Dx (group) Share Discussion Threads

[speedsgh] 21/9/2016 14:03

Of course there is no evidence. But equally there is no evidence that it is a foregone conclusion that the HMPO contract will be awarded to them again. So the market is bound to build in a discount for such an evntuality to reflect the uncertainty.

What I have been unable to fathom thus far is how material the contract actually is to DX?

[jbat] 21/9/2016 12:57

There's no evidence that DX has or would lose the contract - it's just something that might happen. Good to be wary, but lots of worrying is pointless.

[my retirement fund] 21/9/2016 12:40

Staggered this has not fallen further. Am I correct in thinking the loss of the contract would require further fundraising?

[neilyb675] 21/9/2016 12:38

Added.

Buy into weakness, sell into strength.

[aleman] 21/9/2016 12:08

Zeus forecast flat earnings in 2017 and 2018 for a p/e of 4.5. (Looks like 4.8p and 4.9p earnings implied.)



(And it's quite clear that nobody in the business/investment world knows what an inflexion point is although they actually managed to spell it correctly here!)

[skinny] 21/9/2016 11:25

Numis Hold 21.25 23.00 23.00 Retains

Cantor Fitzgerald Hold 21.25 23.00 23.00 Reiterates

[mrbridgeruk] 21/9/2016 11:23

775k shares just bought!!!

[speedsgh] 21/9/2016 10:02

Do we have any idea how material the HMPO contract is to the company?

We do know that the contract is fulfilled by their DX Secure division.

History of the contract is covered in their 2014 Admission document:
"In 2004, the business grew substantially having become a distributor of passports in the UK. This contract with HM Passport Office has been retained following tenders in 2007 and 2012. The current contract runs to July 2015. The delivery service for sensitive and time critical documentation has also been extended to cover identification and visa documentation for a number of overseas embassies in London."

More recently in the last Annual Report:
"DX Secure was established to deliver bank and credit cards and has a marketleading level of security in the delivery of high value items and important personal documents to residential and business addresses. Security is supported by a rigorous vetting process for employees, suppliers and contractors, and an end-to-end security audit trail for deliveries. Her Majesty’s Passport Office (‘HMPO’) is a major customer as DX Secure has the exclusive contract for the national delivery of all UK passports."
"Mail and packets generated a 3.5% increase in ongoing revenues over the year to £116.4 million from £112.5 million in the prior year. (This result excludes revenues from untracked mail and publication activities which were ceased from 30 June 2014). Revenue from this segment represented 39.1% of DX’s total ongoing revenues. The rise was driven by good growth from both existing and new DX Secure customers, including increased volumes from HMPO. As previously reported, HMPO also extended our current three year contract for a further year to July 2016. The good growth in DX Secure more than offset the ongoing decline in volumes at DX Exchange."

[the patient investor] 21/9/2016 09:07

blue soon?

[jbat] 21/9/2016 08:57

Ok - no dramatic revaluation, but a solid set of results, even if they reiterate existing known problems.

It's still a cracking yield, and I would expect a steady revaluation over the coming weeks - I agree with Aleman that 30p looks more sensible than 20p. We'll also find out in November whether the passport contract is staying, not to mention the Essington hub and how that will finally unfold.

I'm in this for the distance, but very very happy to keep taking 10%pa off DX and watch them heal their wounds.

[this_is_me] 21/9/2016 07:58

That still makes a 14.8% yield on my buying price and a 30% gain if I had sold at yesterday's close. Well worth the risk at these levels.

[aleman] 21/9/2016 07:47

Results about as expected. Cashflows a touch down on my expectations and earnings a touch up on broker forecasts. Next years results should see synergies coming through from the acquisitions and cost savings from investments. This should see hopefully see earnings foecasts a little higher, say 5.2p, and a held dividend - or just maybe - a small increase in the dividend if things go plan. It is conceivable things could turn out a bit better if higher costs from lack of certificated drivers continue to ease and the IKEA contract continues to grow strongly. It is also possible things could be a bit worse if attrition in legal post continues at recent higher rates and the passport contract is lost. I'd suggest the market was too pessimistic and the shares should be more like 30-35p - still a large fall on last year and a p/e of 6-7ish to allow for uncertainties. Problems are still there but they are not as bad as feared. I'd hope to see a gradual rise in shares from here. (These are just my initial thoughts. Please do your own research.)

[tuftymatt] 21/9/2016 07:38

In the short term everything still hinges on the HMPO tender process.

If that stays with DX then all the other efficiencies will really help boost this share price but if it doesn't then.........

[mrbridgeruk] 21/9/2016 07:28

Good news, take away the impairment charge and we are looking at a profitable company with profits of £11.5m on a £40m market cap. With the acquisition of first post and the new hub development I would expect greater efficiencies, this coupled with the growth in the parcel business is good news.

[the patient investor] 21/9/2016 07:27

Nothing we did not know already, the tone of the last paragraphs is reassuring, they are still paying a dividend. Not to mention the very recent substantial institutional investments. I suspect we will se another blue day. And look at the graph!

Any views?

[mister md] 21/9/2016 07:22

Compared with marketcap of only 44m and dividend yield of over 10%...

[skinny] 21/9/2016 07:02

KEY POINTS

Financial

· FY results in line with revised management expectations and reflect the impacts outlined in H1

· Revenue of £287.9m (2015: £297.5m)

· EBITDA of £18.0m (2015: £33.7m)

· Adjusted* profit before tax and exceptional items of £11.5m (2015: £26.7m)

· Exceptional (non-recurring) items of £92.1m - includes goodwill impairment of £88.4m (2015: nil) as announced with the interim results, a non-cash charge which reflected challenging industry conditions and profit decline

· Reported loss before tax of £82.7m (2015: profit of £24.8m)

· Adjusted* EPS of 4.9p (2015: 10.9p) / Reported loss per share of 42.1p (2015: EPS of 9.9p)

· Net debt at 30 June 2016 of £9.8m (2015: £1.8m)

· Proposed final dividend of 1.5p per share (2015: 4.0p), subject to shareholder approval and in line with Board's commitment to full year dividend of 2.5p per share

Operations

· Strong focus on addressing the trading issues of H1 including:
- DX Exchange; H2 renewals in line with management expectations
- Driver resourcing issues; now stabilised but ongoing higher costs reflect continuing shortages of CPC-qualified drivers

· Continued progress with 'OneDX' programme - including network development and IT infrastructure investment

· Ongoing improvements to customer service including launch of 'DX Parcel Exchange' service, a market-leading 'pick up and drop off' solution

· Planning appeal submitted and public consultations commenced in respect of a revised proposal for potential new central hub in the West Midlands

· Post period, further targeted investment in IT and sales

· Outcome of HMPO contract tender expected by the end of November

· Daljit Basi appointed to the Board as Finance Director - see separate announcement

· Integration of Legal Post and First Post resumed after lifting of CMA's Initial Enforcement Order

* Adjusted profit before tax and adjusted EPS exclude amortisation of intangibles and exceptional items






Petar Cvetkovic, Chief Executive Officer, commented:

"It has been a challenging year, with the specific trading pressures we reported in the second quarter of the year having a substantial impact on profitability. Our focus has been on responding to these pressures while also driving forward our 'OneDX' programme and further improvements to our already high levels of customer service.

We continue to take positive steps to address the Group's performance and to support this we are making further targeted investment in IT and sales. While there are still uncertainties ahead as we await the outcome of the HMPO tender process and our planning appeal, we have confidence that our business transformation plans will deliver long term benefits."

[rickyvader] 20/9/2016 19:04

Thanks Aleman . I'm expecting a positive result as good few bits of info coming through in last few weeks

[rickyvader] 20/9/2016 18:29

Have they released the date for the final results yet. Think they mentioned this month at some point ?

[mister md] 20/9/2016 14:01

requires a lot of patience, but we seem to be getting there ...

[the patient investor] 20/9/2016 10:44

700,000 shares just bought at 22p