UK DX Services plc – trading update
The leading independent provider of early morning, next day mail services.
DX delivers over one million items each day and operates a UK-wide, end-to-end
network including collection, sortation and final mile delivery.
The directors expect turnover in the year to 30 June 2005 to have been similar
to last year (#131.9m in 2004). Operating profit before amortisation of
goodwill and exceptional demerger costs is also expected to have been similar to
last year (#32.7m in 2004), except for the effect of the additional costs of
being an independent and listed company of up to #2m.
Net debt is estimated at #60m at 30 June 2005. This is significantly less than
market expectations and results in a lower than expected interest charge for the
year. The Board expects to pay a final dividend higher than previously
anticipated of 8.5p per share and confirms its intention to enhance dividends
progressively in future years.
Document Exchange and Parcels services continue to deliver stable operating
profits and cash flows.
Mail services have grown in line with expectations, with successful piloting of
stamps and blue DX mail boxes in high street retail outlets now offering easy
local access to business customers. As previously reported, Mail services
passed its break even point during the last 6 months.
Outlook
DX is uniquely positioned to take advantage of the increasing awareness
of other mail providers which is now starting to emerge, and to expand its share
of the early morning, next day mail market in the UK from around 15%. In the
year to 30 June 2006, the directors expect that this will require increased
investment in brand, product and customer support processes broadly equivalent
to the additional contributions from new volume. The directors also expect that
Document Exchange and Parcels services will benefit from opportunities for
enhanced returns from price trends in the market and new Parcels customers.
The Document Exchange
Revenue from the Document Exchange for the year to 30 June 2005 is expected to
be broadly in line with the previous year (#84.8m in 2004). Volumes were at or
above historic levels, other than mail related to property transactions.
Supplementary charges and ad-hoc income have stabilised at around 10% of total
Document Exchange revenue. Consistent with the recent increase in First Class
stamp rates and the approach adopted in 2003, the Members' subscriptions were
increased on average by around 5.5% from 7 April 2005.
Parcels
Like-for-like revenue from Parcels for the year to 30 June 2005 is
expected to be marginally down on the prior year (#42.9m in 2004, excluding
#1.4m subsequently converted to Mail services). As expected, price increases
have partly mitigated the effect of reduced volumes.
Revenue from Mail is expected to be around #5m for the year to 30 June 2005
(#4.2m in 2004, including #1.4m subsequently converted from Parcels services).
We enter the new year with an annualised run rate in line with expectations.
Break even performance has been achieved for the second half of the year.
Peter Brougham, Chief Executive of DX Services plc, commented:
'In our first year since demerger, DX has begun to exploit the opportunities
from deregulation to deliver more early morning, next day mail. Most of this
mail is sent by small and medium sized businesses, who need to access our
services easily for modest volumes of mail. DX has the only UK-wide end-to-end
network currently providing these services in competition to Royal Mail. Our
strategy is to deliver a proven quality alternative to Royal Mail for many
thousands of customers at a cost less than First Class stamps.'
DX Services plc expects to announce its preliminary results for the year ended
30 June 2005 on 6 September 2005.
Contacts:
Peter Brougham, Chief Executive Officer, DX Services plc + 44 (0) 1753 630630
Michael-John Saunders, Finance Director, DX Services plc + 44 (0) 1753 630630
Jon Coles, Brunswick Group + 44 (0) 20 7404 5959
Rupert Young, Brunswick Group + 44 (0) 20 7404 5959
Conference Call
There will be a conference call for analysts and investors at 09.00 on Tuesday
5 July 2005 which can be accessed by dialing +44 (0)1452 561 263. The call will
be recorded and available for 7 days on 0845 245 5205 or +44 (0)1452 550 000,
access code 7325847#.
5 July 2005
This information is provided by RNS
The company news service from the London Stock Exchange
