3.5 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
2024
Other employee benefit obligations | Restructuring | Claims and indemnities | Other | Total | |
---|---|---|---|---|---|
Non-current other provisions | 32 | 9 | 1 | 42 | |
Current other provisions | 11 | 6 | 4 | 21 | |
Balance at 1 January 2024 | 43 | 6 | 13 | 1 | 64 |
Additions | 21 | 1 | 17 | 38 | |
Withdrawals | (6) | (3) | (1) | (11) | |
Releases | (2) | (5) | (7) | ||
Interest | 1 | 1 | |||
Total changes | 16 | (5) | 11 | 21 | |
Non-current other provisions | 44 | 11 | 1 | 56 | |
Current other provisions | 15 | 1 | 13 | 29 | |
Balance at 31 December 2024 | 59 | 1 | 24 | 1 | 85 |
The estimated utilisation of the other provisions in 2025 is €29 million, in 2026 €18 million, in 2027 €7 million and in 2028 and thereafter €31 million.
Other employee benefit obligations
As at 31 December 2024, the other employee benefit obligations mainly related to a provision for expected disability costs for the WGA benefits, following the decision to become self-insured (in Dutch: “eigenrisicodrager”) of €38 million (2023: €22 million), jubilee benefits of €11 million (2023: €12 million), expected costs related to continued salary payments during illness of €8 million (2023: €7 million) and termination benefits for early retirement of €1 million (2023: €2 million).
Restructuring
The additions in restructuring provision of €1 million mainly related to the restructuring programmes within operations Mail in the Netherlands. The withdrawals in restructuring provisions of €3 million concerned severance payments under the cost-saving programmes. The release of €2 million mainly related to the reduction programmes for FTE in overhead, 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 exposure regarding the postal delivery quality relates to the Dutch Postal Act 2009, which among others requires a 95% next-day delivery level for regulated consumer mail, funeral announcements and medical mail. In 2019, 2020, 2021, 2022, 2023 and 2024 next-day delivery of consumer mail was below the 95% target, due to circumstances beyond our control, such as the Covid pandemic and the impact of the tight labour market. In 2024, next-day delivery of funeral announcements and medical mail was also slightly below the 95% target. The exposure includes uncertainty on the proper application of the loss of value to consumers and the assessment of severity and recidivism. For 2019, PostNL paid a fine to the ACM. This fine is under appeal at the ‘College van Beroep voor het bedrijfsleven’. For 2020, the ACM refrained from imposing a fine. For 2021, 2022 and 2023, the (re)assessment of facts and circumstances and the decision to impose a fine lies with the ACM. For 2024, PostNL is still in process of the relevant regulatory reporting.
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.