Trading and Coronavirus Update

RNS Number : 8043J

DX (Group) PLC

16 April 2020

 

16 April 2020

AIM: DX.

DX (Group) plc

("DX" or "the Group" or "the Company")

A leading provider of delivery solutions,

including parcel freight, secure, courier and logistics services

Trading and Coronavirus Update

DX, the provider of delivery solutions, including parcel freight, secure, courier and logistics services, announces an update on trading and the impact of the coronavirus pandemic on the business.

The Company's priority remains the welfare of employees, customers and the wider communities in which the Group operates. In line with UK Government guidelines, both the Company's divisions, DX Express and DX Freight, are designated as "essential service providers" and have continued to operate during the current 'lockdown' period.  However, delivery procedures have been modified in line with the Public Health England guidelines to ensure social distancing and Government guidance will continue to be monitored.

Trading and Market Guidance

Trading between 3 March 2020, when the interim results were issued, and 21 March 2020, just prior to the Government's 'lockdown' measures to contain the spread of coronavirus, was in line with management's expectations. However, there was a reduction in overall delivery activity in the weeks immediately following the lockdown announcement of around 33% with this reduction varying across the different services. More recently, activity levels have shown improvement, and management has also re-allocated resources, where appropriate, towards the demand for more B2C deliveries and other initiatives.

The Board expects the reduction to significantly impact results for the current financial year ended 27 June 2020. As the duration and extent of the necessary measures to manage the coronavirus crisis are currently unknown, it is difficult to predict the full impact of the coronavirus crisis on the business. The Company will provide further updates on trading when the position becomes clearer.   

Financial Position and Management Actions

The Board believes that the Company has the operational and financial capacity to navigate this challenging period. It has taken mitigating actions to conserve cash, reduce costs, and manage the Group through the crisis as prudently as possible. These measures will result in ongoing cost savings of approximately £21m in Q4 FY20. As operations return to more normal levels, these costs will be re-introduced in a managed, phased process. Approximately £10m of cash payments due to date and to be paid in the balance of Q4 FY20, have been deferred for up to 12 months. Net debt at the end of March was £8.9m, below the normal seasonal peak of £10-12m. It should be noted that this position is before the benefit of a number of large annual Document Exchange renewals due on 1 April.

The Group has a £20 million invoice discount facility available to it. Based on the current cash position, mitigating actions taken, and the forecast cash requirements, which take into account the current reduced level of activity, management believes that the Company has a satisfactory level of headroom through this period of disruption to trading. In addition, DX's funding bank remains supportive.

Swift and decisive actions taken include reducing the amount of temporary labour and spot hire vehicles used across the Group, and furloughing employees from those areas that are experiencing a reduced level of business. Other measures are in place, including utilising government assistance programmes, HMRC initiatives and payment holidays with vehicle providers. The Board has also re-evaluated capital expenditure plans and cut capex spending, proceeding only with a limited number of committed projects. In addition, all Board Directors and members of the senior management team have agreed to a reduction of 20% in salaries and fees with effect from 1 May 2020 until further notice.

Ronald Series, Chairman, commented:

"Our top priority remains the welfare of our staff and customers, and we would like to thank all our staff for their tremendous response during this difficult time.

"While the coronavirus crisis has impacted the business, we believe that the Group has sufficient financial capacity, and the operational expertise and management to weather this disruption and the ongoing uncertainty. We have taken swift and decisive action, and have implemented sensible measures to conserve cash and reduce costs to support the Group's position.

"We remain very well-positioned to continue to support all our customers and to contribute to the important services provided to Her Majesty's Government and to the National Health Service."

Enquiries:

DX (Group) plc		T: 020 3178 6378 (c/o KTZ
Ronald Series, Chairman		Communications)
Lloyd Dunn, Chief Executive Officer
David Mulligan, Chief Financial Officer
finnCap (Nominated Adviser and Joint Broker to DX)		T: 020 7220 0500
Matt Goode/Simon Hicks/Hannah Boros (Corporate Finance)
Andrew Burdis/Camille Gochez (ECM)
Liberum (Joint Broker to DX)		T: 020 3100 2000
Robert Morton/Euan Brown/Laura Hamilton
KTZ Communications		T: 020 3178 6378
Katie Tzouliadis
Dan Mahoney

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

 

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