the fastgrowing express delivery company

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Business Post Group plc
the fast-growing express delivery company
2003/04 Interim Results Presentation
November 2003
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Presenters
Paul Carvell - Chief Executive Peter Fitzwilliam
- Finance Director Russell Hodgson - Group
Managing Director, Parcel Services
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Programme
Introduction Paul Carvell Financial Review Peter
Fitzwilliam Business Review - Parcel
Services Russell Hodgson - Other Services Paul
Carvell Conclusion Paul Carvell
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Background

• First half of Year Two
• Three Year Plan objective
• substantial profit growth
• Year One was investment phase

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Highlights

• Turnover up 23 to 89.4m
• Operating profit before goodwill up 18 to 8.0m
• Express revenues up 7
• Substantial percentage growth in HomeServe and UK
  Today
• Weaver Pallet Express acquired
• Board expects further progress in current year
  and remains very confident about the long-term

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Summarised Profit and Loss Account
Six months to 30 September 2003 2002 Increase T
urnover (m) 89.4 72.9 23 Operating profit
before goodwill (m) 8.0 6.8 18 Pre-tax profit
(m) 8.0 7.1 13 Earnings per share
(p) 10.5 9.3 13 Dividend per share
(p) 5.95 5.60 6
Strong progress in H1
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Revenues per Working Day
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Organic Revenue Growth - by Business Unit (m)
2003 2002 Increase Express 63.0 59.0 7 Internat
ional 9.9 8.5 16 HomeServe 6.9 2.6 165 UK
Today 2.9 1.6 81 Total Organic 82.7 71.7 15
Excludes BXT (acquired in February 2003) and
Weaver Pallet Express (July 2003)
Two-speed strategy delivering strong growth
overall
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Gross Profit Margins

• 21.1 vs 21.5
• Affected by business unit mix
• newer businesses
• acquisitions
• Affected by network structure
• corporate/franchise mix

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Overheads
2002/03 2003/04 Change
H1 H2 H1 on H1 on H2 m m m Like-for-like 8.9
9.7 10.4 17 7 Acquisitions - - 0.6 8.9 9.7 11.
0 24 13
Rate of increase in underlying overheads is
slowing
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Operating Profit Margins

• 8.8 vs 9.3
• Affected by business unit mix and overheads
  growth
• H2 seasonality
• Target is to achieve 02/03 levels (excl Weaver)

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Interest Income

• 0.1m vs 0.3m
• Weaver acquisition
• Working capital requirements
• 10m term loan

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Summarised Cash Flow Statement
Six months to 30 September 2003 2002 m m Pre-ta
x profit 8.0 7.1 Depreciation 1.8 1.8 Working
capital (3.7) (4.3) Tax (2.2) (2.1) Capital
expenditure (3.8) (2.5) Trading cash flows
0.1 - Acquisitions (9.7) - Dividends (6.0) (5.7)
Cash flow before financing (15.6) (5.7) Financing
10.1 0.1Net cash flow (5.5) (5.6)
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Summarised Balance Sheet
As at 30 September 2003 2002 m m Goodwill 10.6
- Fixed assets 33.2 30.4 Debtors 40.9 30.3 Net
(debt)/cash (13.9) 1.1 Other creditors lt1
year (21.1) (15.3) Long-term liabilities (1.3) (1.
0) Net assets 48.4 45.5 RONA 23.1 22.0
Balance sheet remains strong RONA improving
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Business Overview

• Parcel Services
• Express - UK business-to-business parcels
• International - International parcels and mail
• HomeServe - UK business-to-consumer parcels
• Network Services - Shared activities centrally
  managed
• UK Today - UK (same day) business couriers
• UK Pallets - UK business-to-business freight
• UK Mail - UK business mail

The provision of time-definite delivery services
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Business Review
Express

• Core business - although reduced to 70 from 81
  of Group turnover
• Revenues up 7 to 63.0m
• Action taken to improve quality of revenue
• Focus remains on premium service

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Business Review
International

• 11 (2002 12) of Group turnover
• Revenues up 16 to 9.9m
• FedEx relationship - most of the above - remained
  strong
• International Mail, launched in July 2002, made
  good progress
• Eurodis road deliveries network commenced trails
  on 1 October prior to launch in January
• Market, worth 1.0bn p.a., is growing twice as
  fast as domestic market

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Business Review
HomeServe

• 8 (2002 4) of Group turnover
• Revenues up 165 to 6.9m
• New customers include Walsh Western International
• Further new services being explored
• Focus on 250m p.a. upper end of the market

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Business Review
Network Services

• Level of on-time deliveries consistently high
• Unit cost increases well below inflationary
  levels
• Programme to improve customer satisfaction under
  way
• Programme to improve staff satisfaction under way

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(No Transcript)
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Business Review

• Express - Focus on yield
• International - Eurodis launch
• HomeServe - Rapid growth
• Network Services - Optimise infrastructure
• Technology - Market leading
• Cross-selling

Parcel Services
Focus on greater operational leverage
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Business Review

• Weaver Pallet Express acquired in late July for
  9-12.5 million
• Pro forma turnover and EBIT of 16.2 million and
  1.2 million
• Nationwide express pallet delivery service
  through partnership network of 70 independent
  haulage businesses, with national hub at
  Lichfield (Staffs)
• No 4, but outperforming fast-growing market
• Excellent prospects

• UK Pallets

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Business Review
UK Today

• 3 (2002 2) of Group turnover, with BXT a
  further 2 (2002 nil)
• Revenues up 81 to 2.9m
• Targeting national contracts
• FastPart service to be introduced in H2
• BXT technical courier trading well and developing
  in line with expectations
• UK courier market estimated to be worth over
  300m p.a

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giving you the choice
Business Review
UK Mail

• Unique two-day Business Class proposition
• Definitive determination by Postcomm of access
  terms, requested in April 2002, expected by
  Christmas 2003
• Operational details to be agreed
• Service will not start before April 2004 at the
  earliest
• 0.1m H1 costs expensed
• 5bn p.a. market opportunity

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Strategy - 3 Year Plan

• Express to remain core Further market share
  gains
• Substantially develop HomeServe, International
  and UK Today by bringing in expertise Excellent
  sales growth
• Identify new growth opportunities UK Mail, UK
  Pallets
• Consider strategic acquisitions BXT, UK Pallets
• Maximise use of existing infrastructure ongoing Pa
  rcel Services will assist

Two-speed strategy backed up by greater focus
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Strategy - Markets
Market Market Market Share
Size bn Growth 2001 2003 Existing
Markets Express 1.6 c5-6 c6 c7.5 International 1.0
c10 lt1 c2 HomeServe 0.2 Rapid c1 c5 UK
Today 0.3 Consolidating lt1 c2 Prospective
Markets UK Pallets 0.9 gt30 Nil c3 UK
Mail 5.0 3 Nil Nil
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Current Trading and Prospects

• October in line with expectations
• Board expects further good progress this year
• Very confident about long term potential