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1 the fast-growing express delivery company November 2003 2003/04 Interim Results Presentation Business Post Group plc 1.

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Presentation on theme: "1 the fast-growing express delivery company November 2003 2003/04 Interim Results Presentation Business Post Group plc 1."— Presentation transcript:

1 1 the fast-growing express delivery company November 2003 2003/04 Interim Results Presentation Business Post Group plc 1

2 2 Presenters Paul Carvell - Chief Executive Peter Fitzwilliam - Finance Director Russell Hodgson - Group Managing Director, Parcel Services

3 3 Programme IntroductionPaul Carvell Financial ReviewPeter Fitzwilliam Business Review - Parcel ServicesRussell Hodgson - Other ServicesPaul Carvell ConclusionPaul Carvell

4 4 Background First half of Year Two Three Year Plan objective substantial profit growth Year One was investment phase

5 5 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

6 6 Summarised Profit and Loss Account Six months to 30 September 20032002Increase Turnover (£m)89.472.923% Operating profit before goodwill (£m)8.06.818% Pre-tax profit (£m)8.07.113% Earnings per share (p)10.59.313% Dividend per share (p)5.955.606% Strong progress in H1

7 7 Revenues per Working Day

8 8 Organic Revenue Growth - by Business Unit (£m) *Excludes BXT (acquired in February 2003) and Weaver Pallet Express (July 2003) 20032002Increase Express63.059.07% International9.98.516% HomeServe6.92.6165% UK Today2.91.681% Total Organic*82.771.715% Two-speed strategy delivering strong growth overall

9 9 Gross Profit Margins 21.1% vs 21.5% Affected by business unit mix newer businesses acquisitions Affected by network structure corporate/franchise mix

10 10 H1H2H1on H1on H2 £m£m£m Like-for-like8.99.710.417%7% Acquisitions--0.6 8.99.711.024%13% Overheads 2002/032003/04Change Rate of increase in underlying overheads is slowing

11 11 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)

12 12 Interest Income £0.1m vs £0.3m Weaver acquisition Working capital requirements £10m term loan

13 13 Summarised Cash Flow Statement Six months to 30 September20032002£m Pre-tax profit8.07.1 Depreciation1.81.8 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) Financing10.10.1 Net cash flow(5.5)(5.6)

14 14 Summarised Balance Sheet As at 30 September 20032002£m Goodwill10.6- Fixed assets33.230.4 Debtors40.930.3 Net (debt)/cash(13.9)1.1 Other creditors <1 year(21.1)(15.3) Long-term liabilities(1.3)(1.0) Net assets48.445.5 RONA23.1%22.0% Balance sheet remains strong; RONA improving

15 15 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

16 16 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

17 17 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

18 18 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

19 19 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

20 20

21 21 Business Review Focus on greater operational leverage Express - Focus on yield International - Eurodis launch HomeServe - Rapid growth Network Services - Optimise infrastructure Technology - Market leading Cross-selling Parcel Services

22 22 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 Business Review UK Pallets

23 23 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

24 24 Business Review UK Mail giving you the choice 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

25 25 Strategy - 3 Year Plan Express to remain coreFurther market share gains Substantially develop HomeServe, International and UK Today by bringing in expertiseExcellent sales growth Identify new growth opportunitiesUK Mail, UK Pallets Consider strategic acquisitionsBXT, UK Pallets Maximise use of existing infrastructureongoingParcel Services will assist Two-speed strategy backed up by greater focus

26 26 Strategy - Markets MarketMarket Market Share % Size £bnGrowth %20012003 Existing Markets Express1.6c5-6c6c7.5 International1.0c10<1c2 HomeServe0.2Rapidc1c5 UK Today0.3Consolidating<1c2 Prospective Markets UK Pallets0.9>30Nilc3 UK Mail5.03NilNil

27 27 Current Trading and Prospects October in line with expectations Board expects further good progress this year Very confident about long term potential

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