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New world, new ways:

succeeding in a rapidly evolving

postal landscape

PostNL’s experience Herna Verhagen

Vienna, October 1, 2013

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Changed postal landscapeReduce costs and pursue new opportunities

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Strong volume decline Dutch postal market

- Cumulative� Annual

PostNL volume decline (%)

-10

-8

-6

-4

-2

000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

50

60

70

80

90

100

Average volume decline

outlook 2013 - 2015: ~ 8-10%

-4% to 0%-8% to -4%over -8%

Volume development 2011-2012selection European PPO’s (%)

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Strong competition

Diversified shareholders

Volume development competitor in NL (mln)

Strong differences in pension arrangements, VAT exemptions, business portfolio, etc.

+

&

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How to face the challenge

Reduce costs

Vision

Expand

Increase prices

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Explore growth opportunities

Growth opportunities

in mail, parcel & international business

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Additional advantagesAdditional advantagesAdditional advantagesAdditional advantages

Work togetherWork togetherWork togetherWork together

- Support physical mail with online (e.g. apps)

- Contributes to the innovative image of PostNL- Appeals to younger users of Mail

- Intensive cross functional cooperation - Other Posts have introduced similar concepts

What is itWhat is itWhat is itWhat is it - Online generated code that indicates payment for letter mail

PostNL an Innovative company Development of digital franking: stamp code

Digital franking helps PostNL to remain relevant

VisionVisionVisionVision

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PostNL an Innovative company Publication of leaflet: Folders.nl

Folders.nl helps physical mail to remain relevant

Additional advantagesAdditional advantagesAdditional advantagesAdditional advantages

Work togetherWork togetherWork togetherWork together

What is itWhat is itWhat is itWhat is it

VisionVisionVisionVision - Multichannel approach enhances the relevance of physical mail

- Helps to increase the reach of the leaflet as direct marketing medium

- Via app increases online accessibility of content

- Intensive cross functional cooperation

- Online publication of leaflets (unaddressed direct mail)

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PostNL an Innovative company mijnpakket.nl

Vision and industry leadership have resulted in a renewed focus on the real customer: the recipients of Parcels

Additional advantagesAdditional advantagesAdditional advantagesAdditional advantages

Work togetherWork togetherWork togetherWork together

What is itWhat is itWhat is itWhat is it

VisionVisionVisionVision - Reduction cost price one of main priorities of large web shops

- Recipients preferences increasingly drive delivery process

- Increases loyalty of recipients and delivery efficiency

- Created through commercial and operational cooperation

- Online application that allows consumers to set delivery preferences or retrieve delivery information

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PostNL an Innovative company Development .post strengthens postal business

.post is a platform for postal digital services and cross border e-commerce

- .post transfers typical postal assets to the digital world (trust, interconnectivity and visibility)

- Poste Italiane and PostNL are developing a cross border e-commerce platform on .post

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A few other examples in parcels

Extra@Home Mikropakket

trans-o-flex IPC Interconnect Programme

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Mail in NLPrice increases

Price increaseInflation

Price increaseInflation

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Long term planning of cost reductions and persistence enable tough changes

<2000 2000 - 2005 2005 - 2010 2010 - 2015

Postal officesClose postal offices, simple products

Close traditional postal offices

Stand alone shop in shops

Parcel focused pick up points

Structure ~180 units � ~30 regions � 6 areas � 5 areas � Full centralisation

Sorting &

delivery

Centralised auto-mated walk sorting

Decentral automated sequencing

Peak / off-peakEliminate Monday delivery

Parcels Separate sorting Seperate delivery Registered mail New infrastructure

Staff

Civil servant �100% private

Reorganisation by natural attrition

Design Mobility Programme

Fulltime � parttime

Savings ~€ 250m ~€ 235m ~€ 330m ~€ 390m

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Towards 20152012

260260260260 125125125125

2013 2014

210210210210 160160160160

2012 2015

Number of locations

Logistical redesignLess disruptive and smaller scale centralisation

9999

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Large cost reductions are a marathon, not a sprint

Lessons from cost reduction successes

Success factors

• Long term planning and persistent execution

• Employees - focus on voluntary outplacement

• Process - simple primary mail process as basis for large cost reductions

• Retail - more density at lower costs with shop in shop concept

• Management - strong change management organisation

Lessons learnt

• Always carefully pilot

• Invest in relationships with unions, workers' councils, politicians and ministries

• Carefully balance experienced and non experienced people

• Provide steering tools and data

• Do not forget the behavioural component in process redesign

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Vision for PostNL

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The end