2.4 Net profit and earnings per share
2.4.1 Net financial expense/(income)
Accounting policies
Interest income and expense are recognised on a time-proportionate basis using the effective interest method. All borrowing costs are recognised in profit or loss using the effective interest method, except to the extent that they can be capitalised as cost of a qualifying asset.
PostNL Net financial expense/(income) in € million
2022, 2023
| Year ended at 31 December | 2022 | 2023 |
|---|---|---|
| Interest expenses on long-term borrowings | 7 | 9 |
| Interest on net defined benefit pension liabilities | 2 | 0 |
| Interest on leases | 9 | 9 |
| Other | 5 | 4 |
| Interest and similar expense | 22 | 22 |
| Other interest and similar income | (3) | (20) |
| Net financial expense/(income) | 19 | 2 |
The increase of other interest and similar income of €17 million mainly relates to higher interest on cash and cash equivalents.
2.4.2 Income taxes
Accounting policies
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised directly in other comprehensive income. The amount of income tax included in the income statement is determined in accordance with tax rules and legislation, based on which income taxes are payable or recoverable.
PostNL Income taxes in € million
2022, 2023
| Year ended at 31 December | 2022 | Change in pension accounting classification | 2022 excl. change in pension accounting classification | 2023 |
|---|---|---|---|---|
| Current tax expense | 36 | 36 | 20 | |
| Changes in deferred taxes | (366) | (350) | (16) | 4 |
| Total income tax expense | (330) | (350) | 21 | 24 |
| Income taxes paid | (1) | (1) | 35 |
The difference between the total income taxes in the income statement and the current tax expense is due to temporary differences. These differences are recognised as deferred tax assets or deferred tax liabilities, except for the tax effect on the change in pension accounting classification. See note 3.8 Deferred income tax assets and liabilities to the Consolidated financial statements for more information.
In 2023, the income taxes paid relates mainly to income taxes paid in the Netherlands and Belgium. The 2023 difference between the total income tax expense (€24 million) and the income taxes paid (€35 million) can mainly be explained by the 2023 movements of the net income tax payable position (€15 million) and partly offset by changes in deferred taxes (€4 million).
PostNL Effective income tax rate in %
2022, 2023
| Year ended at 31 December | 2022 | Change in pension accounting classification | 2022 excl. change in pension accounting classification | 2023 |
|---|---|---|---|---|
| Dutch statutory income tax rate | 25.8 | 25.8 | 25.8 | |
| Adjustment regarding statutory income tax rates other countries | 0.0 | (0.3) | 0.3 | (0.2) |
| Weighted average statutory tax rate | 25.8 | (0.3) | 26.1 | 25.6 |
| Tax effects of: | ||||
| Non and partly deductible costs | (0.2) | (5.2) | 5.0 | 3.9 |
| Exempt income | 0.0 | (0.6) | 0.6 | 0.3 |
| Other | (0.5) | (13.3) | 12.8 | 0.8 |
| Effective income tax rate | 25.1 | (19.4) | 44.5 | 30.6 |
The effective income tax rate is 30.6%. This effective income tax rate, being higher compared to the Dutch statutory tax rate (25.8%), can mainly be explained as follows:
The line ‘Non and partly deductible costs’ mainly relates to the so-called mixed expenses (e.g. meals, entertainment), claim-related costs and the non-deductible treatment of our share-based payments. The line ‘Exempt income’ relates to the non-taxable treatment of our (negative) results from (former) participations. The line ‘Other’ consists in 2023 mainly of the impact of the derecognition of previously recognised tax losses in various countries (2.5%), updates of our prior year tax positions in the Netherlands (-0.4%) and several smaller effects (-1.3%).
Global minimum top-up tax
On 19 December 2023, the government of the Netherlands enacted the Pillar Two income taxes legislation effective from 1 January 2024. PostNL NV is the ultimate parent company (UPE in Pillar Two terms) and has been incorporated in the Netherlands. Under the new Pillar Two legislation, the UPE will be responsible for the payment of top-up tax on profits of group entities that are taxed at an effective tax rate of less than 15% according to the Pillar Two legislation. For 2023 there is no Pillar Two impact for the PostNL group, since the enacted legislation in the Netherlands is only effective as from 2024. The main jurisdiction in which material Pillar Two exposures may arise as from 2024, is the Netherlands based on an analysis of the 2023 figures in terms of results.
If the Pillar Two legislation had already applied in 2023, there would have been no impact for the PostNL group based on an analysis of the Country-by-Country Reporting (CbCR) data of 2022 and 2023. Based on this analysis, the PostNL group would have been able to make use of the transitional CbCR-safe harbour tests of the Pillar Two legislation. This information is based on the profits and tax expense determined as part of the preparation of the group’s consolidated financial statements and CbCR reports of 2022 of 2023. For 2024 the PostNL group will continue to monitor the impact of the Pillar Two legislation.
2.4.3 Profit/(loss) from discontinued operations
Accounting policies
Discontinued operations
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:
• Represents a separate major line of business or geographical area of operations
• Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or
• Is a subsidiary acquired exclusively with a view to resale.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the income statement.
The following table presents the financial performance for the discontinued operations in the years 2022 and 2023.
PostNL discontinued operations Financial performance in € million
2022, 2023
| Year ended at 31 December | 2022 | 2023 |
|---|---|---|
| Revenues | ||
| Expenses | (15) | 2 |
| Operating income | (15) | 2 |
| Income taxes | 3 | (1) |
| Profit/(loss) after taxes | (11) | 1 |
| Profit/(loss) from discontinued operations | (11) | 1 |
In 2022, the net result of €(11) million mainly reflected the financial impact related to a settlement reached between PostNL and the Italian tax authorities relating to a VAT dispute of a divested entity previously classified as discontinued operations. The financial impact includes a payment due to the Italian tax authorities of €30 million partially offset by management’s best estimate of the collectability of the related imputed VAT receivables from former customers of €16 million and a positive income tax effect of €3 million. In 2023, the amount due to the Italian tax authorities of €30 million has been fully paid. At 31 December 2023, €17 million has been received from former customers, with an outstanding receivable position of €1 million reflecting management's reassessed best estimate. The VAT receivables from former customers are included in 'Prepayments and accrued income' in the consolidated statement of financial position. Cash flow from discontinued operations of €(16) million (2022: €(1) million) is considered as operational cashflow.
2.4.4 Earnings per ordinary share: 11.3 eurocents (2022: (201.6) eurocents)
Accounting policies
PostNL presents (diluted) earnings per share (EPS) for its ordinary shares. EPS is calculated by dividing the profit or loss attributable to the equity holders of the parent by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is calculated by dividing the profit or loss attributable to the equity holders of the parent by the weighted average number of ordinary shares outstanding, including the effects for dilution of ordinary shares following the obligations to employees under existing share plans.
The following table summarises the outstanding shares for PostNL’s calculation related to earnings per share.
PostNL (Average) number of outstanding ordinary shares in shares
2022, 2023
| Year averages and numbers at 31 December | 2022 | 2023 |
|---|---|---|
| Number of issued and outstanding ordinary shares | 487,530,628 | 494,207,248 |
| Shares held by the company to cover share plans | 0 | 0 |
| Average number of ordinary shares per year | 492,519,772 | 490,686,943 |
| Diluted number of ordinary shares per year | 1,122,612 | 1,097,685 |
| Average number of ordinary shares per year on a fully diluted basis | 493,642,384 | 491,784,628 |
At 31 December 2023, PostNL had potential obligations under share plans to deliver 1,097,685 shares (2022: 1,122,612 shares), calculated based on the share price of €1.413 as at 31 December 2023 (31 December 2022: €1.7005).