Investment We have continued to invest in the business with £4.3m of targeted investments in 2017, an increase of 7.3%, to ensure we remain the high quality and e¤cient operator in the market. The programme included network development, fleet renewal and our people. We have also invested in developing our growth strategies with new products and services in parcels, international and fulfilment. The highlight of our investment programme was the opening of our new super depot in Bolton which replaced our Leeds and Warrington depots. This purpose-built facility has generated operational savings and increasing capacity for growth in Parcels. Construction has also commenced of a parcel sortation system in Bolton, to be commissioned in 2018, which will develop our service o¦ering while also further driving e¤ciency and capacity. Financial position We maintain a strong balance sheet, liquidity and credit rating in order to give the Group financial flexibility to invest and grow. Shareholder’s equity increased by £5.9m to £16.2m (2016: £10.3m) due to retained earnings while net cash increased by £14.2m to £37.1m (2016: £22.9m), supported by strong cash management. In addition to cash reserves, the Group can draw on a fully committed facility provided by Royal Bank of Scotland (RBS) totalling £65m which is divided into a credit and working capital facility of £36m and a guarantee facility of £29m. In the year we used the guarantee facility to refinance supplier guarantees previously provided by the former parent company PostNL. The credit and working capital facility remained unutilised during the year. Revenue in Downstream Access and Parcels increased by £10.2m (1.9%) to £538.6m driven by the growth areas of Parcels and International which grew by 10% and 31% respectively. In Mail, volumes per day reduced by only 0.4%. Progress in Parcels and International demonstrates the success of our continuing strategy to grow our presence in these markets which we are supporting with targeted investments and product development. We have integrated new carriers and developed new tracked and untracked economy and premium services to more destinations across multiple formats. Our robust performance in Mail and the stability of the wider DSA market segment demonstrates Whistl’s success at retaining and acquiring customers and the continuing power of the postal medium in the communication mix. Performance Downstream Access and Parcels
The DSA and Parcels market continues to be very competitive, which together with the return of inflationary pressure in the cost base has impacted profitability in 2017. The annual increase in the consumer price index was 3% in December 2017 after almost 2 years below 1%. Whistl’s costs in particular were impacted by the 4.2% increase in the National Living Wage and average fuel prices which increased by 9% after a period of decline. Whistl’s e¤cient network, continuing investments, leadership position in the DSA market segment and strong financial position makes us well placed to respond to competitive pressure. In particular our investments in the Bolton super depot and parcel sortation, while incurring start-up costs in the short term, ensure we retain our place as the most e¤cient and competitive operator in our market.
Group underlying operating profit was £10.5m (2016: £11.8m).
Revenue
Segment
2017 £m 538.6 58.4 6.0 603.0
2016 £m 528.4 63.3 - 591.7
Change £m 10.2
Change % 1.9%
Downstream Access & Parcels Doordrop Media Fulfilment Group
(4.9) 6.0 11.3
(7.7)% n/a 1.9%
Underlying operating profit 1
Segment
2017 Operating £m 9.2 1.1 0.2 10.5
2016 Operating £m 10.9 0.9 - 11.8
Change Operating £m (1.7)
Downstream Access & Parcels Doordrop Media Fulfilment Group
0.2 0.2 (1.3)
1 Excludes exceptional items
Capex
2017 £m 3.1 1.2 4.3
2016 £m
Change £m 1.0
Growth Maintenance Total capital additions
2.1 1.9 4.0
(0.7) 0.3
CFO Financial Review | Whistl Annual Report 2017
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