A market leader in retail logistics 2019 Interim Results - PowerPoint PPT Presentation

A market leader in retail logistics 2019 Interim Results Presentation 5 December 2019 “ Continued evolution in a dynamic world”

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

Highlights and 1 operational developments

Financial Highlights (1) Group revenue growth of 11.7% to £254.6m (H1 FY19: £227.9m), driven by strong growth in logistics Underlying EBIT growth of 26.0% excluding the impact of negative goodwill, property related revenue and share based payment charges. Headline Group EBIT growth of 13.5% to £12.1m (H1 FY19: £10.7m): E-fulfilment and returns management services – EBIT of £8.4m, up 34.2% (H1 FY19: £6.2m) o Non e-fulfilment logistics – EBIT of £7.9m, up 8.8% (H1 FY19: £7.3m) o Commercial vehicles – EBIT of £0.86m, down 5.9% (H1 FY19: £0.91m) o Profit before tax and amortisation up 10.4% to £10.9m (H1 FY19: £9.9m) EPS of 7.8p, up 8.3% (H1 FY19: 7.2p) Interim dividend of 3.5p per share, up 9.4% (H1 FY19: 3.2p) Note: The highlights are for the 6 months ended 31 October 2019, as compared to the 6 months ended 31 October 2018 (“H1 FY19” ) Note (1): All numbers presented above are presented on a comparable pre-IFRS 16 basis. 4 Note (2): There has also been a change in where German overhead costs are costed. In H1 FY19, these were included as a cost to non e-fulfilment logistics. These are reclassified to Logistics Central costs in full year FY19 and in H1 FY20. This reclassification has no impact on overall EBIT.

Summary Income Statement (1) £m 6m to 31 October Change Year to 30 2019 2018 % April 2019 Revenue 254.6 227.9 +11.7% 460.2 • Strong top-line performance in the period driven by e-fulfilment and returns Cost of sales (184.3) (164.9) (331.9) management services Gross profit 70.4 63.0 +11.6% 128.3 • Key EBIT metric saw continuing growth of Other net gains 3.7 0.1 (0.3) 13.5% Admin expenses (62.2) (52.3) (108.4) • Excluding negative goodwill, property- Operating profit before share of equity-accounted 11.9 10.8 +9.4% 19.5 investees, net of tax related advisory fees and share based payments, EBIT is up 26.0% Share of equity-accounted investees, net of tax (0.4) (0.6) (0.4) Operating profit 11.5 10.3 +11.7% 19.1 • Finance costs up £0.3m, due to HP interest EBIT (excluding Non-underlying factors) 9.0 7.2 +26.0% 15.9 • Profit before tax and amortisation up 10.4% Non-underlying factors 3.1 3.5 4.3 to £10.9m (H1 FY19: 9.9m) EBIT 12.1 10.7 +13.5% 20.2 • Profit before tax ahead by 9.5% to £10.1m Less: amortisation of other intangible assets (0.7) (0.6) (1.2) (H1 FY19: £9.3m) Share of tax and finance costs of equity-accounted investees 0.1 0.2 0.1 • EPS ahead by 8.3% to 7.8p (H1 FY19: 7.2p) Operating profit 11.5 10.3 19.1 • Interim dividend up 9.4% to 3.5p (H1 FY19: (1.3) Net finance costs (1.0) (2.1) 3.2p) Profit before income tax 10.1 9.3 +9.5% 16.9 Income tax (2.2) (1.9) (3.5) Profit for the financial period 7.9 7.3 13.4 Basic earnings per share (p) 7.8 7.2 +8.3% 13.2 Interim dividend per share (p) 3.5 3.2 +9.4% - 5 Note (1): All numbers presented above are presented on a comparable pre-IFRS 16 basis.

Segmental performance (1) Revenue • Strong organic growth in e-fulfilment driven by: Including o Continued migration online and consequent growth in £m Underlying (2) non-underlying factors activity levels on established customers – e.g. ASOS 6m to 31 October Change 6m to 31 October Change Browns, Dunnes, Westwing, Zara, 2019 2018 % 2019 2018 % o Benefit of prior year contract wins - e.g. Mountain Warehouse, PrettyLittleThing, Vestel. E-fulfilment & returns management 136.5 107.1 +27.5% 136.5 107.1 +27.5% services New contract wins in FY20 – e.g. Amara, Hope&Ivy, o Non e-fulfilment logistics 74.8 76.1 -1.7% 74.8 73.3 +2.1% Shop Direct, Simba Total value-added logistics services 211.3 183.2 +15.4% 211.3 180.4 +17.2% • Clicklink: loss of £0.5m (H1 FY19: £0.7m loss): Commercial vehicles 43.6 45.4 -3.9% 43.6 45.4 -3.9% o Expected to be profitable for the full year due to: Inter-segment sales (0.4) (0.7) (0.4) (0.7) • Seasonality: 40% of annual volume in Nov-Jan Group Revenue 254.6 227.9 +11.7% 254.6 225.1 +13.1% • New customer onboarding • Non e-fulfilment EBIT favourably impacted by: EBIT Including o Organic growth, including Browns £m Underlying (2) Non-underlying factors o 6m to 31 October Change 6m to 31 October Change New customer wins, including Ginger Ray, Levi Strauss, Neon Sheep, SLG, Sports Direct 2019 2018 % 2019 2018 % E-fulfilment & returns management o Commercial rates on M&S NDC operation and Kuhne 8.4 6.2 +34.2% 6.7 6.2 +6.7% services transport improved Non e-fulfilment logistics 7.9 7.3 +8.8% 6.2 5.1 +20.9% • Commercial vehicles EBIT down due to reduced new Central logistics overheads (3.4) (2.5) -33.8% (3.2) (3.4) -5.5% vehicles sales, but partly offset by improved dealer support Total value-added logistics services 12.9 11.0 +17.4% 9.6 7.9 +21.1% • Continued investment in solutions development and IT Commercial vehicles 0.9 0.9 -5.9% 0.9 1.0 -4.9% infrastructure Head office costs (1.6) (1.2) (1.5) (1.7) -13.8% • Share based payment charge £0.4 million (H1 FY19: Group EBIT 12.1 10.7 +13.5% 9.0 7.2 +26.0% credit £0.7m) Note (1): All numbers presented above are presented on a comparable pre-IFRS 16 basis 6 Note (2): Underlying strips out the one-off impacts of the negative goodwill, property-related advisory fees and share based payments, and of reclassifying German overheads from Non e-fulfilment to Central logistics overheads.

Summary cash flow statement (1) £m 6m to 31 October Year to 30 2019 2018 April 2019 EBIT 12.1 10.7 • EBITDA ahead 17.7% 20.2 Depreciation & Amortisation 4.9 3.8 8.2 • Working capital outflow due to higher than Other non-cash items 2 (2.8) (0.0) (0.7) normal accrued revenue and certain short-term Change in working capital (12.1) (4.4) 0.6 overdue trade debtors, together with increased Cash generated from operations 2.2 10.1 28.3 activity levels Net interest paid (1.3) (1.0) (1.9) • Interest payments increase due to increase in Tax paid (3.2) (1.9) (4.3) assets funded on HP, which will largely be Net cash flows from operating activities (2.3) 7.2 22.1 recovered from customers through open-book contract mechanisms Net capital expenditure (6.4) (10.9) (25.9) • Tax payments increased in UK and Poland due Acquisition of subsidiaries (2.9) (0.5) (0.5) to payments on account in respect of the current Net cash flows from investing activities (9.3) (11.4) (26.4) year, reflecting higher profitability • Business combinations outflow relates to Shop Net drawdown of bank loans 16.5 8.5 7.2 Direct in FY20, Repairtech in FY19 Finance lease drawdowns 4.5 3.8 18.7 Repayment of capital on finance leases (4.2) (3.4) (10.4) • Bank loans includes RCF increase, used to fund Shares issued 0.1 0.1 increased working capital balances (see above) 0.3 Dividends paid (6.6) (5.7) (8.9) • Net finance leases broadly flat Net cash flows from financing activities 10.3 3.3 6.9 • Dividends increase of £0.9 million due to increased final dividend for FY19 Net increase / (decrease) in cash & cash equivalents (1.2) (0.9) 2.6 Note (1): All numbers presented above are presented on a comparable pre-IFRS 16 basis. Note (2): Other non cash items comprises gain on disposal, negative goodwill, share of equity-accounted investees, share based payments and exchange differences 7