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DELIVERING THE FUTURE

A leap forward

Activity report 2017

bpost ACTIVITY REPORT 2017

ContentsKey figuresKey eventsMessage to the stakeholdersOur strategyMaintaining our core businessGrowingDelivering operational excellenceStrengthening ties with employees and customersFinancial reviewThe bpost share

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ACTIVITY REPORT 2017 bpost

On August 7, 2017 bpost strengthened its position in sustainable logistics with the acquisition of Bubble Post

This confirms the growth ambitions of both companies in smart and sustainable urban delivery solutions and enhances the hybrid network of bpost with complementary expertise in cold transport.

On May 10, 2017 four new members of the Board of Directors were appointed, as well as a new Chairman of the Board of Directors

The bpost annual Shareholders’ Meeting approved the appointment of Jos Donvil as non-executive director, proposed by the Belgian State, and of Thomas Hübner, Philly Teixeira and Saskia Van Uffelen as independent directors of bpost. On the same day the members of the newly composed Board of Directors of bpost appointed François Cornelis as the new Chairman of the Board of Directors.

On July 14, 2017 the Council of Ministers approved the bill introduced by Minister De Croo on postal services

The bill ensures continuity with the existing regulatory framework, while at the same time introducing more flexibility to allow the universal service provider to respond to changing customer needs. The bill was approved by the Parliament in January 2018.

On July 3, 2017 bpost started powering its sorting centers in Charleroi and Liège using solar energy

6,500 solar panels have been installed on the roofs of the Charleroi and Liège sorting centres. They capture no less than 17,000 m2 of solar energy.

3,024 millionEUR turnover

190,000 parcels handled every day

26,906FTE and interim (average)

8.1 millionletters handled every day

Key eventsin 2017


On October 25, 2017 bpost launched 100% delivery

In order to increase convenience, bpost offers its customers the possibility to choose where they want their parcel delivered (at a safe place around their house, at a neighbour or at a pick up point) in case he or she is absent.

On November 16, 2017 bpost acquired 100% of the shares of Radial after having obtained all necessary approvals from the relevant competition authorities

The acquisition of Radial, a leading provider of integrated e-commerce logistics, perfectly fits within bpost’s growth strategy. It allows bpost to scale up its existing US presence and expand its product offering into value-added activities that cover the entire value chain in e-commerce logistics.

On October 4, 2017 Cubee, the largest Belgian parcel locker network open to all couriers, was launched

Cubee is the result of the joining of forces of bpost and Dutch company de Buren in 2016. It is an independent, open network of parcel lockers for retailers, online customers and couriers.

On October 20, 2017 bpost opened the biggest sorting center in the Benelux

New Brussels X, the brand new bpost sorting center in Neder-Over-Heembeek, was officially opened. With 80,000 m² it is the biggest sorting center in the Benelux and the second biggest in Europe. It has a capacity of 300,000 parcels and 2.5 million letters per day.

86%satisfied customers

1,336post offices and post points

-37% carbon emissions in 2017 vs. 2007

Key Figures

22,500 m²solar panels


Message to the stakeholders

A leap forward

In 2017 we have progressed in every aspect of our strategy.

Supporting mail, our core business

In 2017 we grew advertising mail with targeted sales efforts, strengthening the position of the letter as a communication channel, notably through our own agency Welcome Media.

Under pressure from electronic substitution, traditional mail declined by 5.8%. This is in line with our expectations.

Growing

To counter the decline of our historical business, we continued to diversify our activities and enhance our position in our customers’ value chain.

E-commerce is a source of great growth potential, with regard to the last mile in parcel delivery, but also to managing and preparing online shopping orders. bpost is committed to offering customers a robust cross-border service that covers the entire e-commerce logistical chain.

The acquisition of US company Radial is key to this. Radial markets clever solutions for the whole process triggered by the customer’s online purchase. Its expertise and skills will enable us to become a key player in online services related to e-commerce. Radial also bolsters our position in the United States, which is already the world’s leading e-commerce market, but still has huge untapped growth potential.

In 2017 the domestic parcel volume broke all records. On average, bpost handled 190.000 parcels per day, up 28% on the 2016 figure. Peak volume hit 350.000 per day during the year-end holidays.

2017 was a key year for bpost. Thanks to the acquisition of Radial and the opening of our new Brussels X sorting center our ambition to become a major player in e-commerce logistics took shape. Furthermore, the new postal law provides us with a modern and transparent regulatory framework, which is essential for the future of companies active in the postal industry. This law also entrusts the provision of the universal postal service to bpost for a term of five years.

The new postal law provides us with a modern and transparent regulatory framework, essential for the future of companies active in the postal industry.

The new Brussels X, the biggest sorting center in the Benelux and the second biggest in Europe, has doubled our parcel sorting capacity.


François CornelisChairman of the Board of Directors

Koen Van GervenCEO

In 2017 we invested efforts to meet the new needs of our customers and offer them greater convenience and more choice. We substantially enlarged the parcel delivery options, allowing customers to choose their delivery location.

We also launched Cubee, Belgium’s biggest parcel locker network open to all retailers, online customers and couriers. A result of the acquisition of Dutch company de Buren, Cubee offered 152 parcel lockers in Belgium and 61 in the Netherlands at the end of 2017.

Safeguarding our operational flexibility

bpost opened the new Brussels X sorting center in 2017. An integral part of our Vision 2020 strategy, Brussels X covers 80.000 m2, more of half of which is dedicated to letters. Our new sorting center, the biggest in the Benelux and the second biggest in Europe, has doubled our parcel sorting capacity.

Earning the loyalty of our customers and employees

bpost aspires to be an employer of choice. We make investments to improve the wellbeing of our employees, including guidance and mentoring for new hires

and more than 128.000 hours of training. We reduced the number of occupational accidents by 2.5%.

In 2017 bpost signed the first Belgian loan linked to sustainable development. The financial conditions of the loan depend on how well bpost performs in sustainable development. We also installed another 17.000 m2 of solar panels on the roofs of our Liège and Charleroi sorting centers. The acquisition of Bubble Post enhanced our green, sustainable urban delivery network. 86% of our customers said they were satisfied with bpost in 2017.

Our efforts were also reflected in our financial results. Turnover increased by 25% (to EUR 3.023,8 million in 2017). EBITDA was up 2% to EUR 598,0 million.

The General Shareholders’ Meeting approved for 2017 payment of a gross

Radial’s expertise and skills will enable us to become a key player in online services related to e-commerce.

dividend of EUR 1.31 per share1, the same as in 2016.

We thank our employees, who, day after day, show their dedication and a real concern for our customers. We thank the shareholders for their confidence, and trust that we have implemented a strategy that remunerates them and serves society.

François Cornelis Chairman of the Board of Directors

Koen Van Gerven CEO

(1) Still to be confirmed.


In 2017 we made progress in every aspect of our strategy.

provide innovative services that capitalize on “proximity” and “convenience”.

The successful, targeted approach we have taken in recent years forms the basis of the strategic direction of bpost going forward, which we confirmed in 2017. Our strategy is based on four pillars.

In recent years bpost has adapted to a fast-changing world and the changing needs of our customers. Our good results, increased productivity and improved service are the best proof of that. In 2017 we confirmed our strategic direction.

The fundamental transformation of bpost over the past decade shows that we are always looking for ways to bring our customers closer together and make their lives easier. It all began with mail and that will continue to play an important role in the future of our company. In the meantime we have adapted to meet the changing needs of our customers. We have built a dynamic offering of domestic and international parcels, we work on the whole e-commerce logistics chain and we

1Maintaining

our core business

Our strategy

A four-pillar strategy


1. MAIL REMAINS OUR CORE BUSINESS

We still generate a large part of our revenue in mail. Although this business is under pressure in our digital world, we believe strongly in the power of the letterbox as a communication channel. The fact that people give more attention to a letter (which thus has more stopping power) means that mail has added value in a company’s communication mix. Today, the ideal marketing mix combines digital communication with a large reach and paper communication with a big impact (call to action). We support our core business as well as taking care of the daily delivery of newspapers and magazines.

2. GROWTH GUARANTEES OUR FUTURE

We capitalize on the many opportunities the world now offers us. We use the expansion of e-commerce to set the tone in parcels in Belgium and abroad.

We are growing in e-commerce logistics, offering our customers solutions that cover their entire e-commerce logistics chain.

We want to enlarge our “proximity” and “convenience” offering. As well as the continued diversification of our businesses and offerings, and our financial products, we work on developing new solutions.

3. OUR WAY OF WORKING WILL REMAIN LEAN AND FLEXIBLE

In a changing world, we are focused and we continue to improve productivity and achieve operational excellence. We will also have the right answers in the world where flexibility is becoming increasingly important.

4. OUR BIGGEST ASSET IS OURSELVES

Our employees are our biggest asset in creating value for the whole of society. We will continue to invest in their expertise. Their loyal engagement ensures that our customers remain loyal to us and recommend us to others. We also want to reward our shareholders and achieve our results in a sustainable and socially responsible way.

3

4

Delivering operational excellence

Strengthening ties with

employees and

customers

2

Growing

A leap forward

Maintaining our core business


In 2017, preparations were made for the new postal law, which was adopted by the Belgian Parliament at the beginning of 2018. The law guarantees the provision of a high-quality universal service across the whole territory of Belgium until 2023, with customers able to send and receive mail on a daily basis. bpost has been designated the universal service provider

for this five-year term. Furthermore, the maintenance of fair terms of employment prevents social dumping in the industry. The new postal law provides a modern, transparent and stable regulatory framework, which is essential in order to safeguard the future of the postal industry.

Traditional mail is still our main business, accounting for almost half of our revenue. So we continue to do our utmost to promote its use in the face of e-substitution. Our domestic post volumes fell by 5.8%, a trend that is in line with expectations. We achieved very good results in advertising mail, bucking the trend on the postal market.

A leap forward

Maintaining our core business


ADVERTISING MAIL

The letterbox remains a powerful communication channel. Paper is an important medium for conveying emotions and commercial messages. Consumers prefer to receive important administrative and commercial information by mail, while mail also has value for companies. People give more attention to mail (stopping power), which more often has a call to action, such as requesting additional information or making a purchase. Combined with digital communication, mail has great added value in a company’s communication mix.

Convinced of the strengths and growth potential of advertising mail, in 2017 bpost focused on further strengthening the position of addressed advertising mail and door-to-door leaflets in the corporate communication mix. We were able to buck the trend by achieving growth in this segment.

We have focused on two target groups: SMEs and big companies.

In the latter case, we concentrate on five high-potential sectors: supermarkets, cars, fashion, travel and fast-moving consumer goods. These are sectors where mail often has a major impact. To convince customers in this sector, we run our own sales teams and we conduct targeted commercial campaigns, which are sometimes linked to major events, such as the Motor Show Brussels.

Research shows that most decisions about whether or not to buy certain goods and services are still taken at home. This

finding strengthens bpost in its strategy to promote “in house advertising” as a fully fledged ingredient in the corporate media mix. The advantage of a letter or a direct mail item is that it remains visible in the home for longer. Most other communication channels, like online media or TV, are fleeting. Welcome Media was set up in 2016 to further improve the quality of advice to companies and media agencies. Our own media house puts us in a stronger position to put both addressed and unaddressed mailings into the corporate media mix.

Our Optitouch planning tool gives media agencies a highly activating medium to add to their media plan, while the wide choice of selection criteria enables them to carefully compose their target groups. In doing so, they get the most out of every advertising budget, due to the optimal reach and cost.

The Welcome Media range was enlarged to include unaddressed mailings in 2017. With its data-driven approach, Welcome Media enables companies to optimize their mailings for their specific target group. They can be based on sociodemographic criteria (age, social class), lifestyle (hobbies), geographical reach or a combination of these.

We also invest in innovation, introducing new products and services to respond to the needs of customers. In doing so, we make full use of the digital possibilities and offer integrated solutions. A great example is Mailing Maker, an online tool that SMEs and the self-employed can use to create impactful direct mailings. This has been available for addressed

advertising since 2016 and in 2017 we extended it to door-to-door drops. Convenience, transparency and efficiency are key factors here.

We are looking at ways to update established services and products. The postcard is a good example. It is a carrier of emotions that tells stories and connects people. Mobile Postcard enables everyone with a smartphone or a tablet to create and send their own personalized postcard. You could say that we have reinvented the postcard for the digital age. In 2017, use of Mobile Postcard increased by 15%, peaking at 10,000 cards per day. And we continue to innovate with the new video card.

TRANSACTIONAL MAIL

Many consumers still prefer to receive bills and other documentation on paper.

bpost continues to work to convince its customers of the value of mail for transactional purposes. We also want to make it as easy as possible for large senders to send their mail efficiently. We offer hybrid solutions that combine the convenience of digital technology with the strength of mail. 2017 saw the commercial rollout of Quick Stamp. With this product, SMEs can frank their registered mail items online and then simply drop them in a regular red mailbox. This efficient solution saves them a lot of time, as they no longer need to go to the post office and all digital proofs of sending are automatically saved to a digital archive.


In the living room

At bpost we have set up our own media agency, Welcome Media, to capitalize on the strengths of the letter and reinforce its place within the various media. Our message is clear: in-home advertising brings a brand to the heart of the living room, where buying decisions are made. You could say, we open doors for brands. So, the letter fully deserves its place in advertisers’ media mix.

The letter brings a brand or a product into the living room, where the buying decision is made.

Alert and attentive

With Welcome Media, we not only want to highlight that, we also want to offer an easy and efficient cut-and-dried direct mailing solution, based on the customer’s needs and budget. We can for example take care of the planning and the logistics. We also help our customers to reach their target audience, based on socio-demographic criteria, lifestyle or buying behavior and as such increase the impact of their mailing.

Michel GodinSales Manager

Ensuring that consumers know and choose their products, brands or services, that’s what advertising and agencies rack their brains trying to do. No easy task, bearing in mind today’s wide range of often fleeting communication channels. But the letter has one big thing going for it: studies show that a letter is read more often than other media. Moreover, 86% of all recipients keep the letters they receive for four to five days. Talking about high visibility.

Through our subsidiary Speos, we offer a full document management solution that enables companies to focus on their core business. We manage all aspects of their outgoing document flow, from creation to delivery through all existing channels (paper and digital). Our solutions are integrated with the leading e-platforms to optimize business processes, data security and cost savings.

NEWSPAPERS AND MAGAZINES

bpost delivers newspapers and magazines to households throughout Belgium. The Belgian state has awarded us the concession for 2016-2020, so we will continue to do so going forward. Newspapers are delivered before 7.30am on weekdays and before 10am on Saturdays.

Through AMP, part of our subsidiary Ubiway, which we acquired in 2016, we also deliver newspapers and magazines to many points of sale.

15%In 2017, use of Mobile Postcard increased by 15%.

A leap forward

Growing


Growing

PARCELS

The worldwide growth of e-commerce has generated a considerable increase in parcel flows and bpost is eagerly taking advantage both in Belgium and internationally.

Domestic parcels

Parcels broke all records in 2017: on the domestic parcel market we achieved

in 2017 a growth of no less than 28% compared with 2016.

In 2016 we particularly saw a strong rise in parcel volumes sent by major (online) senders, not only within Belgium but also from neighbouring countries. This is partly due to the partnership we entered into with DHL Parcel in 2016 for the delivery of B2C parcels at pan-European level.

The continuing expansion of e-commerce offers us a lot of opportunities for growth. The number of parcels is rising at an exponential rate and there is strong demand for solutions for the whole e-commerce logistics chain. We also want to enlarge our proximity and convenience offering, by making optimal use of our strengths to offer innovative solutions and by continuing our diversification efforts.

A leap forward

Growing


Convenience

In the early days of e-commerce consumers mainly ordered products online because they could not find them in the shops, but now people prefer shopping online because of the convenience. With that in mind, our parcel strategy is centred on delivering parcels to our customers when and where they want.

In that respect we made a number of significant advances in 2017:

• Now customers can choose where they want their parcels delivered if they are not home: to a neighbor, a pick-up point or a safe place in the vicinity of the home. They simply register their preference on the website at www.bpost.be/mypreferences. To rule out any misunderstandings, customers can register the specific house number of a neighbor or upload a photo depicting a safe place in the vicinity of their home. The service was launched in October and 180,000 preferences had been registered by the end of 2017.

• As well as the location, customers also want to know when their parcel will be delivered. To meet that demand, bpost has started a pilot to track parcels in real time as much as possible. Based on this successful trial, we are able to give our customers a

time window for the delivery of their parcel. The aim is to give the most precise possible time window for each delivery.

The majority of customers still prefer to have their parcels delivered to their home, but it is important to offer an extensive, widely accessible network of parcel pick-up points. With more than 1,300 post offices and post points we already easily fulfil that requirement and in 2018 we also incorporated the Kariboo! network. In addition, in 2017 we launched Cubee, Belgium’s largest parcel locker network, which is open to all retailers, consumers and couriers. That makes it an open and independent network, which is the biggest point of difference with the earlier bpost parcel lockers. Cubee resulted from the acquisition of Dutch company de Buren and at the end of 2017 had 152 parcel lockers in Belgium and 61 in the Netherlands.

The ability to return items is a decisive factor in deciding whether to shop online or not. In 2017 bpost launched various initiatives to facilitate this return process. For instance, at a large number of post offices customers can print a free return label to affix to their parcel. And for a major customer in the fashion industry in Ghent, Belgium, we ran a trial in which bpost picked up returns from consumers.

Hybrid network

In spite of these initiatives, customers sometimes require a personalized solution for their parcels. To this end, bpost continues to work on a hybrid network that provides flexible solutions to meet specific personalised delivery needs alongside our long-established distribution network.

Our subsidiary DynaGroup, which provides a wide range of logistics services, often under a specific brand name, plays an important role in this. For instance, Dynafix repairs electronic equipment, from smartphones by way of coffeemakers to computers. Dynafix picks up the device or appliance, makes the requisite repairs and returns it to the customer. Any installation is also included. Dynalogic makes very specific parcel deliveries, with the customer able to select the desired time (a 2-3 hour window) and location. Dynalogic delivers products of any size, from the very small, like a passport or medication, to the very large, like a washing machine or a sofa.

In 2017 the services of Parcify and bringr were consolidated into a single service. With Parcify, customers can have their parcels delivered in just a couple of clicks. Parcify connects consumers and businesses with self-employed couriers that are going in the same direction, on a crowdsourced

At the end of 2017 there were 152 Cubee parcel lockers in Belgium.


A close partnership

During the 2017 peak season, this client experienced sales that were 114% over their forecasted expectations. Because of their intimate understanding of our operation, they knew the challenge ahead of us to react to this unplanned demand. They partnered with us to support additional hours and shifts, which increased our capacity and ultimately

Our client understands how important the people picking, packing and shipping their products are to the brand’s success.

allowed us to exceed their expectations and deliver on their customer’s expectations. Quickly after the peak season concluded, our client was on site throwing a party for associates to help celebrate a successful peak season. I truly believe the investment in a close partnership with the client was key to our mutual success.

Melissa K. AnnelerDirector of Operations & Client Experience at Radial

In our Atlanta-based distribution center, we have a strong relationship with one of Radial’s key apparel clients. Our facility views the client as a part of our team and, in turn, they view our operations as an extension of their brand. To foster brand engagement, this client gives our associates samples of their products to wear. Through first-hand experience with the product, associates gain a close affiliation with the brand. The client is very engaged in our operation and the people supporting it. They spend a lot of time on the floor talking with associates to get their feedback, not only on the products, but on suggestions to improve process and the ultimate consumer experience. The client understands how important the people picking, packing and shipping their products are to the brand’s success.

A leap forward

Growing


delivery platform. That ensures goods are delivered in a sustainable, money-saving and convenient way. Parcels can now be sent by Parcify from Antwerp, Ghent and Brussels to anywhere in Belgium.

International parcels

bpost aims to be a player on the international parcel market, offering its customers the best solutions through its Landmark Global subsidiary. This cross-border parcel strategy, driven by e-commerce, was strengthened in 2017 with the continued consolidation of our international activities and an integrated organizational structure.

Landmark Global has various strategic facilities that are located close to customers in the United States, Canada, the United Kingdom, the Netherlands, Belgium, China, Hong Kong, Singapore, Australia and New Zealand. The acquisition of Radial (see the “E-commerce logistics” section) also gives us an even firmer foothold on the US market.

This approach has immediately paid dividends. Thanks to our outstanding relations with major customers we have presented excellent results in Asia, while new customers also helped us drive up our revenue in the United States.

E-COMMERCE LOGISTICS

The flourishing of e-commerce does not simply generate a lot of growth potential for the last-mile delivery of parcels. Online stores are also looking for a partner to take on full responsibility for logistics. By covering the whole logistics chain in the fast-growing e-commerce sector, bpost aims to provide customers with a robust cross-border service.

The acquisition of US company Radial is key to our push to become a leading player in e-commerce logistics services. Radial’s expertise, size and competencies are essential in this regard. They enable us to enlarge our service offering and speed up the development of our e-commerce logistics solutions.

That’s because Radial offers intelligent solutions for the whole process triggered by the customer’s online order: services in the sphere of payment, tax and fraud protection, order processing (fulfillment) and customer service. So the whole integrated logistics service related to e-commerce.

Radial is headquartered in King of Prussia, Penn. (USA) and has 24 fulfillment centers across the United States and Canada.

The acquisition of Radial is key to our push to become a leading player in e-commerce logistics services.


PROXIMITY AND CONVENIENCE

Our dense point-of-sale network and our postwomen and men, who enjoy the confidence of our customers, ensure that we are close to our customers and able to offer them innovative solutions.

Our network

Our close-knit sales network ensures that we are never far from our customers. The sales network comprised 662 post offices and 674 post points at the end of 2017.

In 2017 we continued to work on modernizing those post offices. Ten offices were fully transformed into modern retail spaces with open counters and an ATM. Seventy-six offices were given a makeover, including clearer signage for customers and the installation of a parcel dropbox. Twenty-nine offices with closed counters were equipped with a full hatch to allow (large) parcels to be conveniently dropped off or picked up.

The number of customer contacts at the post points increased by 11% in 2017, mainly due to their role as parcel pick-up point.

During the Christmas and New Year period we opened a temporary “parcel

house” in Ghent, where our customers were able to fulfill all their parcel drop-off and pick-up needs. Customers were very enthusiastic about this initiative, specifically the speed and efficiency with which they were served. As well as a number of operational advantages (the creation of extra parcel storage space), the “parcel house” also radiated the innovative image of bpost.

The number of stamp shops remains stable; there are currently 4,250.

Bank and financial products

bpost bank was strongly focused on mortgages in 2017. Well-trained experts now sell mortgage products at 163 offices across the country, based on their location and potential. 2017 also saw the sale of the first open investment funds, which means we are now in an even better position to offer our customers the right product, tailored to their knowledge, experience, wishes and risk appetite. And with a new app bpost bank customers are able to complete bank account transactions in a fast and efficient way on their smartphone, tablet or computer.

Worldwide money transfer through Western Union remains a successful

financial business for bpost. The number of transactions grew slightly in 2017. As a result, Western Union is now available at all post offices and at 200 post points. Sales of bpaid cards remain important too, with 110,000 sold in 2017. This card is not only a safe means of payment when shopping online. It also hands users the possibility of keeping their spending under control as they cannot spend more than the amount they have put on the prepaid card.

Solutions

Alongside established services like letters and parcels, bpost continues to offer customers innovative solutions that fulfill their specific needs. In doing so, we mainly draw on our strengths, such as our tightly knit network and our postwomen and men, who are not only out and about every day, but also enjoy the trust of the general public.

In 2017 we strengthened our focus on innovation, improving existing products (by capitalizing on digitization, for instance), building on our financial knowhow and developing new things. In doing so, we will deploy our resources (our people, buildings and fleet) in an original way to develop new solutions and services.

A leap forward

Growing


Some of those solutions are linked to a specific service at our customers’ front door. We often take advantage of the strengths of our subsidiaries, such as DynaGroup (see “Hybrid network” section on page 14).

There are also solutions that simplify administrative or operational processes and make them more user friendly. These are often solutions for state enterprises and the public sector. Examples include the processing and delivery of RIZIV/INAMI health care provision certificates and the delivery of license plates. A few years ago the Belgian state contracted us to take on the administrative and financial management of traffic fines. To that end, in 2017 we launched www.trafficfines.be, a portal to facilitate the collection of traffic fines incurred on Belgian roads by inhabitants of Belgium as well as foreign vehicle owners.

Lastly, we also introduced solutions relating to our proximity to daily life

and the general public. A good example is bclose, in which postwomen and men gather information about senior citizens during their round for the local social security department to assess whether they are socially isolated.

In 2017 we also continued our checks ensuring that building permits were displayed where they should be.

Eighteen bpost delivery vans were equipped with sensors to measure air quality on behalf of the University of Antwerp and Imec.

Fresh food

bpost is also targeting fresh food logistics. We tried to launch our own product for food deliveries to consumers, originally under the “Shop & Deliver” name and later as “combo”, but we cancelled the project in 2017. In the future, bpost aims to concentrate on

markets where food and the cold chain are more tightly regulated. We are convinced that we have everything we need to organize food delivery logistics in full compliance with the prevailing regulations. With the acquisition of Bubble Post (in 2017) and Leen Menken Foodservices Logistics (in early 2018), we have two major foundation stones (in terms of knowledge, materials, customers and network) that we can build our ambitions on.

Ubiway

To further diversify our activities, in 2016 bpost acquired the Belgian activities of Lagardère Travel Retail, which now operate under the Ubiway name.

Ubiway Retail is the company behind four strong chains in press, retail and convenience: Press Shop, Relay, Hubiz and Hello! The 220 points of sale are run by independent retailers at strategic


locations, such as airports, metro and train stations (30%), major shopping streets (50%) and centres, international institutions, office buildings and hospitals (20%). In 2017 Ubiway won the Belgian railways contract for newsagent concessions in railway stations.

These shops and their product range meet the needs of today’s customers. As well as newspapers, magazines, tobacco and lottery products, Press Shop and Relay also stock books, gifts, phone accessories and a wide range of food and beverages. Hubiz specialises to an even greater degree in the convenience range, with compact supermarkets in stations. Hello! offers a range of fresh budget-friendly bakery products. They serve more than 124,000 customers every day.

In 2017 the new Press Shop concept was launched at a number of locations; characterized by a modern look, with fresh, light colours, and a coffee corner where customers can enjoy a

hot drink. In the center of Brussels we opened “Ubiway, eat, read, meet”, a contemporary press, food and coffee house, where, as well as buying newspapers and magazines, customers can also enjoy breakfast and lunch or do some work.

In 2017 the Kariboo! network grew to more than a thousand points, where customers can send or receive parcels.

The 220 Ubiway points of sales are run at strategic locations, such as train stations, shopping streets and centres.

GRONINGEN, UTRECHT

BRUSSELS

WARSZAW

BEIJING

SHENZHEN

SHANGHAI

GUANGZHOU

HONG KONG

SINGAPORE

SYDNEY

AUCKLAND

LONDON

MANCHESTER

LEIPZIG

CHENNAI

CANADA

USA

CALGARYSEATTLE

SALT LAKE CITY

TORONTO

PUEBLO

EAU CLAIRE

BRUNSWICK

LAWRENCEVILLERIALTO

RENO

CHICAGO COLUMBUS

RICHWOOD WALTON LOUISVILLE MARTINSVILLE

BURLINGTON

MELBOURNE

BOYNTON BEACH

BUFFALO

STERLING

LOS ANGELES

landmark

landmark global

L

D

A leap forward

Growing


bpost, a global company.

RRadialKING OF PRUSSIA, UNITED STATES

Wide range of e-commerce logistics services and omnichannel technology solutions with extensive geographical coverage.

www.radial.com

Landmark GlobalSANTA BARBARA, UNITED STATES

International delivery of letters and parcels, plus e-commerce solutions. Strategic locations in 11 countries.

www.landmarkglobal.com

DynagroupSITTARD, NETHERLANDS

E-commerce-related logistics services, home deliveries and deliveries that demand special transport with value-adding activities, such as repairs and installations.

www.dynagroup.nl/en

de BurenHENGELO, NETHERLANDS

Unstaffed pick-up points in Belgium and the Netherlands.

www.deburen.nl

Euro-SprintersMECHELEN, BELGIUM

Domestic and international express deliveries.

www.eurosprinters.com

Welcome MediaBRUSSELS, BELGIUM

Advertising mail advice and services to agencies and advertisers. Plus document management solutions under the eXbo name.

https://welcome.media

Handled by bpost

GRONINGEN, UTRECHT

BRUSSELS

WARSZAW

BEIJING

SHENZHEN

SHANGHAI

GUANGZHOU

HONG KONG

SINGAPORE

SYDNEY

AUCKLAND

LONDON

MANCHESTER

LEIPZIG

CHENNAI

ANTWERPEN

HASSELT

GENT

BRUSSELS

SITTARD

NETHERLANDS

BELGIUM

NUTH

BREDA

AMSTERDAM

UTRECHT

VIANEN

SINT-KATELIJNE-WAVER

WOERDEN

MECHELENST-NIKLAAS

KORTRIJK

OOSTENDE

WAVRE

ROTTERDAM

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bpost, a global company.

ParcifyANTWERP, BELGIUM

Parcel deliveries by self-employes couriers that are going in the same direction, via a crowdsourced delivery platform.

www.parcify.com/en

SpeosBRUSSELS, BELGIUM

Management of outgoing document flows for businesses, from document creation to delivery, through all available channels (paper and electronic).

www.speos.be

Bubble PostGHENT, BELGIUM

Efficient, sustainable urban delivery, including refrigerated transport.

www.bubblepost.eu

CityDepotHASSELT, BELGIUM

Total sustainable goods delivery solution to and from city centers.

www.citydepot.be

UbiwayBRUSSELS, BELGIUM

Press, retail and convenience.

www.ubiway.be

bpost bankBRUSSELS, BELGIUM

Banking and insurance.

www.bpostbanque.be

A leap forward




Controlling costs, raising productivity and pursuing operational excellence are constant concerns at bpost. That’s why we innovate, deploy new technologies and update our working methods.

We think deeply about this on a daily basis in all echelons of the company, but this is also set down in black and white in our strategic programs, such as Vision 2020.

VISION 2020

The Vision 2020 program, the aim of which is to further automate sorting, industrialise mail bag preparation and plan the future mail organization, is the most important concrete expression of our ambition to continually improve how we work.

As part of Vision 2020, the 400 local mail offices we still had in 2010 are being consolidated into 60 mail centres. 229 mail offices remained at the end of 2017.

Operational excellence and flexibility are essential to be able to constantly adapt our organization to meet the expectations of our customers and adapt to the trends in a fast changing world. In that respect, we took a critical step in 2017 with the opening of our new Brussels X sorting centre.

A leap forward



In 2017 we opened our brand-new Brussels X sorting centre in Neder-Over-Heembeek. All domestic parcels sorting is done there, along with all mail preparation for Brussels and Flemish Brabant. At 80,000 m² in total, this is the biggest sorting centre in the Benelux and the second biggest in Europe.

The new sorting centre is an essential milestone in the implementation of Vision 2020 and is unmissable if we are to respond to the phenomenal growth of e-commerce. Our infrastructure and processes have been adapted so that we can continue to guarantee customers high quality and flexibility. That means that online shops can drop parcels at the new Brussels X as late as 2 am for delivery to the addressee just a few hours later.

The parcel sorting machine (PSM) is the showpiece of the sorting centre. The PSM, which scans and sorts parcels, instantly doubles sorting capacity at bpost to 300,000 parcels per day. It is equipped with cutting-edge technology for the postal market. With the arrival of the PSM, bpost is able to capitalize on such innovations as 360° parcel scanning, automatic sorting in the correct containers and large parcel sorting.

In addition, six additional mixed sorting machines (MSMs) were also taken into use at our sorting centres in 2017. The MSM is a highly advanced sorting machine that forms the backbone of our future mail sorting activity. By the end of 2017, 22 MSMs were operational.

HYBRID NETWORK

We meet the expectations of most of our customers through our standard distribution network. But to be able to respond to the specific needs of specific customers, we are building a special network for sending and receiving parcels with supplementary added value. That will give us a hybrid parcel delivery network: our traditional network for standard deliveries and large volumes, together with complementary solutions, as offered by our subsidiaries CityDepot, Euro-Sprinters and DynaGroup, for highly specific deliveries.

The hybrid network strengthens the position of bpost on the parcel market.


A smile, making time and being attentive; those are the three ingredients for satisfied customers.

Sonja Desmet Postwoman in Kortrijk

sticker on their letterbox, you obviously need to respect that. With newspapers, I feel there are two essential rules. On the one hand, and without exception, you must respect the final delivery time, which is 7.30am during the week and 10am in the weekend. And, on the other hand, you should do your newspaper round the same way every time. Customers quickly work out when their newspaper will be delivered, so it’s best to work towards that time. I also make sure I push the newspaper deep enough through the letterbox, because, let’s be honest, who wants to read a wet newspaper?

are less mobile or have just gone upstairs for a moment, so you have to give them the time to answer the door. That will only make you friends. I do think the new system, in which customers can say what we should do with their parcel if they are not home, is a big step forward. It’s a win-win: customers get the parcel how they want it and I don’t have to take the parcel back to the office. You’re certain to create satisfied customers with initiatives like that.

Alert and attentive

When delivering regular mail, being alert and attentive is key. It starts in the office before you even begin your round: you avoid mistakes during delivery by making sure that all mail is in the right order. And if anyone has a ‘no unaddressed mail’

Even in this age when we have unlimited ways to communicate, postwomen and men continue to be important contact persons, not least in rural areas and for older people. A smile or a greeting doesn’t cost you anything and immediately cheers people up. But I also insist on making time for my customers if they have a question. Nowadays they often ask about parcels - how to send them and, above all, how to track their parcels online.

Waiting at the door

Talking of time, there’s nothing more annoying than when a postwoman with a parcel or registered mail doesn’t wait for long enough at the door. Some people

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A leap forward



Two movable conveyors carry loose parcels directly from the truck to the parcel sorting machine.

The sorting building covers 50,000 m², split over two floors. It has capacity to handle 2.5 million letters per day. Regular-sized letters are sorted by four LSMs (letter sorting machines) at delivery office level.

Large sized letters are sorted at delivery office level by the high-tech mixed sorting machines (MSM). The new Brussels X has six MSMs.

The mail is delivered to the 85 loading docks for sorting, after which it is forwarded to the delivery offices. There are 35 loading docks for letters and 50 for parcels. The new Brussels X uses 117 trucks in total.

Tour of the new Brussels XWith a useable floor space of around 80,000 m² (50,000 m² for letter sorting, 25,000 m² for parcel sorting and 5,800 m² in office space), the new Brussels X is the size of about 12 football pitches. 1,500 employees and 30 high-tech machines keep the sorting centre open 24 hours a day, 7 days a week. A tour…

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The parcel sorting machine’s conveyor is one kilometre long and moves at 2.3 metres per second. It can process parcels weighing up to 31 kilograms. It also comes equipped with various hi-tech tools, such as 360-degree parcel scanning.

The eyes of the parcel sorting machine. The entire machine can be monitored from the control room by means of cameras. The parcel flow can be adjusted immediately if anything should go wrong.

A lifting system automatically empties containers and places the parcels on the sorting machine conveyor. Parcels can also be placed on the conveyor in a semi-automated way (using pallets) or manually.

The parcel sorting machine is the showpiece of the new Brussels X. It can process up to 300,000 parcels per day. The total floor space of the parcels sorting hall is 25,000 m².

The parcels are sorted automatically into one of the 406 direct or 142 indirect chutes, depending on whether they require further processing.

A leap forward

Strengthening ties with employees and customers



Our corporate social responsibility (CSR) program is based on three cornerstones: people, planet and proximity. At bpost we back up that engagement by integrating the sustainable development goals of the United Nations in our CSR strategy.

We report on our CSR strategy in more detail in our annual report (CSR report).

PEOPLE

We endeavour to offer our employees the best working conditions.

In the people@core program we follow the wellbeing and engagement of our employees based on three indicators: the bpeople survey (which helps us find out how our staff are feeling), the absenteeism figures and the customer index. This gives bpost insight into how our employees score in terms of engagement, satisfaction and loyalty, and how they experience their working conditions.

Our engaged employees are the best way to create loyal customers. As a company with deep roots in society, bpost also has its social role very much at heart. By working sustainably we aim to create value for the whole of society.

A leap forward



The results of recent years have shown where improvements could be made and have led, among other things, to the launch of initiatives to enhance information provision, collaboration and leadership. At bpost, we have also created a stable schedule in which the need for rest is respected and taken steps to ensure a balanced, consistent distribution of work.

Health and safety of our employees

At bpost the safety of our employees is a priority. To ensure that and prevent occupational accidents we rely on a good prevention policy. Various actions were taken in 2017, particularly in our operational departments, such as internal awareness campaigns, safety trainings and tools to report safety incidents. The number of occupational accidents fell by 2.5% in 2017. The frequency rate (the number of incidents per the number of hours worked) fell slightly.

We contribute to the good health of our employees with appropriate safe and ergonomic equipment and free flu vaccinations. The Psychosocial Prevention department helps employees deal with work-related stress and offers support in connection with significant events, such

as physical and verbal violence, the death of a colleague, accidents at work, conflicts between employees and complaints of bullying or undesirable behaviour.

Training and talent development

We encourage our employees to follow training to continue to develop and grow. In 2017, some 128,127 hours of training or coaching were given at the company. Over the summer, we hosted the Summer Academy for the sixth time. With this initiative we encourage our employees to use this less busy period to work on their skills.

In 2017 bpost continued the Recognizing Experience program. This offers employees the possibility of earning a higher secondary education diploma when they have not had this opportunity in the past. A diploma enhances their employment options and future prospects within the company. Recognizing Experience, a two-year bpost training course in collaboration with ten adult education centres, helped 243 employees to earn their higher secondary education diploma in 2017.

Good leadership results in a better corporate culture. With that in mind, in September 2015 bpost introduced “Leading@bpost” to shape our corporate

culture. By the end of 2017, some 2,500 managers at bpost had completed this course. Various activities have now been launched to enhance and embed this culture-shaping process. Regular dialog sessions are held throughout the organization, each one focusing on one or more concepts of the culture, with the aim of narrowing the gap between concept and reality.

In 2017 bpost also continued to invest in hiring additional staff. We find young talent by organizing a job day for young graduates and actively participating in various university job fairs. Through the public employment services VDAB and Forem, we also contact companies that are undergoing restructuring to find new employees who already have work experience. Lastly, in 2017 bpost also ran targeted recruitment campaigns to fill vacancies as quickly as possible, including those at the new Brussels X sorting centre and in regions where finding new postwomen and men and drivers is proving to be a challenge.

bpost has made great advancements in Belgium as an attractive employer. In a 2017 Randstad study bpost ranked third of the best known private transport and logistics companies.


The “Recognizing Experience” program helped 243 employees to earn their higher secondary diploma in 2017.

Ethics and diversity

It is our ambition to create a working environment for our employees that promotes ethics, non-tolerance of bribery, diversity and equal opportunities.

The goal of our diversity and integrity programme is to support bpost employees in their efforts to build a culture in which diversity and integration become daily practice.

bpost has had a code of conduct since 2007. It sets out what the company expects from every employee with regard to professional ethics and working together in harmony. For example, in the event of corruption, attempted corruption or active or passive participation in corruption, both the company and the employee are liable for heavy fines or a custodial sentence.

We even go further: we have introduced the issues of diversity and integration into our corporate leadership model.

Social dialog

bpost has a long tradition of social dialog; a tradition we value greatly and continue to defend. The legislation that applies to bpost as an autonomous state enterprise and our articles of association provide for a structure and processes at various levels that facilitate efficient negotiation, consultation and information. This way of working together enables fast responses to incidents, which prevents escalation and limits social conflicts.

Pay and conditions, collective bargaining agreements, restructuring, and safety and wellbeing at work are examples of topics that may be examined and discussed every month. Meal vouchers and the end-of-year bonus were both increased in the 2016-2017 collective bargaining agreement.

The safety of our employees is a priority. The number of occupational accidents fell by 2.5% in 2017.

A leap forward



PLANET

By the very nature of our activities, bpost inevitably has an environmental impact, be that the carbon emissions of our fleet, our energy consumption or our waste production. We work to minimize that environmental impact through our sustainability program.

The reduction of our fuel and energy consumption has enabled us to cut our carbon emissions by 37% in the period 2007-2017.

Green fleet

At bpost, we endeavor to make our fleet greener and deploy innovative alternatives to meet our transport needs. More than 2,500 electric bikes are already in use, while the number of mopeds has fallen from 1,940 in 2016 to 1,114 in 2017. In 2017 we also added 300 three-wheeled electric scooters and our pedelec (three-wheeled e-bike) fleet is also growing.

Our subsidiaries are working hard to make their fleet greener, too. For example, Euro-Sprinters began encouraging its drivers to use natural gas vehicles in 2017. And we have strengthened our position in sustainable logistics with the acquisition of Bubble Post (ecological urban delivery using eco-friendly vehicles).

We also continue to train our drivers to drive in an environmentally sustainable way, including a biannual Eco-Driving Challenge. In addition, 93 vehicles have already been equipped with a datalogger, which alerts drivers when they are not driving ecologically.

We also give special attention to our employees’ commutes. bpost has a green car policy to encourage members of management to opt for means of transport that emit less carbon.

300In 2017 we added 300 three-wheeled electric scooters to our green fleet.


PROXIMITY

One of our biggest assets at bpost is our presence across the whole country each and every day, through our postwomen and men and our points of sale. We work every day to maintain that proximity, to ensure that we are as close as possible to society and to anticipate and respond to current and future needs.

Close to our society

bpost is involved in local communities with our support of a number of social projects, particularly the fight against illiteracy in Belgium. We also give financial incentives to employees who do voluntary work for charity. We do not only look at the social aspect, we also want to improve biodiversity and the environment in our local communities.

Fight against illiteracy and encouraging writing

Since 1997 bpost has been involved in the fight to eradicate illiteracy in Belgium. This commitment is made on the basis of financial support to the bpost Literacy Fund, which is managed by the King Baudouin Foundation, specifically by donating part of the price of the Christmas stamp to the fund.

Green buildings

bpost also wishes to limit the impact of all activities in its buildings (which number some 880 in Belgium alone). We hold ISO 14001 certification for our biggest sites (the five sorting centres, Stamps Production Belgium in Mechelen and the head office in Brussels). bpost also invests to cut energy consumption in its premises, including smart lighting systems, insulation and improved heating and air-conditioning systems.

bpost consumes 100% green electricity and we increasingly produce our own power. In 2017 we installed 17,000 m² of solar panels on the roofs of our sorting centres in Liege and Charleroi, bringing the total to 22,500 m².

Waste management

We constantly work to reduce waste and improve our waste management. We do so by carefully sorting and properly collecting all our waste flows.

100% of all plastic, paper and cardboard is recycled and 100% of our unsorted waste is processed into new energy.

More than EUR 1.36 million has been donated to the fund since 2010, of which EUR 150,000 in 2017.

bpost encourages writing through various initiatives. Including “The Letter Brigade”, an initiative that targets schools. Our aim is to get children aged between 2½ and 12 years old interested in writing and stamps. Teachers can download a set of educational materials from the bpost website. These are tailored to the various stages of education and are updated every year.

Every November to early December, children can send letters to St Nicolas, as per the Belgian custom. More than 400,000 children did so in 2017. bpost employees give the good man a helping hand by sending a gift to every child who sends him a letter.

Encouraging voluntary work

Through the “Star4U” initiative, since 2010 bpost has been encouraging employees who actively work on a completely voluntary basis for social, cultural or ecological projects. bpost has already given EUR 558,000 in financial support (of which EUR 71,000 in 2017) to around 600 projects. A new edition of the initiative was launched in 2018.

A leap forward



Protecting biodiversity

In the Beepost project bpost has set up various bee colonies on the roof of the Brussels head office in association with the Made in Abeilles cooperative. This project promotes the multifunctional use of our roofs, responds to the mass disappearance of bees and the related loss of biodiversity. In 2017 we won PostEurop’s “Coup de Coeur” environment award for this project.

Close to our suppliers

Our ambitions are not limited to our own company; they apply to the entire value chain. Throughout our whole organisation, a responsible and sustainable contracting practice is stimulated with our suppliers.

bpost is determined to be the best in class with regard to responsible paper consumption. Our partners PEFC and FSC help us achieve this goal. Various steps have been taken in recent years: 99% of paper purchased is PEFC and/or FSC-certified or recycled and 100% of our stamps are printed on FSC paper.

We work with Ecovadis to conduct CSR risk assessments on our suppliers. These assessments are focused on gaining insight into their vision and results with regard to sustainability. Both environmental (energy, water, waste, products) and social performances (health and safety, working conditions, child and forced labour) are taken into account. In 2017 we assessed the CSR risk of the suppliers who account for 90% of our procurement budget.

Médecins Sans Frontières

bpost entered into a partnership with Médecins Sans Frontières (Doctors Without Borders) in 2017. This emphasizes bpost’s engagement to taking its responsibilities on a global level as an international company.

In the “Beepost” project bpost has set up various bee colonies on the roof of the Brussels head office.


Close to our customers through our services

We offer reliable products and services to give our customers the opportunity to make sustainable choices and assess the impact of those choices.

An example is our Carbon Meter, which customers can use to calculate the carbon footprint generated in performing their postal services. That helps them make well-informed decisions that minimize the impact on the environment (such as the paper type, use of cardboard, size and ink). Alongside the tool, bpost gives customers the possibility to offset the emissions generated by their mail flows. This service was developed with CO2logic to fund climate-related projects in order to reduce greenhouse gases in emerging countries.

Under the bclose service, postwomen and men gather information during their round on a group of senior citizens as identified by the client, the local social security department (OCMW/CPAS), to assess whether they are socially isolated. In doing so, bpost helps nip social isolation in the bud.

Lastly, in CityDepot and Bubble Post bpost has two environmentally friendly urban delivery solutions. CityDepot uses electric vehicles, cargo bikes and other means of transport for consolidated deliveries of goods of various haulers or major retailers to downtown retailers and consumers. That helps reduce traffic in cities. Bubble Post, which bpost acquired in 2017, provides an environmental friendly city delivery service.

Our customers can offset the emissions generated by their mail flows.

Financial review


The following table presents bpost’s financial results for the years 2015, 2016 and 2017:

For the year ended 31 December

In million EUR 2017 2016 2015 Evolution 2017-2016

Turnover 2,972.2 2,399.4 2,393.4 23.9%

Other operating income 51.6 25.8 40.3 99.7%

Total operating income 3,023.8 2,425.2 2,433.7 24.7%

Material costs (240.7) (60.4) (26.6) 298.5%

Services and other goods (972.8) (665.2) (645.6) 46.3%

Payroll costs (1,206.7) (1,111.1) (1,185.8) 8.6%

Other operating expenses (5.6) (1.7) (20.5) 230.8%

Total operating expenses excluding depreciations/amortizations (2,425.9) (1,838.4) (1,878.5) 32.0%

EBITDA 598.0 586.9 555.2 1.9%

Depreciation, amortization (105.1) (90.3) (89.1) 16.3%

Profit from operating activities (EBIT) 492.9 496.5 466.1 -0.7%

Financial income 5.8 10.7 5.3 -45.6%

Financial costs (19.5) (27.6) (10.9) -29.4%

Share of profit of associates 9.6 9.9 10.2 -3.3%

Profit before tax 488.7 489.5 470.6 -0.1%

Income tax expense (165.8) (143.2) (161.4) 15.8%

Profit for the year 322.9 346.2 309.3 -6.7%

1.1 Consolidated income statement

Financial review


Total operating income (revenues)Total operating income (revenues) increased by EUR 598.6 million or 24.7% from EUR 2,425.2 million to EUR 3,023.8 million. This increase was driven by Parcels (EUR 416.7 million, explained by Parcels growth and the integration of DynaGroup and Radial in Logistic Solutions), along with the integration of Ubiway, which was the main contributor to the increase of Additional sources of revenues (EUR 231.4 million) and

the total operating income attributable to Corporate (EUR 11.5 million). All these effects were partially offset by the decrease of Domestic Mail as the price increase in Domestic Mail (EUR 61.0 million).

The evolution per product line can be summarized as follows:


In million EUR 2017 2016 2015 Evolution2017-2016

Domestic mail 1,353.4 1,414.4 1,464.2 -4.3%

Transactional mail 807.9 873.3 917.6 -7.5%

Advertising mail 252.9 247.8 250.9 2.0%

Press 292.6 293.2 295.6 -0.2%

Parcels 796.1 379.4 340.7 109.9%

Domestic parcels 224.2 181.8 161.2 23.3%

International parcels 222.6 189.5 170.0 17.5%

Logistic Solutions1 349.2 8.0 9.6 -

Additional sources of revenues 831.5 600.1 589.0 38.6%

International mail 160.4 162.0 175.7 -1.0%

Value added services 101.5 103.1 96.2 -1.5%

Banking and financial products 182.6 192.4 205.1 -5.1%

Distribution2 98.1 - - -

Retail & Other 288.9 142.6 112.0 102.5%

Corporate (Reconciling post) 42.9 31.4 39.8 36.5%

Total 3,023.8 2,425.2 2,433.7 24.7%

(1) Logistic Solutions:previously called Special Logistics, contains DynaGroup consolidated as of January 1, 2017 and Radial consolidated as of November 16, 2017.

(2) Distribution contains Ubiway distribution revenues.

Revenues from Domestic Mail decreased by EUR 61.0 million to EUR 1,353.4 million in 2017 with a reported and underlying volume of -5.9% and -5.8% respectively compared to an underlying volume decline of -5.0% last year. Whereas Advertising Mail volumes increased by 1.5% compared to the volume decline of -3.0% of last year, in Transactional Mail an increased e-substitution has been noted in 2017. The good performance within Advertising Mail was driven by focus on growth segments and indirect channels. Overall the price and mix improvement had a positive contribution of EUR 12.5 million despite the impact of the regulatory decision on small user basket pricing and shift towards cheaper products, while the volume decline amounted to EUR 71.3 million and the impact of less working days amounted to EUR 2.3 million.

Parcels grew by EUR 416.7 million to reach EUR 796.1 million driven by:• Excellent Domestic Parcels volume growth of 28.2%

in 2017 versus 17.1% in 2016 and 12.6% in 2015.

This increase was driven by strong e-commerce growth and the continued growth in C2C parcels (online offering). Price increases were fully offset by the evolution of the client and product mix (faster growth of large e-tailers with high volumes and lower prices compared to smaller customers), resulting in a negative price mix effect of -5.8%. Overall Domestic Parcels contributed EUR 42.4 million to the income increase.

• Growth in International Parcels (EUR 33.1 million), driven by the positive contribution from acquisitions and increase in flows from Asia.

• Logistic Solutions increased by EUR 341.2 million, mainly due to the integration of DynaGroup and Radial.

Total operating income from the Additional sources of revenues increased by EUR 231.4 million to EUR 831.5 million in 2017. The integration of Ubiway resulted in an increase of Retail & Other (i.e. proximity and convenience retail) as well as the newly created Distribution (Ubiway press distribution and pre-paid services through Alvadis and impulse

Financial review


products via Burnonville) category. Excluding the impact of Distribution (EUR 98.1) and Retail & Other (EUR 146.2 million), the operating income decreased by EUR 12.9 million. This decrease was mainly due to the decrease of Banking and financial products (EUR 9.8 million), due to the lower revenues from financial transactions managed on behalf of the Belgian State and the lower commission of bpost bank. International mail and Value Added Services slightly decreased to EUR 160.4 million and EUR 101.5 million respectively.

The evolution of total operating income of Corporate (reconciling category) increased by EUR 11.5 million to EUR 42.9 million.

Operating expenses (including depreciation)Operating expenses, including depreciation, amortization, and impairment charges, amounted to EUR 2,530.9 million (2016: EUR 1,928.7 million) and increased by EUR 602.2 million compared to last year of which EUR 583.4 million was due to the integration of new subsidiaries. Excluding these subsidiaries operating expenses increased by EUR 18.8 million, as the decrease of depreciation and amortization (EUR 7.9 million), the payroll costs (EUR 4.7 million) and material costs (EUR 0.5 million) were offset by the increase of other operating expenses (EUR 1.3 million) and services and other goods (EUR 30.6 million).

Material costsMaterials costs, which include the cost of raw materials, consumables and goods for resale, increased by EUR 180.3 million to EUR 240.7 million (2016: EUR 60.4 million) primarily due to the integration of the new subsidiaries.

Services and other goodsThe cost of goods and services increased by EUR 307.7 million or EUR 30.6 million excluding the integration of the new subsidiaries. The increase of the latter was mainly due to increased rent and rental costs (EUR 9.2 million), energy costs (EUR 4.8 million) and transport costs (EUR 27.8 million), offset by lower third party remunerations and fees (EUR 9.5 million).

Note that interim costs are analyzed together with payroll costs, as they are better performance indicator of human capital utilization. In certain cases of natural attrition, personnel is replaced by interims to anticipate reorganizations and productivity improvement programs.


In million EUR 2017 2016 2015 Evolution2017-2016

Rent and rental costs 104.3 72.6 66.7 43.7%

Maintenance and repairs 86.9 77.5 78.7 12.2%

Energy delivery 40.7 33.7 37.0 20.6%

Other goods 26.2 22.7 21.1 15.2%

Postal and telecom costs 8.9 6.3 6.4 40.8%

Insurance costs 11.8 12.4 12.0 -4.7%

Transport costs 374.2 217.2 212.6 72.3%

Publicity and advertising 18.7 14.3 16.6 30.5%

Consultancy 19.4 15.5 12.8 24.9%

Interim employees 107.1 54.8 40.3 95.6%

Third party remuneration, fees 132.3 118.9 118.3 11.3%

Other services 42.4 19.2 23.0 120.6%

TOTAL 972.8 665.2 645.6 46.3%


• Rental costs have increased by EUR 31.7 million or excluding the integration of the new subsidiaries by EUR 9.2 million, mainly due to the new Brussels sorting center (NBX) and the growing fleet.

• The increase of maintenance and repairs (EUR 9.4 million) was mainly caused by the integration of the new subsidiaries.

• Energy delivery costs increased by EUR 6.9 million or EUR 4.8 million excluding the new subsidiaries, mainly due to increased fuel prices and the growing fleet.

• Transport costs amounted to EUR 374.2 million and excluding the integration of the new subsidiaries (EUR 129.2 million), increased by EUR 27.8 million. This increase was mainly explained by the growth in international business.

• The growth in interim costs was driven by the integration of the new subsidiaries, see also section payroll costs.

• Not taking into account the integration of the new subsidiaries, third party remunerations and fees decreased by EUR 9.5 million, mainly due to last year’s strategic projects.

• Other services increased by EUR 23.2 million mainly due to the integration of the new subsidiaries.

Payroll costsPayroll costs (EUR 1,206.7 million) and interim costs (EUR 107.1 million) in 2017 amounted to EUR 1,313.7 million. Payroll and interim costs increased by EUR 147.9 million (payroll costs increased by EUR 95.6 million and interim costs increased by EUR 52.3 million) compared to last year and was mainly driven by the integration of the new subsidiaries (EUR 152.1 million).

The reported average year-on-year staff showed an increase of 2,057 FTE and interims, generating extra costs of EUR 155.8 million, explained by the integration of FTE and interims of the new subsidiaries.

A positive mix effect reduced costs by EUR 13.1 million and was mainly driven by the recruitment of auxiliary postmen.

The indexation of salaries combined with the impacts of the CLA and the normal salary and merit increases, partially compensated by the impact of the tax shift and employee benefits led to a negative price impact of EUR 5.2 million.

Other operating expensesOther operating expenses increased by EUR 3.9 million versus last year or EUR 1.3 million excluding the integration of the new subsidiaries. The slight increase of the latter was mainly driven by the lower reversal of provisions given last year’s reversal of provisions related to a terminal dues settlement with another postal operator for which the corresponding costs had been booked within the transport costs. This was partially offset by the decrease of local, real estate and other taxes.

Depreciation and amortizationDepreciation, amortization and impairment charges have increased by EUR 14.7 million or 16.3% to EUR 105.1 million in 2017 (2016: EUR 90.3 million), mainly driven by the integration of the new subsidiaries and the depreciation related to the intangible assets recognized throughout the purchase price allocation for de Buren, DynaGroup and Ubiway.

EBITThe overall EBIT increased by EUR 5.1 million excluding the depreciation on the intangible assets related to the purchase price allocation for de Buren, DynaGroup and Ubiway.

Despite lower Domestic Mail revenues (EUR 61.0 million), partially due to the absence of a price increase for the small user basket with an estimated impact of EUR 20.0 million, EBIT grew thanks to parcels performance and the contribution of the newly acquired subsidiaries.

Net financial resultNet financial result increased by EUR 3.2 million due to decrease of non-cash financial charges related to IAS 19 employee benefits, partially offset by the interests on the bridge loan entered into for the purchase of Radial. The year-on-year evolution of IAS 19 employee benefits financial costs was mainly explained by last year’s increase of non-cash financial charges, which was due to the decrease in the discount rates at that time.

Share of results of associatesThe share of results of associates mainly related to bpost bank and Citie and decreased by EUR 0.3 million to EUR 9.6 million.

Income tax expenseIncome tax expense increased from EUR 143.2 million in 2016 to EUR 165.8 million in 2017. bpost’s effective tax rate increased from 29.3% in 2016 to 33.9% in 2017. In 2016 Deltamedia NV/SA had been liquidated, triggering a positive impact of EUR 22.2 million. The loss on the participation incurred by bpost NV/SA was tax deductible upon liquidation to the extent it represented previously fiscally paid-up capital in Deltamedia NV/SA and had been excluded from the normalized results due to its non-recurring nature.

Furthermore as the Belgian and US corporate tax reform has been substantially enacted before December 31, 2017 bpost reassessed their deferred tax position under IFRS taking into consideration these new measures, this led to a tax expense of EUR 7.0 million.

Financial review


In million EUR 2017 2016 2015

Assets

Non-current assets

Property, plant and equipment 710.3 561.6 548.5

Intangible assets 910.6 224.4 89.6

Investments in associates 329.2 373.7 375.0

Investment properties 5.7 6.2 6.5

Deferred tax assets 31.5 48.2 47.2

Trade and other receivables 9.4 2.8 2.3

1,996.6 1,216.8 1,069.2

Current assets

Assets held for sale 0.6 1.5 3.1

Investment securities 0.0 12.0 0.0

Inventories 39.1 36.7 11.1

Income tax receivable 1.6 2.6 1.7

Trade and other receivables 719.4 481.8 411.2

Cash and cash equivalents 466.0 538.9 615.7

1,226.7 1,073.5 1,042.8

Total assets 3,223.3 2,290.3 2,112.0

Equity and liabilities

Equity attributable to equity holders of the Parent

Issued capital 364.0 364.0 364.0

Reserves 310.1 274.2 230.9

Foreign currency translation (11.5) 2.5 0.6

Retained earnings 110.9 135.5 99.3

773.5 776.3 694.8

Non-controlling interests 4.3 3.1 (0.0)

Total equity 777.8 779.3 694.8

1.2 Statement of financial positionAs at 31 December


As at 31 December


Non-current liabilities

Interest-bearing loans and borrowings 58.4 47.7 56.2

Employee benefits 326.9 356.7 346.2

Trade and other payables 45.2 40.3 61.7

Provisions 24.2 31.6 29.2

Deferred tax liabilities 12.3 1.1 1.3

467.0 477.3 494.7

Current liabilities

Interest-bearing loans and borrowings 699.9 10.3 9.6

Bank overdrafts 0.0 0.0 0.2

Provisions 21.2 27.1 35.0

Income tax payable 39.3 31.4 39.4

Trade and other payables 1,218.2 964.8 838.3

1,978.5 1,033.6 922.5

Total liabilities 2,445.5 1,511.0 1,417.2

Total equity and liabilities 3,223.3 2,290.3 2,112.0

• Amortization and impairments amounting to EUR 25.1 million.

Investment propertiesInvestment properties decreased from EUR 6.2 million in 2016 to EUR 5.7 million in 2017, as the number of buildings, which were rented out, slightly decreased.

Investments in associatesInvestments in associates decreased by EUR 44.5 million to EUR 329.2 million. This decrease was due to the decrease in the unrealized gain on the bond portfolio of bpost bank in the amount of EUR 42.1 million, reflecting an average increase of the underlying yield curve by 8 basis points (bps) compared to December 31, 2016 and the dividends received from bpost bank for EUR 11.8 million. This was partially offset by bpost’s share of result of associates in the amount of EUR 9.6 million. End 2017, investments in associates comprised net of deferred taxes unrealized gains in respect of the bond portfolio in the amount of EUR 125.0 million, which represented 38.0% of total investments in associates. The unrealized gains were generated by the lower level of interest rates compared to the acquisition yields of the bonds. Unrealized gains are not recognized in the Income Statement, but directly in equity in the other comprehensive income.

Deferred Tax assetsDeferred tax assets amounted to EUR 31.5 million (2016: EUR 48.2 million) and mainly relate to the timing difference between the accounting and the tax value of the employee benefits. As the Belgian and US corporate tax reform had been substantially enacted before December 31, 2017 bpost reassessed their deferred tax assets under IFRS taking into consideration these new measures.

AssetsProperty, plant and equipmentProperty, plant and equipment have increased by EUR 148.6 million from EUR 561.6 million to EUR 710.3 million. This increase was mainly explained by:The integration of new subsidiaries EUR 141.6 million.• Acquisitions (EUR 96.7 million) related to

production facilities for sorting and printing activities (EUR 57.2 million), mail and retail network infrastructure (EUR 13.9 million), ATM and security infrastructure (EUR 1.3 million), transportation related infrastructure (EUR 16.3 million) and IT and other infrastructure (EUR 7.9 million).

• Depreciation and impairment amounted to EUR 80.2 million and increased compared to last year (2016: EUR 71.4 million).

• Transfer to assets held for sale (EUR 7.3 million) and from investment property (EUR 0.3 million).

Intangible assetsIntangible assets have increased by EUR 686.2 million from EUR 224.4 million to EUR 910.6 million, due to:• The integration of new subsidiaries EUR 92.3 million.• Increase in goodwill (EUR 606.4 million) throughout

the acquisitions of Radial, DynaGroup and Bubble Post, partially offset by the allocation of the goodwill throughout the purchase price allocation process for Ubiway and de Buren. Note that the goodwill calculations for Radial and Bubble Post are provisional because purchase price allocation is still under review.

• Investments in software and licences (EUR 8.0 million), development costs capitalized (EUR 16.4 million) and other intangible assets (EUR 0.2 million).

Financial review


InventoriesInventories increased by EUR 2.4 million and amounted to EUR 39.1 million (2016: EUR 36.7 million), this increase was mainly due to the integration of the new subsidiaries.

Current trade and other receivablesCurrent trade and other receivables increased by EUR 237.6 million to EUR 719.4 million (2016: EUR 481.8 million), driven by a rise in trade receivables of EUR 185.6 million mainly as a result of the integration of Radial and DynaGroup. Furthermore other receivables increased by EUR 49.6 million, mainly due to the outstanding receivable for the purchase of Radial at year end 2017.

Cash and cash equivalentsCash and cash equivalents decreased by EUR 72.9 million, or 13.5%, to EUR 466.0 million. This decrease was mainly due to the free cash flow (EUR -485.8 million), the payment of EUR 262.0 million dividends partly compensated by the bridge loan entered into for the purchase of Radial.

Equity and LiabilitiesEquityEquity decreased by EUR 1.5 million, or 0.2%, to EUR 777.8 million as of December 31, 2017 from EUR 779.3 million as of December 31, 2016. The realized profit (EUR 322.9 million) was offset amongst others by the exchange differences on translation of foreign operations, the fair value adjustment in respect of bpost bank’s bond portfolio and the payment of dividends, respectively for an amount of EUR 16.5 million, EUR 42.1 million and EUR 262.0 million.

Non-current interest-bearing loans and borrowingsNon-current interest-bearing loans and borrowings increased by EUR 10.6 million to EUR 58.4 million mainly due to the integration of Radial, as Radial has a financial lease for an office building (EUR 18.3 million). This increase was partially offset by a decrease of EUR 9.1 million corresponding to the portion of the loan of the European Investment Bank transferred to current liabilities.

Employee benefitsAs at 31 December


Post-employment benefits (50.7) (82.1) (77.7)

Long-term employee benefits (108.2) (107.7) (108.9)

Termination benefits (6.6) (4.1) (11.6)

Other long-term benefits (161.5) (162.8) (148.1)

TOTAL (326.9) (356.7) (346.2)


Deferred tax liabilitiesDeferred tax liabilities increased by EUR 11.2 million from EUR 1.1 million in 2016 to EUR 12.3 million in 2017. This increase was mainly due to the deferred tax liabilities linked to the intangible assets recognized throughout the purchase price allocation process for de Buren, DynaGroup and Ubiway in 2017. Furthemore as the Belgian and US corporate tax reform had been substantially enacted before December 31, 2017 bpost reassessed their deferred tax liabilities under IFRS taking into consideration these new measures.

Current interest-bearing loans and borrowingsCurrent interest-bearing loans and borrowings increased by EUR 689.5 million to EUR 699.9 million due to the bridge loan entered into 2017 to buy Radial. bpost borrowed a part in USD to mitigate the risk on foreign exchange rate differences on the foreign operation, hence bpost performed a net investment hedge.

Current provisionsCurrent provisions decreased by EUR 6.0 million to EUR 21.2 million (2016: EUR 27.1 million).

Current trade and other liabilitiesCurrent trade and other liabilities increased by EUR 253.5 million EUR, or 26.3%, to EUR 1,218.2 million in 2017. This variance was mainly due to the increase of trade payables by EUR 155.0 million, the payroll and social security payables increased by EUR 34.3 million and other payables increased by EUR 62.1 million. The increase of the trade payables as well as the increase of the payroll and social security payables was mainly due to the integration of the new subsidiaries. The increase of the other payables was caused by the contingent considerations relating to the acquisition of DynaGroup, an outstanding payable for the purchase of Radial at year-end 2017, partially compensated by the payment of the remaining 24.5% of the shares of Landmark during 2017 and the payment of a contingent consideration to FDM and Apple Express.

On June 29, 2017 bpost and its social partners signed an agreement concerning the transfer of certain transport benefits for bpost’s retirees. Effective January 1, 2018 the scheme providing certain transport benefits for bpost’s retirees will be transferred to a separate entity, “Pensoc”, managed by the representatives of the workers. A single payment to Pensoc has been performed in July 2017 by bpost.

As a consequence bpost no longer has a constructive obligation towards the inactive population and the benefit is no longer valued. Following the curtailment of this benefit, a non-cash profit of EUR 15.3 million has been recorded in bpost’s consolidated income statement in accordance with the IAS 19 Employee benefits standard.

Employee benefits decreased by EUR 29.8 million, or 8.3%, to EUR 326.9 million in 2017 from EUR 356.7 million in 2016. The decrease mainly reflects:• The payment of benefits for an amount of

EUR 44.3 million.• Operational actuarial losses (EUR 0.4 million).• Additional service costs (EUR 21.6 million), positive

past service costs (EUR 18.6 million) and interest costs (EUR 4.6 million).

• Financial actuarial losses of EUR 1.4 million caused by changes in the discount rates.

• An actuarial gain of EUR 4.3 million related to post-employment benefits, recognized through other comprehensive income.

• The incorporation of Ubiway EUR 9.7 million.After deduction of the deferred tax asset relating to employee benefits which amounted to EUR 32.4 million, the net liability amounted to EUR 294.5 million (2016: EUR 308.3 million).

Non-current trade and other liabilitiesNon-current trade and other liabilities increased by EUR 4.9 million (2016: EUR 40.3 million), mainly due to the commitments relating to contingent considerations for Bubble Post and DynaGroup, partially offset by a decrease of the contingent consideration of de Buren following the finalization of the purchase price allocation.

Non-current provisionsNon-current provisions amounted to EUR 24.2 million (2016: EUR 31.6 million) and decreased by EUR 7.4 million compared to last year.

Financial review


In 2017, bpost consumed EUR 68.9 million of net cash. This is a decrease of EUR 7.3 million compared to the net cash outflow of EUR 76.2 million in 2016.

Cash flow from operating activities resulted in a cash inflow of EUR 266.1 million, EUR 86.5 million less than in 2016. Cash generation from operating activities had been impacted by the net impact of last year’s pay-outs for the social plan related to the Alpha project (EUR +18.7 million), the payment of terminal dues in 2016 (EUR +16.8 million), which was mainly phasing, and the deterioration of working capital by EUR 121.1 million mainly driven by the peak sales season at Radial combined with lower outstanding trade payables.

Investing activities generated a cash outflow of EUR 751.9 million in 2017 compared to an outflow of EUR 158.7 million last year, resulting from lower proceeds from sale of property, plant and equipment (EUR -3.2 million) and higher capital expenditures (EUR -36.3 million), which was partially offset by investment securities (EUR +24.0 million). Cash outflows related to the acquisition of new subsidiaries and activities increased by EUR 577.7 million: Radial (EUR -581.5 million), DynaGroup (EUR -50.2 million), LGI (EUR -11.0 million), Ubiway (EUR +43.0 million), Apple Express (EUR +12.3 million), FDM (EUR +8.6 million), other acquisitions (EUR +1.0 million).

The net cash flow relating to financing activities amounted to EUR 416.8 million, an increase by EUR 687.0 million compared to last year given the bridge loan entered into for the purchase of Radial and the dividend to minority interests paid in 2016 which were partially counterbalanced by the higher final dividend in 2017.

1.3 Statement of cash flows


bpost also analyzes the performance of its activities on a normalized basis or before non-recurring items. Non-recurring items represent significant income or expense items that due to their non-recurring character are excluded from internal reporting and performance analyses. bpost uses a consistent approach when determining if an income or expense item is non-recurring and if it is significant enough to be excluded from the reported figures to obtain the normalized ones.

A non-recurring item is deemed to be significant if it amounts to EUR 20.0 million or more. All profits or losses on disposal of activities are normalized whatever the amount they represent, as well as all non-cash Purchase Price Allocation (PPA) accounting impacts

Income Statement relatedOperating income for the year ended 31 December


Total operating income 3,023.8 2,425.2 2,433.7 24.7%

Sale of sizeable building1 0.0 0.0 (26.1) -

Normalized total operating income 3,023.8 2,425.2 2,407.6 24.7%

Operating expenses for the year ended 31 December


Total operating excluding depreciation, amortization (2,425.9) (1,838.4) (1,878.5) 32.0%

Social plan - Alpha project2 0.0 0.0 54.5 -

Normalized total operating expenses excluding depreciation, amortization (2,425.9) (1,838.4) (1,824.0) 32.0%

EBITDA for the year ended 31 December

In million EUR 2017 2016 2015Evolution

2017-2016

EBITDA 598.0 586.9 555.2 1.9%



Normalized EBITDA 598.0 586.9 583.6 1.9%

related to acquisitions. Reversals of provisions whose addition had been normalized from income are also normalized whatever the amount they represent.

The presentation of normalized results is not in conformity with IFRS and is not audited. The normalized results may not be comparable to normalized figures reported by other companies as those companies may compute their normalized figures differently from bpost. Normalized financial measures are presented below.

1.4 Reconciliation of reported to normalized financial metrics

Financial review


EBIT for the year ended 31 December


Profit from operating activities (EBIT) 492.9 496.5 466.1 -0.7%



Non-cash impact of purchase price allocation (PPA)4 8.7 0.0 0.0 -

Normalized profit from operating activities (EBIT) 501.6 496.5 494.4 1.0%

Profit (EAT - Earnings After Taxes) for the year ended 31 December


Profit for the year 322.9 346.2 309.3 -6.7%



Liquidation of Deltamedia3 0.0 (22.2) 0.0 -

Non-cash impact of purchase price allocation (PPA)4 6.3 0.0 0.0 -

Normalized profit of the year 329.3 324.1 328.1 1.6%

Cash Flow Statement relatedFor the year ended 31 December


Net Cash from operating activities 266.1 352.6 361.1 -24.5%

Net Cash used in investing activities (751.9) (158.7) (45.1) -

Operating free cash flow (485.8) 193.9 315.9 -

Normalized operating free cash flow (485.8) 193.9 315.9 -

For 2015, 2016 and 2017 no non-recurring cash flow statement items were identified.

Operating free cash flow represents net cash from operating activities less acquisition of property, plant and equipment (net of proceeds from sale of property, plant and equipment), acquisition of intangible assets, acquisition of other investments and acquisition of subsidiaries (net of cash acquired).

(1) In December 2015, bpost sold a sizeable building on which a capital gain of EUR 26.1 million was realized. Given the nature of the gain and the fact that it exceeded the threshold of EUR 20.0 million, this gain was considered as non-recurring.

(2) On July 23, 2015 during the joint committee, bpost management and representatives of the workforce reached an agreement concerning the social plan related to the Alpha project in the support departments. The agreement contained the conditions for early retirement and determined the layoff conditions, in case certain employees were not selected for a new job. The estimated impact of this agreement had been accrued for within the payroll costs during the third quarter of 2015.

(3) In December 2016, Deltamedia NV/SA, a 100% subsidiary of bpost NV/SA, had been liquidated. The loss on the participation incurred by bpost NV/SA was tax deductible upon liquidation to the extent it represents previously fiscally paid-up capital in Deltamedia NV/SA.

(4) In accordance with IFRS 3 bpost finalized in 2017 the purchase price allocation (PPA) for de Buren, DynaGroup and Ubiway and recognized several intangible assets (brand names, know-how, customer relationships, …). The non-cash impact consisting of amortization charges on these intangible assets are being normalized. In 2016 and 2015 there was no impact related to PPA.


bpost’s unconsolidated profit after taxes prepared in accordance with Belgian GAAP can be derived from the consolidated IFRS profit after taxes in two stages.

The first stage consists of un-consolidating the profit after taxes under IFRS, i.e.:• Subtracting the results of the subsidiaries, i.e.

removing the profit after tax of the subsidiaries; and

• Eliminating any other Income Statement impact the subsidiaries had on bpost (such as impairments) and adding the dividends received from these subsidiaries.

The table below sets forth the breakdown of the above mentioned impacts:


IFRS Consolidated Net Profit 322.9 346.2 309.3

Results of subsidiaries and deconsolidation impacts (23.3) (39.5) (11.3)

Differences in depreciation and impairments (2.0) (2.6) 0.2

Differences in recognition of provisions (0.1) 0.2 (6.5)

Effects of IAS19 (38.8) 2.3 (17.3)

Depreciation intangibles assets PPA 8.7 - -

Deferred taxes 20.3 0.3 10.2

Other 3.2 1.8 3.0

Belgian GAAP unconsolidated net profit 291.0 308.7 287.7

Profit of the Belgian fully consolidated subsidiaries (local GAAP) (11.8) (9.3) (7.0)

Profit of the international subsidiaries (local GAAP) (25.1) (18.4) (7.5)

Share of results of associates (local GAAP) (13.0) (11.5) (10.1)

Other deconsolidation impacts 26.6 (0.3) 13.3

TOTAL (23.3) (39.5) (11.3)



1.5 From IFRS Consolidated Net Profit to Belgian GAAP Unconsolidated Net ProfitAs at 31 December

Financial review


• The evolution of the other deconsolidation impacts in 2017 compared to 2016 was mainly explained by higher dividends in 2017.

The second stage consists of deriving the Belgian GAAP figures from the IFRS figures and is achieved by reversing all IFRS adjustments made to local GAAP figures. These adjustments include, but are not limited to the following:• Differences in the treatment of depreciation and

impairments: Belgian GAAP allows different useful lives (and hence depreciation rates) for fixed assets from IFRS. Goodwill is amortized under Belgian GAAP while IFRS requires impairment testing for goodwill. IFRS also allows intangible assets to be recorded on the balance sheet under different conditions from Belgian GAAP;

• Recognition of provisions is subject to different criteria under Belgian GAAP and IFRS;

• IFRS requires that all future obligations to personnel be recorded as a liability under IAS 19, whereas Belgian GAAP has no such obligation. The movements in the IFRS liability are reflected on bpost’s Income Statement under payroll costs (EUR 41.7 million in 2017 versus EUR 16.1 million in 2016) or provisions (EUR 3.2 million in 2017 versus EUR 0.2 million in 2016), except for the impact of changes in the, which was recorded as a financial result

(negative EUR 6.0 million in 2017 versus negative EUR 18.7 million in 2016).

• The evolution of IAS 19 in 2017 compared to 2016 was mainly explained by last year’s increase of non-cash financial charges related to employee benefits, which was due to the decrease in the discount rates and the curtailment of the transport benefits for bpost’s retirees.

• In accordance with IFRS 3 bpost finalized in 2017 the purchase price allocation (PPA) for de Buren, DynaGroup and Ubiway and recognized several intangible assets (brand names, know-how, customer relationships, …). The depreciation on these intangible assets amounted to EUR 8.7 million. In 2016 and 2015 there was no impact related to PPA.

• Deferred taxes require no accounting entries under Belgian GAAP, but are recorded under IFRS. As the Belgian corporate tax reform has been enacted before December 31, 2017 bpost reassessed its deferred tax position under IFRS taking into consideration these new measures.

The outlook for 2018 includes the acquisitions of Radial, Bubble Post, Leen Menken Foodservice Logistics, IMEX Global Solutions and M.A.I.L.

We expect revenues to grow driven by: • double digit volume growth in

Domestic Parcels, with a price/mix effect between -3% and -6%;

• continued growth in international parcels supported by newly acquired businesses;

• stable Radial revenues,partly offset by: • an underlying Domestic Mail volume

decline of up to 7%, partially compensated by price/mix effect of +4% on average;

• continued decline in Banking & Financial revenue.

Outlook for 2018 • On the cost side, we expect higher costs

driven by: • increase in transport cost reflecting

growth in International Parcels & Mail; • consolidation of acquired businesses; • salary indexation expected as of

November 2018; • Radial costs impacted by phase out

webstore business and higher than expected opex (medical benefits & inflation) not fully compensated by productivity improvements.

Partly compensated by: • continued productivity improvements

and optimized FTE mix; • continued cost optimization.

This results in our ambition to achieve a recurring EBITDA in the range of EUR 560 to 600 million and dividend for 2018 at the same level as 2017. • Gross capex is expected to be around

EUR 140.0 million explained by Recurring & Vision 2020 investments and business development investments for new subsidiaries (Radial, Ubiway and Dynagroup).

bpostBel20

120

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110

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90Januari Februari Maart April Mei Juni Juli Augustus September Oktober November December

EVOLUTION OF THE SHARE PRICE

The bpost shareOn June 21, 2013 bpost became a stock listed company after a successful initial public offering on Euronext Brussels at EUR 14.50 per share. In 2014, the bpost share was included in the BEL 20 index, the main index of the Euronext Brussels stock exchange and in the DJ Euro STOXX 600 which resulted in an improved visibility of the company in the global financial markets.

29/03/2017BIPT stamp price increase refusal

8/03/2017Announcement FY 2016 results

3/05/2017Announcement Q1 2017 results




bpost share in 2017

Share price (EUR/share)

High 26.38

Low 20.95

At 29 December 25.39

Trading volume 77,724,071

Average daily traded volume 298,939

Number of outstanding shares 200,000,944

Dividends paid during the year (EUR/share, gross)

1.31

Gross dividend yield1 9.03%

(1) Based in initial public offering price of 21 June, 2013.

(2) Still to be confirmed.

DEVELOPMENT OF THE SHARE PRICE OVER THE YEAR

The bpost share started the year at EUR 22.88 and closely followed the evolution of the BEL 20 index until March 30, 2017 when the regulator refused the proposed stamp price increase for the year 2017. The share price fell 4.5% on that day to reach a closing price of EUR 21.93.. This was followed by a period of flattish share price development between EUR 20.95 (the year-low) and EUR 22.45 until July 26, 2017 when the Federal Government announced a corporate income tax reform kicking in as of January 1, 2018. The share price reacted very positively (+6.8% in 2 days) as financial analysts noted bpost will be positively impacted by the reduced corporate income tax rate (29.58% for 2018 and 2019 and 25% as of 2020 down from 33.99%). From that date, the share started a steady ride up reaching EUR 24.80 on October 6, 2017 (+13.5% since closing on July 25, 2017) and outperforming the BEL 20 index (+3.7%) over the same period. On October 9, 2017 bpost announced the acquisition of the US e-commerce logistics firm Radial, upon which the share price fell by 4.7% to EUR 23.64 at market closing on October 18, 2017. From that date, bpost shares rose by 7.4% until the end of December and reached the year-high at EUR 26.38 on December 5, 2017, the day following the interim dividend announcement. Overall, the bpost share was up 10.9% versus the start of the year compared to 9.6% for the BEL 20 index.

DIVIDEND POLICY

Creating value and rewarding shareholders is at the heart of the company’s strategy. The dividend policy of the company is to distribute minimum 85% of the net profits of bpost SA/NV in two installments. Firstly, an interim dividend is paid in December based on the results of the 10 months period from January through October of the current year. Secondly, a final dividend payment is proposed to the Shareholders’ Meeting based on the results of the last two months of the year before. In 2017, the company paid a final dividend based on 2016 results of EUR 0.25 gross per share in May and an interim dividend of EUR 1.06 gross per share in December. This means a dividend yield of 9.03% for investors having purchased shares at the initial public offering price. The Shareholders’ Meeting of May 9, 2018 approved the payment of a final dividend of EUR 0.25 gross per share based on the results of 2017. Consequently, the

dividend paid based on the 2017 results amounts to EUR 1.31 gross per share2, which is the same as the previous year and in line with company guidance.

OUR SHAREHOLDERS

At the end of 2017, bpost’s main shareholder was the Belgian State, directly and through the Société Fédérale de Participations et d’Investissement/Federale Participatie- en Investeringsmaatschappij.

Together they hold 51.04% of the shares outstanding. Institutional investors hold approximately 36.9% of shares outstanding and are mainly located in North America, the United Kingdom and Ireland, Germany and France. Retail investors hold approximately 7.0% of shares outstanding (or 14.3% of the free float shares). bpost did not own treasury shares at the end of 2017.

INVESTOR RELATIONS

bpost is committed to communicate in a transparent way on its performance to the financial community, private and institutional investors, shareholders and analysts. It therefore discloses a full analysis of the quarterly figures with the same level of detail as for half-yearly and yearly results via press releases available on the website of the company (corporate.bpost.be) and sent directly to subscribers of the mailing list of the company.

The Group Executive Management and bpost’s Investor Relations professionals meet regularly with investors of the main financial centers worldwide as well as with private investors in Belgium.

85%At least 85% of bpost’s profits are distributed.


bpostCentre Monnaie – Muntcentrum1000 Brusselswww.bpost.be

InvestorsTel: +32 2 276 76 43http://corporate.bpost.be/[email protected]

PressTel: +32 476 517 [email protected]

Public AffairsTel: +32 2 276 29 [email protected]

Customer serviceTel: +32 22 012345

Editor-in-chiefBaudouin de HepcéeCentre Monnaie – Muntcentrum1000 Brussels

Concept, content and coordinationSteve De Loor

Design and productionConcerto.be

PrintingGraphius

Picturesbpost photo gallery, Guy De Smet

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