UK DX postal chief quits after strategy row

The chief executive of the business-to-business postal group DX Services has resigned following what is understood to have been a disagreement about the group's strategy ahead of the liberalisation of the British letters market at the beginning of next year.

Peter Brougham, whose salary is pounds 243,000 a year, will stay on in his role until a successor is appointed.

DX, which was founded in 1975, was demerged from its former parent, Hays plc, late last year when it was listed on the London market.

Yesterday, DX's chairman, John Maxwell, said: "Peter successfully demerged the business out of Hays, stabilised revenues and profits and established the business as an independent company. In accepting Peter's notice, the board has the opportunity to review and agree the strategies for growth presented by the deregulating postal market."

DX is scheduled to announce its full-year results next month. According to last month's trading statement, the figures for the year to the end of June are expected to be similar to the previous year's turnover of pounds 132m and operating profits of pounds 32m. That would also suggest that Mr Brougham's decision was related to strategic rather than trading issues.

DX reckons that it is the only company which provides an end-to-end network to compete with Royal Mail and has said that it is seeking to exploit the opportunities presented by full-scale liberalisation. In particular, it wants to use that network to compete with Royal Mail for business from small and medium-sized enterprises

The postal market is in the process of rapid change with new and established players jostling for position ahead of the changes. The Department of Trade and Industry is looking at the future of Royal Mail as it faces increasing private-sector competition. Meanwhile the organisation is involved in a bruising price review with the industry regulator Postcomm.

The outcome of the DTI deliberations and the price review will have an important bearing on the development of the liberalised market but until they are resolved they will mean uncertainties for the other players.

DX Services chief executive Peter Brougham quits SUPPORT SERVICES
Financial Times UK, London Ed1, Sec. COMPANIES UK, p 21 08-17-2005
By By MACKENZIE

Peter Brougham, the founding chief executive of DX Services, has resigned from the recently demerged mail delivery company.

A replacement has not been named for Mr Brougham, 50, who joined DX in January 2003 and saw it through the demerger last November from the recruitment company Hays.

The company declined to comment about the resignation but a statement hinted at new strategies for DX, which is an established business mail provider but faces the prospect of a fully-deregulated mail market from January 2006.

"Peter successfully de-merged the business out of Hays, stabilised revenues and profits, and established the business as an independent company," said John Maxwell, chairman.

Mr Brougham was not available for comment. There was little dissatisfaction with Mr Brougham's performance among analysts contacted by the Financial Times, but some pointed to the challenges facing DX.

Some shareholders and some at the company are understood to have felt a new chief executive was needed to tackle the new, more challenging environment DX faces.

Emma Ormond, partner at Oriel Securities, said: "I think Peter was regarded as someone who was well-positioned to take the business through the demerger . . . but perhaps may not have the sales and marketing skills to capitalise on the opportunities they may be facing."

DX delivers parcelsand mail between 27,000 companies and, apart from Royal Mail, is the onlyprovider of end-to-end business mail delivery across the UK.

Another nine companies, excluding Royal Mail, hold long-term mail licences, with the most recent, RedStar, granted a licence on Monday

While full deregulation is expected to bring more competition in consumer mail delivery, there is also concern this will spill over into DX's business.

Paul Jones, an analyst at Numis Securities, said the document exchange business, which accounts for the majority of DX's revenues, was solid but competitive pressures loomed in other areas, such as deliveries to high street retailers.

DX shares have outperformed the sector by 14 per cent since flotation andyesterday rose 4 1/2p to 350p, valuing the company at Pounds 304m.