Interim Results
27/02/2023 07:00
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RNS Number : 0496R DX (Group) PLC 27 February 2023
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
Interim Results for the 26 weeks ended 31 December 2022
Dividends resumed as Group continues to build revenue, profit and net cash
DX remains well-positioned for future growth
H1 ended H1 ended 1 Jan 2022 Change FY ended
31 Dec 2 Jul
2022 2022
Revenue £231.3m £202.0m +15% £428.2m
EBITDA £25.5m £19.4m +31% £50.3m
Adjusted profit from operating activities(1) £11.6m £7.1m +63% £24.9m
Adjusted profit before tax(1) £9.2m £4.7m +96% £20.2m
Adjusted profit per share(1) 1.3p 0.8p +63% 2.9p
Dividend declared per share 0.5p - +0.5p Nil
Cash and cash equivalents £36.4m £14.5m +151% £27.0m
Cash flow from operating activities £27.7m £10.7m +159% £36.5m
Statutory measures
Reported profit from operating activities £11.5m £5.7m +102% £22.1m
Reported profit before tax £9.1m £3.3m +176% £17.4m
Reported profit per share - basic 1.3p 0.5p +160% 2.4p
(1)The Group uses alternative performance measures ("APMs") to
measure performance. See notes 2 and 11 to the financial information for
details of APMs used, including reconciliations of these APMs to IFRS reported
measures.
( )
Financial Key Points
· Revenue up 15% to £231.3m; higher contributions from both divisions,
driven by new business wins, price increases and strong customer service
levels
· Adjusted profit from operating activities(1) up 63% to £11.6m (H1 2022:
£7.1m)
· Operating margin increased to 5.0% (H1 2022: 3.6%); target remains 7.5%
- 10.0%
· Strong operating cash flow, driven by improved profitability and
reduction in working capital
· Cash of £36.4m at 31 December 2022 (H1 2022: £14.5m) reflects strong
operating cash flows and is stated after increased capital expenditure
· Capital expenditure of £4.6m (H1 2022: £3.2m) on new depots,
parcel-handling equipment, new electric vehicles and IT, as three-year
£20-£25m investment programme continues
Capital Allocation
· Dividend payments resume with interim dividend of 0.5p per ordinary
share declared today, in line with the Capital Allocation Policy published in
September 2022
· £2.7m expended on the cash settlement of share options, thereby
reducing the number of ordinary shares that would otherwise have been issued
Operational Key Points
· DX Freight division:
- Revenue up 15% to £137.1m (H1 2022: £119.1m)
- Profit from operating activities up 56% to £16.2m (H1 2022:
£10.4m)
- Operating margin improved to 11.8% (H1 2022: 8.7%)
- 1-Man revenue up by 19% to £106.4 million, driven by improved
business mix, price increases and high levels of customer service
- Logistics/2-Man revenue up by 4% to £30.7m, helped by new
contract commencements
- Two new depots opened, at Paisley and West Bromwich, and Plymouth
depot expanded
· DX Express division:
- Revenue up 14% to £94.2m (H1 2022: £82.9m)
- Profit from operating activities up 31% to £8.0m (H1 2022:
£6.1m)
- Operating margin improved to 8.5% (H1 2022: 7.4%)
- Parcels revenue up by 20% to £76.7m
- Document Exchange and Mail revenue decreased as expected by 8% to
£17.5m
- Two new depots opened at Basildon and Plymouth
Outlook
· On 31 January 2023 Paul Ibbetson, Managing Director of DX Freight, was
appointed as the Group's Chief Executive Officer. Accordingly, Mark Hammond
relinquished his executive role to become Non-executive Chairman
· The Board remains confident that the Group is well-positioned to meet
its targets for the financial year despite the economic headwinds
Paul Ibbetson, Chief Executive Officer of DX (Group) plc, commented:
"The Group performed strongly, with both divisions contributing higher revenue
and expanded margins. Trading was helped by the easing of customer supply
chain and labour market pressures.
"We are also pleased to return to the dividend list after six years. It
reflects the success of our turnaround and growth plans, which commenced in
2018, as well as our confidence in the Group's future prospects.
"We are now in the second year of our £20-£25 million capital investment
plan, which supports our growth ambitions and will help to drive further
operational improvements and margin gains. Trading to date in the second half,
traditionally our stronger period, is in line with expectations, and we
believe that despite economic headwinds, the Group is well-placed to meet its
targets for the financial year."
Notes
The Group accounts for its operations on a '4-5-4 weekly' basis, which
reflects its cost base and operations. The current financial year, which ends
on 1 July 2023, comprises 52 weeks of trading. The period to 31 December 2022
is from 3 July 2022 to 31 December 2022 (26 weeks), and the comparative period
was from 4 July 2021 to 1 January 2022 (26 weeks). The year ended 2 July 2022
comprised 52 weeks. Future financial years will comprise 52 weeks or
occasionally 53 weeks in order to keep the year-end date as close as possible
to 30 June.
Enquiries:
DX (Group) plc T: 020 3178 6378 (c/o KTZ
www.dxdelivery.com Communications)
Paul Ibbetson, Chief Executive Officer
David Mulligan, Chief Financial Officer
finnCap (Nominated Adviser and Joint Broker to DX) T: 020 7220 0500
Matt Goode/Simon Hicks (Corporate Finance)
Andrew Burdis/Charlotte Sutcliffe (Corporate Broking)
Liberum (Joint Broker to DX) T: 020 3100 2000
Nick How/William Hall
KTZ Communications T: 020 3178 6378
Katie Tzouliadis/Robert Morton/ Dan Mahoney
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the company's obligations under Article 17 of
MAR.
INTERIM STATEMENT
INTRODUCTION
Trading
Trading over the first half of the financial year ending 1 July 2023 was
strong. Revenue increased by 15% to £231.3 million (H1 2022: £202.0 million)
and adjusted profit before tax rose by 96% to £9.2 million (H1 2022: £4.7
million).
These results reflect further excellent progress at DX Freight and an improved
performance from DX Express, driven by increased volumes. Both divisions
increased profitability, expanded operating margins, and secured healthy
levels of net new business. We also managed cost pressures effectively. In
addition, the strong first half performance was helped by an easing of the
supply chain issues and labour market pressures experienced in the same period
in the previous financial year.
We are now in the second year of our major three-year capital expenditure
programme, which is expected to total £20-£25 million once completed. We
invested £4.6 million of capital expenditure during the period (H1 2021:
£3.2 million), funding four new depot openings, improvements to existing
sites, additional parcel-handling equipment, and IT advancements. We also made
good progress with the rollout of new electric vehicles across the fleet at
both DX Freight and DX Express. A similar level of investment is expected in
the second half, which will help to support growth and continued margin
expansion.
The Board remains focused on driving growth in revenue, profitability and cash
generation. This will be delivered by maintaining our emphasis on high
customer service levels and our commercially disciplined approach to securing
new business, and by implementing further operational improvements.
We are also very pleased to announce today an interim dividend of 0.5p per
ordinary share. The reintroduction of the dividend marks a significant
milestone in the transformation of the Group since 2018 when the business
turnaround plan was started. It also reflects the Board's confidence in the
ongoing growth prospects for DX.
Corporate Governance Inquiry and restoration of listing
On 20 September 2022, we reported the findings of a corporate governance
inquiry and investigation, centred on an allegation of bribery. We also
detailed the key measures we had taken or proposed to take in order to
strengthen the Group's corporate governance and individual conduct. These
measures are now substantially complete. On the same date, we published the
Company's delayed 2021 Annual Report & Accounts, with the 2022 Annual
Report published soon after in November 2022. The Company's ordinary shares
were readmitted to trading on AIM on 19 October 2022 following their
suspension on 4 January 2022.
On 10 February 2023, the Group received a legal claim from Tuffnells Parcels
Express, in relation to confidential competitor information being obtained by
DX in the past. Matters referred to in the claim are related to the
investigation and corporate governance inquiry and its findings. As stated in
our announcement of 13 February 2023, the Group intends to defend its position
robustly and will respond to the claim in due course. With matters now subject
to legal proceedings, the Company will not be providing further comment until
the appropriate time.
FINANCIAL RESULTS
Total revenue for the 26 weeks to 31 December 2022 increased by 15% to £231.3
million (H1 2022: £202.0 million) and Group profitability markedly improved,
with adjusted profit from operating activities rising by 63% to £11.6 million
(H1 2022: £7.1 million) and adjusted profit before tax increasing by 96% to
£9.2 million (H1 2022: £4.7 million).
Adjusted earnings per share was 63% higher year-on-year at 1.3p (H1 2022:
0.8p). The adjusted operating margin rose year-on-year to 5.0% compared with
3.6% for the first half of the previous financial year. We continue to target
a Group operating margin of 7.5% - 10.0%, with the second half of our
financial year traditionally providing a stronger operating margin than the
first half.
These very encouraging results demonstrate the benefit of operational leverage
across the Group, with improved business mix in DX Freight's 1-Man operation
and growing Parcels activity in DX Express driving profitability and higher
operating margins. The Group's overall performance was also underpinned by our
high levels of customer service, which remained strong throughout the period.
In line with capital expenditure plans, we invested £4.6 million (H1 2022:
£3.2 million) in the period. This follows the £6.2 million invested over
the previous financial year. As previously mentioned, we are now in the second
year of a three-year capital expenditure programme, which is expected to total
in the region of £20-£25 million.
BALANCE SHEET
The Group has maintained a healthy balance sheet and continues to generate
positive cash flows. This puts it in a strong position to continue to grow
revenues, expand the depot network and capacity and enhance market share,
despite the current economic uncertainties.
Net cash on 31 December 2022 was 151% higher year-on-year at £36.4 million
(H1 2022: £14.5 million). This substantial improvement was driven by
increased net cash generated from operating activities in the period of £27.7
million (H1 2022: £10.7 million, which included a £5.1m repayment of
deferred VAT), which reflected both the increased profitability of the Group
and a £5.3 million reduction in working capital. Cash flow funded capital
expenditure, lease repayments and the cash settlement of share options, which
was undertaken in order to reduce the number of ordinary shares that otherwise
would have been issued ("Net Settlement").
Net assets at 31 December 2022 increased by 39% to £60.8m (1 January 2022:
£43.6m).
DX FREIGHT
Revenue generated by the DX Freight division rose by 15% to £137.1 million
(H1 2022: £119.1 million). Growth was principally driven by 1-Man, which
increased revenue by 19% to £106.4 million, helped by an improved business
mix, price increases and high levels of customer service. Revenue at
Logistics/2-Man grew by 4% to £30.7 million (H1 2022: £29.4 million).
Profit from operating activities rose by 56% to £16.2 million (H1 2022:
£10.4 million), and the division's operating margin increased to 11.8% from
8.7% in the comparative period in the prior year.
The division's performance benefitted from the changes made in the previous
financial year to address market-wide disruption to the supply of drivers and
warehouse labour, and customers' supply chain issues.
We continued to expand the delivery network, opening two new depots in
September 2022, at Paisley in Scotland and at West Bromwich in the West
Midlands. In December 2022, we expanded capacity at our existing depot in
Plymouth by moving DX Express's activities to new premises. Enlarging the
delivery network not only increases capacity, but also improves operational
efficiency through reduced stem mileage. Customer service also benefits
through greater proximity to customers.
In October 2022, we announced the launch of a three-year project to establish
a fleet of electric vehicles for use in our partnership with IKEA. The
initial fleet will comprise over 60 vehicles.
The strategy for DX Freight remains unchanged, which is to continue to expand
its market share in irregular dimension and weight items ("IDW"), a growth
segment of the parcel market, securing new business on profitable commercial
terms. We will continue to grow Logistics/2-Man services by broadening its
customer base, and have committed additional sales and operational resources
to support this objective.
DX EXPRESS
Revenue at DX Express increased by 14% to £94.2 million (H1 2022: £82.9
million). This result reflected the expansion of the Parcels service, which
increased revenue by 20% to £76.7 million (H1 2022: £63.9 million) from
healthy levels of new business. Parcels' growth more than offset expected
revenue erosion at Document Exchange and Mail, which decreased by 8% to £17.5
million (H1 2022: £19.0 million). Profit from operating activities increased
by 31% to £8.0 million (H1 2022: £6.1 million), and operating margin rose to
8.5% (H1 2022: 7.4%), benefiting from operational leverage.
We continue to expand DX Express' network and opened two new depots, at
Basildon in Essex in November 2022 and at Plymouth in Devon in December 2022.
As with DX Freight, this will help to drive improvements in delivery
productivity and operational efficiency and, by being closer to customers, the
division is also able to provide an enhanced level of service.
Document Exchange and Mail remains a very important service for the delivery
of documents in the legal sector, with our pre-9.00 a.m. dedicated delivery
service being a valued component of the service. The launch of the Digital
Document Exchange in the previous financial year has broadened our offering
and provides members with easy access to our wider delivery services.
We continue to invest in the IT platform for DX Express and around 25% of the
division's activity is now managed on the new tracking application. This has
enhanced the consumer experience and provides improved management data to
support timely decision-making. We expect the full transition of the
division's Parcels activity onto the new application to be completed over the
remainder of this calendar year.
The opportunity for DX Express remains significant in a very large market for
small parcels. Our strategy is to continue to diversify the division's
revenue, building on its historic strength in documents and small packets by
expanding the Parcels activity. These results demonstrate that, as DX Express
grows, efficiencies from operational leverage will lead to margin expansion.
We expect to grow Parcels' market share from its current relatively low base
by continuing to provide reliable and secure, next-day deliveries, backed by
high levels of local customer service. We remain focused on taking advantage
of this significant market opportunity.
CENTRAL SERVICES
Central overheads for the period (including the share-based payments charge)
increased to £12.7 million (H1 2022: £10.8 million, including £0.8 million
of exceptional items). This included the one-off recognition of £1.5 million
of payroll-related costs arising from Board Director departures, in particular
Employer's National Insurance calculated on the potential gain on the exercise
of share options under the Performance Share Plan, which otherwise would have
been accounted for in future periods related to the Directors' service.
We expended an additional £0.9 million on IT-related costs in the period to
support the development of new IT platforms and address legacy systems. Legal
costs are also up slightly year-on-year driven by the timing of property
transactions.
CAPITAL ALLOCATION
The Group previously announced details of its capital allocation policy, which
has the following priorities:
· Investment for organic growth: the Board intends to continue its focus
on driving organic growth across the business, and will continue to invest in
new depots, operational equipment and IT systems to support the growth of the
existing depot network in line with previously announced plans. Current
requirements are forecast at £8-10 million per annum;
· Regular returns to shareholders: following reinstatement the Board
intends to maintain a progressive dividend policy that will take into account
growth in earnings and cash generation. It will seek to maintain dividend
cover of between two- and three-times adjusted earnings per share through the
economic cycle and to ensure that dividend payments are funded by operating
free cash flow. (Adjusted earnings per share comprise earnings adjusted for
amortisation of any acquired intangibles, exceptional items and share-based
payment charges, including related tax where applicable). Further details on
dividends for the financial year are set out below;
· Strategic investments: the Board will consider selective property
investment to support the Group's operations and the acquisition of operating
businesses that are accretive to earnings and which support growth over the
long term; and
· Other returns to shareholders: the Board is committed to ensuring that
the balance sheet remains efficient. Given the relatively high operational
leverage of the business, it will maintain a positive cash balance. As and
when appropriate, it will return surplus capital to shareholders in the form
of special dividends or share buy-backs.
Recommencement of dividend
In line with its commitment to establishing regular returns to shareholders,
the Board is recommencing the payment of dividends in the current financial
year and is pleased to confirm today an interim dividend of 0.5p per ordinary
share for the current financial year.
The interim dividend will be paid on 31 March 2023 to shareholders on the
register at 10 March 2023. The ex-dividend date is 9 March 2023. As previously
disclosed, it is the Board's intention to pay a total dividend for the full
year of 1.5p.
Net Settlement of share options
During the period, the Company took the decision to reduce the number of
Ordinary Shares to be issued in respect of the exercise of options under the
Performance Share Plan 2017 (the "PSP"), equal to the tax liability that
arises in connection with any exercise. The exercise of options became an
entitlement to receive a reduced number of Ordinary Shares (the "Adjusted
Award") and a cash amount (the "Cash Amount") equal to the value of the number
of Ordinary Shares by which the options are reduced. The Company ensured that
the Cash Amount was paid directly to HMRC to discharge the tax liability that
arises as a result of the exercise.
£2.7 million was expended in the period on Net Settlement of options being
exercised. A further £5.5 million has been spent in the second half of the
year up to the date of this report.
BOARD CHANGES
On 31 January 2023, we were delighted to announce the appointment of Paul
Ibbetson, Managing Director of DX Freight, as the Group's Chief Executive
Officer. With his appointment, Mark Hammond, Executive Chairman, who joined
the Board on 15 November 2022, relinquished his executive role to become
Non-executive Chairman.
Paul joined DX in November 2017 as a senior member of the incoming turnaround
team and has over 25 years' senior experience in the freight, parcels and
logistics sectors. He led the DX Freight division as its Managing Director and
was instrumental in its transformation to profitability, cash generation and
growth from its prior position of substantial losses. Paul previously worked
at Tuffnells Parcel Express until June 2016, having played an important role
in its successful turnaround and subsequent sale to Connect Group in 2014.
Before that, he worked at Target Parcels Express for 10 years in senior
management roles and at Business Post for seven years.
Mark Hammond has over 25 years' commercial and financial experience and has
been a member of the Institute of Chartered Accountants of Scotland since
1991. He was co-founder and manager of a private equity fund, Caird Capital
LLP, having previously worked for Bank of Scotland Corporate as Head of
Integrated Finance. He is the Senior Independent Director of Genuit Group plc,
and a Non-executive Director of Chaffin Holdings Limited. He was previously a
Non-executive Director of Tuffnells Parcel Express Limited, until its sale to
Connect Group plc and a Non-executive Director of David Lloyd Leisure Group
Limited.
Jon Kempster and Mike Russell joined the Group as independent Non-executive
Directors in July 2022. Both are highly experienced executives with senior
financial and commercial experience. As previously announced, we will be
appointing a third independent Non-executive Director in due course.
Four Directors stood down from the Board in the period. Lloyd Dunn resigned as
Chief Executive Officer on 6 September 2022, Ronald Series, Executive
Chairman, retired on 15 November 2022, and Non-executives, Liad Meidar and
Russell Black, left the Board on 19 October 2022.
CURRENT TRADING AND PROSPECTS
We are encouraged by the Group's performance in the first half of this
financial year, and in particular by the strong profit and margin growth at
both DX Freight and DX Express.
We expect to make further progress in the second half of the financial year,
both financially and strategically through our investment plans. The second
half typically generates a greater proportion of annual earnings and cash flow
than the first half.
Trading in the second half of the financial year to date is in line with our
expectations, and we have a healthy pipeline of opportunities. While we
expect economic headwinds, the Board remains confident that the Group is on
track to meet its expectations for the financial year.
Looking further ahead, we see significant scope to drive the Group's ongoing
growth and development. Today's reinstatement of the dividend is a
demonstration of the Board's confidence in DX's future prospects as well as
its robust financial position, which remains well-supported by strong cash
generation, and net cash.
Mark Hammond, Chairman
Paul Ibbetson, Chief Executive Officer
FINANCIAL REVIEW
Revenue of £231.3 million for the first half was 15% ahead of the comparable
period in the prior year (H1 2022: £202.0 million). Both divisions
contributed to this increase, with 1-Man driving strong growth in the DX
Freight division, while at the DX Express division, growth in Parcels more
than off-set expected decline at Document Exchange and Mail.
Adjusted profit from operating activities for the period improved by £4.5
million to a profit of £11.6 million (H1 2022: £7.1 million) as a result of
the productivity efficiency and revenue improvements undertaken by management.
Net cash at 31 December 2022 was £36.4 million (1 January 2022: net cash of
£14.5 million) and operating cash flow inflow for the period was £27.7
million (H1 2022: £10.7 million).
26 weeks 26 weeks Change
ended ended
31 December 2022
1 January 2022
£m £m £m
Revenue 231.3 202.0 29.3
Operating costs before depreciation, amortisation, exceptional items and (205.8) (182.6) (23.2)
share-based payments charge
EBITDA(1) 25.5 19.4 6.1
Depreciation (13.5) (11.8) (1.7)
Amortisation of software and development costs (0.3) (0.3) -
Share-based payments charge - SAYE award shares (0.1) (0.2) 0.1
Adjusted profit from operating activities(1) 11.6 7.1 4.5
Share-based payments charge - PSP award shares (0.1) (0.6) 0.5
Exceptional costs - (0.8) 0.8
Reported profit from operating activities 11.5 5.7 5.8
Finance costs (2.4) (2.4) -
Profit before tax 9.1 3.3 5.8
( )(1) See notes 2 and 11 for details of alternative performance measures
("APMs") used, including reconciliations of APMs to IFRS reported measures.
Revenue by segment
A breakdown of Group revenue is shown below and further commentary on each
Division's performance is provided in the Interim Statement.
26 weeks 26 weeks Change
ended ended
31 December
1 January
2022 2022
£m £m £m
DX Freight 137.1 119.1 18.0
DX Express 94.2 82.9 11.3
Total revenue 231.3 202.0 29.3
Net assets
A summary of the Group's net assets is set out below:
31 December 1 January 2 July
2022 2022 2022
£m £m £m
Non-current assets 155.9 145.9 145.3
Current assets excluding cash and cash equivalents 40.5 34.3 44.6
Cash and cash equivalents 36.4 14.5 27.0
Current liabilities (76.4) (67.0) (74.9)
Non-current liabilities (95.6) (84.1) (86.6)
Net assets 60.8 43.6 55.4
The increase in net assets since the period ended 2 July 2022 represents the
profit for the period and change in equity relating to share-based payment
transactions.
Cash flow and net cash
26 weeks 26 weeks Change
ended ended
31 December 2022
1 January
2022
Cash flow: £m £m £m
EBITDA(1) 25.5 19.4 6.1
Exceptional items - (0.8) 0.8
Movement in working capital - deferred payments - (5.1) 5.1
Movement in working capital 5.3 (0.1) 5.4
Interest paid (2.4) (2.4) -
Tax paid - net (0.7) (0.3) (0.4)
Net cash generated in operating activities 27.7 10.7 17.0
Capital expenditure (4.6) (3.2) (1.4)
Net increase in cash before financing activities 23.1 7.5 15.6
Lease repayments (11.0) (9.8) (1.2)
Share options exercised (2.7) - (2.7)
Net increase/(decrease) in cash 9.4 (2.3) 11.7
31 December 1 January 2 July
2022 2022 2022
Net cash: £m £m £m
Cash and cash equivalents 36.4 14.5 27.0
Net cash(1) 36.4 14.5 27.0
( )
(1) See notes 2 and 11 for details of alternative performance measures
("APMs") used, including reconciliations of APMs to IFRS reported measures.
Net cash at 31 December 2022 was £36.4 million, an increase of £21.9 million
since the period ended 1 January 2022. The increase was driven by the
increased operating profit offset by capital expenditure, lease repayments and
the exercise of share options. Net cash generated from operating activities
was £27.7 million (H1 2022: £10.7 million), helped by improvements in
working capital management of £5.3m, whilst capital expenditure was £4.6
million, resulting in a net increase in cash before financing activities of
£23.1 million for the period (H1 2022: £7.5 million). The net cash generated
from operating activities in the prior period included £5.1m repayment of
deferred VAT.
Working capital decreased by £5.3 million in the period, mainly due to a
reduction in receivables.
Interest paid in the period was £2.4 million, the same as in the prior year
(H1 2022: £2.4 million).
Tax paid for the period was £0.7 million (H1 2022: £0.3 million), consisting
of instalments on account for the Group's UK and Irish operations.
Capital expenditure for the period was £4.6 million (H1 2022: £3.2 million),
consisting principally of investment in IT and operational equipment as well
as property and security improvements.
As detailed in the interim statement above, £2.7 million was expended in the
period on the Net Settlement of options that were exercised. A further £5.5
million has been spent in the second half of the financial year up to the date
of this report.
David Mulligan, Chief Financial Officer
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 31 December 2022
26 weeks 26 weeks ended 52 weeks ended
1 Jan
2 Jul
ended
2022
2022
31 Dec
2022
Notes £m £m £m
Revenue 3 231.3 202.0 428.2
Operating costs (406.1)
(219.8) (196.3)
Profit from operating activities 11.5 5.7 22.1
Analysis of results from operating activities:
EBITDA 25.5 19.4 50.3
Depreciation and amortisation (13.8) (12.1) (25.0)
Share-based payments charge (SAYE) (0.1) (0.2) (0.4)
Share-based payments charge (PSP) (0.1) (0.6) (1.2)
Exceptional items 5 - (0.8) (1.6)
Profit from operating activities 11.5 5.7 22.1
Finance costs 6 (2.4) (2.4) (4.7)
Profit before tax 9.1 3.3 17.4
Tax expense (1.6) (0.3) (3.4)
Profit for the period 7.5 3.0 14.0
Other comprehensive expense - - -
Total comprehensive expense for the period 7.5 3.0 14.0
Profit per share (pence):
Basic 7 1.3 0.5 2.4
Diluted 7 1.2 0.5 2.2
Adjusted 7 1.3 0.8 2.9
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
31 Dec 1 Jan 2 Jul
2022 2022 2022
Notes £m £m £m
Non-current assets
Property, plant and equipment 16.7 13.6 14.5
Right-of-use asset 12 103.3 93.4 94.2
Intangible assets and goodwill 31.2 31.4 31.1
Deferred tax assets 4.7 7.5 5.5
Total non-current assets 155.9 145.9 145.3
Current assets
Trade and other receivables 40.5 34.3 44.6
Cash and cash equivalents 36.4 14.5 27.0
Total current assets 76.9 48.8 71.6
Total assets 232.8 194.7 216.9
Equity
Share capital 5.8 5.7 5.7
Share premium 25.2 25.2 25.2
Retained earnings 29.8 12.7 24.5
Total equity 60.8 43.6 55.4
Non-current liabilities
Lease liabilities 13 87.5 78.7 79.6
Provisions 8.1 5.4 7.0
Total non-current liabilities 95.6 84.1 86.6
Current liabilities
Trade and other payables 41.4 35.7 40.7
Current tax payable 0.2 - 0.4
Lease liabilities 13 22.3 20.4 20.7
Deferred income 8.6 8.1 10.2
Provisions 3.9 2.8 2.9
Total current liabilities 76.4 67.0 74.9
Total liabilities 172.0 151.1 161.5
Total equity and liabilities 232.8 194.7 216.9
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 31 December 2022
Share capital Share premium Retained earnings Total
£m £m £m £m
At 3 July 2021 5.7 25.2 8.9 39.8
Profit for the period - - 3.0 3.0
Other comprehensive expense - - - -
Share-based payment transactions - - 0.8 0.8
At 1 January 2022 5.7 25.2 12.7 43.6
Profit for the period - - 11.0 11.0
Other comprehensive expense - - - -
Share-based payment transactions - - 0.8 0.8
At 2 July 2022 5.7 25.2 24.5 55.4
Profit for the period - - 7.5 7.5
Other comprehensive expense - - - -
Share-based payment transactions - - 0.2 0.2
Exercise of share options 0.1 - (2.8) (2.7)
Tax credit on exercise - - 0.4 0.4
At 31 December 2022 5.8 25.2 29.8 60.8
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 31 December 2022
26 weeks ended 26 weeks ended 52 weeks
31 Dec 1 Jan ended
2022 2022 2 Jul
2022
Notes £m £m £m
Cash generated from operations 9 30.8 13.4 42.1
- Interest paid (2.4) (2.4) (4.7)
- Tax paid - net (0.7) (0.3) (0.9)
Net cash generated from operating activities 27.7 10.7 36.5
Cash flows from investing activities
Acquisition of property, plant and equipment (4.2) (2.8) (5.6)
Software and development expenditure (0.4) (0.4) (0.6)
Net cash used in investing activities (4.6) (3.2) (6.2)
Net increase in cash before financing activities 23.1 7.5 30.3
Cash flows from financing activities
Lease repayments (11.0) (9.8) (20.1)
Share options exercised (2.7) - -
Net cash used in financing activities (13.7) (9.8) (20.1)
Net increase/(decrease) in cash and cash equivalents 9.4 (2.3) 10.2
Cash and cash equivalents at beginning of period 27.0 16.8 16.8
Cash and cash equivalents at end of period 36.4 14.5 27.0
NOTES TO THE FINANCIAL INFORMATION
1 General information
DX (Group) plc is incorporated in England and domiciled in the United Kingdom.
The address of its registered office is Ditton Park, Riding Court Road,
Datchet, Slough, SL3 9GL. The registered number of the Company is 08696699.
The condensed interim financial statements were approved by the Board of
Directors on 26 February 2023.
2 Basis of preparation
The condensed consolidated interim financial information has been prepared in
accordance with International Financial Reporting Standard IAS 34 Interim
Financial Reporting and the Disclosure and Transparency Rules of the UK's
Financial Services Authority, which are applicable to DX (Group) plc. The
accounting policies applied in these condensed interim financial statements
are the same as those set out in the annual report and accounts for the period
ended 2 July 2022.
The Group accounts for its operations on a '4-5-4 weekly' basis, which
reflects its cost base and operations. The current financial year which ends
on 1 July 2023 comprises 52 weeks of trading. The period to 31 December 2022
is from 3 July 2022 to 31 December 2022 (26 weeks), and the comparative period
was from 4 July 2021 to 1 January 2022 (26 weeks). The year ended 2 July 2022
comprised 52 weeks.
Future financial years will comprise 52 weeks or occasionally 53 weeks in
order to keep the year-end date as close as possible to 30 June.
The half year results for the current and comparative period are unaudited.
The information for the period ended 2 July 2022 does not constitute statutory
consolidated financial statements as defined in section 434 of the Companies
Act 2006. The annual report and accounts for that year has been filed with the
Registrar of Companies and the audit opinion on those accounts was unmodified.
The financial statements have been prepared on a going concern basis, which
the Directors consider to be appropriate as they are confident the Group and
the Company will have sufficient funds to continue to meet their liabilities
as they fall due for at least 12 months from the date of approval of the
financial statements.
The Group has prepared trading and cash flow forecasts for a period up to 29
June 2024, which have been reviewed and approved by the Board. The forecasts
included a base case and a reverse stress test scenario.
The Group also has in place a £20.0 million invoice discounting facility
provided by Barclays Bank plc, which was not drawn at the year end. Interest
is charged at Bank of England Base Rate plus 1.95%.
On the basis of these forecasts and the invoice discounting facility, and
after a detailed review of trading, financial position, assessing the impact
of any potential material disruption to the business and cash flow models, the
Directors have a reasonable expectation that the Group and Company have
adequate resources to continue in operational existence for the foreseeable
future. For these reasons, they continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
The preparation of financial information in conformity with IAS 34 requires
management to make estimates and assumptions that affect the reported amount
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reported period. Although
these estimates are based on management's best knowledge of the amount, event
or actions, actual events ultimately may differ from those estimates.
The Group use alternative performance measures ("APMs") to measure
performance. These APMs are applied consistently from one period to the next,
and the Directors believe that this information is important for the
shareholders as it allows them to understand the difference between the
reported results and the trading performance excluding certain non-cash
charges and other items that are not expected to recur. Details of the APMs
used by the Group along with reconciliations to the respective IFRS reported
measures are shown in note 11.
3 Revenue
In the following table, revenue is disaggregated by service. The table also
includes a reconciliation of the disaggregated revenue with the Group's
reportable segments (see note 4).
26 weeks ended 26 weeks ended 52 weeks
31 Dec 2022
1 Jan 2022
ended
2 Jul 2022
£m £m £m
DX Freight
1-Man 106.4 89.7 195.5
Logistics/2-Man 30.7 29.4 61.4
Total DX Freight 137.1 119.1 256.9
DX Express
Parcels 76.7 63.9 135.3
Exchange and Mail 17.5 19.0 36.0
Total DX Express 94.2 82.9 171.3
Total revenue 231.3 202.0 428.2
4 Segment information
26 weeks ended 31 December 2022: DX DX Central Total
Freight Express
£m £m £m £m
Revenue 137.1 94.2 - 231.3
Costs before overheads (107.4) (78.7) - (186.1)
Profit before overheads 29.7 15.5 - 45.2
Overheads (3.7) (4.1) (11.9) (19.7)
EBITDA 26.0 11.4 (11.9) 25.5
Depreciation and amortisation (9.8) (3.4) (0.6) (13.8)
Share-based payments charge - - (0.2) (0.2)
Results from operating activities 16.2 8.0 (12.7) 11.5
Finance costs - - (2.4) (2.4)
Profit/(loss) before tax 16.2 8.0 (15.1) 9.1
Tax - - (1.6) (1.6)
Profit/(loss) for the period 16.2 8.0 (16.7) 7.5
26 weeks ended 1 January 2022: DX DX Central Total
Freight Express
£m £m £m £m
Revenue 119.1 82.9 - 202.0
Costs before overheads (98.4) (68.7) - (167.1)
Profit before overheads 20.7 14.2 - 34.9
Overheads (3.1) (4.0) (8.4) (15.5)
EBITDA 17.6 10.2 (8.4) 19.4
Depreciation and amortisation (7.2) (4.1) (0.8) (12.1)
Share-based payments charge - - (0.8) (0.8)
Exceptional items - - (0.8) (0.8)
Results from operating activities 10.4 6.1 (10.8) 5.7
Finance costs - - (2.4) (2.4)
Profit/(loss) before tax 10.4 6.1 (13.2) 3.3
Tax - - (0.3) (0.3)
Profit/(loss) for the period 10.4 6.1 (13.5) 3.0
( )
52 weeks ended 2 July 2022: DX DX Central Total
Freight Express
£m £m £m £m
Revenue 256.9 171.3 - 428.2
Costs before overheads (202.9) (142.4) - (345.3)
Profit before overheads 54.0 28.9 - 82.9
Overheads (6.2) (7.9) (18.5) (32.6)
EBITDA 47.8 21.0 (18.5) (50.3)
Depreciation and amortisation (16.7) (6.5) (1.8) (25.0)
Share-based payments charge - - (1.6) (1.6)
Exceptional items - - (1.6) (1.6)
Results from operating activities 31.1 14.5 (23.5) 22.1
Finance costs - - (4.7) (4.7)
Profit/(loss) before tax 31.1 14.5 (28.2) 17.4
Tax - - (3.4) (3.4)
Profit/(loss) for the year 31.1 14.5 (31.6) 14.0
The Board of Directors is considered to be the chief operating decision maker
("the CODM"). The Group has two separate Divisions, DX Freight and DX Express.
Whilst the CODM considers that assets and liabilities are reviewed on a Group
basis, the profitability of these two Divisions is reviewed and managed
separately. Given overheads are largely integrated, the EBITDA of the two
Divisions above is shown before any allocation of certain central overheads
between DX Freight and DX Express. Central overheads comprise costs relating
to finance, legal, personnel, property, internal audit, IT, procurement and
administrative activities that cannot be specifically allocated to an
individual division. The CODM considers there to be only one material
geographical segment, being the United Kingdom and the Republic of Ireland.
5 Exceptional Items
During the 2021 financial year and the subsequent period the Group had to
address a corporate governance matter as described on pages 45 to 46 of the DX
(Group) plc Annual Report and Accounts 2022. The investigation and inquiry
costs related to that matter were mainly incurred in the year ended 2 July
2022.
26 weeks 26 weeks ended 52 weeks ended
1 Jan
2 Jul
ended
2022 2022
31 Dec
2022
£m £m £m
Exceptional items - 0.8 1.6
6 Finance costs
26 weeks 26 weeks ended 52 weeks ended
1 Jan
2 Jul
ended
2022 2022
31 Dec
2022
£m £m £m
Interest on lease liabilities 2.4 2.4 4.7
Total finance costs 2.4 2.4 4.7
7 Earnings per share
The calculation of basic profit per share at 31 December 2022 is based on the
profit after tax for the period and the weighted average number of shares in
issue.
Adjusted earnings per share is calculated based on the profit after tax,
adjusted for certain non-cash charges and other items which are not expected
to recur. The Group does not adjust for share-based payments relating to the
recently introduced SAYE scheme. Adjusted earnings per share represents an
alternative performance measure. Further details about the use of alternative
performance measures are detailed in notes 2 and 11.
Diluted earnings per share is calculated based on the weighted average number
of shares in issue, adjusted for any potentially dilutive share options issued
under the Group's share option programmes. Where there is an adjusted loss for
the period, no adjustment is made for share options issued under the Group's
share option programmes as these would reduce the loss per share.
31 Dec 1 Jan 2 Jul
2022
2022 2022
£m £m £m
Profit for the period 7.5 3.0 14.0
Adjusted for:
- Share-based payments charge - PSP share award 0.1 0.6 1.2
- Exceptional items - 0.8 1.6
Adjusted profit for the period 7.6 4.4 16.8
Million Million Million
Weighted average number of shares in issue 583.2 573.7 573.7
Potentially dilutive share options 45.8 95.6 71.5
Weighted average number of diluted ordinary shares 629.0 669.3 645.2
Pence Pence Pence
Basic profit per share 1.3 0.5 2.4
Diluted profit per share 1.2 0.5 2.2
Adjusted profit per share 1.3 0.8 2.9
8 Loans and borrowings
The Group has a £20.0 million invoice discounting facility which can be
terminated by either party at 3 months' notice. Drawings on the invoice
discounting facility at 31 December 2022 were £nil (H1 2022: £nil).
9 Cash generated from operating activities
26 weeks 26 weeks 52 weeks
ended ended ended
2 Jul
31 Dec 1 Jan
2022
2022 2022
£m £m £m
Cash flows from operating activities
Profit for the period 7.5 3.0 14.0
Adjustments for:
- Depreciation 13.5 11.8 24.4
- Amortisation of intangible assets 0.3 0.3 0.6
- Finance costs 2.4 2.4 4.7
- Tax expense 1.6 0.3 3.4
- Loss on disposal of intangible assets - - 0.3
- Equity-settled share-based payment transactions 0.2 0.8 1.6
Net cash profit 25.5 18.6 49.0
Changes in:
- Trade and other receivables 4.1 5.8 (4.7)
- Trade and other payables 0.7 (8.1) (3.1)
- Deferred income (1.6) (3.3) (1.2)
- Provisions 2.1 0.4 2.1
Net change in working capital 5.3 (5.2) (6.9)
Cash generated from operations 30.8 13.4 42.1
10 Related-party transactions
The nature of other related-party transactions of the Group have not changed
from those described in the annual report and accounts for the period ended 2
July 2022.
All transactions undertaken with related parties were undertaken at arms'
length and on normal commercial terms.
11 Alternative performance measures ("APMs")
The Group uses APMs to measure performance. These APMs are applied
consistently from one year to the next, and the Directors believe that this
information is important for the shareholders as it allows them to understand
the difference between the reported results and the trading performance
excluding certain non-cash charges and other items that are not expected to
recur. These measures are not defined by International Reporting Standards
("IFRS") and therefore may not be directly comparable to similar measures
adopted by other companies. These alternative performance measures should be
considered in addition to, and are not intended to be a substitute for, or
superior to, IFRS measures but provide useful information on the performance
of the Group and underlying trends. Various measures of performance and
profitability are industry standard and are used by shareholders and potential
investors to compare performance with industry peers. The Group presents
EBITDA, adjusted profit before tax ("adjusted PBT"), adjusted profit per share
("adjusted EPS") and adjusted profit from operating activities, which are
calculated as the statutory measures stated before amortisation of acquired
intangibles, any exceptional items and share-based payments charge, including
related tax where applicable. The Group adjusts for share-based payments due
to the one-off nature of the Recovery Awards in driving the turnaround of the
business in the short term. The Group does not adjust for share-based payments
relating to the recently introduced SAYE scheme. The Group also presents net
cash/net debt, calculated as gross debt before debt issue costs and net of
cash. The reconciliations between these APMs and the IFRS reported measures
are shown in the locations detailed below:
APM IFRS reported measure Location of reconciliation
EBITDA Profit from operating activities Note 4
Adjusted PBT Profit before tax See below
Adjusted EPS Profit per share Note 7
Net cash/net debt Net cash/net debt Financial review section
Adjusted profit from operating activities Profit from operating activities Financial review section
The reconciliation of the adjusted profit before tax APM to the IFRS reported
measure of profit before tax is shown below:
31 Dec 1 Jan 2 Jul
2022
2022 2022
£m £m £m
Reported profit before tax 9.1 3.3 17.4
Adjusted for:
- Share-based payments charge 0.1 0.6 1.2
- Exceptional items - 0.8 1.6
Adjusted profit before tax 9.2 4.7 20.2
The £0.1m share-based payment charge above relates to the PSP awards charge.
A £0.1m charge relating to the Group's SAYE scheme is not adjusted for.
12 Right-of-use assets
Total
£m
Net book value as at 3 July 2021 95.4
Additions 8.6
Disposal (0.3)
Depreciation (10.3)
Net book value as at 1 January 2022 93.4
Additions 11.5
Disposal -
Depreciation (10.7)
Net book value as at 2 July 2022 94.2
Additions 20.8
Disposal (0.3)
Depreciation (11.4)
Net book value as at 31 December 2022 103.3
13 Lease liabilities
Leases typically consist of leases for premises, vehicles and equipment such
to support operations and to help service the Group's customers. Leases of
land and buildings are usually subject to rent reviews at specified intervals
and provide for the lessees to pay all insurance, maintenance and repair
costs.
31 Dec 1 Jan 2 Jul
2022 2022 2022
Maturity analysis - contractual undiscounted cash flows £m £m £m
Less than one year 26.6 24.1 25.5
One to five years 70.3 66.1 67.2
More than five years 31.0 26.8 28.3
Total undiscounted lease liabilities 127.9 117.0 121.0
31 Dec 1 Jan 2 Jul
2022 2022 2022
£m £m £m
Current
Lease liabilities 22.3 20.4 20.7
Non-current
Lease liabilities 87.5 78.7 79.6
Lease liabilities included in the statement of financial position 109.8 99.1 100.3
The amounts charged to the income statement due to the practical expedients
taken are shown below:
31 Dec 2022 1 Jan 2022 2 Jul 2022
Property Plant and equip- Property Plant and equip-ment Property Plant and equip-ment
ment
£m £m £m £m £m £m
Expense relating to short-term leases 0.3 - 0.3 - 0.6 -
Expense relating to low-value leases - 0.4 - 0.3 - 0.8
0.3 0.4 0.3 0.3 0.6 0.8
Forward-looking statements
This announcement may include certain forward-looking statements, beliefs or
opinions, including statements with respect to DX's business, financial
condition and results of operations. These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "plans", "anticipates", "targets", "aims",
"continues", "expects", "intends", "hopes", "may", "will", "would", "could" or
"should" or, in each case, their negative or other various or comparable
terminology. These statements are made by the DX Directors in good faith based
on the information available to them at the date of this announcement and
reflect the DX Directors' beliefs and expectations. By their nature these
statements involve risk and uncertainty because they relate to events and
depend on circumstances that may or may not occur in the future. A number of
factors could cause actual results and developments to differ materially from
those expressed or implied by the forward-looking statements, including,
without limitation, developments in the global economy, changes in UK
government policies, spending and procurement methodologies, and failure in
health, safety or environmental policies.
No representation or warranty is made that any of these statements or
forecasts will come to pass or that any forecast results will be achieved.
Forward-looking statements speak only as at the date of this announcement and
DX (Group) plc and its advisers expressly disclaim any obligations or
undertaking to release any update of, or revisions to, any forward-looking
statements in this announcement. No statement in the announcement is intended
to be, or intended to be construed as, a profit forecast or to be interpreted
to mean that earnings per DX (Group) plc share for the current or future
financial years will necessarily match or exceed the historical earnings. As a
result, you are cautioned not to place any undue reliance on such
forward-looking statements.
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. END IR EAXALAFKDEFA