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By Steve Moore | Friday 14 July 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Having listed at 100p per share in February 2014 and currently suspended at sub 10p amidst reverse takeover discussions for John Menzies' Distribution division, parcels, mail and logistics group DX (DX.) has now announced “an update on trading, reorganisation of the business and board changes”.
This notes expected “adjusted profit before tax (before exceptional items) in line with market forecasts”, though these reflect “an exceptionally challenging year”, and “net debt at the year end is expected to stand at £19.1m” (£18.4 million at the 31st December half-year stage). Additionally, management “now considers that earnings before interest tax, depreciation and amortisation will be broadly flat year-on-year. The company continues to enjoy the support of its bank”.
So “broadly flat” on “an exceptionally challenging year” and reliance on bank support. Hmmm. The announcement continues; “the company has been undertaking a wide-ranging review of its operations in the period and, as part of this review, the company is announcing a reorganisation of the business to create two divisions”.
Er, ok – doesn’t exactly sound radical, though the company argues it “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”. We’ll see. The announcement then though continues that, taking immediate effect, “as part of the reorganisation, Chief Executive Officer, Petar Cvetkovic, and Finance Director, Daljit Basi, will be stepping down”.
The noted changes may be seen as creating opportunity to improve previously calamitous performance, but uncertainty dominates - will the changes facilitate an improved performance and for how long will there be financial support? In better news since I wrote last month, the company has been notified that a preliminary City of London Police investigation following allegations centred on the DX Exchange operations “will not be proceeding to a full investigation”. It though “has reviewed and made changes to internal business processes in this unit, which will be kept under review”.
Overall, I retain my prior caution; still on the bargepole list.
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