1 corporate express - amsterdam, 1 october 2007 - focus. execute. deliver. strategic review - focus....

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Corporate Express - Amsterdam, 1 October 2007

Strategic Review - Focus. Execute. Deliver. - Focus. Execute. Deliver.

1 October 2007 2Corporate Express Strategic Review; FOCUS. EXECUTE. DELIVER.FOCUS. EXECUTE. DELIVER.

“Safe Harbour” Statementunder the Private Securities Litigation Reform Act of 1995

Statements included in this press release, which are not historical facts are forward-looking statements made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. Such forward-looking statements are made based upon management’s expectations and beliefs concerning future events impacting Corporate Express and therefore involve a number of uncertainties and risks, including, but not limited to industry conditions, changes in product supply, pricing and customer demand, competition, risks in integrating new businesses, currency fluctuations, and the other risks described from time to time in the Company’s filings with the US Securities and Exchange Commission, including the Company’s Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 9, 2007. As a result, the actual results of operations or financial conditions of the Company could differ materially from those expressed or implied in such forward-looking statements. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update publicly or revise any forward-looking statements.


Agenda for today

• Introduction

• Strategy assessment

• Key strategic priorities

• Transforming the company

• Closing remarks


Strategic Review process

Reshaping business portfolio

Broaden product portfolio of businesses

Strategic review

1999-2003 March-September 20072004-2007

• Increased focus on office products

• Adding categories to create single source offer

• Shift organisation to category focus

• Focus on mid market• Private brands,

preferred supplier, global sourcing

Key strategic

moves

Key strategic

moves

• Sold IT and Paper Merchanting businesses• Acquired office products business

- Corporate Express- SAMAS OP- USOP OP

• Acquisitions in Australia, Scandinavia, North America, Spain

• Divested ASAP Software and Veenman GermanyM&A

activityM&A

activity

• Detailed assessment together with external advisors, including Deutsche Bank and JPMorgan:

1. Do we have a sound strategy?2. How can we improve

performance?3. What operational changes are

needed to deliver?4. Which strategic options do we

have?

Introduction Transforming the companykey strategic prioritiesStrategy assessment Closing remarks


Which strategic options do we have?

SaleSale

Break-upBreak-up

MergerMerger

Stand-aloneStand-aloneWe have considered a wide range of options

We concluded that the stand-alone scenario is in the best interest of our shareholders and other stakeholders Based on the strategic review’s conclusions, we today announce a series of strategic initiatives and management and organisational changes to create value and growth as a stand-alone global player



Key issues

• Corporate Express has the right strategy and is well positioned but has been lacking in execution…

• …we should further increase FOCUS and improve how we EXECUTE our plans...

• …we need to change our organisation and leadership to be able to unlock full potential and DELIVER shareholder value

1. Do we have a sound strategy?

2. How can we improve performance?

3. What operational changes are needed to deliver?

Key questionsKey questions Key issuesKey issues



Changes in Board composition

CEO Executive Board

• Frans Koffrie has stepped down with immediate effect

• Peter Ventress new CEO

Chairman Supervisory Board

• Paul van den Hoek decided to step down at the end of today

– Previously scheduled to step down at AGM in April 2008

• Frank Meysman to succeed

– Supervisory board member as of 2006



New leadership - Peter Ventress (1960) Appointed as new CEO, effective immediately

Joined Corporate Express in 1999

1999-2000President Corporate Express France Image SAS

2001-2002Regional president Corporate Express Europe

2002 - 2005 President of Corporate Express Canada and member of North America management team–Realised sales growth of +16% and EBITDA growth of +50%

2005 - September 2007 President Corporate Express Europe– Excluding ATG sales growth of +9% and EBITDA tripled (based on 4 quarter rolling)– ATG acquired in September 2006

Member of the Executive Board since 2007


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FOCUS. EXECUTE. DELIVER.FOCUS. EXECUTE. DELIVER.

INTRODUCTIONINTRODUCTION


Overview Corporate Express

• Pure-play contract supplier

within office products industry

• Leading global player

• Extensive logistical backbone

• Sophisticated eCommerce

platforms

• Strong brands

• Over 18,000 employees

1 Last 4 quarters, excluding ASAP Software

Global footprintGlobal footprint

Annual revenues of EUR 5.6 billion1Annual revenues of EUR 5.6 billion1

• #1 position in US, Australia, Norway, Sweden, Benelux and Germany

• Top 3 position in Canada, Austria, New Zealand, Ireland and Italy

• Present at over 300 locations in 20 countries in Europe, North America and Australia

Company descriptionCompany description



H1 2007 performance as reported

• Sales up 2.4% to EUR 3,194 million–7.0% at constant rates

• Organic growth Corporate Express +3%– Office Products North America down 2%– Office products industry US facing challenging environment– US operations stable after disruptions in sales force and customer service

• OP Europe and OP Australia showing good performance• Printing systems reporting a good first half

• Operating result EUR 108 mln –(4.2%), at constant rates flat

• Operating result before special items EUR 119 mln–(16.7%), at constant rates (13%)


Trading update Q3 2007 resultsQ3 2007 to be published Tuesday 6 November

• CEUS organisation stabilised; enhanced morale

• ‘Simplify and Sell’ approach paying off

• Continue to gain market share

Office Products North AmericaOrganic growth (1%)

Q2 2007 (3%)Q1 2007 (1%)

Office Products EuropeOrganic growth +7%

Q2 2007 +5%Q1 2007 +6%

Organic growth Q3 2007Organic growth Q3 2007


13


STRATEGY ASSESSMENTSTRATEGY ASSESSMENT


Key actions to deliver shareholder value

• Launch 4 key strategic priorities to deliver profitable growth– Increase share of wallet– Improve category offering– Grow mid-market share– Strengthen geographic footprint

FocusFocus

Execute Execute

• Transform into a more operationally focussed and sales driven organisation

• Creation of one global management team to improve operational execution significantly

• Clear and specific targets, KPI’s and accountability

DeliverDeliver

Global Office Products:

• Average annual organic sales growth of at least 6% for 2008-2010

• Given business model, EBITDA margin of at least 7%



Strategic direction 2007-2010

Broaden product portfolio of businesses

Focus. Execute. Deliver.

2004-2007 2007-2010March-September 2007

• Adding categories to create single source offer

• Shift organisation to category focus

• Focus on mid market• Private brands,

preferred supplier, global sourcing

Key strategic

moves

Key strategic

moves

• Acquisitions in Australia, Scandinavia, North America, Spain

• Divested ASAP Software and Veenman Germany

M&A activity

M&A activity

1. Do we have a sound strategy?

2. How can we improve performance?

3. What operational changes are needed to deliver?

4. Which strategic options do we have?

Introduction Transforming the companykey strategic prioritiesStrategy assessment

Strategic Review

• Increase share of wallet

• Improve category offering

• Grow mid-market share

• One global management team

• KPI’s, accountability

• Strengthen geographicfootprint

Closing remarks


Introduction Transforming the company

A leading player …S

tron

g c

om

peti

tive p

osit

ion

Str

on

g c

om

peti

tive p

osit

ion

• Pure-play contract OP supplier with distinct

B2B model

• Large global footprint

• Scale benefits

- Merchandising, sourcing

• Exchange best practices

- Private brands, product range extension,

Pick-to-Voice, eCommerce, Saleforce.com

• Scalable platform

- Logistics and distribution infrastructure

- Sophisticated eCommerce platforms

• Leading B2B market positions in key markets

- #1 in US, Australia, Norway, Sweden, Benelux

and Germany

- Top 3 positions in Canada, Ireland, Austria,

New Zealand and Italy

• Present at over 300 locations in 20 countries in

Europe, North America and Australia

• Alliances in Europe, Latin America and South-

East Asia

• Only player able to service customers globally

- Strong sales growth with global accounts

key strategic prioritiesStrategy assessment Closing remarks


Introduction Transforming the company

… in an attractive market…

• High barriers to entry

– Different infrastructures (IT, logistics)

– Sourcing, multiple suppliers

• Operational leverage of fixed cost base

• Attractive Return on Capital Employed

Att

racti

ve m

ark

et

Att

racti

ve m

ark

et

• Close link with white-collar employment

• Leverage of distribution, IT, eCommerce and sales force infrastructure

• Little risk of disintermediation

key strategic prioritiesStrategy assessment Closing remarks


…with continued focus on Office Products…

• The group has been streamlining and focussing the business

Recen

td

isp

osals • ASAP Software, USA (Aug-07)

• Veenman, Germany (Sep-07)

• Reselling of desktop software, USD 992 mln in revenues

• Selling and servicing non-impact printing equipment, EUR

36mln in revenues

Recen

t acq

uis

itio

ns

• Davenport, Canada (Aug-07)

• Educational Experience, Australia (Oct-06)

• ATG, Norway, Sweden, Denmark (Sep-06)

• Coastwide Laboratories, USA (May-06)

• Ofiexpress, Spain (Jan-06)

• Office Supply and Furniture distribution, CAD 71mln in revenues

• Educational supplies

• Office Products distribution, EUR 300 mln in revenues

• Facilities distribution, USD 45 mln in revenues

• Office Products distribution, EUR 13 mln in revenues



…and a streamlined operational infrastructure…



…but with room to drastically improve execution

• Decentralised organisation and unfocused go-to-market models

…leading to unsuccessful execution and poor sales performance

…however, with successful sourcing, merchandising, logistics and eCommerce

• Identified challenges – Under-utilized position with larger clients– Limited penetration in mid-market– Increasing complexity in category offering– Sub scale or absent in some geographies


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KEY STRATEGIC PRIORITIESKEY STRATEGIC PRIORITIES


Introduction Transforming the companyKey strategic prioritiesStrategy assessment

4 strategic priorities to deliver profitable growth

• Adjust category offering

• Standardise category approach

• Full leverage private brands

• Capture customer value potential

• Continue logistics/supply chain

initiatives

• Opportunity to attain leading positions• Build selective beach heads• Conduct fill-in M&A

• Refine, test and rollout mid market model

• Focused approach, increased accountability

Key initiativesKey initiatives

Increase share of wallet


Improve category offering


Growmid-market

share

Growmid-market

share

Strengthen geographic

footprint


footprint

PriorityPriorityIdentified challengesIdentified challenges

• Share of wallet potential with clients

• Grow market share

• Too broad product offering in some

countries

• Earn the right to expand offering

• Currently only 20% of sales• Poor execution• Too limited accountability

• Certain geographies subscale or absent

• Limited presence in emerging markets

OpportunityOpportunity

% customers

% wallet% customers

% wallet

% at customers

% wallet# customers

Closing remarks

% wallet# customers


“Increase share of wallet”

OpportunityOpportunity Key actionsKey actions

• Further penetration of large and strategic accounts

• Increase number of large and strategic customers served

• Reduce sourcing and supply chain costs

• Focus on customer need• Drive commercial excellence program

– Improve go-to-market model and differentiate depth of sales approach

– Create transparency on customer potential– Improve and intensify customer acquisition

• Initiatives to reduce supply chain costs already being rolled-out


% wallet

% customers

Closing remarks


“Improve category offering”

OpportunityOpportunity

• Align a country’s offering with a cascading offering staircase– ‘Right to expand offering’ needs to be earned based on clear KPIs– When a country’s offering is broader than it should be, offering needs

to become more focused– Categories should be managed in a coordinated way across CE– Fully leverage private brands programme

Key actionsKey actions

• Cross-sell selected extended categories

• Rationalise and standardise assortment

• Centralise sourcing

• Refocused and targeted marketing & sales approaches


Office supplies PaperComputer supplies

Step 1: “Focus on thecore”

Step 2: “Cross-sell OP-related products”

Step 3: “Selectively offer ‘indirects’ if attractive”

2a

2d

3g

Basic facilitiesandBasic printandBasic catalog furnitureandBasic Office Equipment hardware

3a

3b

3c

3d

3e

3f

Extended facilitiesand/orProject furnitureand/orOther hardwareand/orMarketing printand/orPPE and work wearand/orSingle sourceServicesand/orOther product lines

2b

2c

1

% customers

% wallet

Closing remarks



• Further exploit above–average gross margins and market growth of mid-market

• Reduce implementation issues around mid-market model roll-out

• Further increase sales and reduce costs to serve

“Grow mid-market share”

• Reinvigorate mid-market initiative in US– Increase contacts with high-potential prospects and

inactives– Build out operational metrics dashboard– Monitor handoffs to identify where processes are

broken

• Refine and roll out mid-market model in Europe– Refine mid-market model in Germany and apply

“quick fixes” (where required) in other mid markets– Implement mid-market model in priority markets


% wallet# customers

Closing remarks



• Attain leading positions across Europe

• Create viable growth options in high growth emerging markets

• Pursue opportunities in countries where currently present, but not in a leading position

• Focus on strong organic growth in countries where already in leading position

“Strengthen geographic footprint”

• Create beach heads in selected cities in emerging markets over time


% at customers

% wallet# customers

Closing remarks



Implementation underway, key milestones defined

Sales excellence programme Phased roll-out (country by country)

Country plans Phased roll-out (country by country)

Quick wins in USPhased roll-out in US

Categoryapproach

Pilots Roll-out

200920092008200820072007

2

Roadmap to roll out strategic priorities



Continued implementationContinue logistics/supply chain initiatives

Standardise category approach

Readjust category offering

Businesscases Targeted M&A

4 Strengthen geographic footprint

Conduct fill-in M&A

Capture customer value potential

1

Continued effortsGrow market share

Quick wins in Europe Phased roll-out in Europe

Grow mid-market share3

Closing remarks


4 key strategic priorities


Grow

mid-market share



footprint

Introduction Transforming the companyKey strategic prioritiesStrategy assessment Closing remarks

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TRANSFORMING THE COMPANYTRANSFORMING THE COMPANY


To become a fully operational driven company

• Peter Ventress (CEO): ”We have to transform radically our management structure and our ability to execute.”

• Decentralised structure no longer appropriate

• Organisation has to mirror our unique position as global pure play B2B office supplies company





“Quite simply, we have to be better at the basics”


Focus.• On operations and sales driven culture• Stronger focus on results, accountability and clearer measures

Execute.• We have to do significantly better than before• Be closer to the business• Clear and specific targets and key performance indicators (KPI’s)

Deliver.• Capitalising on our strong global position as pure-play B2B


• EBITDA margin of at least 7%

It is all about Focus. Execute. Deliver.


Peter Ventress (CEO)

- 1960

Execu

tive M

an

ag

em

en

t G

rou

p

Introduction Transforming the companykey strategic prioritiesStrategy assessment

New management teamStrong operational focus

Jay Mutschler

President USA

Peter Damman

President Europe

Ron Lalla

EVP Merchan-

dising

Not yet filled

SVP People &

Organisation

Tim Beauchamp

SVPOperations

Dick Dijkstra

SVPIT

Grant Harrod

PresidentAustralia

Supervisory Board

Executive Board

George Dean

- 1947

-To retire as planned after AGM in April 2008

Closing remarks

Floris Waller (CFO)

- 1958


Enabling Corporate Express to deliver strategy

• Creation analytical performance culture

• Further strengthen HR organisation

• Close capability gap

• Share best practices

• Reassigning roles in management of sales and logistics

• Continue IT initiatives

• Strengthen individual accountability and improve performance

• Strengthen people, processes and capabilities to support strategy implementation• Fill in short-term capability gaps • Ensure strong talent base

• Improve cost efficiency of business

• Refocus its activity and resources towards sales

• Create a more integrated, effective IT backbone

Additional performance initiativesAdditional performance initiatives ObjectiveObjective


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Closing remarksClosing remarks


Key actions to deliver shareholder value

• Launch 4 key strategic priorities to deliver profitable growth– Increase share of wallet– Improve category offering– Grow mid-market share– Strengthen geographic footprint

FocusFocus

Execute Execute



• Clear and specific targets, KPI’s and accountability

DeliverDeliver

Global Office Products:


• Given business model, EBITDA margin of at least 7%


36

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1 corporate express - amsterdam, 1 october 2007 - focus. execute. deliver. strategic review - focus....

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