PostNL and Pension Fund PostNL agree on determination and conditions of final payment for transitional plans
FY 2020 outlook for free cash flow improves by €100 million
PostNL and Pension Fund PostNL have signed an agreement to determine details and conditions of the final payment for transitional plans. This results in a significant improvement in PostNL’s FY 2020 outlook for free cash flow. Employees’ soft pension entitlements remain unchanged.
Based on the financing agreement with the Pension Fund, the final payment for transitional plans at year-end 2020 was determined on parameters as in Q3 2019, when interest rates were very low. Taking into account the interests of all stakeholders, PostNL initiated discussions with the Pension Fund on options for a solution to smooth the impact of low interest rates in determining the final payment. It has now been agreed that the maximum final payment will be €290 million. This is €10 million below the initially determined amount. Should interest rates develop favourably, the final payment could be lower.
PostNL will pay the Pension Fund around €205 million at year-end 2020. The remaining (at most) €85 million will be deferred and paid in five annual instalments between 2021 and 2025. The funding costs of soft pensions during 2020 will be reduced by around €5 million. Thus, the total reduction in the cash contribution for transitional plans amounts to at least €15 million.
Based on this agreement, PostNL now expects free cash flow for 2020 to come in at between €(215) million and €(185) million (previously anticipated at between €(315) million and €(285) million). The reduction in cash contribution of at least €15 million will also have a positive impact on PostNL’s net debt position.
This press release contains inside information within the meaning of article 7(1) of the EU Market Abuse Regulation.
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Use of non-GAAP information
In presenting and discussing the PostNL Group operating results, management uses certain non-GAAP financial measures. These non-GAAP financial measures should not be viewed in isolation as alternatives to the equivalent IFRS measures and should be used in conjunction with the most directly comparable IFRS measures. Non-GAAP financial measures do not have a standardised meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The main non-GAAP key financial performance indicator is normalised EBIT. Normalised EBIT is derived from the IFRS-based performance measure operating income adjusted for the impact of project costs and incidentals.
We are PostNL, the mail and logistics solutions provider for all. With our mail and parcel deliverers who get everywhere, our 5,500 PostNL locations, 11.000 mail boxes and 517 automated parcel lockers, we are always nearby. We aim to be our customers’ favourite deliverer by making it as easy as possible for them to send and receive parcels and letters. Our over 35,000 people are right at the heart of society. On weekdays, we deliver an average 1.1 million parcels and 7.4 million letters across the Benelux region. Our focus is on quality for our customers, creating opportunities for our people and adding value for our stakeholders through growth, digitalisation and sustainability initiatives.
We optimise and support our physical networks by using smart digital solutions and launching new propositions that create value for our customers. We build long-lasting working relationships by acting as a good employer and client for everyone who works for and with us. To make our deliveries as sustainable as possible, we cover a lot of kilometres on foot or by bicycle or e-bike, provide innovative city logistics, use cleaner fuels, and use electric vans and light electric trucks. PostNL NV is a listed company with revenues of €3.1 billion in 2022, 61% of this derived from e-commerce. We provide deliveries of mail and parcels, logistics solutions for e-commerce, and cross-border solutions.