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“the fast-growing express delivery company”

Business Post Group plc. “the fast-growing express delivery company”. 2003/04 Interim Results Presentation. November 2003. 1. Presenters. Paul Carvell - Chief Executive Peter Fitzwilliam - Finance Director Russell Hodgson - Group Managing Director, Parcel Services. Programme.

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“the fast-growing express delivery company”

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

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

  3. Programme Introduction Paul Carvell Financial Review Peter Fitzwilliam Business Review - Parcel Services Russell Hodgson - Other Services Paul Carvell Conclusion Paul Carvell

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

  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. Summarised Profit and Loss Account Six months to 30 September2003 2002 Increase Turnover (£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

  7. £800k £720k £640k £560k £480k £400k Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 00/01 01/02 02/03 03-04 03-04 Incl Weaver Revenues per Working Day

  8. Organic Revenue Growth - by Business Unit (£’m) 2003 2002 Increase Express 63.0 59.0 7% International 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

  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. Overheads 2002/032003/04 Change H1H2H1 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

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

  13. Summarised Cash Flow Statement Six months to 30 September2003 2002 £m £m Pre-tax profit 8.0 7.1 Depreciation 1.81.8 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) Financing 10.1 0.1Net cash flow (5.5) (5.6)

  14. Summarised Balance Sheet As at 30 September2003 2002 £m £m Goodwill 10.6 - Fixed assets 33.2 30.4 Debtors 40.930.3 Net (debt)/cash (13.9) 1.1 Other creditors <1 year (21.1) (15.3) Long-term liabilities (1.3) (1.0) Net assets 48.4 45.5 RONA 23.1% 22.0% Balance sheet remains strong; RONA improving

  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. 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. 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. 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. 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. 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

  21. UK Pallets 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

  22. 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

  23. 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

  24. 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 Parcel Services will assist Strategy - 3 Year Plan Two-speed strategy backed up by greater focus

  25. 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 <1 c2 HomeServe 0.2 Rapid c1 c5 UK Today 0.3 Consolidating <1 c2 Prospective Markets UK Pallets 0.9 >30 Nil c3 UK Mail 5.0 3 Nil Nil

  26. 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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