3.1 Working capital
Accounting policies
Trade receivables are recorded where PostNL has the unconditional rights to consideration from the customers. Trade receivables that do not contain a significant financing component or for which PostNL has applied the practical expedient are measured at the transaction price determined under IFRS 15.
PostNL recognises an allowance for expected credit losses (ECLs). ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that PostNL expects to receive, discounted at an approximation of the original effective interest rate. For trade receivables, PostNL applies a simplified approach in calculating ECLs. Therefore, PostNL does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. PostNL has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. The amount of the ECLs is recognised in the income statement. Any reversal of the ECLs is included in the income statement on the same line as where the original expense was recorded.
The risk of uncollectability of accounts receivable is primarily estimated based on prior experience with, and the past due status of, doubtful debtors adjusted for forward-looking factors. Large accounts are assessed individually based on factors that include ability to pay, bankruptcy and payment history. In addition, debtors in certain countries are subject to a higher collectability risk, which is taken into account when assessing the overall risk of uncollectability.
Prepayments and accrued income
Prepayments and accrued income mainly relates to prepaid expenses, accrued income for receivables where PostNL has not the unconditional rights to the consideration, receivables for terminal dues and the positive fair value of the outstanding foreign exchange hedges and interest rate swaps.
3.1.1 Accounts receivable
PostNL Accounts receivable in € million
2022, 2023
| At 31 December | 2022 | 2023 |
|---|---|---|
| Trade accounts receivable - total | 377 | 326 |
| Allowance for expected credit losses | (7) | (7) |
| Trade accounts receivable | 370 | 320 |
| VAT receivable | 4 | 5 |
| Other accounts receivable | 8 | 8 |
| Accounts receivable | 12 | 13 |
| Total accounts receivable | 382 | 333 |
Trade accounts receivable are non-interest bearing and are generally on terms of 7 to 30 days.
Trade accounts receivable include an amount of €134 million (2022: €144 million) that was unbilled at 31 December 2023.
The main part of the allowance for expected credit losses related to a collective loss component established for groups of similar trade accounts receivable balances. This collective loss component is largely based on the ageing of the trade accounts receivable and is reviewed periodically. The fair value of the total (trade) accounts receivable approximated its carrying value.
The decrease of trade accounts receivable - total from €377 million on 31 December 2022 to €326 million on 31 December 2023 is a result of strict working capital management .The trade accounts receivable past due increased from €122 million on 31 December 2022 to €133 million on 31 December 2023 (see table expected credit losses on the next page).
The top 10 trade accounts receivable accounted for 19% of the outstanding balance as at 31 December 2023 (2022: 21%). The concentration of the trade accounts receivable portfolio over the different regions can be summarised as follows:
- The Netherlands €266 million (2022: €305 million)
- Rest of Europe €42 million (2022: €45 million)
- The rest of the world €12 million (2022: €20 million).
The movements in the allowance for expected credit losses of trade accounts receivable were as follows:
PostNL Statement of changes in the allowance for expected credit losses of trade accounts receivable in € million
2022, 2023
| 2022 | 2023 | |
|---|---|---|
| Balance at 1 January | 7 | 7 |
| Provided for during financial year | 3 | 3 |
| Receivables written off during year as uncollectable | (3) | (3) |
| Balance at 31 December | 7 | 7 |
Set out below is the information about the credit risk exposure on the trade accounts receivable using a provision matrix.
PostNL Expected credit losses in € million
2022, 2023
| At 31 December | Months due | |||||
|---|---|---|---|---|---|---|
| Up to 1 month | 1-2 months | 2-3 months | 3-4 months | over 4 months | Total | |
| Expected credit loss rate | 1% | 3% | 7% | 23% | 5% | |
| Gross amount of trade accounts receivable | 276 | 19 | 10 | 4 | 67 | 377 |
| Trade accounts receivable past due | 26 | 16 | 9 | 4 | 66 | 122 |
| Expected credit loss 2022 | 2 | 1 | 1 | 1 | 3 | 7 |
| Expected credit loss rate | 0% | 1% | 7% | 5% | 7% | |
| Gross amount of trade accounts receivable | 222 | 17 | 9 | 4 | 73 | 326 |
| Trade accounts receivable past due | 36 | 14 | 8 | 2 | 73 | 133 |
| Expected credit loss 2023 | 1 | 0 | 1 | 0 | 5 | 7 |
3.1.2 Other current liabilities
PostNL Other current liabilities in € million
2022, 2023
| At 31 December | 2022 | 2023 |
|---|---|---|
| VAT payable | 67 | 42 |
| Social security contributions payable | 30 | 24 |
| Payments from customers received in advance | 48 | 48 |
| Pension payable | 16 | |
| Other | 7 | 12 |
| Total | 168 | 126 |
The VAT payable decreased by €25 million following the payment of the VAT Payable of €30 million outstanding in 2022 related to a settlement reached between PostNL and the Italian tax authorities. Pension payable in 2022 contained the last instalment of €16 million related to the unconditional funding obligation with the pension fund.
3.1.3 Contract liabilities
PostNL Contract liabilities in € million
2022, 2023
| At 31 December | 2022 | 2023 |
|---|---|---|
| Deferred revenue from unused stamps | 47 | 39 |
| Deferred revenue from franking machines | 7 | 6 |
| Rental of mailboxes | 8 | 8 |
| Other amounts received in advanced from customers | 8 | 5 |
| Total | 70 | 57 |
We expect to perform almost all services related to the outstanding contract liabilities at 31 December 2023 within one year. However, note that within one year we expect outstanding contract liabilities more or less in line with the amounts currently reported.
3.1.4 Accrued current liabilities
PostNL Accrued current liabilities in € million
2022, 2023
| At 31 December | 2022 | 2023 |
|---|---|---|
| To be paid to third parties | 139 | 136 |
| To be paid to personnel | 21 | 31 |
| Vacation days/vacation payments | 98 | 99 |
| Terminal dues | 181 | 154 |
| Interest payable | 1 | 2 |
| Other accrued current liabilities | 0 | 0 |
| Total | 441 | 421 |
Main items within the expenses to be paid to third parties included payables to business partners of €18 million (2022: €20 million) and claims of €5 million (2022: €4 million), the remainder are various other expenses to be paid.
Expenses to be paid to personnel included accrued wages and salaries of €20 million (2022: €17 million) and accruals for employee profit-sharing of €8 million (2022: €1 million).
The accrual for terminal dues relates to payables to foreign postal operators relating to the years 2023 and before, partly consisting of positions in SDR currency. The net payable position, including the receivable for terminal dues of €40 million (2022: €28 million) included in prepayments and accrued income, amounted to €114 million (2022: €153 million). The change reflects both the regular course of business as well as settlements of outstanding positions. The positions where there is no price multi- or bilateral agreement on price are based on our best estimate of the price for which we expect to settle.