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.