DX (Group) (LON:DX.) Market Cap £37 million Share Price 18.27p 
About DX (Group)
“DX is an independent logistics and parcel distribution company operating throughout the UK & Ireland, established in 1975. DX offers customer choice to public and private sector organisations, providing proven next day delivery for mail, parcels and 2-Man deliveries to business and residential addresses nationwide. DX routinely handles goods from many retailers, high street retailers, and a wide range of items from many industry sectors. DX is the preferred provider of the UK Government and foreign embassies for identity documents and visas.”
This Week
I took some comfort that the share price seemed stuck in the 18-19p range having fallen from circa 24p at the start of the week. Intense selling pressure struck the share after the new hub planning failure announcement. The price temporarily seems to have stabiised. Support levels at 17p where recent directors’ purchased is essential to hold.
Set Backs Galore!
Let us remind ourselves of the known negatives. The planning permission for the new hub on a 27 acres development near the M6 failed at the planning application stage. The original DX Group management idea had been scrubbed in favour of a lease agreement with a third party developer. The agreement was to be based on a 25-year lease at £2.1m p.a. rent with the first year rent free. Presuming the rent remains constant (which is unlikely) would have involved a minimum future rent roll of £50.4 million to be paid.
DX Group had stated they had hoped to have annualised savings of 4 million from the hub when the hub was completed in a couple of years’ time. This saving is now at risk and hence DX’s long-term profitability. The market, therefore, re- acted with good reason negatively to the planning rejection and knocked the share price by 25% in short order for what might appear at first glance to others and myself only be a temporary delay. There will certainly be the normal planning appeals and changes to original plans to meet the necessary demands of the planning authority. Personally, I would prefer the cancellation of the project altogether to free up management time to take advantage of other opportunities with lower hanging fruit.
The company listed in February 2014 raising £200 million at £1.00 per share. Share price did…
