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

A market leader in retail logistics 2018 Interim Results Presentation 6 December 2018 Logistics evolved: Agility and Ability

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 Highlights – Steve Parkin 1 Financial review – David Hodkin 2 Operational review – Tony Mannix 3 Summary and Q&A – Steve Parkin 4 3

Highlights 1

Highlights Group revenue growth of 14.1% to £227.9m (H1 FY18: £199.7m) Group EBIT growth of 16.1% to £10.7m (H1 FY18: £9.2m) Group EPS growth of 14.3% to 7.2p per share (H1 FY18: 6.3p) Interim dividend of 3.2p per share, up 14.3% (H1 FY18: 2.8p) Strong growth in e-fulfilment and returns management, with revenue up 40.7% (excluding Clicklink) Clicklink well positioned to enhance earnings due to new customer wins and rate enhancements Non e-fulfilment EBIT in H1 adversely impacted by activity levels, offset by property-related income. New contract wins provide positive earnings momentum into H2 European operations growing strongly, driven by e-fulfilment and returns management Commercial vehicles EBIT reduced due to lack of manufacturer support on new vehicle sales Strong pipeline of new business opportunities in logistics 5

Financial review 2

Financial Highlights Group revenue growth of 14.1% to £227.9m (H1 FY18: £199.7m), driven by strong growth in logistics Group EBIT growth of 16.1% to £10.7m (H1 FY18: £9.2m): E-fulfilment and returns management services – EBIT of £6.2m, up 17.1% (H1 FY18: £5.3m) o Non e-fulfilment logistics – EBIT of £7.3m, up 16.4% (H1 FY18: £6.3m) including property related o advisory service fees of £2.8m (H1 FY18: £nil) Commercial vehicles – EBIT of £0.9m, down 36.9% (H1 FY18: £1.4m) o Profit before tax and amortisation up 17.3% to £9.9m (H1 FY18: £8.4m) EPS of 7.2p, up 14.3% (H1 FY18: 6.3p) Interim dividend of 3.2p per share, up 14.3% (H1 FY18: 2.8p) Note: The highlights are for the 6 months ended 31 October 2018, as compared to the 6 months ended 31 October 2017 (“ H1 FY18 ”) 7

Summary Income Statement £m 6m to 31 October Change Year to 30 2018 2017 % April 2018 • Strong top-line performance in the period Revenue 227.9 199.7 14.1% 400.1 driven by e-fulfilment & non e-fulfilment business units Cost of sales (164.9) (142.1) (283.3) Gross profit 63.0 57.6 9.3% 116.8 • Key EBIT metric saw continuing growth of 16.1%, again driven by logistics, including Other net gains 0.1 0.1 2.4 property-related advisory fees Admin expenses (52.3) (48.3) (98.4) • Finance costs up slightly, due to prior year Operating profit before share of equity-accounted 10.8 9.4 14.6% 20.8 acquisitions investees, net of tax Share of equity-accounted investees, net of tax (0.6) (0.6) (0.9) • Profit before tax and amortisation up 17.3% Operating profit 10.3 8.8 15.9% 19.9 to £9.9m (H1 FY18: 8.4m) EBIT 10.7 9.2 16.1% 20.9 • Profit before tax ahead by 16.9% to £9.3m (H1 FY18: £7.9m) Less: amortisation of other intangible assets (0.6) (0.5) (1.1) Share of tax and finance costs of equity-accounted investees 0.2 0.1 0.1 • EPS ahead by 14.3% to 7.2p (H1 FY18: 6.3p) Operating profit 10.3 8.8 19.9 • Net finance costs (1.0) (0.9) (1.9) Interim dividend up 14.3% to 3.2p (H1 FY18: 2.8p) Profit before income tax 9.3 7.9 16.9% 18.0 Income tax (1.9) (1.7) (3.7) Profit for the financial period 7.3 6.3 14.3 Basic earnings per share (p) 7.2 6.3 14.3% 14.2 Interim dividend per share (p) 3.2 2.8 14.3% - 8

Segmental performance Revenue • Strong organic growth in e-fulfilment driven by: £m 6m to 31 October Change o Continued migration online and consequent growth in activity 2018 2017 % levels on established customers – e.g. ASOS, Wilko, Browns E-fulfilment & returns management services 107.1 76.1 40.7% o Benefit of prior year contract wins - e.g. M&S returns, River Island, ASOS Poland Non e-fulfilment logistics 76.1 65.7 15.8% New contract wins in FY19 – e.g. Pretty Little Thing, Ginger Ray o Total value-added logistics services 183.2 141.8 29.2% • Commercial vehicles 45.4 58.8 -22.8% Clicklink: loss of £0.7m (H1 FY18: £0.7m loss): o Inter-segment sales (0.7) (0.9) Profitability expected to improve substantially in H2 due to: • Group Revenue 227.9 199.7 14.1% Seasonality: 40% of annual volume in Nov-Jan • Rate enhancements • New customer onboarding EBIT • Non e-fulfilment EBIT adversely impacted by activity levels as a key customer re-shapes their network, and a reduction in tobacco activity, £m 6m to 31 October Change offset by property-related advisory fees of £2.8m (H1 FY18: nil): 2018 2017 % o Contract wins and increased tobacco activity will provide E-fulfilment & returns management services 6.2 5.3 17.1% earnings growth into H2 and beyond Non e-fulfilment logistics 7.3 6.3 16.4% • Commercial vehicles EBIT down due to lack of manufacturer support: Central logistics overheads (2.5) (2.5) o Cost base addressed Total value-added logistics services 11.0 9.1 21.2% • Continued investment in solutions development and IT infrastructure Commercial vehicles 0.9 1.4 -36.9% • Head office costs (1.2) (1.3) Share based payment credit £0.7m (H1 FY18: charge £0.6m) Group EBIT 10.7 9.2 16.1% 9

Summary cash flow statement £m 6m to 31 October Year to 30 2018 2017 April 2018 EBIT 10.7 9.2 20.9 • EBITDA ahead 14.5% Depreciation & Amortisation 3.8 3.4 6.9 • Working capital outflow due to higher than Other non-cash items 1 0.3 1.2 (0.1) normal accrued revenue Change in working capital (4.4) (1.2) (3.2) Cash generated from operations 10.1 12.6 24.5 • Strong underlying cash flow and cash Net interest paid (1.0) (0.9) (1.9) conversion Tax paid (1.9) (2.0) (4.0) • Majority of capex is back-to-back with Net cash flows from operating activities 7.2 9.7 18.6 agreements by customers to repay the capital through open-book contract mechanisms Net capital expenditure (7.4) (3.6) (1.0) Acquisition of subsidiaries (0.5) (11.8) (11.8) Net cash flows from investing activities (7.9) (15.4) (12.8) Loan advance to joint venture - - (0.5) Net drawdown of bank loans 8.5 14.1 8.1 Finance leases advanced 0.3 - - Repayment of capital on finance leases (3.4) (3.7) (7.3) Shares issued 0.1 0.2 1.6 Dividends paid (5.7) (4.8) (7.6) Net cash flows from financing activities (0.2) 5.8 (5.7) Net increase / (decrease) in cash & cash equivalents (0.9) 0.1 0.1 1. Other non cash items comprise share of equity-accounted investees, share based payments and exchange differences 2. EBITDA calculated as EBIT plus depreciation and amortisation 10

Summary balance sheet £m 6m to 31 October Year to 30 2018 2017 April 2018 • Investment in fixed assets largely to support new Intangible assets 37.7 36.8 37.2 open-book contracts under which capital will be repaid Property, plant & equipment 51.2 46.7 45.0 over the term of the contract Interest in equity-accounted investees 0.7 1.6 1.3 • Net debt £42.1m , slightly lower than the Board’s Non-current financial assets 1.9 1.4 1.9 expectations Non-current assets 91.5 86.5 85.4 Inventories 24.7 30.9 22.1 Trade & other receivables 94.7 70.8 73.4 Cash & cash equivalents 2.1 0.9 2.3 Current assets 121.5 102.6 97.8 Trade & other payables 120.7 110.6 102.4 Borrowings 10.6 7.8 9.2 Short term provisions 0.1 0.3 0.1 Current tax liabilities 2.9 1.9 2.5 Current liabilities 134.3 120.6 114.2 Borrowings 35.5 33.3 26.7 Long term provisions 1.6 1.4 1.5 Deferred tax liabilities 0.9 1.3 1.5 Non-current liabilities 38.0 36.0 29.7 Net assets 40.7 32.5 39.3 11

Operational review 3