Investor Presentation • Nov 30, 2016
Investor Presentation
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Annex to press release – Brussels, 30/11/2016 November 2016 Time: 21.30 CET Inside information – Regulated Information corporate.bpost.be
This document has been prepared in connection with bpost SA/NV's ("bpost") announcement on 30 November 2016 that it has submitted a best and final proposal to PostNL N.V. ("PostNL") for the combination of both companies (the "Combination"). Such announcement was made on the basis of Section 4, subsection 3 of the Dutch Decree on Public Takeovers (the Netherlands) . Such announcement was made on the basis of Section 4, subsection 3 of the Dutch Decree on Public Takeovers (the Netherlands) . Such announcement and this document do not constitute or form part of an offer, or any solicitation of any offer, to buy or subscribe for any securities in bpost or any other securities or to sell any securities in PostNL. Any offer will be made only by means of an offer memorandum and on the terms and conditions set forth therein. The announcement and this document are not for release, publication or distribution, in whole or in part, in or into, directly or indirectly, the United States, Australia, Canada or Japan. The announcement and this document contain inside information within the meaning of article 7(1) of the Regulation 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (Market Abuse Regulation).
By reviewing this document or by reviewing any part of this document beyond this disclaimer, you agree to be bound by the following limitations.
The information contained in this document (the "Information") is derived from publicly available information and contains estimates, projections, targets or forecasts which have been prepared as at the date of the final and best proposal and involve significant elements of subjective judgment and analysis which may or may not be correct and are subject to change without notice. The Information may be subject to updating, completion, revision and amendment and the Information may change materially. Neither bpost nor any of its advisors is under any obligation to update or keep current the Information, and any opinions expressed in the Information are subject to change without notice. Rounding adjustments have been made in calculating some of the financial figures included in the Information. As a result, figures shown as totals may not be exact arithmetic aggregations of the figures that precede them. Certain figures included in the Information are unaudited.
The Information includes market and industry data and forecasts obtained by bpost from reports, studies, estimates, industry publications and surveys. Neither bpost nor any of its advisors have had access to the facts and assumptions underlying the numerical data, market and industry data and forecasts and other information extracted from publicly available sources. As a result, neither bpost nor any of its advisors are able to verify such market and industry data and forecasts and other information. Such market and industry data and forecasts are included herein for information purposes only.
The Information may include forward-looking statements, which are based on current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about bpost and PostNL, including, among other things, the development of their businesses, trends in their operating industry, future capital expenditure, general economic conditions, changes in laws and regulations, changes in the policies of governments and/or regulatory authorities and the other risks and uncertainties detailed in the recent public disclosures made by each of bpost and PostNL, many of which are difficult to predict and generally beyond the control of bpost and PostNL. In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur or may occur differently. Neither bpost nor any of its advisors undertakes to update or revise any such forward-looking statement and no representation or warranty is given as to the achievement or reasonableness of future projections, management targets, estimates, prospect or returns, if any. Such forward-looking statements are included for information purposes only.
The Information does not constitute or form a part of any offer or solicitation to exchange, sell, purchase or subscribe for securities of bpost or PostNL in the United States (including its territories and dependencies, any State of the United States and the District of Columbia), Japan, Canada or Australia or in any jurisdiction in which such offer or solicitation would be unlawful absent prior registration, filing or qualification under the securities laws of any such jurisdiction. Accordingly, the Information must not be sent, mailed or otherwise transmitted in, into or from the United States, Japan, Canada or Australia or any other such jurisdiction. The securities mentioned herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered, exchanged, sold, resold, delivered or distributed, directly or indirectly, in or into the United States except pursuant to an available exemption from the registration requirements of the Securities Act and in compliance with the securities laws of any state or other jurisdiction of the United States. There will be no public offering of such securities in the United States. Nor will any action be taken to register or qualify the securities mentioned herein for sale to the public under the laws of Japan, Canada or Australia. Accordingly, unless an exemption under the relevant securities law is applicable, such securities may not be offered, exchanged, sold, resold, delivered or distributed, directly or indirectly, in or into Japan, Australia or any other jurisdiction where registration or qualification otherwise would be required. All persons having access to the Information (including without limitation, custodians, trustees and nominees) should inform themselves of and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of applicable law. Neither bpost, PostNL nor any other party involved in a potential transaction, nor any other person, assumes any liability by any part of any such restriction.
In respect of any member state of the European Economic Area, the Information is only directed at persons who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive (2003 /71/EC, as amended). In respect of the United Kingdom, the Information is only directed at (i) persons who have professional experience in matters relating to investments, i.e., investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), and (ii) high net worth companies, unincorporated associations and other bodies to whom such Information may otherwise lawfully be communicated in accordance with Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons").
The Information is for background purposes only and does not purport to be full or complete. In particular, the Information must not be used in making any investment decision. If Castor and Pollux reach an agreement on the Combination, an offer document (prospectus) and response memorandum will, upon approval by the relevant market authorities, be published. In such case, the availability of these documents and the place where they can be obtained will be announced. You understand that you should refer to, and may only rely on, such offer document, if and when such offer document will be made available, for further and more complete information about the potential Combination. You are reminded that any acquisition or disposal of securities of bpost or PostNL in the context of the Combination may be made solely on the basis of information contained in any such offer document.
At this time it is uncertain whether the Combination will occur. bpost will proceed with an offer only on the basis of a negotiated merger agreement with PostNL and upon adoption of a Belgian royal decree authorizing the Combination so agreed. The offer itself, if any, would be subject to customary pre-offer and offer conditions precedent for transactions of this nature, including, but not limited to, a minimum acceptance level, anti-trust clearance and such other regulatory clearances as may specifically be required in respect of the Combination.
SOURCE: Euromonitor 1 Retail sales value (RSP excl. sales tax) In particular, there is a clear strategic rationale for the proposed combination of PostNL and bpost
Maintain commitment to "universal and public services" in both countries, respective USO and broader public services
Boost profitable parcel growth in BE stimulating its economy and its digital agenda, while PostNL accelerates the realization of its current strategy
Optimize the network continuously to be able to introduce new solutions and technologies at scale
Build profitable and growing international businesses by tapping into the cross-border value pool
Create a sustainable and stronger investment proposition through a resilient business model, a de-risked capital structure and sustainable accretive cash dividends
Remain an attractive and responsible employer of reference in BeNe, maintaining emphasis on CSR
1 De Tijd, May 28, 'bpost slaat vleugels uit terwijl treinen niet rijden' 2 De Tijd, May 28, 'bpost maakt kwantumsprong op pakjesmarkt' 3 De Tijd, May 29, 'PostNL blaast onderhandelingen met bpost op' 4 De Tijd (quoting Het Financieele Dagblad), May 30, 'PostNL vreesde voor Belgische overheidsbemoeienis'
SOURCE: Press clippings (De Tijd, Het Financieele Dagblad)
1 Reported numbers 2 Simple pro-forma, excluding synergies or potential re-rating 3 Reported EBIT 4 As defined by reported and operating income 5 As defined by IFRS consolidated net profit 6 As of Nov 30, 2016 7 2015 average SOURCE: Annual report PostNL & bpost
Relative size versus listed EU Peers123, 2015 figures in € million
1 Simple pro-forma, excluding synergies or potential re-rating 2 Excluding Poste Italiane, for which 87% of the revenue comes from financial services 3 Includes all activities of the postal operators, incl. financial services 4 Year ending Mar 31, 2016 using a GBP to € exchange rate of 1.263 on Mar 31 2016 5 Using a SEK to € exchange rate of 9.187 on Dec 31 2015; EBIT defined as operating income 6 Using a NOK to € exchange rate of 9.625 on Dec 31 2015 SOURCE: Annual reports
The Combination will be mutually beneficial as it would combine bpost's efficient mail operations and PostNL's developed parcels operations 2015
PostNL already has a strong footprint in parcels bpost is one of the most efficient mail operators in the EU ~150 ~50 88 86 3 9 0.34 11 0.92 51 Mail volume handled per FTE Thousand items Unit cost per mail item €, total mail Customer satisfaction % Parcels per capita # parcels Total parcels revenue € billion Parcels EBIT margin % bpost PostNL European average
SOURCE: Annual reports 1 Average based on UPS, Deutsche Post, Swiss Post, FedEx, La Poste, Royal Mail, PostNord, TNT, Österreichische Post, Posten Norge, Correos
Modernization of the 1991 Law for autonomous public companies, creating a level-playing field and aligning the corporate governance rules and culture to those of disciplined private listed companies, without state intervention 2015
Over the past decade, bpost has been run independently from the State and in accordance with strict industrial and financial logic
1 Excluding non-recurring items
1 Fill gap with previous offer in cash, which was created by recent decline in value of share component (leading to implied offer value of EUR 5.37 vs. EUR 5.65) 2 Based on bpost closing share price on November 30 (€ 21.20)
| Our commitment to PostNL organization |
Balanced governance |
▪ Well-balanced governance model with 3 representatives of PostNL as members of the Board of Directors (including its Chairman) – equivalent to the representation of the BE state ▪ Balanced PostNL representation in Group Executive Committee (e.g., PostNL CEO and CFO) |
|---|---|---|
| NL legal entity | ▪ Continuation of PostNL operations under its current legal identity, subject to the Dutch large company regime |
|
| Preserved Brand |
▪ Continuation of brand name & positioning, highly trusted by Dutch consumers |
|
| Our commitment to PostNL employees |
Additional pension guarantee |
▪ Pension guarantee in the form of a suretyship ("Borgtocht"), for the fulfillment of PostNL's pension obligations |
| Local employ ment and opportunities |
▪ Mail network to remain separate (i.e., not integrated with that of bpost) ▪ Parcels and niche sectors (e.g., value transport) to remain at the very heart of PostNL's business ▪ As a result, creation of ~1,600 jobs in NL1, as well as international career opportunities for Dutch talents |
|
| Our commitment to Dutch citizens |
Commitment to USO in NL |
▪ Commitment to remain fully compliant universal service providers, ensuring that PostNL has the necessary resources available to perform its role of national USO provider |
| Local Decision and Innovation Center |
▪ Retention of Dutch national mail HQ in The Hague ▪ Creation of an Innovation Center in NL leading to high-value employment creation |
1 On top of PostNL's standalone strategy and including innovation center
Strategic Committee (CEO chair)
Audit Committee (independent chair)
Remuneration Committee (PostNL chair)
Nomination Committee (BE State chair)
1 bpost nominees other than the CEO are independents
2 Decisions will include (i) changes to the ground rules of the corporate governance charter, (ii) capital increase under authorized capital, (iii) propositions concerning dividend payment that deviate significantly from the dividend payout path set forth in the corporate governance charter, and (iv) debt financing in excess of a pre-defined net debt/EBITDA ratio
2 Appointed for a period of at least 4 years
BALANCED GOVERNANCE
| Decision center |
• Group headquarters in Brussels |
|
|---|---|---|
| • Dutch business of PostNL will have an operating structure as a separate division within the Group, with headquarters of Mail and Parcels NL anchored in the Netherlands |
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| • Dutch subgroup will retain collecting, sorting and delivery functions related to the Mail NL business |
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| Governance | • Well-balanced governance model with 3 representatives of PostNL as members of the Board of Directors of bpost (including Chairman) |
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| • Representation of PostNL in Board will always be at par with BE Government, the BE State can never appoint more than one third of the Board members, and certain decisions of institutional or strategic importance1 will require a special majority vote of 75% |
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| • bpost CEO and current PostNL CEO will jointly establish composition of Group Executive Committee, ensuring balanced representation and adherence to culture and values of PostNL |
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| • PostNL Supervisory Board will consist of 8 members, i.e., 2 nominated by PostNL, 2 nominated by PostNL Workers Council and 4 nominated by bpost (incl. chairman) |
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| • PostNL Executive Committee is appointed by the PostNL Management Board (CEO and CFO) |
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| • Current NL executive committee remains responsible for daily operations, and will naturally represent Dutch geography, culture and values of PostNL |
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| Privatization Law |
• As a result of the adoption of the Privatization Law2 in 2015, the governance model is that of a privately owned listed company |
|
| • Hence, BE State only retains governance rights proportional to its shareholding |
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| Other commitments |
• Continuation of PostNL operations under its current legal identity, subject to the Dutch large company regime |
|
| • Continuation and further development of PostNL highly trusted brand in the Netherlands in the foreseeable future |
1 Decisions will include (i) changes to the ground rules of the corporate governance charter, (ii) capital increase under authorized capital, (iii) propositions concerning dividend payment that deviate significantly from the dividend payout path set forth in the corporate governance charter, and (iv) debt financing in excess of a pre-defined gearing ratio 2 Currently being challenged before the Constitutional Court
The pension guarantee provided by bpost is a suretyship, i.e., bpost commits to pay PostNL's pension obligations to the Pension Fund, conditional upon PostNL being in default in relation to its payment obligations towards the Pension Fund Terms • There will be no changes to the unconditional contributions PostNL makes towards the pension fund • bpost will have the same rights and defenses as PostNL towards the pension fund Scope • The pension guarantee will cover all current and future obligations under the execution agreement with the PostNL pension fund and the unconditional contributions of €129m • The long-term guarantee towards the TNT pension fund will not be covered by the guarantee Certainty • The pension's formal agreements may not be amended without both parties' consent Enforceability • The suretyship will be effective as of settlement of the offer – as of then, in case PostNL is unable to meet its obligation, bpost will cover them
COMMITMENT TO USO IN NL
The Combination is committed to ensure continuity of the universal service and adequate financing of PostNL
| is part of our DNA … | … and the Combination commits to keeping it at its core | |
|---|---|---|
| • PostNL and bpost are the traditional USO providers in NL and BE • As such, we are both committed to comply with high USO requirements (e.g., ensuring high delivery |
Maintaining the service quality of USO |
The Combination will remain fully committed to • Confidentiality & proof of exchange • Reliability, with >95% delivery D+1 • Accessibility via extensive retail network of post offices & post points • Affordability • Innovative services |
| quality, delivering all private mail five days a week) • We are proud to fulfill this mission in the interest of all citizens and persist in doing so under the Combination |
Supporting USO in NL |
• The Combination shall ensure PostNL has access to functions and resources necessary to meet universal service requirements in NL • The Combination will ensure this for as long as PostNL is the designated universal service provider in NL • Joint veto right of two independent members of PostNL Supervisory Board in respect of material asset relocations, etc. that they consider contrary to the NFCs |
INNOVATION CENTER
The innovation center based in NL will position the Combination at the forefront of the industry, while creating high quality employment
A key pillar of the deal rationale is to be the shaper of ecommerce in BeNe, which implies the need for continuous innovation and introduction of new product features
The e-commerce environment is evolving fast,
increasingly pressured by new product innovations, consolidating competitors, large international logistics companies and new digital solutions
By developing innovation best practices and combining resources, the innovation center will enable us to continue competing and swiftly deliver more innovative services to citizens in NL and BE
The center will focus on
Dedicated resources including diverse experts and a clearly identified location
Clear organization (e.g., innovation center steering committee, innovation charter)
processes to shape, test, pilot, rollout in short innovation cycles to ensure speed to market
Close connection to ecosystem (e.g., suppliers, consumers, legal and political environment, etc.)
The Combination shall ensure PostNL has access to functions and resources necessary to meet its universal service requirements
The independent members of PostNL's Supervisory Board can veto decisions that are contrary to the terms and conditions of the non-financial covenants
▪ The combination will remain an attractive and responsible employer of reference, ensuring long-term job conservation (incl. 1,600 new jobs in NL) and offering international and high-quality job opportunities
When pursuing inorganic growth opportunities, bpost diligently follows objective criteria in its decision making process. bpost is convinced that this best and final proposal is compelling to both Parties, creating substantial value for all stakeholders. Further concessions would be detrimental to bpost's shareholders and destroy joint value creation.
bpost is fully convinced of the merits of the transaction and the compelling industrial rationale for both parties. It constitutes an opportunity to accelerate both companies' growth strategy. At the same time, the Combination will be a larger and more competitive international postal operator that is able to withstand some of the key volatilities to which PostNL is exposed in its standalone plan.
A key pillar of the deal rationale is to take on a shaping role in the BeNe region, allowing both companies to keep their future in their own hands.
This best and final proposal is a sound basis to reach a final agreement on the Merger Protocol, which aims at ensuring the interests of all stakeholders are well reflected
Baudouin de Hepcee - Director External Communication, Investor Relations & Public Affairs tel: +32 2 276 22 28 (for journalists and investors) e-mail: [email protected]
Additional contacts: Barbara Van Speybroeck T. +32 476 51 79 29 - [email protected] (Press only) Saskia Dheedene T. +32 2 276 76 43 (Investors only)
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