PostNL’s financial framework is based on:
- steering business performance by using value-based performance measures,
- strict cash flow management, and
- an efficient and strong capital structure, with a long-term investment grade credit rating target of BBB+ / Baa1.
The financial strategy provides adequate financial flexibility. This is necessary to support strategic growth platforms, the restructuring of the Dutch mail business and to combat a degree of business or economic headwind.
The key components of PostNL’s financing strategy mentioned above relate directly to:
- effective risk management, internal control, and compliance,
- financial risk management and insurance,
- aligned legal and funding structures, and
- working capital management
The current capital structure is based on and managed with regard to the following components:
- targeting an investment grade credit rating of BBB+ / Baa1,
- structural availability of €400 – €500 million of undrawn committed facilities out of our €570 million revolving credit facility,
- structural funding via a combination of public and bank debt, with a risk-weighted mix of fixed and floating interest,
- cash pooling systems that ensure optimised cash requirements for the Group by facilitating centralised funding and surplus cash concentration at group level, and
- tax-optimal internal and external funding focused on optimising the cost of capital for the Group, within boundaries that are sustainable on a long-term basis.
PostNL’s current credit ratings are BBB- 'Outlook Negative' from Standard & Poor’s (S&P) and Baa3 'Negative' from Moody’s.
PostNL manages its financial risk profile along a cash flow to debt ratio and a debt to EBITDA ratio.
An important factor in re-establishing PostNL's targeted BBB+ / Baa1 credit rating will be a reduction of the outstanding debt, using part of the proceeds from a gradual sale of the 29.8% shareholding in TNT Express, thereby improving the financial ratios.
PostNL expects its financial ratios to be in line with a BBB+ / Baa1 in 2016.