Finance Strategy
Express' financial strategy is based on three pillars:
- Secure business performance by driving revenue, margin growth and tax efficiency
- Secure asset efficiency through continued stringent investment and working capital, and continued attention to cash flow
- Maintain a strong and efficient capital structure, defined by a long-term investment grade credit rating targeted at BBB+/Baa1 in order to ensure the lowest cost of capital while being able to support Express's 2015 plans.
Express' capital structure is based on and managed along the following components:
- An investment grade credit rating targeted at BBB+/Baa1
- Availability of at least €400 million to €500 million in undrawn committed facilities
- Cash pooling systems facilitating optimised cash requirements for the Express group by enabling centralised funding and surplus cash concentration at group level, and
- A tax optimal internal and external funding focussed at optimising the cost of capital for the Express group, within long-term sustainable boundaries.
Express has set target credit ratings of BBB+ for Standard & Poor’s Ratings Services (S&P) and Baa1 for Moody’s Investors Services (Moody’s). These credit ratings result from an evaluation and analysis of many different factors. Express will monitor the development of the key credit ratios that are used by rating agents and which may vary from time to time.
Express aims to meet shareholders’ return requirements long term through growth in the value of the company, and short term through dividends and, incidentally, through tax exempt share repurchases or other returns from excess cash.
Following its dividend guidelines, it is Express' intention to pay a dividend that develops substantially in line with the development of its operational performance. Express intends in principle to pay a dividend of around 40% of normalised net income. Normalised net income is defined as “profit attributable to equity holders of the parent” adjusted for significant one-off and exceptional items.
Express aims to pay interim and final dividends annually in cash and/or in stock. Furthermore, stock may be offered as part of an optional dividend.
Express will operate a comprehensive insurance policy covering its operational risk profile as appropriate, using a mix of self insurance, reinsurance, and direct external insurance.
