Shares in Aim-listed DX Group jumped this morning despite the delivery firm reporting a loss for the half year as the company's turnaround plan got underway.
DX Group's sales for the six months to December 2017 edged up to £146.6m from £142.7m the previous year, but the firm's loss before tax swelled to £9m from a loss of £500,000 in 2016, mainly due to losses in the company's freight unit.
The firm said it plans to raise £4m in equity fundraising to support the turnaround plans of its new boss, Lloyd Dunn.
Shares flew 14.71 per cent to 8.5p at the time of writing.
Why it's interesting
DX reorganised into two divisions last year – DX freight and DX express – after a proposed £40m deal for John Menzies logistics arm, which would have given John Menzies control of DX, was called off in August.
Ron Series, the chairman of DX, said the company's first-half results reflect "another challenging period", but that "the new management team, led by Lloyd Dunn, our CEO, has developed turnaround plans to set the business on the road to recovery and long-term profitable growth".
The company today said major shareholders are "fully supportive" of the three-year turnaround plan, which includes a change in leadership style, operational strategy and culture.
Liad Meidar, managing partner and chief investment officer of Gatemore, said Gatemore is confident in management's ability to deliver long-term growth.
“The business is already heading in the right direction, and we are pleased to see the clean-up of the balance sheet which will pave the way for future profitability. We look forward to working closely with the management team over the course of the three-year plan and beyond," Meidar said.
Series said the new capital raised "will help fund our growth initiatives, including expanding the sales teams, adding new depots, enhancing the group's IT capabilities and developing the networks".
What DX Group said
DX is a company with many strengths, including a strong service culture and a compelling offering in several market sectors. We believe that we can unlock the latent strengths of the business and, while there are challenges ahead, we are tremendously encouraged by the expertise and capability across the group.
Trading conditions remain challenging, but we are already seeing encouraging signs that our turnaround plans are gaining traction and expect this to build through the year and into 2019.