bpost SA/NV — Investor Presentation 2018

Nov 7, 2018

Third quarter 2018 results

Analyst call

Koen Van Gerven, CEO Henri de Romrée, CFO

Brussels – November 8, 2018

Investor presentation - Interim financial report 3Q18

Financial Calendar

More on corporate.bpost.be/investors

03.12.2018 (17:45 CET) Interim dividend 2018 announcement

06.12.2018 Ex-dividend date (interim dividend)

10.12.2018 Dividend payment date

19.03.2019 (17:45 CET) Annual results FY18

02.05.2019 (17:45 CET) Quarterly results 1Q19

08.05.2019 Ordinary General Meeting of Shareholders

13.05.2019 Ex-dividend date

15.05.2019 Payment date of the dividend 07.08.2019 (17:45 CET) Quarterly results 2Q19

06.11.2019 (17:45 CET) Quarterly results 3Q19

02.12.2019 (17:45 CET) Interim dividend 2019 announcement

Disclaimer

This presentation is based on information published by bpost in its Third Quarter 2018 Interim Financial Report, made available on November, 7th 2018 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 3Q18

Total operating income up 34.9%

• Driven by acquisitions, excellent domestic parcels growth and stable domestic mail revenues

Underlying Domestic Mail volume evolution

• Impacted by continued e-substitution, rationalization and competitive advertising market; increased monthly volatility

Continued strong parcels growth and Radial in line with expectations

• Domestic: continued double-digit organic volume growth driven by strong e-commerce development; price/mix effect of -5.5% fully mix related
• Logistic Solutions: mainly driven by Radial acquisition (€ +184.2m) in line with expectations. Preliminary PPA of Radial is included in the financial statements

Organic costs impacted by growth and cost inflation

• Opex from acquisitions (€ +212.2m)
• parcels (€ +8.5m), transport cost (€ +11.2) linked to evolution of international activities and cost inflation (€ +8.3m) in core business

+ € 257.5m Lower EBITDA as expected impacted by higher organic costs BGAAP net profit of bpost SA/NV € 78.9m € 29.3m • Excluding one-offs (€ +17.2m), organic cost base impacted by growth of domestic

2018 outlook, dividend and back-loaded trajectory confirmed

€ 873.7m

-6.4%

+25.5% + € 188.8m

EBITDA impacted by growth activities and core business cost inflation

€ million

€ -9.1m / -10.3%

• 3Q18 revenues below last year driven by:
• Growth from new and existing customers does not compensate clients terminating with Radial
• Webstore phase-out and expected client churn in Fulfilment & Transport
• 3Q18 EBITDA in line with expectations but below last year driven by:
• Growth from existing clients, better productivity and tighter control on SG&A spend
• Offset by phase-out of (high margin) webstore business and impact of customer churn in Fulfilment & Transport

€ m	Reported 3Q18
Total operating income	184.2
Operating expenses	185.2
Transport	57.6
Payroll and interim	80.1
Other SG&A	39.1
Other costs	8.4
EBITDA	(1.0)
Margin (%)	-0.6%

Purchase Price Allocation of Radial has been reviewed

• Preliminary Purchase Price Allocation results in reviewed Radial opening balance sheet for fair value adjustments by external independent accounting firm as per IFRS 3 practice.
• Initial goodwill has been reduced by \$ 155.7m (€ 132.3m) to amount to \$ 516.0m (€ 438.4m) following:
• the fair value adjustment (prolongation of useful life) of fixed assets for \$ 43.8m (€ 37.2m)
  • o Radial reported D&A decreased by € 9.5m for 9M18 (1Q18 and 2Q18 restated for respectively € 2.5m and € 3.5m, € 3.5m in 3Q18) following the fair value adjustment (prolongation of useful life) of fixed assets

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• the recognition of intangible assets for \$ 132.3m (€ 112.4m) consisting of customer relationships, in-house developed technology and tradename
• o Radial reported D&A increased by € 10.2m for 9M18 (1Q18 and 2Q18 restated for respectively € 4.3m and € 3.0m, € 2.9m in 3Q18) following the recognition of intangible assets.
• o This D&A impact is normalized.
• partially offset by the fair value adjustments of other assets and liabilities for \$ 20.4m (€ 17.3m).
• o Radial reported EBITDA impacted positively by € +7.8m for 9M18 (1Q18 and 2Q18 restated for respectively € +3.0m and € +2.2m, € +2.7m in 3Q18)
• Audit to confirm the full year impact.

1 3Q18 figures are not audited

services. Radial

some delay

Summary of key financials 3Q18¹

€ million

	Reported		Normalized
	3Q17	3Q18	3Q17	3Q18	% Δ
Total operating income	647.6	873.7	647.6	873.7	34.9%	€ 6.1m linked to amortization on
Operating expenses	537.3	794.8	537.3	794.8	47.9%	intangible assets
EBITDA	110.3	78.9	110.3	78.9	-28.4%	(purchase price allocation "PPA"
Margin (%)	17.0%	9.0%	17.0%	9.0%		Radial, Ubiway,
EBIT	87.2	40.6	87.2	46.7	-46.4%	Dynagroup & de
Margin (%)	13.5%	4.7%	13.5%	5.3%		Buren)
Profit before tax	91.4	39.9	91.4	46.0	-49.7%	Tax impact of PPA on amortization of
Income tax expense	31.4	12.7	31.4	13.4		€ 0.8m
Net profit	60.0	27.2	60.0	32.6	-45.7%
FCF	(76.3)	(53.3)	(76.3)	(45.7)		Normalized FCF excludes the cash
bpost S.A./N.V. net profit (BGAAP)	52.0	29.3	52.0	29.3	-43.6%	Radial receives on
Net Debt/ (Net cash), at 30 September	(518.6)	354.1	(518.6)	354.1		behalf of its customers for
						performing billing

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Total operating income

€ million

		3Q17	∆	3Q18	% ∆
	Transactional mail	177.4	1.6	178.9	0.9%
Domestic mail	Advertising mail	55.6	-0.5	55.1	-0.8%
	Press	67.8	-0.8	67.0	-1.2%
	Domestic parcels1	52.5	9.7	62.2	18.5%
Parcels	International parcels	51.8	6.0	57.8	11.5%
	Logistic solutions2	38.7	188.8	227.5	-
	International mail3	35.3	22.5	57.7	63.7%
Additional	Value added services	25.2	1.9	27.1	7.5%
sources of revenues	Banking and financial	44.8	-3.6	41.2	-8.0%
	Distribution	21.9	1.8	23.7	8.3%
	Retail & Other	69.9	1.0	70.9	1.4%
	Corporate4	6.7	-2.1	4.6	-31.2%
TOTAL		647.6	226.2	873.7	34.9%

1 Defined as domestic and Belgian in- and outbound

• ² Including scope changes: Radial, Leen Menken, BubblePost, Active Ants
• ³ Including scope changes: Imex, M.A.I.L. Inc.
• ⁴ Including one-off 3Q17 operating income

Domestic mail underlying volume trend at -6.4% in line with full year guidance of up to -7.0%

Total operating income, € million

• Elections: local elections took place on October 14th, 2018 impacting advertising mail for € 2.1m (+3.5% volume impact). 4Q18 will also be positively impacted by election mail.
• Transactional Mail: continued e-substitution and rationalization.
• Advertising Mail: excluding elections, unfavorable media mix evolution in Direct Mail and higher competition in Unaddressed.
• Press: newspapers trend in line vs. LY excluding impact of 1 distribution day less; periodicals hit by increased digitization and further rationalization.

	Reported					Underlying (excl. elections)1
	FY17	1Q18	2Q18	3Q18	YTD18	FY17	1Q18	2Q18	3Q18	YTD18
Transactional mail	-8.3%	-7.0%	-3.5%	-5.3%	-5.2%	-8.1%	-6.7%	-3.2%	-6.1%	-5.3%
Advertising mail	1.5%	-7.6%	-7.8%	-3.4%	-6.5%	1.5%	-7.6%	-7.8%	-6.9%	-7.5%
Press	-3.7%	-3.3%	-2.5%	-7.1%	-4.1%	-3.7%	-3.3%	-2.5%	-7.1%	-4.1%
Domestic Mail	-5.9%	-6.8%	-4.3%	-5.1%	-5.4%	-5.8%	-6.6%	-4.1%	-6.4%	-5.7%

¹ 3Q18 had 1 working day more on franking machines and 2 more on stamps vs. 3Q17.

² Advertising addressed and unaddressed volumes related to elections are neutralized in the calculation of the underlying volume trend.

Continued strong organic parcels growth

Total operating income, € million

• Consolidation of Radial as of 16 November 2017 (revenues are reported under Logistic Solutions), revenues impacted by webstore phase-out and customer churn.
• Reported organic volume growth of +25.5% driven by strong e-commerce growth.
• Price/mix of -5.5%: price increase more than offset by product & client mix effect.
• Growth driven by US and Europe.
• Driven by consolidation of Leen Menken and Active Ants.

Additional sources of revenues driven by acquisitions

Total operating income, € million

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Organic costs impacted by growth and cost inflation in core business

Operating expenses excl. depreciation and amortization, € million

¹ Opex of Radial, Bubble Post, Leen Menken, Imex, M.A.I.L., Inc., Active Ants (see appendix for more detail)

Cash inflow in line with refinancing activities

	€ million	3Q17	3Q18	Delta
	Cash flow from operating activities	-38.9	-30.2	+8.8
	Cash flow from investing activities	-37.3	-23.1	+14.2
	Operating free cash flow1	-76.3	-53.3	+23.0
	Financing activities	-0.1	+106.4	+106.4
	Net cash movement	-76.3	+53.1	+129.4
Capex -35.1 -26.9				+8.2
	• Tax prepayments: € +10.0m
	Proceeds from sale of buildings: € +3.3m • • Lower capex: € +8.2m • Apple Express Earn-out paid in 3Q17: € +2.7m
	• Bond issuance (€ +650.0m) and commercial papers (€ +20.0m) offset the reimbursement of the bridge loan for Radial acquisition and related costs

Outlook for 20181 as issued on May 2, 2018 – maintained

Normalized EBITDA at the low end of the € 560-600m range² Dividend payment at least at the same level as 2017

Revenues

Increase driven by:

• Growth in domestic parcels: volume double digit, price/mix effect between -3% and -6%
• Continued growth in international parcels
• Partly offset by volume decline in domestic mail3 up to -7%, average domestic mail price/mix effect of +4%
• Continued decline in Banking & Financial revenue
• Radial revenues impacted by client churn

Operating expenses

Increase driven by:

• Increase in transport cost (reflecting growth in International Parcels & Mail)
• Consolidation of acquired businesses
• Salary indexation effective as of October 2018
• Partly compensated by continued productivity improvements and optimized FTE mix and
• Continued cost optimization
• Radial EBITDA impacted by phase out webstore business and higher than expected opex (medical benefits & inflation) not fully compensated by productivity improvements

Capex

• Recurring and business development investments for new subsidiaries (Radial, Ubiway and Dynagroup) for an estimated total amount of ~ € 140m

¹ Outlook for 2018 includes the acquisitions of Radial, Bubble Post, Leen Menken, Imex, M.A.I.L., Inc. and Active Ants

² EBIT range of € 400m to € 440m as communicated at CMD of June 21st

³ 4Q18 will count 2 working days more on franking machines vs. the same quarter of 2017.

Strong balance sheet structure

€ million

Operating expenses excl. depreciation and amortization

€ million

Key contacts

Baudouin de Hepcée Director Corporate Finance	• 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 •
Stéphanie Voisin Manager Investor Relations	Email: stephanie.voisin@bpost.be • • Direct: +32 (0) 2 276 21 97 • Mobile: +32 (0) 478 48 58 71 Address: bpost, Centre Monnaie, 1000 Brussels, Belgium •