bpost SA/NV — Investor Presentation 2018

Mar 13, 2018

Fourth quarter 2017 results

Analyst call

Koen Van Gerven, CEO Henri de Romrée, CFO

Investor presentation - Interim financial report 4Q17

Financial Calendar

More on corporate.bpost.be/investors

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

06.12.2018 Ex-dividend date

10.12.2018 Dividend payment date

Disclaimer

This presentation is based on information published by bpost in its Fourth Quarter 2017 Press Release and 2017 Annual Report, made available on March, 13th 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.

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

Highlights of 4Q17

Revenues up 38.3%

• Driven by excellent growth in Parcels and by acquisitions (Radial consolidation as from mid-November) partly offset by lower Domestic Mail revenues

Domestic Mail underlying evolution

• Accelerated e-substitution in transactional mail partly compensated by volume growth in advertising mail, full year underlying volume trend in line with guidance

Strong parcels performance

• Domestic: excellent reported volume increase driven by strong e-commerce growth and C2C during year-end peak season; continued price/mix effect of -6.9% fully mix related
• Logistic Solutions: mainly driven by Radial & DynaGroup acquisitions

Cost evolution

• Opex influenced by acquisitions (€ +257.7m) and year-end peak season
• Increase in transport cost in line with international business evolution

4Q17

-6.4%

€ 955.1m

+30.8%

+ € 237.2m

+ € 269.9m

EBITDA € +9.9m above last year mainly driven by new acquisitions

Proposed total dividend per share equal to last year € 1.06 already paid in December 2017 and € 0.25 to be proposed at the Annual General Meeting in May 2018

€ 1.31 gross

€ 151.4m

Highlights FY17 – Results slightly below guidance

€ million

Topic	Results		Last outlook for 2017
EBITDA	FY17:	€ 598.0m (+1.9%, + € 11.1m)
EBITDA excl. Radial	FY17:	€ 581.1m (-1.0%, - € 5.8m)	at the same level as 2016
Domestic Mail	FY17:	-5.8% (underlying volume)	Between -5% and -6%
Parcels	FY17:	+28.2% (domestic volumes)	Double digit
Dividend	Total gross dividend of € 1.31 per share proposed • Interim dividend already paid: € 1.06 Final dividend of € 0.25 •		at the same level as 2016 (i.e. € 1.31)

EBITDA impacted by SUB price refusal not compensated by M&A contribution as well as transition to new Brussels sorting centre

Summary of key financials 4Q17

€ million

		Reported	Normalized	1
	4Q16	4Q17	4Q16	4Q17	% Δ	€ 8.7m linked to
Total operating income (revenues)	690.7	955.1	690.7	955.1	38.3%	depreciation on intangible assets
Operating expenses	549.2	803.7	549.2	803.7	46.3%	(purchase price
EBITDA	141.5	151.4	141.5	151.4	7.0%	allocation "PPA" Ubiway, Dynagroup
Margin (%)	20.5%	15.9%	20.5%	15.9%		& de Buren)
EBIT	118.0	115.5	118.0	124.2	5.3%
Margin (%)	17.1%	12.1%	17.1%	13.0%		Tax impact of PPA on depreciation of
Profit before tax	121.0	106.9	121.0	115.7	-4.4%	€ 2.5m
Income tax expense	19.3	39.8	41.5	42.2
Net profit	101.7	67.1	79.5	73.5	-7.6%	Positive tax impact
FCF	34.5	(576.6)	34.5	(576.6)		of Deltamedia liquidation € 22.2m
bpost S.A./N.V. net profit (BGAAP)	86.8	68.2	64.7	68.2	5.5%
Net Debt/ (Net cash), at 31 December	(492.7)	292.4	(492.7)	292.4

7

Total operating income (revenues)

€ million

		4Q16 comparable	∆	4Q17	% ∆
	Transactional mail	235.1	-20.3	214.8	-8.6%
Domestic mail	Advertising mail	66.2	1.1	67.3	1.7%
	Press	79.9	-2.2	77.7	-2.8%
	Domestic parcels 1	53.1	11.7	64.8	22.0%
Parcels	International parcels	66.3	-3.3	63.0	-5.0%
	Logistic solutions 2	3.0	237.2	240.2	-
	International mail	43.6	-0.6	43.0	-1.4%
Additional	Value added services	24.8	0.7	25.4	2.6%
sources	Banking and financial	49.9	-6.5	43.5	-13.0%
of revenues	Distribution 3	10.7	15.1	25.8	-
	Retail & Other 3	40.7	36.2	76.9	-
	Corporate	2.0	10.8	12.8	535.7%
TOTAL		675.3	279.8	955.1	41.4%

¹ Defined as domestic and Belgian in- and outbound

² Contains Dynagroup consolidated as of 1 January 2017 and Radial consolidated as of 16 November 2017

³ Contains Ubiway consolidated as of 1 December 2016; 4Q16 Ubiway Distribution revenues restated for € 15.4m in order to be in line with the accounting policies of the bpost Group and with IAS 18 "Revenue" and to be comparable with 4Q17

Domestic mail underlying volumes impacted by accelerated e-substitution in Transactional Mail

Total operating income (revenues), € million

Excellent domestic parcels volume growth driven by year-end peak; Logistic Solutions driven by Radial and DynaGroup

• Consolidation of Radial as of 16 November 2017 (revenues are reported under Logistic Solutions).
• Reported volume growth of +30.8% driven by strong e-commerce growth and the online C2C product offering.
• Price/mix of -6.9%: price increase fully offset by product & client mix effect.
• Growth in flows from Asia and Europe. Flows from the US negatively impacted by FX (weaker USD in 4Q17 vs. 4Q16) and phasing on booking of Apple Express revenues3. Excluding these 2 impacts, flows from US are stable vs. LY.

• Consolidation of DynaGroup as of 1 January 2017.

• ¹ Defined as domestic and Belgian in- and outbound

• ² New category, previously called Special Logistics
• ³ In 4Q16 5 months of revenues were booked vs. 3 months in 4Q17.

9

Additional sources of revenues driven by the acquisition of Ubiway

Total operating income (revenues), € million

¹ New category, contains Ubiway consolidated as of 1 December 2016

Opex influenced by acquisitions (€ +257.7m) and year-end peak. Increase in transport cost in line with growth in international business.

Operating expenses excl. depreciation and amortization, € million

FDM, Apple Express, Ubiway, DynaGroup, Parcify, de Buren,

• Excluding scope change, increase driven by growth in the international business.
• Average reported FTE & interim increase of 3,654 leading to € +93.5m additional costs explained by the integration of new subsidiaries.
• Favourable FTE mix of € -3.0m mainly driven by the recruitment of auxiliary postmen.
• Negative price effect of € +5.5m explained by salary indexation, CLA and merit increases.
• Excluding scope change, decrease of third party remuneration fees and maintenance & repairs partly offset by increase in rent and rental costs (new Brussels sorting centre).
• Excluding scope change, phasing on recoverable VAT (increase of rate in 2017 vs. 2016) and decrease of provisions for local and property taxes related to the previous years.

12

Lower operating FCF1 due to acquisitions and phasing in working capital evolution

€ million	4Q16	4Q17	Delta
Cash flow from operating activities	+123.5	+46.7	-76.9
Cash flow from investing activities	-89.0	-623.2	-534.2
Operating free cash flow	+34.5	-576.6	-611.1
Financing activities	-220.6	+466.6	+687.2
Net cash movement	-186.1	-110.0	+76.1
Capex	-42.0	-54.4	-12.4

• Deterioration in working capital as a result of peak sales season at Radial combined with lower outstanding trade payables: € -77.2m
• Proceeds from sale of buildings: € +3.5m
• Investment securities: € +12.0m
• Higher capex: € -12.4m
• Cash outflows related to acquisitions: € -537.3m, out of which
• Radial: € -581.5m net of cash acquired
• Ubiway and Apple Express in 4Q16: resp. € +39.9m and € +3.7m
• Bridge loan for Radial acquisition: € +691.6m

13

Final gross dividend of € 0.25/share will be proposed to reach a total gross dividend payment of € 1.31/share

• Based on the communicated dividend policy, taking into account the interim dividend paid and subject to Board and Shareholders' meeting approval, we propose a gross final dividend of € 0.25/share (same as FY16).
• The pay-out ratio for the total proposed gross dividend was increased to 90.0%.

Dividend payment, € gross per share	€ 0.25
Proposed final dividend	€ 50.0m
Pay-out ratio	119%
bpost S.A./N.V. net profits after tax November to December 2017 (BGAAP)	€ 42.1m
	Dividend
Total proposed dividend for 2017	€ 1.31
Proposed final dividend payment (€, gross per share)	€ 0.25
Interim dividend paid in December 2017 (€, gross per share)	€ 1.06

Strong balance sheet structure

€ million

Dec 31, 2016 Dec 31, 2017

Dec 31, 2017 Dec 31, 2016

Outlook for 2018¹

Recurring EBITDA in the range of € 560 to 600m 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 supported by newly acquired businesses
• Stable Radial revenues
• Partly offset by volume decline in domestic mail2 up to -7%, average domestic mail price/mix effect of +4%
• Continued decline in Banking & Financial revenue

Operating expenses

Increase driven by:

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

Capex

• Recurring & Vision 2020 investments 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 and Mail Inc.

² 1Q18 will count 1 working day less on franking machines, 2Q18 will count 1 working day less on stamps, 3Q18 will count 1 working day more on franking machines and 2 more on stamps and 4Q18 will count 2 working days more on franking machines vs. the same quarters of 2017.

Appendix: Full year 2017 figures

Brussels – March 14, 2018

EBITDA mainly impacted by SUB price refusal not fully compensated by M&A contribution as well as transition to new Brussels sorting centre

€ million

1 Including € -15.4m accounting restatement on Ubiway Distribution revenue and materials costs in 4Q16

Summary of key financials FY17

€ million

		Reported		Normalized1
	FY16	FY17	FY16	FY17	% Δ	€ 8.7m linked to depreciation on
Total operating income (revenues)	2,425.2	3,023.8	2,425.2	3,023.8	24.7%	intangible assets
Operating expenses	1,838.4	2,425.9	1,838.4	2,425.9	32.0%	(purchase price
EBITDA	586.9	598.0	586.9	598.0	1.9%	allocation "PPA" Ubiway, Dynagroup
Margin (%)	24.2%	19.8%	24.2%	19.8%		& de Buren)
EBIT	496.5	492.9	496.5	501.6	1.0%
Margin (%)	20.5%	16.3%	20.5%	16.6%		Tax impact of PPA on depreciation of
Profit before tax	489.5	488.7	489.5	497.5	1.6%	€ 2.5m
Income tax expense	143.2	165.8	165.4	168.2
Net profit	346.2	322.9	324.1	329.3	1.6%	Positive tax impact
FCF	193.9	(485.8)	193.9	(485.8)		of Deltamedia liquidation € 22.2m
bpost S.A./N.V. net profit (BGAAP)	308.7	291.0	286.5	291.0	1.6%
Net Debt/ (Net cash), at 31 December	(492.7)	292.4	(492.7)	292.4

Total operating income (revenues)

€ million

		FY16 comparable	∆	FY17	% ∆
	Transactional mail	873.3	-65.4	807.9	-7.5%
Domestic mail	Advertising mail	247.8	5.0	252.9	2.0%
	Press	293.2	-0.6	292.6	-0.2%
	Domestic parcels 1	185.5	38.7	224.2	20.9%
Parcels	International parcels	192.3	30.3	222.6	15.8%
	Logistic solutions 2	11.1	338.1	349.2	-
	International mail	159.2	1.2	160.4	0.8%
Additional	Value added services	101.1	0.4	101.5	0.4%
sources of revenues	Banking and financial	192.4	-9.8	182.6	-5.1%
	Distribution 3	10.7	87.3	98.1	-
	Retail & Other 3	111.7	177.2	288.9	-
	Corporate	31.4	11.5	42.9	36.5%
TOTAL		2,409.8	614.0	3,023.8	25.5%

¹ Defined as domestic and Belgian in- and outbound

² Contains Dynagroup consolidated as of 1 January 2017 and Radial consolidated as of 16 November 2017

³ Contains Ubiway consolidated as of 1 December 2016; 4Q16 Ubiway Distribution revenues restated for € 15.4m in order to be in line with the accounting policies of the bpost Group and with IAS 18 "Revenue" and to be comparable with 4Q17

Domestic mail underlying volume trend in line with guidance at -5.8%

Total operating income (revenues), € million

• Transactional Mail: increased e-substitution mainly towards the end of the year.
• Advertising Mail: volume growth of +1.5% vs. -3.0% for FY16 driven by focus on growth segments and indirect channels.
• Press: corrected for distribution days (3 less FY17 vs. FY16) total press volumes decline by 3.3% vs. -2.8% for FY16.

		Reported		Underlying 1
	FY16	4Q17	FY17	FY16	4Q17	FY17
Transactional mail	-5.9%	-9.2%	-8.3%	-5.9%	-8.9%	-8.1%
Advertising mail	-3.0%	0.5%	1.5%	-3.0%	0.5%	1.5%
Press	-2.8%	-2.6%	-3.7%	-2.8%	-2.6%	-3.7%
Domestic Mail	-5.0%	-6.6%	-5.9%	-5.0%	-6.4%	-5.8%

• Impacted by regulatory decision on small user basket pricing and shift towards cheaper products.

¹ 1Q17 had 2 working days more, 2Q17 2 less, 3Q17 1 less on franking machines and 2 less on stamps and 4Q17 1 less on franking machines and 1 more on stamps vs. the same quarters of 2016.

FY17

21

Robust domestic and international parcels performance; Logistic Solutions driven by positive contribution from M&A

Total operating income (revenues), € million

¹ Defined as domestic and Belgian in- and outbound

² New category, previously called Special Logistics

FY17

Additional sources of revenues driven by the acquisition of Ubiway

Total operating income (revenues), € million

¹ New category, contains Ubiway consolidated as of 1 December 2016

Organic cost evolution on track. Opex influenced by acquisitions (€ +579.0m). Increase in transport cost in line with positive international business evolution.

Operating expenses excl. depreciation and amortization, € million

FDM, Apple Express, Ubiway, DynaGroup, Parcify, de Buren,

• IAS19 non-cash profit related to termination of transport benefit in payroll & interim.
• Excluding scope change, increase driven by growth in the international business and lower favorable settlement of previous year's terminal dues.
• Average reported FTE & interim increase of 2,057 leading to € +155.8m additional costs explained by the integration of new subsidiaries.
• Favourable FTE mix of € -13.1m.
• Price effect & others for an impact of € +5.2m explained by salary indexation, CLA and merit increases partly compensated by tax shift and employee benefits.
• Excluding scope change, mainly decrease of third party remuneration partly offset by increase in rent and rental (mainly new Brussels sorting centre) and energy costs (increased fuel price & growing fleet).

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

€ million	FY16	FY17	Delta
Cash flow from operating activities	+352.6	+266.1	-86.5
Cash flow from investing activities	-158.7	-751.9	-593.2
Operating free cash flow	+193.9	-485.8	-679.7
Financing activities	-270.1	+416.8	+687.0
Net cash movement	-76.2	-68.9	+7.3
Capex	-85.0	-121.3	-36.3

• Alpha pay-outs: € +18.7m
• Terminal dues payment, phasing in 3Q16: € +16.8m
• Working capital evolution: € -121.1m, mainly driven by peak sales season at Radial combined with lower outstanding trade payables
• Proceeds from sale of buildings: € -3.2m
• Higher capex: € -36.3m
• M&A activities: € -577.7m
• Investment securities: € +24.0m
• Bridge loan for Radial acquisition: € +691.6m

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