Business Post Group plc”the UK’s leading independent express delivery company”

Interim Results Presentation

November 2005

2

Presenters

Paul Carvell - Chief Executive

Peter Fitzwilliam - Finance Director

Guy Buswell - Managing Director, UK Mail

3

Programme

Introduction Paul Carvell

Financial Results Peter Fitzwilliam

Parcel Services Paul Carvell

Specialist Distribution Services Paul Carvell

Mail Services Guy Buswell

Conclusion Paul Carvell

4

Key Points

reduced profit reflects poor economic conditions in two parts of Parcel Services - Express and franchises

Specialist Distribution and Mail Services trading well

trading conditions in Parcel Services worse since 21 September

Board remains confident of the business model and the Group’s long-term potential

5

Summarised Income Statement

6 months to 30 September 2005£m

2004£m

Change

Revenue 133.0 109.9 +21%

Gross profit 22.1 22.8 -3%

Overheads - as before, but pre-goodwill (15.3) (13.6) +12%

- new IFRS share costs (0.5) (0.5)

Operating profit under IFRS 6.3 8.7 -28%

Interest (0.1) (0.1)

Profit before exceptional charge 6.2 8.6 -28%

Exceptional provision (3.2) -

Profit before tax 3.0 8.6

Tax (0.7) (2.7)

Profit after tax 2.3 5.9

6

Group Revenue Per Working Day

7

Parcel Services6 months to 30 September By Value By

Proportion

2005£m

2004£m

Growth 2005%

2004%

Revenue

Express 67.5 65.6 +2.9% 51 60

International 15.2 13.6 +12% 11 12

HomeServe 15.0 10.8 +39% 11 10

97.7 90.0 +8.6% 73 82

Operating profit

Normal trading 11.5 15.0

Franchise support (1.5) -

Exceptional provision (3.2) -

6.8 15.0

Margin

Adjusted for exceptional provision 10.2% 16.7%

8

Parcel Services – Profit shortfall£m

Volume (2.0) Growth was 4% below expectations

Price (0.9) 1% increase achieved vs 2% expected

Cost

- one-off redundancy/restructuring

(0.5) H2 will benefit by £0.7m

- higher fuel and other costs (0.7) Recovered in surcharge and Central

(4.1)

9

Specialist Distribution ServicesBy Value By Proportion

Year to 30 September 2005£m

2004£m

Growth 2005%

2004%

Revenue

UK Pallets 13.6 11.3 +20% 10 10

Courier 6.8 6.2 +10% 5 6

20.4 17.5 +16.6% 15 16

Operating profit 1.5 0.7

Margin 7.4% 4.0%

10

Mail Services

By Value By Proportion

Year to 30 September 2005£m

2004£m

Growth 2005%

2004%

Revenue 14.6 2.1 +595% 11 2

Operating profit 1.1 (0.5)

Margin 7.5% (24%)

11

Central

2005£m

2004£m

Change

Revenues 0.3 0.3

Operating profit (6.3) (6.5) -3%

Percentage of Group revenue 4.7% 5.9%

12

Summarised Cash Flow Statement

6 months to 30 September 2005£m

2004£m

Profit before franchise costs 7.7 8.6

Depreciation and share-based charges 3.1 2.6

Franchise indebtedness (1.8) (0.2)

Working capital (1.4) (2.8)

Tax (2.6) (2.5)

Operating activities 5.0 5.7

Capital expenditure (5.7) (4.5)

Dividends and financing (6.9) (6.7)

Net cash flow (7.6) (5.5)

13

Summarised Balance Sheet

at 30 September 2005£m

2004£m

Property, goodwill and other non-current assets

48.0 45.6

Deferred tax on share-based incentives under IFRS

0.4 1.1

Net current assets excl. cash/debt 23.7 22.3

Non-current liabilities (1.8) (1.6)

Net debt (12.2) (10.1)

Net assets under IFRS 58.1 57.3

14

Segmental profits

2004 (£m) 2005 (£m)

H1 H2 FY H1 H2 FY

Parcel Services 15.0 15.3 30.3 10.0

Specialist Distribution

0.7 1.2 1.9 1.5

Mail Services (0.5) 0.5 - 1.1

Central pre-share costs

(6.0) (5.4) (11.4) (5.8)

Interest (0.1) (0.2) (0.3) (0.1)

Profit pre tax and IFRS

9.1 11.4 20.5 6.7

IFRS share costs (0.5) (0.4) (0.9) (0.5) (0.7) (1.2)

Pre-tax profit 8.6 11.0 19.6 6.2

15

Parcel Services

Express (B2B) International HomeServe (B2C) Network Services

Revenue 73% (2004: 82%)

Profit 79% (2004: 99%)

16

Express

1.3% growth in revenue per day, reducing as the period progressed, reflecting increasingly difficult economic conditions

pricing competitive

we believe we’ve maintained market share

17

Express Revenue Per Working Day

18

International

10% growth in revenue per dayFedEx increase was slightly lessnon-FedEx increase was more, reflecting

recent success of Eurodis arrangements and international mail

International Mail will transfer to Mail Services FedEx contract renewal subject to competitive

tender

19

HomeServe

37% growth in revenue per day, ahead of expectations

Walsh Western a substantial contributor to growth

evening deliveries increasing

H2 volumes weaker

20

Network Services

quality of service maintained throughout

investments in infrastructure

H1 fuel costs of £0.4m recovered through surcharges

redundancies, restructuring, productivity initiatives

21

Franchises – the past

network is dependent upon each and every location

loans and advances have existed since 2001exposure increased by £1.4m to £3.2m during

2005position deteriorated by £1.5m in first five

months of 2006 from franchise trading lossesBusiness Post’s financial exposure has been

cleared by expensing to P&L

22

Franchises – the future small amount of local underpayment, eg FedEx,

evening deliveries, linehaul, will be redressed certain amount of regional difficulties, eg SE England,

will be redressed primarily a volume issue leading to losses central resource allocated to supplement franchise

sales effort tight monitoring of performance those that won’t survive are provided for in provision

and reduced expectations

23

Specialist Distribution Services

UK Pallets UK Today Business Post Technical Couriers

Revenue 15% (2004: 16%)

Profit 12% (2004: 5%)

24

Specialist Distribution Services

UK Pallets exceeding expectationsexpansion of sales team (20% y-o-y growth) improvements in operational managementon track for significantly improved performance

UK Today being rewarded for focus on quality (15% growth)

Business Post Technical Couriers flat top line but profit margins improved under new MD

25

Mail Services

Revenue 11% (2004: 2%)

Profit 9% (2004: -3%)

26

UK Mail

excellent progress, ahead of the Board’s initial expectations

2% market share means we are c.6 months ahead of schedule

profit of £1.1m (2004: loss of £0.5m) matches market share

unsorted mail business successfully launched

27

UK Mail Revenue Per Working Day

28

UK Mail – Plans for the current year and beyond

sorted mail

unsorted mail

SME market

29

Parcel Services Consignments Per Working Day

30

Longer Term Prospects

Board expects resumed progress

Board’s confidence in Group’s long-term

potential remains