To: the General Meeting of Shareholders and the Supervisory Board of PostNL N.V.
In our opinion the accompanying financial statements give a true and fair view of the financial position of PostNL N.V. (hereafter: PostNL or the Company) as at 31 December 2022 and of its result and its cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code.
We have audited the financial statements 2022 of PostNL N.V. based in The Hague, the Netherlands. The financial statements comprise:
the consolidated and corporate primary statements of financial position as at 31 December 2022;
the following consolidated and corporate primary statements for 2022: the income statement, the statements of comprehensive income, changes in equity and cash flows; and
the notes comprising a summary of the significant accounting policies and other explanatory information.
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the ‘Our responsibilities for the audit of the financial statements’ section of our report.
We are independent of PostNL in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics).
We designed our audit procedures in the context of our audit of the financial statements as a whole and in forming our opinion thereon.
The information in respect of going concern, fraud and non-compliance with laws and regulations, climate and the key audit matters was addressed in this context, and we do not provide a separate opinion or conclusion on these matters.
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Going concern, Fraud/Noclar and Climate related risks
Key audit matters
Based on our professional judgement we determined the materiality for the consolidated financial statements as a whole at €15 million (2021: EY €15 million). The materiality for the consolidated financial statements is determined with reference to revenues (0.5%). We consider revenues to be the most appropriate earnings-based measure. This will lead to consistent and predictable materiality levels throughout the year and on a year to year basis. We consider revenues as the most appropriate benchmark because this is a relative stable earnings-based measure in comparison to operating income, which was the benchmark of EY in 2021, and profit before income taxes. We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the consolidated and corporate financial statements for qualitative reasons.
We agreed with the Supervisory Board that misstatements identified during our audit in excess of €0.75 million would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
PostNL is at the head of a group of components. The financial information of this group is included in the financial statements of PostNL.
Because we are ultimately responsible for the auditor’s report, we are also responsible for directing, supervising and performing the group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for components reporting for group audit purposes. Our group audit mainly focused on significant components within the segments Parcels and Mail in the Netherlands and PostNL Other (including finance and real-estate components). Based on their significance and/or our risk assessment we performed scopean audit of the complete reporting package or audit of specific items on the 23 group entities within those segments.
For the entities in scope, except for Spring Hong Kong, the group engagement team performed the audit procedures. This resulted in a coverage of 87% of total revenue and 91% of total assets. The remaining 13% of total revenue and 9% of total assets is represented by a significant number of components (‘remaining components’), none of which individually represent more than 2% of total revenue and 3% of total assets.
For these remaining components we performed central procedures among others analytical procedures to validate our assessment that there are no risks of material misstatement within these components.
The group audit team has set materiality levels for the components, which ranged from €1.6 million to €10 million, based on the mix of size and risk profile of the respective components.
By performing the procedures mentioned above at group components, together with additional procedures at group level, we have been able to obtain sufficient and appropriate audit evidence about the group’s financial information to provide an opinion about the financial statements.
We involved several KPMG specialists to assist the audit team, including specialists from our actuarial, valuations, tax, forensic and sustainability departments.
We performed our audit using work performed by Internal Audit of PostNL, leveraging their in-depth knowledge of the Company. We agreed in advance on the nature and the scope of the work to be performed, the reporting and documentation. We evaluated and tested the relevant work performed by Internal Audit to satisfy ourselves that the work is adequate for our purposes and established what work had to be performed by our own audit team.
For Spring Hong Kong we used KPMG auditors from Hong Kong (component auditors). We sent detailed instructions to the component auditor, covering the significant areas that should be addressed and set out the information required to be reported to us. We interacted regularly with the component team where appropriate during various stages of the audit, reviewed key working papers remotely and were responsible for the scope and direction of the audit process.
Initial audit engagements involve considerations in addition to recurring audits. During initial audit engagements we have to gain sufficient knowledge about the Company, its business, control environment and application of accounting principles in order to perform our initial audit risk assessment and planning of audit activities. A detailed transition plan, including independence clearance, was prepared prior to the start of the audit. We gained an understanding of PostNL and its business including its control environment and accounting policies as we were involved starting mid 2021. We have been in close contact with the predecessor auditor EY and have performed reviews on their audit files. During the year we had regular meetings with management and assessed key accounting matters at an early stage.
The Board of Management has performed its going concern assessment and has not identified any going concern risks. To assess the Board of Management’s assessment, we have performed, among other things, the following procedures:
we considered whether the Board of Management’s assessment of the going concern risks includes all relevant information of which we are aware as a result of our audit;
we analysed the Company’s financial position as at year-end and compared it to the previous financial year in terms of indicators that could identify going concern risks and considered whether the deteriorated macroeconomic environment indicate a going concern risk.
The outcome of our risk assessment procedures did not give reason to perform additional audit procedures on management’s going concern assessment.
In chapter 11 ‘Risk and opportunity management’ and 12 ‘Regulatory compliance management’ of the Annual Report, the Board of Management describes its fraud risk assessment and its regulatory compliance management and chapter 13 'Report of the Supervisory Board' reflects on this.
As part of our audit, we have gained insights into the Company and its business environment, and assessed the design and implementation of the Company’s risk management in relation to fraud and non-compliance. Our procedures included, among other things, assessing the Company’s code of conduct, whistleblowing procedures, incidents register and its procedures to investigate indications of possible fraud and non-compliance. Furthermore, we performed relevant inquiries with management, those charged with governance and other relevant functions, such as Internal Audit, Legal Counsel, Integrity, Security and Compliance. As part of our audit procedures, we:
read minutes and inspection of internal audit and the integrity committee reports;
evaluated investigation reports on indications of possible fraud and non-compliance;
evaluated correspondence with regulatory authorities such as the ACM as well as legal confirmation letters.
In addition, we performed procedures to obtain an understanding of the legal and regulatory frameworks that are applicable to the Company and identified the following areas as those most likely to have a material effect on the financial statements:
National and International Postal legislation including Postal Degree 2009;
the Dutch Postal market is regulated via the ACM, including oversight on competition legislation, the Ministery of Economic Affairs and the USO regulation;
social and labor legislation reflecting PostNL significant work force and outsourced work.
We, together with our forensic specialists, evaluated the fraud and non-compliance risk factors to consider whether those factors indicate a risk of material misstatement in the financial statements.
With respect to delivery partners in Belgium we identified a risk of non-compliance to relevant regulation in Belgium, which risk we consider material to our audit. We refer to the key audit matter ‘Compliance delivery partners in Belgium’.
Further, apart from the fraud risk on revenue recognition terminal dues, we rebutted the presumed fraud risk on revenue recognition on other recorded revenues as the individual transactions are relatively low in value, routine and highly automated and non-complex.
Based on the above and on the auditing standards, we identified the following fraud risks that are relevant to our audit, including the relevant presumed risks laid down in the auditing standards, and responded as follows:Download spreadsheet
Management override of controls (a presumed fraud risk)
Revenue recognition terminal dues
We incorporated elements of unpredictability in our audit. Our initial audit by itself includes elements of unpredictability, further as an element of unpredictability we performed unannounced site visits to a number of the sorting depots.
We communicated our risk assessment, audit responses and results to the Board of Management and the Supervisory Board. We re-evaluated our risk assessment based on the lower than expected performance for 2022.
Our audit procedures did not reveal other indications and/or reasonable suspicion of fraud and non-compliance that are considered material for our audit.
The Company has set out its targets relating to climate change in chapter 8 ‘Environmental value’ of the Annual Report. PostNL has the ambition to become net-zero by 2050 and to significantly reduce GHG emissions from PostNL’s own operations as well as outsourced activities towards 2030. The target is to deliver all parcels and mail emissions-free in the last mile across the Benelux by 2030.
Management has assessed, against the background of the Company’s business and operations, in detail how climate-related risks and opportunities and the Company’s own targets could have a significant impact on its business or could impose the need to adapt its strategy and operations. Management has considered the impact of both transition and physical risks on the financial statements in accordance with the applicable financial reporting framework, more specifically in relation to valuation of non-current assets, cost increase and demand for the Company's services as described in chapter 11 'Risk and opportunity management' of the Annual Report.
Management prepared the financial statements, including considering whether the implications from climate-related risks and targets have been appropriately accounted for and disclosed. As part of our audit we performed a risk assessment of the impact of climate-related risks and the targets set by the Company in respect of climate change on the financial statements and our audit approach. In doing this we performed the following:
understanding management's processes: we made inquiries with management on the climate risk assessments integrated in the structural risk management approach of the Company. We assessed management’s strategic plan and 2023 business plan which both incorporate targets and strategic actions relating to climate change to understand management's assessment against the background of the Company’s business and operations of the potential impact of climate-related risk and opportunities on the Company’s annual report and financial statements and the Company's preparedness for this.
evaluation of potential climate related fraud risk factors such as the long-term incentive for the Board of Management and have not identified fraud risk factors relating to climate-related risks for the current year’s financial statements.
use of KPMG climate risk experts to assist in understanding how climate-related risks and opportunities may affect the entity and its accounting in the current year’s financial statements.
as part of our risk assessment procedures we also challenged management on the valuation of non-current assets as at 31 December 2022.
Based on the procedures performed above we found that climate-related risks have no material impact on the financial statements, including on the valuation of non-current assets, under the requirements of EU-IFRS and no material impact on our key audit matters.
Furthermore we have read the ‘Other information’ with respect to climate-related risks as included in the Annual Report and considered the material consistency with the financial statements, based on our knowledge obtained throughout the audit.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements. We have communicated the key audit matters to the Supervisory Board. The key audit matters are not a comprehensive reflection of all matters discussed.
Compared to last year the key audit matter with respect to ‘Compliance delivery partners in Belgium’ and ‘Change from defined benefit to defined contribution pension accounting’ are new.Download spreadsheet
Revenue related accruals (terminal dues)
As disclosed in note 3.1.4 to the financial statements, PostNL has outstanding accrued liability positions with international postal operators for services provided for or received totalling €181 million (2021: €204 million). Terminal dues is significant to our audit due to the amounts and judgement involved. This position involves a certain level of management judgement in calculating positions, where negotiations with the counterparties on prices and volume are not yet finalized as per balance sheet date. This results in assumptions being used by management in determination of the accrued terminal dues which can have an impact on operating revenues. The actual settled amounts may differ from management’s estimate as a result of negotiations. Further reference is made to the accounting policy around revenue related accruals in note 1.4. This both relates to prices and quantities, which are considered the main significant assumptions of the estimate. Considering this process is sensitive for management override of controls, this is considered a risk of fraud.
We consider that management’s assumptions related to terminal dues positions are within the reasonable range. Furthermore we assessed that the disclosures are appropriate.
Compliance delivery partners in Belgium
As disclosed in note 3.10 to the financial statements, in 2021 the Belgian labour inspectorate in Belgium filed a case against PostNL Belgium regarding alleged breaches with applicable social laws and regulations. Subsequently in 2022 PostNL became subject to a criminal investigation by the Belgian judicial authorities into alleged breaches of labour law in Belgium by the delivery partners of PostNL.
Our audit approach, which includes involvement of forensic specialists, included amongst others the following procedures. We have:
We consider the matter adequately accounted for and disclosed in the notes to the financial statements.
Change from defined benefit to defined contribution pension accounting
As disclosed in note 3.5 to the financial statements at year-end 2022, the main pension plan has been amended to a collective defined contribution pension plan resulting in a loss (net of taxation) of €1,007 million in the income statement and a gain of €1,020 million in other comprehensive income. The pension plan settlement was significant to our audit due to the financial impact, the non-routine nature and the complexity of pension accounting.
Our audit approach included amongst others the following procedures in which we involved our actuarial specialists. We have:
We consider that the pension amendment is adequately accounted for and properly disclosed in the financial statements.
Valuation of investments in subsidiaries (corporate statements)
As at 31 December 2022 the value of the investments in subsidiaries, as included in the corporate financial statements, amounted to €2,061 million (2021: €3,526 million). At each reporting date, the Company reviews whether there is an indication that its investments in subsidiaries are impaired or whether there are indicators that a previously recognized impairment may no longer exist or may have decreased. The model used to calculate the recoverable amount is complex and subject to significant management judgement and estimation.
Further reference is made to note 6.4.1 in the corporate financial statements in which the accounting policies and assumptions and related changes and sensitivities are disclosed.
Our audit approach included amongst others the following procedures in which we involved our valuation specialists. We have:
We consider management’s assumptions to be within the reasonable range and we assessed that the disclosures for investments in subsidiaries are appropriate.
In addition to the financial statements and our auditor’s report thereon, the Annual Report contains other information. Based on the following procedures performed, we conclude that the other information:
is consistent with the financial statements and does not contain material misstatements; and
contains the information as required by Part 9 of Book 2 of the Dutch Civil Code for the management report and other information.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements. By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is less than the scope of those performed in our audit of the financial statements. The Board of Management is responsible for the preparation of the other information, including the information as required by Part 9 of Book 2 of the Dutch Civil Code.
We were engaged by the annual general meeting of shareholders as statutory auditor of PostNL on 19 April 2021, as of the audit for the year 2022.
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific requirements regarding statutory audits of public-interest entities.
PostNL has prepared its Annual Report in ESEF. The requirements for this are set out in the Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards on the specification of a single electronic reporting format (hereinafter: the RTS on ESEF).
In our opinion the Annual Report prepared in XHTML format, including the (partly) marked-up consolidated financial statements as included in the reporting package by PostNL, complies in all material respects with the RTS on ESEF.
Management of the Company is responsible for preparing the annual report including the financial statements in accordance with the RTS on ESEF, whereby management of PostNL combines the various components into one single reporting package.
Our responsibility is to obtain reasonable assurance for our opinion whether the Annual Report in this reporting package complies with the RTS on ESEF. We performed our examination in accordance with Dutch law, including Dutch Standard 3950N ’Assurance-opdrachten inzake het voldoen aan de criteria voor het opstellen van een digitaal verantwoordingsdocument’ (assurance engagements relating to compliance with criteria for digital reporting). Our examination included among others:
obtaining an understanding of the entity's financial reporting process, including the preparation of the reporting package;
Identifying and assessing the risks that the Annual Report does not comply in all material respects with the RTS on ESEF and designing and performing further assurance procedures responsive to those risks to provide a basis for our opinion, including:
obtaining the reporting package and performing validations to determine whether the reporting package containing the Inline XBRL instance document and the XBRL extension taxonomy files have been prepared in accordance with the technical specifications as included in the RTS on ESEF;
examining the information related to the consolidated financial statements in the reporting package to determine whether all required mark-ups have been applied and whether these are in accordance with the RTS on ESEF.
The Board of Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code.
Furthermore, the Board of Management is responsible for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. In that respect the Board of Management under supervision of the Supervisory Board, is responsible for the prevention and detection of fraud and non-compliance with laws and regulations, including determining measures to resolve the consequences of it and to prevent recurrence.
As part of the preparation of the financial statements, the Board of Management is responsible for assessing PostNL’s ability to continue as a going concern. Based on the financial reporting frameworks mentioned, The Board of Management should prepare the financial statements using the going concern basis of accounting unless the Board of Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of Management should disclose events and circumstances that may cast significant doubt on the Company’s ability to continue as a going concern in the financial statements.
The Supervisory Board is responsible for overseeing the Company’s financial reporting process.
Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.
We have exercised professional judgement and have maintained professional scepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included among others:
identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than the risk resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control;
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Management;
concluding on the appropriateness of the Board of Management’s use of the going concern basis of accounting, and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a Company to cease to continue as a going concern;
evaluating the overall presentation, structure and content of the financial statements, including the disclosures; and
evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We are solely responsible for the opinion and therefore responsible to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the financial statements. In this respect we are also responsible for directing, supervising and performing the group audit.
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant findings in internal control that we identify during our audit. In this respect we also submit an additional report to the Audit Committee of the Supervisory Board in accordance with Article 11 of the EU Regulation on specific requirements regarding statutory audits of public-interest entities. The information included in this additional report is consistent with our audit opinion in this auditor’s report.
We provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Supervisory Board, we determine the key audit matters: those matters that were of most significance in the audit of the financial statements. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the public interest.
The Hague, 27 February 2023
KPMG Accountants N.V.
R.R.J. Smeets RA