FRANCOTYP-POSTALIA HOLDING AG CAN MAKE FREE USE OF SO-CALLED TELEPORTO FUNDS (RESTRICTED CASH) IN FUTURE

After careful review leading to a reassessment of Teleport funds (restricted cash) of the UK subsidiary Francotyp-Postalia Ltd., the financial strength of Francotyp-Postalia Holding AG, multichannel supplier for mail communication and accredited De-Mail provider, has been increased by additional GBP 16.7 million (as at 30 June 2014) freely available to the FP Group as cash and cash equivalents. At the exchange rate on 30 June 2014, this amounts to EUR 20.8 million. This leads directly to a substantial improvement in net debt, which totalled EUR 11.0 million as at 30 June 2014.

The reassessment involves postage advances by customers in the UK, where the FP Group receives an advance similar to a deposit from franking machine users. Current postage recrediting by customers is directly settled with the Royal Mail and customers. Previously, the balance of advances has to be recognised as “restricted cash" according to the Royal Mail requirements. After abolition of this restriction and detailed review by the Management Board, the credit balance is now treated as cash freely available to the FP Group. The following financial reports will include a corresponding correction in accordance with IAS 8. After intensive review, the Teleporto funds in Canada and Austria are still restricted, and cannot be used freely by the Company.

Consideration is being given to using the released funds for investment in the future. An alternative is to use the funds for a temporary repayment of liabilities, which would significantly reduce financial liabilities, leading to a higher equity ratio.

FP CEO and CFO Hans Szymanski, explains: "Previously, advances by customers had to be treated as restricted cash, under Royal Mail regulations. After careful review, we have reassessed the contractually agreed regulations. With due regard for commercial prudence, we can now use the cash and cash equivalents immediately for productive purposes at FP, creating additional value for all parties."