5949 Whistl Annual Report FINAL

Annual Report 2017 Whistl Group Holdings Limited

Whistl Group Holdings Limited Annual report and consolidated financial statements for the year ended 31 December 2017

Registered number: 9779561 (England and Wales)

Contents

Strategic Report 2017 highlights Financial highlights Our Mission & Promise CEO Business Review CFO Financial Review

4 6 8

10 14 18 20 26

Risk Management

Corporate Responsibility and Our People

Governance

Financials Directors’ Report

30 31 33 34 35 36 36 37 38 39 59

Independent Auditor’s Report

Consolidated statement of comprehensive income Consolidated statement of financial position Company statement of financial position Consolidated statement of changes in equity Company statement of changes in equity Consolidated statement of cash flows

Company statement of cash flows

Notes to the consolidated financial statements

Directors and Advisers

3

2017 highlights

£ 602.98m Turnover up 1.9%

£ 16.25m Net Assets up 57.4%

£ 37.10m Cash at bank and in hand up 62.0%

£ 4.34m Capital Expenditure up 7.3%

£ 1.50m Dividend paid for the first time

ALL FIGURES ARE 2017 COMPARED TO 2016

4

2017 highlights | Whistl Annual Report 2017

Whistl is a delivery management company with activities in Downstream Access Mail, Doordrop Media, Parcels and Fulfilment, both in the UK and Internationally.

31 % growth in International business 10 % growth in Parcels

Opening of new

Super Depot in Bolton

Acquisition of

Prism DM signals move into E-commerce Fulfilment sector

Handling

3 in 10 of all letters sent in the UK

2017 highlights | Whistl Annual Report 2017

5

Financial highlights for the year ended 31 December 2017

2017 £’000

2016 £’000 591,713 (27,093)

602,984 (26,846)

Turnover Administrative expenses 1 Underlying operating profit 1 Underlying EBITDA 2 Net assets Cash at bank and in hand Net cash from operating activities Capital expenditure Dividends paid

10,536 11,609 16,248 37,103 19,857 4,335 1,500

11,838 13,289 10,324 22,903 11,770 4,039 -

1 Excludes exceptional items. 2 EBITDA represents earnings before interest, tax, depreciation, amortisation and exceptional items and is calculated as operating profit before exceptional items adjusted for fixed asset, impairment depreciation and amortisation charge for the year.

6 Financial highlights | Whistl Annual Report 2017

ENCOURAGING TRADING SAW REVENUE INCREASE BY £11.3M TO £603.0M (2016: £591.7M) INCLUDING STRONG GAINS IN THE GROWTH AREAS OF PARCELS AND INTERNATIONAL OF 10% AND 31% RESPECTIVELY, UNDERPINNED BY A ROBUST PERFORMANCE IN CORE DOWNSTREAM ACCESS.

THE GROUP IS IN A VERY STRONG FINANCIAL POSITION WITH NET ASSETS RISING FROM £10.3M TO £16.2M AND CASH RESERVES INCREASING TO £37.1M (2016: £22.9M) . CASH INFLOW FROM OPERATING ACTIVITIES GREW TO £19.9M (2016: £11.8M) .

OUR NEW PURPOSE BUILT SUPER DEPOT IN BOLTON WHICH OPENED IN JULY, CONTINUES OUR AMBITIOUS INVESTMENT PROGRAMME AND WE COMMENCED THE CONSTRUCTION OF A PARCEL SORTATION SYSTEM WHICH WILL BE COMMISSIONED IN 2018.

WE ACQUIRED THE FULFILMENT BUSINESS, PRISM DM TO GROW OUR PRESENCE IN THE E-COMMERCE MARKET AND BROADEN THE RANGE OF SERVICES WE CAN OFFER TO OUR CUSTOMERS.

OVERALL CAPITAL EXPENDITURE INCREASED 7% TO £4.3M ADDING GROWTH CAPACITY AND IMPROVING EFFICIENCY.

WE HAVE A SUBSTANTIAL, FULLY COMMITTED BANK FACILITY OF £65M THAT REMAINS UNUTILISED.

THE GROUP MARKED A SIGNIFICANT MILESTONE IN THE YEAR, ON THE 2ND ANNIVERSARY OF THE MANAGEMENT BUYOUT, BY DECLARING A DIVIDEND OF £1.5M (2016: NIL) .

Financial highlights | Whistl Annual Report 2017

7

Our Mission

TO GROW BY DOING A GREAT JOB, WITH CAN-DO PEOPLE WORKING EFFICIENTLY TO DELIVER EXCEPTIONAL SERVICE.

8

Our Mission | Whistl Annual Report 2017

Our Promise

Quality first Reliability, dependability and a quality service – central to everything we do for you.

Easy to work with We work hard at making sure it’s easy for you to use us, to get hold of us and to get on with us. Thinking of you Before we think, speak or act, we put ourselves in your shoes and do what’s right for you and your business.

The human touch Expect happy and helpful, willing and able. Can-do is in our DNA. The right thing We’re open and honest, straight and clear – doing the right thing.

Living up to Our Promise

72 % 76 % 66 % 77 % 72 % 27 NPS

of customers agreed we provide a reliable, dependable quality service. of customers agreed it’s easy to use us and to reach us when they need to.

of customers agreed we see things from their perspective and do the right thing for their business.

of customers agreed we are friendly and helpful, and have a can-do attitude. of customers agreed we are straightforward, open and honest.

our NPS score across the business.

Source: Whistl Annual customer survey 2017

9

Our Promise | Whistl Annual Report 2017

CEO Business Review

Nick Wells Chief Executive O¤cer

We reached the second anniversary of our management buyout of Whistl from PostNL and during the year we continued to invest in our business to become the leading delivery management company in the UK. Our business is built upon our core Downstream Access bulk mail o…ering and we have a growing presence in doordrop media, parcels and international markets. We were pleased to conclude our acquisition of e-commerce fulfilment business Prism DM at the end of July which has been integrated into the Group as Whistl Fulfilment and which gives us a greater presence in the growing e-commerce market. The Whistl business and culture continues to be built upon providing excellent service, and cost e’ciency, with a human touch.

10 CEO Business Review | Whistl Annual Report 2017

Our markets

Downstream Access mail Business mail collected and processed by Whistl and delivered by Royal Mail through a Downstream Access agreement is the core activity of the company. Although the sector is seeing low single digit decline, largely driven by eSubstitution, we have continued to grow our market share in 2017 and have driven further operational e¤ciencies throughout the business. Today the UK Downstream Access market (DSA) is stable having remained at around 7.1bn items since 2011, with any volume reductions being o¦set by new volume being processed through Downstream Access. In the UK 58% of total mail volume goes through DSA, with c.5bn items delivered outside of DSA, presenting a significant opportunity for Whistl to obtain volumes from beyond the DSA market. The UK mail market is competitive and DSA customers are seeking value, whilst retaining a high-quality service. Whistl will continue to o¦er a high quality and reliable service and aim to be the DSA cost e¤cient leader. Whistl will also continue to serve a variety of sectors,(o¦ering protection against sectoral changes) including retailers, financial services, utilities, public sector, and mailing houses. We are proud to have a diversified customer base including both blue-chip and SME’s, built upon longevity of relationships and we continue to have a proven track record of winning new business and increasing cross sales throughout the client base, further embedding Whistl in the customer’s supply chain. Doordrop Media Whistl’s innovative Doordrop Media o¦erings help brands connect with their target customers in the home. We o¦er a full 360° service from brief to evaluation and utilise analytics to provide intelligent profiling of the client’s customers. We also deliver catalogues and sample products to UK homes via a range of doordrop channels including Royal Mail. The doordrop market has evolved as the circulation of free newspapers has changed in recent years. However, doordrop media is now being seen as an e¦ective medium to direct consumers online, or in conjunction with other advertising mediums, such as direct mail, social media or TV advertising. As a result, investment in doordrop media is starting to increase. The emergence of big >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60

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