3.6 Other provisions
Accounting policies
Provisions are recognised when there is a present obligation as a result of a past event, making it probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation on the balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The gross-up of the provision following the discounting of the provision is recorded in the income statement as interest expense.
PostNL recognises termination benefits when the company has committed to terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or provides termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the balance sheet date are discounted to their present value.
Provisions for onerous contracts are recorded when the unavoidable costs of meeting the obligation under the contract exceed the economic benefits expected to arise from that contract, taking into account impairment of fixed assets first. The provision includes both incremental costs and an allocation of other direct costs.
A liability arising as a result of written claim or litigation against PostNL group companies is recorded as a provision. An asset arising as a result of a written claim against a third party (PostNL is claimant) is recorded in Miscellaneous Accounts Receivables.
The following table presents the changes in the short-term and long-term provisions.
PostNL Other long-term and short-term provisions in € million
2023
| Other employee benefit obligations | Restructuring | Claims and indemnities | Other | Total | |
|---|---|---|---|---|---|
| Non-current other provisions | 26 | 7 | 2 | 35 | |
| Current other provisions | 12 | 1 | 1 | 15 | |
| Balance at 1 January 2023 | 38 | 1 | 9 | 2 | 50 |
| Additions | 12 | 6 | 8 | 27 | |
| Withdrawals | (8) | (1) | (1) | (10) | |
| Releases | (1) | (2) | (4) | ||
| Interest | 1 | 1 | |||
| Total changes | 5 | 4 | 5 | 14 | |
| Non-current other provisions | 32 | 9 | 1 | 42 | |
| Current other provisions | 11 | 6 | 4 | 21 | |
| Balance at 31 December 2023 | 43 | 6 | 13 | 1 | 64 |
The estimated utilisation of the other provisions in 2024 is €21 million, in 2025 €13 million, in 2026 €5 million and in 2027 and thereafter €24 million.
Other employee benefit obligations
As at 31 December 2023, the other employee benefit obligations mainly related to a provision for jubilee benefits of €12 million (2022: €11 million), expected costs related to continued salary payments during illness of €7 million (2022: €7 million), expected disability costs for the WGA benefits, following the decision to become self-insured (in Dutch: “eigenrisicodrager”), of €22 million (2022: €13 million) and termination benefits for early retirement of €2 million (2022: €6 million).
Restructuring
The additions in restructuring provision of €6 million mainly related to the restructuring programmes within operations Mail in the Netherlands and reduction programmes for FTEs in overhead. The withdrawals in restructuring provisions of €1 million concerned severance payments under the cost-saving programmes. The release of €1 million mainly related to the restructuring programme within operations Mail in the Netherlands, resulting from reducing redundancies and periodical reassessments of the expected cash costs.
Claims and indemnities
The provision for claims and indemnities includes provisions for claims from third parties with respect to PostNL's ordinary business activities, exposure related to not being able to meet the prescribed quality of postal delivery, as well as indemnities and disputes related to business disposals. The assessment of related exposure contains a high degree of uncertainty and management estimation. The company has made provisions for probable liabilities to the extent a reliable estimate of the future cash outflows can be made. More detailed information relating to these provisions is not provided, as such information could prejudice the company's position with respect to these claims and indemnities.