs and puts the Company in a better position to advance its operational and sales performance and to provide an enhanced service to its customers,” the statement added.
Company restructuring and transformation specialist James Hayward, has been appointed as interim Chief Financial Officer.
"The changes we are making both to the Board of Directors and to the Group's operational structure are aimed at supporting business transformation. In particular, the reorganisation provides greater flexibility in managing costs and puts the Company in a better position to advance its operational and sales performance and to provide an enhanced service to its customers,” explained the Chairman of DX, Bob Holt.
"In a challenging year, we are pleased to have the support of our bank and remain firmly committed to acting in the best interests of all our shareholders."
Gatemore Capital Management, which owns more than 21% of DX Group and was very active in getting the price tag put on the deal with John Menzies reduced significantly, has reportedly welcomed the restructuring measures.
DX's announcement of the organisational and Board changes followed shortly after news that the City of London Police Economic Crime Directorate would not be taking its investigation into one ofthe group's units any further.
In a brief statement issued last month, DX revealed it had been notified by the police body "of an allegation that has been made against the company which has resulted in the commencement of a preliminary investigation centred on the DX Exchange operations.” DX Exchange is a document exchange service for law firms and the public sector.
In a subsequent statement, DX said: “The company co-operated with the City of London Police's preliminary investigation, which centred on the DX Exchange operations, and in addition has reviewed and made changes to internal business processes in this unit, which will be kept under review.”
It has yet to be seen whether these developments at DX will have any repercussions for the proposed deal with John Menzies.
Responding to the announcement that the City of London Police will not be proceeding to a full investigation into a DX unit, John Menzies said:
“The Board of John Menzies continues to believe that the combination of DX and John Menzies’ Distribution division has strong strategic logic for all stakeholders and that the transaction represents an opportunity to deliver significant value. Discussions between John Menzies and DX are ongoing and a further announcement will be made as and when appropriate. There can be no certainty that a transaction will occur.”
As to its reaction to the organisational changes at DX, John Menzies underlined that it “will continue to work with DX to establish the impact, if any, of DX’s announcement on the proposed combination of DX and John Menzies’ Distribution division. John Menzies will make a further announcement as and when appropriate.”
DX's results for the financial year ended 30 June 2017 are expected to show revenues of approximately £292 million and adjusted profit before tax (before exceptional items) in line with market forecasts, the group noted.
Net debt at the year end is expected to stand at £19.1 million.
Taking into account the reorganisational changes, earnings before interest tax, depreciation and amortisation will be broadly flat year-on-year, it added.
