EMEA, Habitat, JD Wetherspoon, MFI, Somerfield, Thresher

1
Interim Results 2004

• John Allan Chief Executive
• John Coghlan Deputy Chief Executive and Group
  Finance Director
• Friday 30 July 2004

2
Agenda

• Highlights John Allan
• Financial review John Coghlan
• Strategic update and outlook John Allan

3
Highlights

• Good turnover and profit growth
• turnover1 and profit before tax1 up 15
• Underlying earnings per share up 102
• Strong free cash flow of 78.2m (2003 31.5m)
• Dividend per share up 8 (2003 interim up 5)
• 450m of annualised new business revenues (2003
  400m), 260m net of losses (2003240m)
• Launched 328m recommended cash offer for Tibbett
  Britten which will enhance Exels ability to
  deliver organic growth

(1) at constant exchange rates before goodwill
amortisation, exceptional items and net return on
pension schemes (2) at actual exchange rates,
before goodwill amortisation, exceptional items
and net return on pension schemes
4
New business wins continue to fuel long-term
organic growth
m

• Record new business gains in H1 2004 of 450m
• Particular strong progress in contract logistics
  for automotive, consumer and retail
• Good freight management wins in technology
• Losses includes exit of loss-making contract
  (25m) in Belgium
• 19 integrated gains

2004
2003
m six months to 30 June
450
400
Annualised gains
2004
(190)
Annualised losses
(160)
Contract Logistics
170
Net annualised gains
260
240
12
Freight
90
logistics turnover
10
10
Mgt
8
5
Segmental overview
2004 m
change
2003 m
Six months to 30 June
Turnover
Contract Logistics
1,432
17
1,228
Operating profit
44.0
13
38.8
Turnover
Freight Management
1,126
14
987
Operating profit
22.8
7
21.4
Turnover
Environmental
63
9
58
Operating profit
7.3
9
6.7
Total
Turnover
2,621
15
2,273
Operating profit
74.1
11
66.9
All figures at constant exchange rates
6
Contract Logistics PerformanceAnalysis by
Geography

• Strong performance with margins improving to 3.5
  (20033.4)
• Good progress in developing and implementing new
  business made in Australia, India, Indonesia,
  Korea, New Zealand, the Philippines and Singapore
• Fujitsu Logistics acquisition completed 1 June
  2004

Asia PacificTurnover 76m 60 Profit 3m
69
EMEA (including UK and Ireland) Turnover 945m
15 Profit 18m 4
AmericasTurnover 411m 15 Profit 23m
18

• Continental Europe turnover up 29, profit up
  over 100 and margins improving to 1.7 (2003
  0.8) despite the loss making contract in Belgium
• 2003 major acquisitions Cappelletti and Pharma
  Logistics performed well
• UK and Irelands margins at 2.0 (2003 2.6)
  impacted by poor Tradeteam and UK industrial
  performances and non-cash FRS 17 assumption
  changes

• Margins improved to 5.5 (20035.4)
• Strong performances from automotive, chemicals
  and healthcare
• New business wins led by non-food retail and
  automotive
• Good development of operations in Latin America

All figures at constant exchange rates
7
Freight Management PerformanceAnalysis by
Geography

• Strong turnover growth
• Margins reduced to 4.6 (2003 5.9) held back by
  firmer airfreight costs mainly due to limited
  cargo capacity on some routes and the impact of
  rising fuel prices
• Seafreight maintained solid growth in turnover
  and margins

Asia PacificTurnover 334m 28 Profit
16m 1
EMEA (including UK and Ireland) Turnover 420m
10 Profit 8m 107
Americas Turnover 372m 8 Loss
1m na

• Good organic progress from improved airweight
  volume and operational efficiency
• Margins improved to 2.0 (20031.1)
• Significant new business wins in technology and
  healthcare
• Strong growth in seafreight turnover notably in
  automotive, retail and technology

• Restructuring of US domestic underway with 1m
  costs in H1
• International operations made progress in
  profitability (especially in Canada and Mexico)
• Increased turnover in road and rail freight
  activities held back by margin pressure and tight
  rail freight capacity

All figures at constant exchange rates
8
Airfreight International airweight year on year
growth v market
Exel
Market1
Global airweight
18
8
Americas
20
4
Europe
11
8
Asia Pacific
22
12

• H1 freight management margin decline to 2.0
  (2003 2.2) primarily due to fuel surcharges
• cost of fuel surcharges to Exel exceeded 20m
  with recovery over 90
• 2.2m adverse impact, principally in Asia Pacific

• Based on analysis of relevant published Airport
  data through to the end of May (latest available)

9
Americas Freight Management

• Integrating domestic operations with
  international freight business to reduce costs in
  overheads and operations
• appointment of new CEO
• management teams merged
• 14 facilities closed to date
• headcount reduced by over 110
• 1m restructuring costs in H1
• Current cost reductions are being offset by weak
  trading
• Further cost reductions will be achieved in H2
  and systems integration will be completed in H1
  2005

10
Seafreight
Year on year growth in TEUs

• Purchased and managed full container load volumes
  up 28 year-on-year to end of May (market up
  12)
• building market share on key Asian routes
• into North America up 98, into Europe up 30 and
  intra Asia up 29
• trans-atlantic up 16, ahead of market
• approx 60 of volumes moving with Exels seven
  partner shipping lines
• Turnover up 19 to 170m, up 26 at constant
  currencies
• Consolidation services saw 40 margin growth
  year-on-year
• New business wins for inbound retail include MFI
  and WH Smith

Year on year growth in TEUs
11
Consumer and retail

• Cappelletti performed well in first six months
• Significant contract logistics wins include
• EMEA, Habitat, JD Wetherspoon, MFI, Somerfield,
  Threshers and Tie Rack
• Asia Pacific Unilever, Matahari and MFI
• Americas Best Buy, Carrefour, Clorox, Procter
  Gamble, SC Johnson and The Home Depot
• International in-bound developments included MFI,
  HarperCollins and WH Smith providing services
  such as management of origin vendors, product
  consolidation, freight shipment and on-line PO
  tracking
• RFID developments
• Extended trials for House of Fraser
• New dedicated RFID research centre

Logistics turnover by sector
12
Leading innovation in the supply chainExels
retail consolidation centres

• Heathrow (opened 2001)
• Makes 550 deliveries each week to 152 retail
  stores, representing over 75 of retail brands at
  Heathrow
• Won London Transport Award 2004 and nominated for
  national award
• Reduced vehicle congestion to retailers by over
  60
• Savings on emissions of 60 tonnes of carbon
  dioxide in 2003
• Meadowhall (opened 2002)
• Services provided to 25 retailers include
  goods-in, pre-retailing, delivery and
  replenishment

• Bristol City Centre (May 2004)
• In May 2004 Exel commenced a trial consolidation
  platform for Bristol City Council under EU funded
  VIVALDI scheme
• Proof of concept trial with no cost to retailers
• New warehouse 7 miles from City Centre
• Exel manage supplier receipt, load consolidation
  and onward delivery to City Centre retailers

Exel also operates consolidation platforms in
Healthcare (NHS Hospital Supplies) and Industrial
(Utility providers)
13
Non-food retail Cross selling solutions

• Exels 36 year relationship with MS now extends
  as far as Turkey, China, Mauritius and Singapore
  covering all aspects of the supply chain from
  consolidation services to in-store activities

• Exels UK based services include
• 8 UK distribution centres,
• 4 sortation centres,
• 35 home delivery and 8 city lunch to go
  operations
• Next steps include
• Offshore storage and Acceptable Quality Level
  Service
• Part of the largest RFID supply chain trial using
  tags in 3.5m returnable trays
• Store picking at origin

14
Technology

• Solid performance underpinned by new business
  wins and completion of Fujitsu Logistics
  acquisition
• Major new business gains include Braun, HP,
  Lexmark, Samsung, Sun Microsystems, Toshiba and
  Vantec
• New multi-user secure facility for
  semi-conductors at Eindhoven in The Netherlands
  now used by Philips and ASML
• Developed relationship with Lexmark further
• TEU volumes have grown from 1,600 containers in
  1999 to over 18,000 in 2004
• In Jan 2004 Lexmark awarded Exel the handling of
  all air and ocean movements from across Asia to
  the US.

Logistics turnover by sector
15
Automotive

• Good progress globally
• Significant contract logistics wins include
• Americas Continental Tire, DaimlerChrysler and
  Ford
• EMEA Saab and VW
• In Europe, Ford renewed its lead logistics
  partnership with Exel
• Spain and Sweden made steady progress after a
  challenging 2003
• In the Americas, DaimlerChrysler named Exel as
  its International Lead Logistics Partner

Logistics turnover by sector
16
Reconfiguring the supply chain

• Exel won 3PL outsourcing contract in the US for
  Continental Tire in December 2003
• Operations include all distribution of tires from
  manufacturing to final customer including network
  design, warehouse and transportation operations
• Competitive bid with three companies, followed by
  a network design and savings generation
  competition with our primary tire distribution
  competitor
• Five phase implementation which will simplify and
  streamline the distribution network through
  network capacity analysis, systems implementation
  and overall NAFTA rationalisation
• Led by joint steering team comprised of
  executives from both Exel and Continental Tire
  which reviews progress and makes key decisions on
  regular basis
• Global account team assembled and developing a
  formal account plan using Exel Way processes
• Projects within Continental AG now being pursued
  using the full complement of Exel services
  including global freight

17
Developing long term relationships

• In 2004, Exel became International Lead Logistics
  Provider (ILLP) for DaimlerChrysler
• Builds upon a relationship between the two
  companies since 1979
• Services Exel currently provides for
  DaimlerChrysler include
• route planning and operation, parts sequencing,
  dedicated delivery, inbound and outbound shipment
  management, transportation management, and
  information management for reverse logistics
• ILLP role encompasses supply chain management
  from non-North American Free Trade Association
  countries into DaimlerChryslers North American
  plants and its aftermarket logistics
• Key areas of focus for the ILLP program include
  international transportation, supplier
  communications and training, and management
  services
• With Exel as our single point of contact, we
  can more effectively control the flow of
  materials from our international supply base and
  better control the associated supply chain
  costs. William Cook, Sr. Manager, International
  Customs and Supply, DaimlerChrysler

18
Healthcare

• Acquisitions performing well
• Unidocks acquisition in 2003 provides platform
  for growth in Brazil
• Good first six month contribution from Pharma
  Logistics in Italy
• Extra licences secured for new facilities in
  Barcelona and Dublin
• New healthcare service in Australia for
  GlaxoSmithKline
• New business wins include Edwards Lifesciences
  and Philips Medical

Logistics turnover by sector
19
Good track record at integrating acquisitions

• Acquired July 2003, Unidocks is Brazils largest
  logistics provider to the pharmaceutical
  industry with over 35 market share
• Integration Process
• Exel project management tools and integration
  discipline applied
• Shadow management for critical functions
  Operations, Finance, HR
• Achievements
• Financial results exceeded project plan
• Awarded Farmasa business and several smaller
  operations
• Named best warehousing operator in Brazil by
  Febrafarma industry association 2004
• Re-certification in ISO 9001
• Transportation management expertise leveraged and
  implemented in other Brazilian operations
• Customers include

20
Environmental

• Municipal services operations performing well
  particularly Milton Keynes and Southend-on-Sea
• Landfill activities remained strong
• steady volumes and pricing
• new site in Merseyside performing well
• Greatness in Kent expected to open in H2 2004
• Void space
• Consented 28m m3
• Unconsented 37m m3
• Thames riverside EfW plant - Public Inquiry
  result expected soon

21
Financial review

• John Coghlan
• Deputy Chief Executive and Group Finance Director

22
Financial summary
2004 m
2003 m
change
Six months to 30 June at actual exchange rates
Turnover
2,621
2,391
9.6
Operating profit1
74.1
71.7
3.3
Profit before tax1
72.2
67.0
7.8
Basic earnings per share1
16.9p
15.4p
9.7
Pension adjusted earnings per share2
21.6p
20.1p
7.5
Free cash flow
78.2
31.5
Interest cover
gt30x
15x
Dividend per share
8.5p
7.9p
7.6
(1) before goodwill amortisation, exceptional
items and net return on pension schemes (2) as
per basic earnings per share adjusted for
non-cash pension service costs, after tax
23
Profit and loss
2004 m
2003 m
Six months to 30 June at actual exchange rates
Operating profit1
74.1
71.7
Net finance cost
(1.9)
(4.7)
Profit before tax1
72.2
67.0
Goodwill
(15.9)
(13.4)
Exceptional items
49.0
0.9
Net return on pension schemes
18.2
15.2
FRS3 Profit before tax
123.5
69.7
(1) before goodwill amortisation, exceptional
items and net return on pension schemes
24
Exceptional items
2004 m
2003 m
Six months to 30 June at actual exchange rates
Profit on disposal of investment 1
49.6
-
Other
(0.6)
0.9
Total exceptional items
49.0
0.9
(1) Disposal of 6.3m Sirva Inc shares net of
costs. Exel retains 2.8m Sirva Inc shares
25
Cash flow analysis Six months to June 2004
m
200
160
120
80
40
0
-40
26
Pension updateDefined benefit schemes

• Service cost 3m increase in H1 2004 FRS 17
  pension service cost to 23m
• 1.8m of increase related to changes in the FRS
  17 assumptions
• bond discount rate and long term inflation rates
  established as at the end of 2003
• divergence gave rise to exceptional increase in
  non-cash service cost
• principally a UK issue
• 0.9m of increase related to demographic and
  other changes
• Full year service cost estimated at 46m (2003
  41m)
• Commenced 10m p.a. cash contribution for
  principal UK scheme
• Non-cash component of service costs expected to
  be around 36m
• Net return on pension schemes 3m increase in H1
  to 18.2m
• 2004 net return on pension schemes estimated at
  36m (2003 29.8m)

27
Cash flow analysis Six months to June 2004
m
200
160
120
80
40
0
-40
28
Working capital12 month moving average working
capital to billings
29
Cash flow analysis Six months to June 2004
m
200
160
120
80
40
0
-40
30
Balance sheet
30 June 2004 m
Goodwill
477.4
Fixed assets
574.4
Working capital
65.7
Provisions (including deferred tax)
(130.0)
Other net liabilities
(96.0)
Net pensions assets
53.2
944.7
Shareholders funds
770.8
Minority interests
18.7
Net debt
155.2
944.7
Gearing
20.1
Gearing
(excluding net pension assets and liabilities)
21.6
31
Foreign exchange

• Significant movement in US dollar average rates
  year-on-year

Operating profit impact
H1 2003 rate
H1 2004 rate
Impact m
US related
1.61
(4.6)
1.81

1.47
(0.2)
1.48

• 2004 amended guidance

PBT impact of a one cent change
Impact m
US related
0.5m

0.2m
32
Strategic update and outlook

• John Allan
• Chief Executive

33
Exels strategy
global coverage
integrated capability
local strength
breadth of solutions

• Mission
• To be the preferred supply chain partner to
  our customers
• To create new value in the supply chain for our
  customers, employees and shareholders through
  consistently superior delivery of innovative
  business solutions

customer focus
skilled people
consistent processes
supply chain expertise
operational excellence
34
The customer focused strategy is working

• Developing integrated solutions
• Integrated freight management and contract
  logistics services are now provided to
• over 50 of Exels top 20 customers
• 100 of Exels top 15 technology customers
• Supporting customers needs on a global basis
• Over 50 of Exels top 20 customers are now
  provided with services in all of EMEA, the
  Americas and Asia Pacific
• Strengthening and deepening our customer
  relationships
• Top 20 customers now represent 28 of Exels
  logistics revenue

35
The customer focused strategy is working
Exels leadership in the delivery of customer
focused solutions, incorporating leading edge IT
solutions is widely recognised

• Gartner were extremely impressed with the
  relationship between Nokia and the Exel Nokia
  team. In our opinion, this is one of the best
  service provider/service recipient relationships
  we have seen Anthony Quayle, Vice
  President, Gartner

36
2004 strategic priorities

• Group
• Balanced growth across key sectors and regions
• Regions
• Major Asian economies including China
• Central and Eastern Europe
• Sectors
• Non-food retail, particularly in the US
• Services
• Seafreight including consolidation services

37
Tibbett Britten strengthens Exels geographic
reach, customer relationships and capabilities
Combined
Central Eastern Europe
Geographic presence (CL)
Mexico Canada
Asia Pacific
US retail


Relationships
Non-food retail
Fashion logistics
Fashion logistics
Capabilities
Reverse logistics
Resource base
The above analysis reflects Exels belief of the
respective strengths of the individual and
combined businesses
38
Tibbett Britten status update

• 16 June Offer announced
• Exel bought 8 Tibbett Britten stock
• Key customers contacted
• Late June Offer document posted
• Class 1 circular distributed
• Competition filings completed
• Mid July Clearance received from Canadian and
  South Africa
• authorities
• 26 July Exels EGM resolution passed
• 27 July 59 acceptances at second close
• 6 Aug Next close
• Early Aug Expect offer to go unconditional
  subject to receipt of outstanding
  competition clearances

39
Delivering operational excellence

• Exel took over the operation of House of Frasers
  National Distribution Centre in June 2003 with
  the challenge to continually improve cost and
  service levels over the next five years
• Management fee based contract with value share
  incentivisation based on KPIs
• Operational improvements made during Exels
  first 7 months
• Further Exel services provided include
• Off site store management for central London
  store
• RFID tagging of garments from China
• Pre-retailing services (e.g. Euro price-tagging
  for Dublin store)

Key fashion lines in-store ahead of major
competitors Product availability maintained
through peak trading for first time ever Greater
volume handled at lower cost
Shrinkage levels down 80 Sickness levels down
50 (5-6 pa from 12-14 pa) Costs reduced by
350,000 through overall efficiencies
In comparison with the equivalent period
operated by the previous provider
40
Fujitsu Logistics updateCompleted 1 June 2004

• Provides a well-developed growth platform in the
  strategically important Japanese domestic
  contract logistics market
• Good progress already made with integration
  activities in first two months
• Appointment of new Vice President with background
  in IT and manufacturing services industry whose
  experience includes over 8 years in Japan with
  Celestica and Fujitsu
• Joint functional workgroups comprising new
  employees, previous Fujitsu employees and
  functional experts deployed across core divisions
  (finance, commercial, IT and HR) to facilitate
  integration and deployment of best practice
• Employee visits to key Exel sites in Asia Pacific
  to understand Exels operating processes,
  particularly as applied to other, non-hi-tech
  industry sectors
• Selecting new combined Japanese location for
  integrated head office function
• 0.4m profit from operations in June 2004

41
Outlook

• Good operational and strategic progress made
  during first six months of 2004
• Exels recent acquisition programme will provide
  significant opportunities for the Group to
  enhance its competitive advantage
• Combined with improved economic conditions in
  most regions of the world and with positive
  trends in trading, Exel believes it is well
  positioned to make good underlying progress in
  2004

42
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