DX Group’s chairman Ron Series is to retire and will be replaced, with immediate effect, by Mark Hammond, following calls for his resignation by a major shareholder, the group announced today (15 November).
The news comes on the same day Series announced that DX had delivered “excellent annual results” with revenue and pre-tax profits reaching a seven-year high.
Gatemore Capital Management began its campaign to remove Series in September, accusing him of bungling the handling of a corporate governance inquiry which resulted in the resignation of the company’s auditors, DX’s shares being suspended on AIM, a 12-month delay on publication of DX’s accounts and related expenses of £1.3m.
The investigation centred around allegations that “certain employees” of a group subsidiary had sought to obtain confidential information from another company and accusations of management mishandling of the situation.
Gatemore, which is a 20% shareholder in DX Group, welcomed Hammond’s appointment, saying he was “best placed to lead the DX Board into a new chapter”.
Gatemore pointed to Hammond’s 25-year track record in senior management, including a period as chairman of Tuffnells Parcels Express, where he had overseen “a period of substantial profit and cash generation at Tuffnells, culminating in the sale of the business and significant value creation for all shareholders”.
The investment company said it now expects Hammond “to lead a strategic review to explore all options available to maximise shareholder value in light of DX’s continued operational and financial outperformance”.
Jon Kempster, DX Group senior independent director said: “Ron has been a key member of the Board over the last five years and contributed to the Group’s successful recovery since 2017, helping to set the turnaround strategy and path to profitable growth. He retires with the Board’s grateful thanks and very best wishes.
"This is an important step as we progress plans for the group's future growth and development to the benefit of all shareholders."
News of Series' retirement and Hammond’s appointment comes on the same day DX Group posted its financial results for the year to 31 July 2022.
Group revenue rose 12% to £428.2m (2021: £382.1m) whilst adjusted pre-tax profit leapt to £20.2m (2021: £12m).
Of its two divisions, DX Freight put in the strongest performance, delivering a 15% rise in revenue for DX Freight, up from £223m in 2021 to £256.9m.
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Operating profit rose by 36% to £31.1m in the same period, up from £22.9m in 2021, whilst operating margins jumped by 12.1% (2021: 10.3%), aided by a “significant number of new customer wins and supported customer retention levels”.
During the year, DX Freight also opened four new depots at Dewsbury, Bodmin, Coventry and Cannock, with another two depots expanded at Maidstone and Swanley.
DX Express also performed well with revenue up 8% to £171.3m (2021: £159.1m), operating profit rising to 17% to £14.5m (2021: £12.4m) and operating margin increasing to 8.4% (2021: 7.8%), aided by growth in parcels volume which the group said outweighed the decline in its document exchange business.
The group said that separating DX’s document exchange delivery network from its parcels network had boosted service levels and increased capacity in the parcels operation, whilst the launch of its document exchange portal was “well received” by clients.
DX Express also opened four new depots in the year, at Grimsby, Luton, Verwood and Dartford, whilst the Edinburgh depot moved to larger premises.
Going forward, DX Group, predicted Q1 2023 trading to be “in line with management expectations” and its three-year £20-25m investment programme, now in its second year, on track to help to drive revenue and margin expansion.
Commenting on the results, Ron Series, DX’s outgoing executive chairman, said: "These are excellent results in a year of challenges for the group. Both revenue and adjusted pre-tax profit reached seven-year highs.
“The significant progress the group has made reflects a well-executed growth strategy, underpinned by the major investment we have made in the business over recent years.
"The group has a very strong balance sheet, with net cash of £27 million. We believe that DX remains very well-positioned to achieve its growth objectives in the current financial year and beyond despite the economic uncertainties."
Gatemore also welcomed the results. In a statement it said: “DX has delivered material revenue and double-digit profit growth across both its freight and express divisions, culminating in adjusted profit before tax growth at the group level of 68%.
“We believe DX’s strong differentiation across both its divisions leaves the company well placed to continue to increase market share, fund organic growth and strategic investments, and provide attractive returns to shareholders.”