News / Shareholders demand change at DX Group – chairman Holt in the crosshairs

Investors have called for an emergency general meeting of DX Group shareholders to vote on replacing chairman Bob Holt and non-executive director Paul Murray over the express delivery operator’s poor performance.

Managing partner at Gatemore Capital Liad Meidar told The Loadstar his company – DX’s largest shareholder, with 11.3% – wanted them replaced by four “truly independent” board members.

He said that the company had been worth £1 per share and was now worth 8p per share He said: “To the shareholders that have lived through this, it is an obvious decision to make.”

Mr Meidar said the proposed appointments – including former Tuffnells Parcels Express chairman Ronald Series, described as a “turnaround king” – have been backed by “most” shareholders.

Asked about the position of chief executive Petar Cvetkovic, Mr Meidar said Gatemore did not want to “overstep the mark”; the performance of the management team would need to be addressed by the new directors.

He said: “Bob Holt and Paul Murray have had a lot of time to make appropriate changes but have failed to do so, and so the changes need to start with them.”

In a statement, DX Group said it was “disappointed” by the Gatemore move, adding that it had commenced a wide-ranging review of the company’s operations.

“The board is pleased with the progress being made in this regard and with its wider initiatives. In addition, it has strengthened the senior management team with several new appointments, including Nick Cullen as chief operating officer,” added the statement.

However, Mr Meidar said investors were unhappy over the company’s performance prior to stock warnings that wiped 90% off its share price.

Over a 16-month period, the board issued two stock warnings: the first, in November 2015, saw share value drop 70%; and the second, this February, resulted in a further 20% loss, he said.

“Prior to each of these, trading statements were issued claiming the company was progressing ‘on track’,” he added.

DX issued a statement in September 2015, alongside its year-ending June 2015 results, that the board remained confident it could “deliver long-term growth”.

A subsequent trading update on 13 November 2015 stated that “higher-than-expected” volume erosion and increased cost base pressures – put down to driver resourcing issues – resulted in an expectation that profits for the year ending June 2016 would be significantly below forecasts.

Following the announcement, the share price fell by 75%, settling at around 22p.

In September last year, DX announced the full-year June 2016 results, saying it was confident business transformation plans would deliver long-term benefits, before again revising expectations, on 7 February, to be “significantly below” market forecasts.

DX said: “The company will be reporting on the half-year ended 31 December 2016 on 31 March, when a further update on its progress will be given. In the intervening period, the board will continue to pursue current initiatives to the benefit of shareholders.

“It views Gatemore’s requisition notice as disruptive to management efforts and focus.”

Mr Medar said Gatemore and other large shareholders saw Mr Series as chairman, and had identified three further candidates to serve as non-executive directors.

These include Lloyd Dunn and Russell Black, who co-founded Nightfreight – purchased by DX Group in 2012. Mr Dunn also worked alongside Mr Series at Tuffnells, turning it from near-bankruptcy to a position where it was sold for £135m in 2015 to Connect Group.

The other candidate is former executive chairman of Great Bear Distribution Paul Goodson, who was involved with the purchase and sale of Nightfreight in 2012.