5.6 DETERMINATION OF FAIR VALUE AND FINANCIAL RISKS
Financial risks
Area of risk
Description of risk
Risk management measures
Exposure
Credit risk
Untimely settlement or failure to settle due receivables.
Continuous and up-to-date recovery activities, in-depth work in the area of compensation, conclusion of settlement agreements and best possible receivables turnover ratio. Preventive measures in the form of verifying credit ratings, the active monitoring of the balance of receivables from customers, the regular implementation of recovery procedures, and the amendment of the rules on receivables.
Low
Currency risk
Effect of changes to exchange rates on operating results.
Due to the low amount of turnover in foreign currencies. Pošta Slovenije did not implement measures, such as currency risk hedging, the purchase of foreign currencies when issuing orders, or the monitoring of indicators on international markets. Pošta Slovenije does not use hedges; instead it concludes agreements in stable currencies.
Low
Interest-rate risk
Failure to achieve planned interest rates according to the plan due to increased borrowing and changes on the market, and lower actual deposit rates.
Distribution of loans and deposits between banks and active cooperation with the latter and agent in the event of a failure to meet financial commitments.
Low
Solvency risk
Mismatched liquidity, i.e. maturity mismatches between assets and liabilities, could result in insolvency.
Raising of loans; control over implementation of investments; regular recovery of receivables from domestic and foreign customers; use of deposits. All of the Pošta Slovenije’s activities focus on continuous control, the planning of liquidity and regulated relations with all stakeholders, ensuring short-term and long-term solvency, the continuous monitoring of liquidity, cash-flow forecasting, the appropriate level and maturity of long-term loans, and regular contact with banks.
Low
Credit risk
Special attention is given to credit risk owing to the socioeconomic environment and the effect of COVID-19. The Company actively monitored trade receivables again in 2020. By applying a standard policy regarding payment terms and maximum exposure limits to individual customers, we can generally prevent significant negative deviations with regard to the regular payment of receivables. Pošta Slovenije is in a more favourable position compared to other sectors in terms of the non-settlement of financial obligations by a specific customer owing to the nature of products, the activities of major customers, the Company’s highly dispersed customer base and the active collection of receivables.
The carrying amount of financial assets was exposed to credit risk, and was as follows as at the reporting date
In EUR
Note
31. 12. 2020
31. 12. 2019
Loans granted and deposits (excluding employees)
7. 13
7,723,209
423,048
Adjustments to the value of loans granted and deposits
7. 13
-1,098
-1,607
Trade receivables
8. 14
41,079,767
40,149,921
Adjustments to the value of trade receivables
8. 14
-2,015,812
-2,402,011
Other operating receivables (excluding advances, employees and the government sector)
8. 14
1,113,797
1,263,366
Adjustments to value of other operating receivables
8. 14
-523,441
-548,832
Cash and cash equivalents
16
61,084,770
38,879,623
Accrued revenues
11
10,838,509
7,460,479
Adjustments to the value of accrued revenues
11
-53,109
-64,400
Total
119,246,592
85,159,587
Pošta Slovenije’s receivables are generally not collateralised, except those from customers with poor credit ratings. Collateralised receivables totalled EUR 5,717 in 2020.
A breakdown of receivables by maturity is presented in the table below.
Current trade receivables by maturity
In EUR
31. 12. 2020
31. 12. 2019
Non-past-due receivables
36,001,874
33,259,770
Past-due receivables
5,077,893
6,890,151
- up to 30 days
1,046,108
2,460,776
- from 31 to 60 days
144,908
1,075,240
- from 61 to 90 days
422,278
189,483
- from 91 to 180 days
1,066,369
901,347
- from 181 to 365 days
727,161
488,027
- more than 365 days
1,671,069
1,775,278
Total
41,079,767
40,149,921
Current receivables for interest and other receivables by maturity
In EUR
31. 12. 2020
31. 12. 2019
Non-past-due receivables
197,425
242,769
Past-due receivables
916,372
1,020,597
- up to 30 days
107,592
100,695
- from 31 to 60 days
3,400
1,280
- from 61 to 90 days
587
3,052
- from 91 to 180 days
9,075
43,438
- from 181 to 365 days
48,498
50,432
- more than 365 days
747,220
821,700
Total
1,113,797
1,263,366
The total value of current trade receivables was up in 2020, with the balance of undue receivables increasing and the balance of overdue receivables decreasing. The sharpest decrease was recorded in overdue current receivables for international invoicing. The total value of current receivables for interest and other receivables was down, both for due and undue receivables.
Operating receivables by maturity are disclosed in their gross value.
Changes in adjustments to the value of operating receivables (non-current and current)
In EUR
2020
2019
Balance at the end of previous financial year
2,950,843
2,946,900
Balance as at 1 Jan
2,950,843
2,946,900
Write-downs
-363,854
-265,648
Payment of receivables
-5,727
-7,964
Losses due to the impairment of receivables (+)
43,835
347,179
Elimination of losses due to impairment (-)
-85,844
-69,624
Balance as at 31 Dec
2,539,253
2,950,843
Changes in adjustments to the value of assets from contracts with customers
In EUR
2020
2019
Balance at the end of previous financial year
64,400
72,286
Balance as at 1 Jan
64,400
72,286
Loss due to the impairment of receivables
-
-7,886
Elimination of losses due to impairment
-11,291
-
Balance as at 31 Dec
53,109
64,400
Changes in adjustments to the value of financial receivables (non-current and current)
In EUR
2020
2019
Balance at the end of previous financial year
1,607
2,100
Balance as at 1 Jan
1,607
2,100
Loss due to the impairment of receivables
-
1,607
Elimination of losses due to impairment
-509
-2,100
Balance as at 31 Dec
1,098
1,607
Currency risk
Similar to all postal service providers, Pošta Slovenije is involved in international postal transactions. Nevertheless, the majority of its cash flows are in euros. The volume of transactions in foreign currencies is insignificant. Exposure to currency risk is thus negligible.
Exposure to changes in exchange rates is presented in the table below.
In EUR
31. 12. 2020
EUR
USD
SDR*
OTHER
Cash and cash equivalents
61,084,770
61,071,903
12,738
-
129
Current operating receivables
42,263,933
39,848,618
2,500
2,412,815
-
Non-current operating receivables
264,212
264,212
-
-
-
Current financial receivables
7,300,000
7,300,000
-
-
-
Non-current financial receivables
422,111
422,111
-
-
-
Current operating liabilities
-36,193,212
-34,891,707
-
-1,300,105
-1,400
Non-current operating liabilities
-877,504
-877,504
-
-
-
Current financial liabilities
-12,633,822
-12,633,822
-
-
-
Non-current financial liabilities
-61,767,226
-61,767,226
-
-
-
Exposure disclosed in the statement of financial position
-136,738
-1,263,415
15,238
1,112,710
-1,271
* SDR (Special Drawing Right) or DTS (Droit de tirage special) is a special drawing right that refers to a currency unit comprised from the basket of currencies defined by the International Monetary Fund, International postal services are typically charged in this currency unit.
In EUR
31. 12. 2019
EUR
USD
SDR*
OTHER
Cash and cash equivalents
38,879,623
38,854,975
24,610
-
38
Current operating receivables
39,438,066
36,210,402
-
3,227,664
-
Non-current operating receivables
369,941
369,941
-
-
-
Non-current financial receivables
421,441
421,441
-
-
-
Current operating liabilities
-31,530,420
-30,613,165
-
-914,859
-2,396
Non-current operating liabilities
-935,293
-935,293
-
-
-
Current financial liabilities
-7,583,141
-7,583,141
-
-
-
Non-current financial liabilities
-42,703,837
-42,703,837
-
-
-
Exposure disclosed in the statement of financial position
-3,643,620
-5,978,677
24,610
2,312,805
-2,358
* SDR (Special Drawing Right) or DTS (Droit de tirage special) is a special drawing right that refers to a currency unit comprised from the basket of currencies defined by the International Monetary Fund, International postal services are typically charged in this currency unit.
Interest-rate risk
Exposure to interest-rate risk, which represents the risk of changes in interest rates on deposits and loans, is low. It also rose with respect to deposits. Banks continuously lowered interest rates on deposits in 2020 and even offered negative interest rates. By planning investment activities, current operations and deposits, the Company’s cash flows are coordinated, and generally do not require additional borrowings.
Exposure to interest-rate risk is presented in the table below.
In EUR
31. 12. 2020
31. 12. 2019
Financial instruments at fixed interest rates
Financial receivables
7,657,111
356,441
Cash and cash equivalents
61,084,770
38,879,623
Financial liabilities
-7,160,116
-8,206,049
Net financial instruments at fixed interest rates
61,581,765
31,030,015
Financial instruments at variable interest rates
Financial receivables
65,000
65,000
Financial liabilities
-67,240,932
-42,080,929
Net financial instruments at variable interest rates
-67,175,932
-42,015,929
Sensitivity analysis and effect on profit or loss from ordinary operations
Changes in the 6-month EURIBOR of 0.10, 0.25 and 0.50 basis points were taken into account to simulate the effect of change in the reference interest rate on operating results in 2020. The 6-month EURIBOR was negative at -0.523% as at 31 December 2020. An interest rate of 0.0% was used in repayment schedules and calculations of interest. In the event of a change in the 6-month EURIBOR by +0.10, +0.25% or +0.5 basis points, the EURIBOR would still be negative and would thus have no impact on the amount of interest paid.
In EUR
Loan as at 31 December 2020
Increase in IR by 0.1 basis points
Increase in IR by 0.25 basis points
Increase in IR by 0.5 basis points
6-month EURIBOR
67,240,932
-
-
-
Total
67,240,932
-
-
-
Liquidity risk
Liquidity risk derives from maturity mismatches between assets and liabilities, which could result in insolvency (insufficient funds to settle liabilities at maturity). This risk is closely linked to credit risk due to negative trends in economic activity, which in 2020 was primarily connected with the COVID-19 pandemic. The aforementioned risk is managed through the prudent planning of cash flows (e.g. investments, and the management of credit risk and current operations). Pošta Slovenije is known for its payment discipline and stable cash flow. We increased financing in the form of loans in 2020 in order to finance investments and the acquisition of Intereuropa d. d. The balance of liquid assets also increased, meaning that Pošta Slovenije has no liquidity issues.
In EUR
Carrying amount as at 31 December 2020
Total contractual cash flows
From 0 to 6 months
From 6 to 12 months
From 1 to 5 years
More than 5 years
Loans from banks and others
67,240,932
69,681,462
5,324,237
5,305,144
41,589,690
17,462,390
Financial liabilities from leases
7,160,116
7,163,966
1,309,441
1,309,441
4,545,084
-
Trade payables
14,336,300
14,336,300
14,336,300
-
-
-
Other operating liabilities
22,734,416
22,764,477
21,886,973
-
877,504
-
Total
111,471,764
113,946,205
42,856,951
6,614,585
47,012,278
17,462,390
In EUR
Carrying amount as at 31 December 2019
Total contractual cash flows
From 0 to 6 months
From 6 to 12 months
From 1 to 5 years
More than 5 years
Loans from banks and others
42,080,929
43,491,438
2,799,552
2,789,246
26,129,056
11,773,585
Financial liabilities from leases
8,206,049
8,217,419
1,175,918
1,175,918
5,865,583
-
Trade payables
13,883,592
13,883,592
13,883,592
-
-
-
Other operating liabilities
18,582,121
18,582,121
17,646,828
-
935,293
-
Total
82,752,691
84,174,570
35,505,890
3,965,164
32,929,932
11,773,585
Determination of fair value
Taking into account the Company’s accounting policies, the determination of the fair value of both financial and non-financial assets and liabilities is required in a number of cases. The Company determined the fair values of individual groups of assets for measurement and/or reporting purposes based on the methods described in the accounting policies. Where necessary, further clarifications regarding assumptions used to determine fair values are disclosed in the notes specific to that asset or liability.
Assets and liabilities are categorised to three levels with respect to the calculation of their fair value:
Level 1 – assets and liabilities at market price (the use of published prices arising on an active market for the same assets or liabilities);
Level 2 – assets and liabilities not classified as Level 1, but whose value is determined directly or indirectly on the basis of market observables; and
Level 3 – assets and liabilities whose value cannot be determined on the basis of market observables and thus cannot be classified to Level 1 or Level 2.
The fair value of investment property is determined on the basis of appraisals drawn up by independent certified real estate valuers. The appraiser used the market approach (for vacant land and business premises) and income approach (for occupied business premises) for investment property whose fair value was assessed. If the estimated value of investment property (fair value less selling costs) is lower than its carrying amount, the investment property was subject to impairment.
In 2020 the Company carried out multiple valuations of real estate in the scope of property, plant and equipment, which were drafted by an independent certified valuer of real estate, applying the market approach and income approach during that process. The recoverable amount of real estate is based on fair value less costs to sell. The valuer used the income approach to appraise the value of the entire location. If the estimated value of real estate was lower than its carrying amount, the real estate was subject to impairment.
The fair value of current assets and liabilities was equal to their carrying amount as at 31 December 2020.
Fair value
31. 12. 2020
31. 12. 2019
In EUR
Carrying amount
Fair value
Carrying amount
Fair value
Non-current financial assets
51,035,095
51,035,095
44,327,606
44,327,606
Investment property
7,459,240
7,459,240
8,337,887
8,337,887
Non-current financial receivables
422,111
422,111
421,441
421,441
Non-current operating receivables
264,212
264,212
369,941
369,941
Current financial receivables
7,300,000
7,300,000
-
-
Current operating receivables
42,263,933
42,263,933
39,438,066
39,438,066
Cash and cash equivalents
61,084,770
61,084,770
38,879,623
38,879,623
Non-current financial liabilities
-61,767,226
-61,767,226
-42,703,837
-42,703,837
Non-current operating liabilities
-877,504
-877,504
-935,293
-935,293
Current financial liabilities
-12,633,822
-12,633,822
-7,583,141
-7,583,141
Current operating liabilities
-36,193,212
-36,193,212
-31,530,420
-31,530,420
Total
58,357,597
58,357,597
49,021,873
49,021,873
Fair value of assets
In EUR
31. 12. 2020
31. 12. 2019
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Assets measured at fair value
Non-current financial assets
44,400
35,898,778
15,091,917
49,284
28,748,266
15,530,056
44,400
35,898,778
15,091,917
49,284
28,748,266
15,530,056
Assets for which fair value is disclosed
Non-current financial receivables
-
-
422,111
-
-
421,441
Non-current operating receivables
-
-
264,212
-
-
369,941
Current financial receivables
-
-
7,300,000
-
-
-
Current operating receivables
-
-
42,263,933
-
-
39,438,066
Cash and cash equivalents
61,084,770
-
-
38,879,623
-
-
61,084,770
-
50,250,256
38,879,623
-
40,229,448
Total
61,129,170
35,898,778
65,342,173
38,928,907
28,748,266
55,759,504
Fair value of investment property
In EUR
31. 12. 2020
31. 12. 2019
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Sredstva, za katera je poštena vrednost razkrita
Investment property
-
-
7,459,240
-
-
8,337,887
Total
-
-
7,459,240
-
-
8,337,887
Fair value of liabilities
In EUR
31. 12. 2020
31. 12. 2019
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Liabilities for which fair value is disclosed
Non-current financial liabilities
-
-
61,767,226
-
-
42,703,837
Non-current operating liabilities
-
-
877,504
-
-
835,293
Current financial liabilities
-
-
12,633,822
-
-
7,583,141
Current operating liabilities
-
-
36,193,212
-
-
31,530,420
Total
-
-
111,471,764
-
-
82,652,691