bpost SA/NV — Investor Presentation 2017

Nov 8, 2017

Third quarter 2017 results

Analyst call

Koen Van Gerven, CEO Koen Beeckmans, CFO

Brussels – November 9, 2017

Investor presentation - Interim financial report 3Q17

Financial Calendar

More on corporate.bpost.be/investors

04.12.2017 (17:45 CET) Interim dividend 2017 announcement

07.12.2017 Ex-dividend date (interim dividend)

11.12.2017 Dividend payment date

13.03.2018 (17:45 CET) Annual results FY2017 02.05.2018 (17:45 CET) Quarterly results 1Q18

09.05.2018 Ordinary General Meeting of Shareholders

15.05.2018 Ex-dividend date

17.05.2018 Payment date of the dividend 08.08.2018 (17:45 CET) Quarterly results 2Q18

07.11.2018 (17:45 CET) Quarterly results 3Q18

03.12.2018 (17:45 CET) Interim dividend 2018 announcement

Disclaimer

This presentation is based on information published by bpost in its Third Quarter 2017 Interim Financial Report, made available on November, 8th 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.

Highlights of 3Q17

Revenues up 20.4%

• Driven by very strong growth in Parcels and acquisitions partly offset by lower Domestic Mail revenues in line with guidance

Domestic Mail underlying evolution as expected

• Continued e-substitution but overall underlying volume trend in line with guidance

Very strong parcels performance

• Domestic: very strong reported volume increase driven by strong e-commerce growth and C2C; price/mix effect of -7.1% fully mix related
• International: mainly driven by increase in flows from Asia

Organic cost evolution on track

-5.3%

€ 647.6m

+32.8%

+ € 9.1m

EBITDA slightly up and driven by very strong Parcels growth and acquisitions

€ million

Total operating income (revenues)

Summary of key financials 3Q17

€ million

	3Q16	3Q17	% Δ
Total operating income (revenues)	538.1	647.6	20.4%
Operating expenses	428.0	537.3	25.5%
EBITDA	110.1	110.3	0.2%
Margin (%)	20.5%	17.0%
EBIT	87.8	87.2	-0.7%
Margin (%)	16.3%	13.5%
Profit before tax	89.0	91.4	2.7%
Income tax expense	28.2	31.4
Net profit	60.8	60.0	-1.3%
FCF	(71.9)	(76.3)
bpost S.A./N.V. net profit (BGAAP)	50.5	52.0	3.0%
Net Debt/ (Net cash), at 30 September	(657.7)	(518.6)	-21.1%

5

Total operating income (revenues) € million

3Q16 comparable ^∆ 3Q17 % ∆ Transactional mail 190.6 -13.3 177.4 -7.0% Advertising mail 55.7 -0.1 55.6 -0.2% Press 68.9 -1.1 67.8 -1.6% Domestic parcels¹ 42.4 10.1 52.5 23.7% International parcels 42.7 9.1 51.8 21.4% Logistic solutions 2.7 36.0 38.7 - International mail 36.7 -1.5 35.3 -4.0% Value added services 23.8 1.4 25.2 5.9% Banking and financial 46.1 -1.4 44.8 -2.9% Distribution - 21.9 21.9 - Retail & Other 23.9 46.0 69.9 192.2% Corporate 4.4 2.3 6.7 52.8% 538.1 109.5 647.6 20.4% Domestic mail Parcels Additional sources of revenues TOTAL

¹ Defined as domestic and Belgian in- and outbound

Domestic Mail underlying volume trend at -5.3% in line with guidance

7

Total operating income (revenues), € million

Very strong parcels performance, growth in Logistic Solutions driven by DynaGroup

Total operating income (revenues), € million

¹ Defined as domestic and Belgian in- and outbound

² New category, previously called Special Logistics

Additional sources of revenues driven by the acquisition of Ubiway

Total operating income (revenues), € million

Organic cost evolution on track. Opex influenced by acquisitions (€ +103.3m). 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

• Excluding acquisitions, increase driven by growth in the international business.
• Average reported FTE & interim increase of 1,488 leading to € +20.0m additional costs and explained by the integration of new subsidiaries.
• Favourable FTE mix of € -2.9m mainly driven by the recruitment of auxiliary postmen.
• Price effect & others for an impact of € -2.6m explained by salary indexation, CLA, merit increases, the evolution of provisions and phasing on CLA 2016.
• Excluding acquisitions, mainly increase of rent and rental costs (new Brussels sorting centre), M&A related costs, maintenance and repairs, energy costs and ICT outsourcing.

Lower operating FCF1 due to higher capex

€ million	3Q16	3Q17	Delta
Cash flow from operating activities	-64.2	-38.9	+25.2
Cash flow from investing activities	-7.8	-37.3	-29.5
Operating free cash flow	-71.9	-76.3	-4.3
Financing activities	-0.1	-0.1	+0.0
Net cash movement	-72.0	-76.3	-4.3
Capex	-11.3	-35.1	-23.8

CF from operating activities in line with 3Q16, excluding:

• Terminal dues payment, phasing in 3Q16: € +16.8m
• Lower tax prepayment in 3Q17: € +10.0m
• Proceeds from sale of buildings: € -3.0m
• Higher capex: € -23.8m mainly explained by Vision 2020
• Cash outflow Apple Express in 2017: € -2.7m

Strong balance sheet structure

€ million

2,290.3	2,348.9	Interest-bearing	2,290.3	2,348.9 69.9 47.4
550.9	588.6	Provisions
58.4	47.9	Trade & other		978.0
373.7	336.7
484.6	438.4	Employee benefits	356.7	323.4
36.7
786.0	896.5	Total equity	779.3	930.2
		40.9	loans & borrowings payables	Equity and liabilities 58.0 58.7 1,037.5

Sept 30, 2017 Dec 31, 2016

Sept 30, 2017 Dec 31, 2016

Outlook for 2017 – reconfirmed

Recurring EBITDA and dividend payment at the same level as 2016

Revenues

Increase driven by:

• Growth in domestic parcels: volume double digit, around -5% 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

New Brussels Sorting Centre fully operational

• Total surface: 103,000 m²
• Working area: 80,000 m²
• Letter sorting hall: 50,000 m² (2 floors)
• Parcel sorting hall: 25,000 m²
• Parking on the roof: 25,000 m²
• Offices: 5,800 m²
• 1,500 FTEs
• 1 high-tech parcel sorting machine (PSM)
• Operational 24/7 with 30 high-tech machines
• Capacity: 300,000 parcels/day & 2,500,000 letters/day

Appendix:

Additional information Radial

Brussels – November 9, 2017

Radial is offering integrated e-commerce logistics services

Payment, tax, & fraud protection services

Warehouse management & fulfillment services

Transport management & last-mile delivery and returns

Managing a large network of carriers for a seamless customer experience

Customer Care Services & Technology

Having a single view of customer's history and profile combined with leading selfservice tech

Optimizing efficiency of order management, shipfrom-store and instore pick up

Processing global payments, maximizing successful authorization and reconciling tax districts and global duties

Adapting warehouse management and parcels preparation to e-commerce with pragmatic automation

~15-20%

Radial

Radial is the product of the 2016 integration of eBay Entreprise (eCommerce) and Innotrac (fulfillment)

Source: Press search, Management presentation

Market dynamics in the US

• As logistics accounts for ~20-25% of the revenues, addressable market represents \$ 25-35bn

Type of player	Description	Examples US not exhaustive	Examples EU not exhaustive
	Dominates e-commerce (logistics) sector across entire value chain (incl. market place)
E2E integrated players	Offers services across the full value chain (including warehousing, fulfillment, payments, claims handling), some focus on 1 specific industry
Value chain specialists	Focuses on specific parts of the value chain (e.g. only web services & digital marketing or only logistics & customer services)
Insourcing	Insources (part of) e-commerce logistics

How does Radial differentiate itself from Amazon?

• Product offering Some brands and retailers only offer selected products on Amazon and the rest via own webstore
• Customer relationship Retailers/brands increasingly want to own the customer relationship themselves
• Brand value Some brands and retailers do not want to be compared with Amazon's suggestions for other brands
• Fulfillment Some customers want to use Amazon's marketplace but use Radial for fulfillment and warehousing

Background information about the integration plans

Radial is the result of an integration of Innotrac and eBay Enterprise. Radial's management has already made significant progress, i.e.

• Operations unified and standardized, operating procedures have been put in place
• IT platforms have been or are in the process of being unified and upgraded
• Product offering and marketing refreshed and refocused
• HR processes and systems have been unified and improved
• Some strategic decisions taken in the past, requiring additional integration costs (e.g. webstore closure)

Ongoing business integration plans will continue, incurring an impact on reported EBIT mainly in 2018 with a tail in 2019 for an estimated total between \$ 35m and \$ 40m relating to:

• Elimination of remaining fixed costs and the related implementation costs for closing the webstore business which exit was announced in 2014. This process will be fully completed in 2018.
• One-off program costs to successfully roll-out strategy horizon 2021 related to:
• Building scale in operations (e.g. scale client onboarding teams, continue technology harmonization)
• Growing the technology business (growth will come from cross-selling and from developing products that solve certain needs of clients)
• Enhancing the go to market strategy (strengthening of the sales force, increase focus on midmarket, increase cross-selling)

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 •