bpost SA/NV

Earnings Release • Aug 7, 2017

Investor presentation - Interim financial report 2Q17

Financial Calendar

More on corporate.bpost.be/investors

08.11.2017 (17:45 CET) Quarterly results 3Q17

04.12.2017 (17:45 CET) Interim dividend 2017 announcement

07.12.2017 Ex-dividend date (interim dividend)

11.12.2017 Payment date of the interim dividend

Disclaimer

This presentation is based on information published by bpost in its Second Quarter 2017 Interim Financial Report, made available on August, 7th 2017 at 5.45pm CET on corporate.bpost.be/investors. This information forms regulated information as defined in the Royal Decree of 14 November 2007. The information in this document may include forwardlooking statements1, which are based on current expectations and projections of management about future events. By their nature, forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other factors because they relate to events and depend on circumstances that will occur in the future whether or not outside the control of the Company. Such factors may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no assurance is given that such forward-looking statements will prove to have been correct. They speak only as at the date of the Presentation and the Company undertakes no obligation to update these forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements. This material is not intended as and does not constitute an offer to sell any securities or a solicitation of any offer to purchase any securities.

1 as defined among others under the U.S. Private Securities Litigation Reform Act of 1995

Highlights of 2Q17

2Q17

Revenues up 18.2%

2017 outlook maintained

• Driven by acquisitions and excellent parcels growth € 699.6m

Underlying Domestic Mail evolution

• Transactional Mail impacted by tough comparables and e-substitution
• Strong positive advertising mail volume trend

-6.7%

EBITDA in line with guidance driven by outstanding parcels performance, acquisitions and strict organic cost control

€ million

4

Summary of key financials 2Q17

€ million

	2Q16	2Q17	% Δ
Total operating income (revenues)	591.9	699.6	18.2%
Operating expenses	432.5	540.3	24.9%
EBITDA	159.4	159.3	-0.1%
Margin (%)	26.9%	22.8%
EBIT	136.8	136.0	-0.5%
Margin (%)	23.1%	19.4%
Profit before tax	130.2	140.1	7.6%
Income tax expense	42.3	40.4
Net profit	87.9	99.7	13.5%
FCF	(14.6)	0.8	-
bpost S.A./N.V. net profit (BGAAP)	81.4	76.5	-6.0%
Net Debt/ (Net cash), at 30 June	(729.9)	(596.2)	-18.3%

Total operating income (revenues)

€ million

		2Q16 comparable	∆	2Q17	% ∆
	Transactional mail	223.9	-22.3	201.6	-9.9%
Domestic mail	Advertising mail	60.8	1.8	62.6	2.9%
	Press	71.6	0.5	72.1	0.7%
	Domestic parcels1	46.1	8.5	54.6	18.4%
Parcels	International parcels	41.5	13.1	54.5	31.5%
	Logistic solutions	2.8	33.6	36.4	-
	International mail	39.7	0.4	40.1	1.0%
Additional sources	Value added services	27.0	-2.1	24.9	-7.9%
of revenues	Banking and financial	47.8	0.0	47.8	0.0%
	Distribution	-	24.2	24.2	-
	Retail & Other	23.2	48.1	71.3	207.1%
	Corporate	7.6	1.9	9.6	25.6%
TOTAL		591.9	107.6	699.6	18.2%

6

¹ Defined as domestic and Belgian in- and outbound

2Q17

Domestic mail underlying volume trend at -6.7% due to tough comparables and e-substitution

Total operating income (revenues), € million

• Despite a tough comparable base at -3.8% for 2Q16, 1H17 came out at -5.7% perfectly in line with guidance.

7

• Transactional Mail: shift towards cheaper products and increased e-substitution.
• Advertising Mail: strong performance with positive volume trend driven by focus segments and indirect channels.
• Press: Slightly lower volume trend mainly due to phasing.

	Reported					Underlying 1
	FY16	1Q17	2Q17	1H17	FY16	1Q17	2Q17	1H17
Transactional mail	-5.9%	-6.0%	-11.0%	-8.4%	-5.9%	-7.0%	-9.9%	-8.4%
Advertising mail	-3.0%	2.7%	4.5%	3.3%	-3.0%	2.3%	4.5%	3.3%
Press	-2.8%	-3.1%	-5.0%	-4.0%	-2.8%	-3.1%	-5.0%	-4.0%
Domestic Mail	-5.0%	-3.9%	-7.4%	-5.6%	-5.0%	-4.7%	-6.7%	-5.7%

• Impacted by regulatory decision on small user basket pricing.

¹ 2Q17 had 2 working days less than 2Q16 for stamps and franking machines.

Outstanding parcels performance, growth in Logistic Solutions driven by DynaGroup

Total operating income (revenues), € million

² New category, previously called Special Logistics

Additional sources of revenues driven by Ubiway acquisition

Total operating income (revenues), € million

¹ New category

Organic cost evolution on track. Opex influenced by acquisitions (€ +107.5m). Increase in transport cost in line with positive international business evolution.

Operating expenses excl. depreciation and amortization, € million

FDM, Apple Express, Ubiway, DynaGroup, Parcify and de Buren 4.4 8.5 432.5 107.5 Transport 2Q17 432.8 Other SG&A 540.3 Other costs +0.3 -7.9 17.2 -4.7 2Q16 Payroll & Interim 22.5 15.6 52.2

• Excluding acquisitions, increase driven by growth in the international business.

10

• Average reported FTE & interim increase of 1,499 leading to € +21.5m additional costs and explained by the integration of new subsidiaries.
• Favourable FTE mix of € -3.3m driven by the recruitment of auxiliary postmen, less interims and more students.
• Price effect and others of € -0.5m mainly salary indexation, CLA, merit increases and some phasing elements compensated by tax shift and employee benefits.
• Excluding acquisitions, decrease of third party remuneration (last year strategic projects) and insurance costs, partly offset by an increase in rent and rental costs and energy costs (linked to increased fuel price).
• Excluding acquisitions, delta explained by the evolution of provisions last year.

2Q17

Increase in operating FCF1 driven by lower cash outflows for investment activities

€ million	2Q16	2Q17	Delta
Cash flow from operating activities	+12.2	+2.8	-9.4
Cash flow from investing activities	-26.8	-2.0	+24.8
Operating free cash flow	-14.6	+0.8	+15.4
Financing activities	-47.4	-49.4	-2.0
Net cash movement	-62.0	-48.6	+13.4
Capex	-19.3	-18.9	+0.4

Primarily working capital evolution: € -7.7m, mainly explained by the increased recoverable VAT in 2016

Mainly due to:

• Proceeds from sale of buildings: € -2.5m
• Lower capex: € +0.4m
• Price adjustment Ubiway acquisition: € +3.1m
• Cash outflow Apple Express and CityDepot in 2016: resp. € +11.4m and € +0.2m
• Investment securities: € +12.0m

• Increased final dividend in 2017: € -2.0m

Strong balance sheet structure

€ million

Assets			Equity and liabilities
Cash, cash equivalents & investment securities	2,290.3 550.9	2,335.0 658.5	Interest-bearing loans & borrowings, bank overdrafts Provisions	2,290.3 58.0 58.7	2,335.0 62.3 55.3
Other assets Investments in associates	58.4 373.7	53.7 333.7	Trade & other payables	1,037.5	998.1
Trade & other receivables Inventories	484.6 36.7	369.7 40.3	Employee benefits	356.7	337.5
PPE & intangible assets	786.0	879.2	Total equity	779.3	881.8
	Dec 31, 2016	Jun 30, 2017		Dec 31, 2016	Jun 30, 2017

Outlook for 2017 – maintained

Recurring EBITDA and dividend payment at the same level as 2016

Revenues

Increase driven by:

• Growth in domestic parcels: volume double digit, around -4% price/mix effect
• Continued growth in international parcels supported by newly acquired businesses
• Growing Ubiway Retail revenues
• Partly offset by decrease in domestic mail¹: volume between -5% and -6%, average domestic mail price increase of 1.5%

Operating expenses

Increase driven by:

• Increase in transport cost (reflecting growth in International Parcels)
• Consolidation of acquired businesses
• Salary indexation confirmed as of July 2017
• Partly compensated by continued productivity improvements and optimized FTE mix, and
• Continued cost optimization

Capex

• Recurring and Vision 2020 investments ~€ 90m
• Business development investments: Ubiway < € 10m

1H17

Domestic mail volume decline compensated by excellent parcels performance, acquisitions and organic cost savings

15

€ million

Summary of key financials 1H17

€ million

	1H16	1H17	% Δ
Total operating income (revenues)	1,196.5	1,421.1	18.8%
Operating expenses	861.2	1,084.8	26.0%
EBITDA	335.3	336.3	0.3%
Margin (%)	28.0%	23.7%
EBIT	290.7	290.2	-0.2%
Margin (%)	24.3%	20.4%
Profit before tax	279.5	290.4	3.9%
Income tax expense	95.7	94.7
Net profit	183.7	195.8	6.5%
FCF	231.3	167.1	-27.8%
bpost S.A./N.V. net profit (BGAAP)	171.4	170.8	-0.3%
Net Debt/ (Net cash), at 30 June	(729.9)	(596.2)	-18.3%

1H17

Total operating income (revenues)

€ million

		1H16 comparable	∆	1H17	% ∆
	Transactional mail	447.7	-31.9	415.8	-7.1%
Domestic mail	Advertising mail	125.9	4.0	130.0	3.2%
	Press	144.4	2.7	147.1	1.9%
	Domestic parcels1	90.0	17.0	107.0	18.8%
Parcels	International parcels	83.3	24.5	107.8	29.4%
	Logistic solutions	5.5	64.9	70.3	-
	International mail	78.8	3.3	82.2	4.2%
	Value added services	52.5	-1.6	50.9	-3.1%
Additional sources	Banking and financial	96.3	-2.0	94.4	-2.0%
of revenues	Distribution²	-	50.4	50.4	-
	Retail & Other	47.0	95.0	142.0	202.0%
	Corporate	25.0	-1.7	23.3	-6.8%
TOTAL		1,196.5	224.6	1,421.1	18.8%

17

¹ Defined as domestic and Belgian in- and outbound

² While the purchase price allocation for the Ubiway acquisition has not been finalized yet, this exercise has led to some alignments of the accounting policies of Ubiway and hence some restatements of the figures reported during 1Q17. Some revenues which had been booked in 1Q17 under the principal model have been restated to the agent model in order to be in line with the accounting policies of the bpost Group and with IAS 18 "Revenue". This also necessitates no further rework under IFRS 15 "revenue from contracts with customers" which will become applicable as of January 1st, 2018. As a consequence certain sales and cost of sales are now being presented on a net basis, this led to a decrease of revenues and materials costs of € 42.5m for 1Q17, within the MRS operating segment but didn't have an impact on the EBITDA, EBIT or net result.

1H17

Domestic mail mainly impacted by tough comparables and increased e-substitution in Transactional mail

Total operating income (revenues), € million

• Despite tough comparable base at -3.9% for 1H16, 1H17 still in line with guidance at -5.7%.
• Transactional Mail: shift towards cheaper products and increased e-substitution.
• Advertising Mail: strong performance with positive volume trend driven by focus segments and indirect channels.
• Press: Slightly lower volume trend mainly due to periodicals.

		Reported				Underlying 1
-32.4		FY16	1Q17	2Q17	1H17	FY16	1Q17	2Q17	1H17
	Transactional mail	-5.9%	-6.0%	-11.0%	-8.4%	-5.9%	-7.0%	-9.9%	-8.4%
	Advertising mail	-3.0%	2.7%	4.5%	3.3%	-3.0%	2.3%	4.5%	3.3%
	Press	-2.8%	-3.1%	-5.0%	-4.0%	-2.8%	-3.1%	-5.0%	-4.0%
	Domestic Mail	-5.0%	-3.9%	-7.4%	-5.6%	-5.0%	-4.7%	-6.7%	-5.7%

• Impacted by regulatory decision on small user basket pricing.

Excellent performance in domestic parcels and continued growth in international

19

Total operating income (revenues), € million

Additional sources of revenues driven by Ubiway acquisition

Total operating income (revenues), € million

1H17

Cost savings on track

Operating expenses excl. depreciation and amortization, € million

• 2016 benefited from a positive impact from the increase of the recoverable VAT from 2016 vs. 2015 (EUR +4.0m) in other costs.
• Excluding acquisitions, increase driven by growth in the international business and lower favorable settlements in previous year's terminal dues (€ 1.9m).
• Average reported FTE & interim increase of 1,543 leading to € +42.4m additional costs explained by the integration of FTEs from new subsidiaries.
• Favourable FTE mix of € -7.2m driven by the recruitment of auxiliary postmen, less interims and more students.
• Price effect & others of € +2.2m mainly explained by salary indexation, CLA, merit increases and some phasing elements partly compensated by tax shift and employee benefits.
• Excluding acquisitions, decrease of insurance costs and third party remuneration (last year strategic projects), partly offset by an increase in rent and rental and energy costs (linked to increased fuel price).
• Excluding acquisitions, delta explained by the evolution of provisions last year.

Decrease in operating FCF1 mainly driven by acquisitions and phasing in working capital evolution

Cash flow from operating activities +293.3 +258.4 -34.9 Cash flow from investing activities -62.0 -91.4 -29.4
Operating free cash flow +231.3 +167.1 -64.3
Financing activities -49.5 -49.7 -0.2
Net cash movement +181.8 +117.3 -64.5
Capex -31.7 -31.8 -0.1

Mainly due to:

• Alpha pay-outs: € +16.1m
• Working capital evolution : € -50.6m, mainly explained by a negative phasing in suppliers, the increased recoverable VAT in 2016 and Social Security payment terms

Mainly due to:

• Proceeds from sale of buildings: € -3.7m
• M&A activities: € -37.6m
• Investment securities: € +12.0m
• Payment of a dividend to minority interest in 2016: € +2.0m compensated by higher final dividend in 2017: € -2.0m

Key contacts

Baudouin de Hepcée Director External Communication, Investor Relations & Public Affairs	• Email: baudouin.dehepcee@bpost.be • Direct: +32 (0) 2 276 22 28 Mobile: +32 (0) 476 49 69 58 • • Address: bpost, Centre Monnaie, 1000 Brussels, Belgium
Saskia Dheedene Manager Investor Relations	• Email: saskia.dheedene@bpost.be Direct: • +32 (0) 2 276 76 43 • Mobile: +32 (0) 477 92 23 43 • Address: bpost, Centre Monnaie, 1000 Brussels, Belgium