A market leader in retail logistics 2018 Full Year Results - PowerPoint PPT Presentation

A market leader in retail logistics 2018 Full Year Results Presentation 2 August 2018 Strengthening our business

Disclaimer This presentation includes statements that are, or may be deemed to be, “forward -looking statements” . These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believe”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will”, or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts and include statements regarding the Company’s intentions, beliefs or current expectations. Any forward-looking statements in this presentation reflect the Company’s current expectations and projections about future events. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. You should not place undue reliance on forward-looking statements, which speak only as of the date of this presentation. No representations or warranties are made as to the accuracy of such statements, estimates or projections. Please note that the Directors of the Company are, in making this presentation, not seeking to encourage shareholders to either buy or sell shares in the Company. Shareholders in any doubt about what action to take are recommended to seek financial advice from an independent financial advisor authorised by the Financial Services and Markets Act 2000. 2

Agenda 1 Highlights and operational developments 2 Financial review Operational review 3 o Operational update o Team Clipper 4 Outlook 5 Summary and Q&A 3

Highlights and 1 operational developments

Highlights – financial* Group revenue growth of 17.6% to £400.1m (2017: £340.1m), driven by strong growth in e-fulfilment. Group EBIT 1 growth of 16.3% to £20.9m (2017: £17.9m): E-fulfilment & returns management services – EBIT of £11.9m, up 16.0% (2017: £10.2m). o Non e-fulfilment logistics – EBIT of £14.8m, up 18.9% (2017: £12.4m). o Commercial vehicles – EBIT of £2.5m, up 4.6% (2017: £2.3m). o Group profit for the year up 14.6% to £14.3m (2017: £12.5m). EPS of 14.2p, up 13.6% (2017: 12.5p). Proposed final dividend of 5.6p per share giving total dividend of 8.4p per share, up 16.7% (2017: 7.2p). Cash generated from operations was £24.5m (2017: £25.7m). * The highlights are for the 12 months ended 30 April 2018, as compared to the 12 months ended 30 April 2017. 5 1 Group EBIT is defined as operating profit, including the Group’s share of operating profit in equity -accounted investees, before amortisation of intangible assets arising on consolidation .

Operational developments Key new contract wins: o Pretty Little Thing o Halfords o Edinburgh Woollen Mill Significant contract extensions: o Wilko: 5 years o Morrisons: 4 years o Supergroup: 5 years Innovation remains key: o Data analytics o Solutions design European expansion – Poland. Incremental cost issues on major contract: World’s largest fashion retailer o o Rapid growth and activity spikes led to higher labour costs c. £1.9m o Commercials now recalibrated o Extension of services: 315k sq ft to 900k sq ft Start-up costs on new transport contract: o Labour and fleet inefficiencies led to under-performance of c.£1.7m o Now profitable; will achieve full expected run rate by October Profit on sale of freehold: o Freehold site acquired with Tesam sold, as planned; profit £2.2m Other property income: £4.2m o Strengthening of covenant o Will become a recurring revenue stream 6

Financial review 2

Summary income statement £m Year to 30 April Change 2018 2017 % Revenue 400.1 340.1 +17.6% Headline financials Cost of sales (283.3) (241.1) Strong top-line performance in the year in all Gross profit 116.8 99.0 business segments. Other net gains 2.4 0.4 EBIT is the key metric, and saw further growth driven by: continued contract evolution in the Admin expenses (98.4) (81.9) logistics business, new acquisitions and property- Operating profit before share of equity- 20.8 17.5 related transactions, but offset by some non- accounted investees, net of tax recurring incremental operational costs. Share of equity-accounted investees, net of tax (0.9) 0.2 Increase in finance costs driven by increased debt Operating profit 19.9 17.7 following the two acquisitions. EBIT 20.9 17.9 +16.3% Dividends Less: amortisation of other intangible assets (1.1) (0.2) Interim dividend of 2.8 pence per share, paid share of tax and finance costs of equity-accounted 0.1 (0.0) investees January 2018. Operating profit 19.9 17.7 Final proposed dividend 5.6 pence per share. Net finance costs (1.9) (1.6) Total dividend 8.4 pence per share (7.2 pence year Profit before income tax 18.0 16.1 to 30 April 2017). Income tax (3.7) (3.6) Profit for the financial year 14.3 12.5 +14.6% Basic earnings per share (p) 14.2 12.5 +13.6% Diluted earnings per share (p) 14.1 12.3 8

Segmental and business activity performance Revenue £m Year to 30 April Change 2018 2017 % Continued growth in Logistics: E-fulfilment & returns management services 159.4 129.9 +22.7% o Organic growth and new business activities on Non e-fulfilment logistics 139.1 121.9 +14.1% existing contracts including Antler, ASOS returns, Asda, Bench, Browns, Haddad, Total value-added logistics services 298.5 251.8 +18.6% Morrisons, Philip Morris, Wilko and Zara in the Commercial vehicles 103.6 91.5 +13.2% UK, and s.Oliver in Germany. Inter-segment sales (2.0) (3.2) o Full year benefit of prior year contract wins including British American Tobacco (for Vype), Group revenue 400.1 340.1 +17.6% Halfords, Inditex, Links of London, Kidly, Pretty Green, Secret Sales, SilkFred, Smiffys, Thread 35 and Westwing. EBIT o Part-year impact of wins in the year including Crosswater, Edinburgh Woollen Mill, M&S £m Year to 30 April Change returns operations and River Island in the UK; 2018 2017 % ASOS returns in Poland; and Superdry and Urban Outfitters in the Clicklink joint venture. E-fulfilment & returns management services 11.9 10.2 +16.0% Non e-fulfilment logistics 14.8 12.4 +18.9% o A contribution from property related advisory services and profit on sale of freehold. Central logistics overheads (5.7) (4.8) o A reduction in contract packing work in the Total value-added logistics services 21.0 17.8 +17.6% tobacco sector. Commercial vehicles 2.5 2.3 +4.6% o Non-recurring incremental operational costs on Head office costs (2.6) (2.2) two key contracts. Group EBIT 20.9 17.9 +16.3% Steady growth in commercial vehicles. 9

Summary cash flow statement £m Year to 30 April 2018 2017 EBIT 1 20.9 17.9 Strong cash flow generated from operations £24.5m (2017: £25.7m). Depreciation & amortisation 6.9 5.1 Other non-cash items 2 (0.1) 0.6 The working capital outflow in the year is not indicative Change in working capital (3.2) 2.0 of a change in the working capital needs of the Group, Cash generated from operations 24.5 25.7 but merely a delay of one day in one large receipt at the year end. Net interest paid (1.9) (1.6) Tax paid (4.0) (3.2) Acquisitions of Tesam (£9.6m) and RepairTech Net cash flows from operating activities 18.6 20.8 (£2.2m) drove increased bank borrowings of £8.1m, and interest costs to £1.9m (2017: £1.6m). Investment in joint venture - (2.0) Cash capex of £7.7m (2017: £4.6m) offset by disposal Acquisition (11.8) - proceeds of £6.7m (2017: £2.3m), primarily on Net capital expenditure (1.0) (2.3) disposal of the freehold property acquired with Tesam. Net cash flows from investing activities (12.8) (4.3) Tax increase in line with increased profits Loan advance to joint venture (0.5) (1.4) £1.6m raised through share issues to employees Net drawdown / (repayment of) bank loans 8.1 (6.0) through Sharesave and Numis (£250k). Finance leases advanced - 4.9 Dividends paid in line with stated policy at IPO. Repayment of capital on finance leases (7.3) (5.7) Share issue 1.6 0.0 Dividends paid (7.6) (6.4) Net cash flows from financing activities (5.7) (14.6) Net increase in cash & cash equivalents 0.1 2.0 EBIT is defined as operating profit, including the Group’s share of operating profit in equity -accounted investees, before 1. amortisation of intangible assets arising on consolidation. 2. Other non cash items comprise exchange differences ,share based payments, share of joint venture, and movement in fair 10 value of derivatives