Growth together | Poste Italiane

Thanks to a sustainable business model, it becomes possible to face the new challenges offered by increasingly changing and competitive scenarios not only by reacting to risks, but by seizing all opportunities without ignoring their social implications.

Sustainability path

Strategy and Business model

Over the last three years, Poste Italiane has undertaken an important sustainability path aimed at promoting the distinctive elements of its corporate strategy, transforming market challenges into opportunities for the creation of shared value and contributing to the development of the company’s reputation.

Intended as a key element to support business strategy, today sustainability is considered an integral component of the company’s activities, processes and strategy, being embedded in all components of the Company and an essential element for the definition of future strategic and financial choices undertaken by the Group.

The value of reputation

Strategy and Business model

In an economic-financial context in which the market value of companies increasingly derives from their intangible assets, reputation represents an extraordinary asset for Poste Italiane, as it is able to significantly influence the behaviour and choices of its stakeholders and, as a result, creates a strong impact on business and corporate strategies and becomes a competitive lever for the Company to face (and win) the challenges of an increasingly evolved market where the boundaries of traditional business are increasingly transient and trust becomes an element of choice for consumers.

ESG Awards and Recognitions

A measure of the reputation achieved by Poste Italiane is represented by the many awards and recognitions achieved in recent years, which further strengthen its image and confirm the effectiveness of the activities undertaken.

	Top Manager Reputation In 2019, for the first time, the CEO of Poste Italiane entered the Top 15 in the Top Manager Reputation ranking, drawn up by the Permanent Observatory of Reputation Science on the online reputation of top management companies active in Italy. The CEO took fifth place in the ranking.
	Top Employer Italy 2020 Poste Italiane is Top Employer Italy 2020. The prestigious award was given to Poste by the Top Employers Institute, the global certification body for excellence in HR practices. The Top Employer Italia 2020 certification is in addition to the other awards given to Poste Italiane by Universum Global, a Swedish company specialized in employer branding.
	World’s Best Employers 2019 According to the ranking drawn up by Forbes, which identifies the top 500 companies in the world in terms of quality of working life, Poste Italiane ranks second globally in the “Life & Health Insurance” sector and fourth among all Italian companies. It is clear that there has been significant progress in the ranking compared to the past.
	Best performance in the 500 Top Brand Finance Among the nine Italian brands that entered the Global 500 ranking, Poste climbed 108 positions, recording the highest performance in terms of image and reputation for the insurance industry, also thanks to the dynamism in digital solutions such as Postepay and growth prospects, winning the AAA rating of excellence (read TRIPLE A).
	15th in the world’s top 100 insurance companies The Company enters for the first time in the world ranking for reputation and brand value in the insurance industry, ranking directly in 15th place. At the same time in the national ranking, Poste moved from eighth to sixth place.
	SMAU Innovation Award Poste is awarded for innovation in the transformation plan of Customer Service in logistics and shipping, financial, insurance and digital payment services.
	HR & Organization Innovation Award The Group was awarded first place in the “Chatbot for digital learning” project for the adoption of an artificial intelligence system applied to learning.
	PostePay first position at the 2019 Awards At the MVNO World Congress in Amsterdam, PostePay SpA, thanks to its Connect offer, distinguished itself as the most innovative and successful telecommunications operator in the international market.
	BancoPosta and Postepay apps products of the year The BancoPosta and Postepay apps have won the “Elected Product of the Year” award, an important recognition of Poste Italiane’s ability for innovation, which has been able to create market-leading products that are central to customers’ lives.
	FEIEA Award The NoidiPoste app, the internal communication tool for employees, stood out among the top five at European level, ranking for the “best use of social media application”.
	The Governance award to Poste Vita Capital Finance International awarded Poste Vita with the Best Pension Fund Governance award for combining Environmental, Social and Governance (ESG) principles with the performance required by investors.
	DEO Fund obtains Green Star rating Poste Vita’s DEO Fund obtained a five-star rating from GRESB, qualifying as Green Star and, with a score of 86/100, ranked 12th among unlisted real estate investments in the Eurozone in the Offices sector, for compliance with Environmental, Social and Governance (ESG) principles.
	5th most transparent company In the transparency ranking, Lundquist’s annual research, Poste climbs the ranking of the major Italian companies and reaches fifth place, thus gaining seven positions compared to 2018.
	posteitaliane.it climbs the European rankings In the Webranking Europe 2019-2020, Poste Italiane is in ninth position, advancing eight steps from the 2018 ranking. Within the Top Ten, the portal www.posteitaliane.it ranks second overall in financial/insurance.
	Top 10 Socially Devoted In 2019, the company was again in the Top 10 of Italian companies, drawn up by SocialBakers, climbing three positions.
	Leader in media communication EIKON Strategic Consulting, through the Top Ten research, analyses and compares the press image of the top 10 Italian companies in the top 10 newspapers of the country. Poste climbs 9 positions. In a range between 0 and 1, the company went from the bottom of the ranking with 0.37 in 2017, to substantial leadership with 0.93 in 2019.
	Poste at the top for young people Poste Italiane enters the Top Ten of the most attractive companies on the Italian job market for young people. This is confirmed by the “Most Attractive Employers Italy” ranking, drawn up annually by Universum Global, a Swedish company leader in employer branding.
	International Finance Award for Administrative and Financial Processes The award recognises Poste Italiane for a new way of doing business with innovative financing methods aimed at making business more and more sustainable.
	Most influential brand among Italian listed companies Poste is the most influential Italian listed company in the daily choices of citizens, according to the international ranking The Most Influential Brands 2019 drawn up by Ipsos. The company has achieved 23rd place in the Global Top 100 for Corporate Social Responsibility by climbing 10 positions in two years.
	Poste Italiane was awarded the highest level (Category 1) in 2019, which entitles it to a certificate of excellence. Only seventeen postal operators in the world have been awarded the highest prize this year, including nine Europeans. The Certificate of Excellence refers to the results achieved in the Sustainable Development Strategy and the reduction of pollutant emissions.

Sustainability Indices

The year 2019 saw the entry of Poste Italiane into important sustainability indices. These indices allow analysts to monitor and evaluate Poste Italiane’s performance with respect to environmental, social and governance issues.

	In 2019, Poste débuts in the Dow Jones Sustainability World Index (DJSI) and the more selective Europe Dow Jones Sustainability Index.
	For the first time, Poste Italiane is included in the FTSE4Good index. An index that assesses the performance of companies that are globally recognised for their high standards of social responsibility. The FTSE4Good Europe and FTSE4Good Developed indices, in which Poste makes its début, include companies that stand out for their transparent management and application of sustainable criteria.
	The Group is included in the prestigious international index for the first time. After the assessment of the company’s performance, Poste was also included in the regional indices Euronext Vigeo Eurozone 120 and Europe 120. In addition, the company is ranked third in the ESG performance evaluation - Environmental, Social and Governance - carried out by Vigeo Eiris both among the 134 companies worldwide and among the 46 European companies in the “Transports and Logistics” sector.”
	Poste Italiane joins the Bloomberg Gender-Equality Index (GEI) 2020, the main index for measuring company performance on gender equality issues and the transparent reporting of data and information related to it. The Gender-Equality Index 2020 includes 325 companies operating in 50 different sectors in 42 countries.
	Poste Italiane conquers ninety-eighth place among the major groups of the Stoxx Europe 600 list in the Gender Diversity Index (GDI) compiled by the organization “European Women on Boards” (EWOB). The new award places the Group at the top positions in Europe for the presence of women in positions of responsibility. The EWOB indicator has a range between 0 and 1 and with a GDI of 0.69, Poste Italiane exceeds the European average of 0.53.
	Poste Italiane ranks among the top ten companies in the global insurance industry in terms of sustainability in the Sustainability Yearbook 2020, the Sustainability Yearbook published by S&P Global in collaboration with rating company ESG RobecoSAM, which assesses the sustainability performance of leading companies globally. The Group was awarded the Industry Mover award for having obtained the best change in score from the previous year with respect to the peers in the selected sector, being, moreover, the only company to have obtained this recognition within the “Insurance” sector.
	This year, Poste Italiane is in sixth place in the general ranking of the Integrated Governance Index (IGI), up four positions compared to the previous edition and is in fifth place in the special category dedicated to human resources.
	The Poste Italiane Group has obtained a rating of 1, considered to be the highest possible, in the Environment and Social areas, in Institutional Shareholder Services Inc. (ISS).

2019 Results

Operating results

Performance

Consolidated operating results

(€m)	2019	2018	Changes
EXTERNAL REVENUE	11,038	10,864	+174	+1.6%
Adjusted external revenue	10,659	10,332	+327	+3.2%
TOTAL COSTS	9,264	9,366	(101)	-1.1%
Adjusted total costs	8,894	8,659	+235	+2.7%
EBIT	1,774	1,499	+275	+18.4%
Adjusted EBIT	1,765	1,673	+92	+5.5%
EBIT Margin %	16.1%	13.8%	.	.
Adjusted EBIT Margin %	16.6%	16.2%	.	.
NET PROFIT	1,342	1,399	(56)	-4.0%
Adjusted net profit	1,258	1,172	+86	+7.3%
NET EARNINGS PER SHARE	1.03	1.07	(0.04)	-4%
CAPEX	734	538	+195	+36%
% of revenue	6.6%	5.0%	.	.

The Group’s total revenue amounted to €11 billion and grew by €174 million compared to 2018 (+1.6%) due to the positive contribution of the Insurance Services Strategic Business Unit, which contributed to the formation of revenue with €1,669 million, marking an increase of €199 million (+13.5% on 2018) mainly due to the growth in financial assets in the Life business and higher premiums in the P&C business, as well as the Payments, Mobile and Digital Strategic Business Unit, which recorded an increase of €71 million in revenue (+12.1%) from €592 million in 2018 to €664 million, and the Financial Services Strategic Business Unit, which recorded revenue of €5,213 million (-€8 million compared to 2018).

Adjusted revenue¹ also show growth of €327 million (+3.2%) compared to last year, mainly thanks to the positive contribution of the Insurance Services Strategic Business Unit (+€199 million) and Financial Services one (+€145 million).

¹ Adjusted revenue items: gains on securities (€404 million in 2018, €353 million in 2019), Anima gain (€120 million in 2018), gain on fair value measurement of Visa shares (€9 million in 2018, €25 million in 2019), gain on sale of Visa shares (€1 million in 2019).

Operating results by Strategic Business Unit

Mail, Parcels and Distribution

(€m)	2019	2018	Change
External revenue	3,492	3,580	(88)	-2.5%
Revenue from other sectors	4,723	4,630	93	+2.0%
Total revenue	8,215	8,210	5	+0.1%
*Total adjusted revenue*	*7,950*	*7,903*	*+47*	*+0.6%*
Costs	8,491	8,574	(83)	-1.0%
Costs vs other sectors	72	67	5	+6.7%
Total costs	8,562	8,641	(79)	-0.9%
*Adjusted total costs*	*8,222*	*8,000*	*+223*	*+2.8%*
EBIT	(347)	(430)	83	+19.3%
*Adjusted EBIT*	*(272)*	*(96)*	*(176)*	*-182.9%*
EBIT margin %	-4.2%	-5.2%
NET RESULT	(306)	(372)	66	+17.7%

Main KPIs	2019	2018	Change
Mail and parcels
Revenue/FTE (€m)	64	62	2	3.4%
Parcels that can be delivered as standard mail (volumes in m)	51.6	44.5	7.0	15.8%
Joint Delivery Model: project progress	100%	50%
Number of Delivery Offices	1,543	1,793	(250)	-13.9%
New PuntoPoste Network (number of lockers and alternative collection points)	6,288	417	5,871	1407.9%
Distribution
Number of Post Offices	12,809	12,812	(3)	(0.0%)
Number of customers (m)	35.0	34.9	0.1	0.4%
Rooms dedicated to consultancy	6,725	6,509	216	3.3%
Postamat ATM network	7,727	7,282	445	6.1%

Payments, Mobile and Digital

(€m)	2019	2018	Change
External revenue	664	592	+71	+12.1%
Revenue from other sectors	375	360	+16	+4.3%
Total revenue	1,039	952	+87	+9.1%
Costs	380	359	+21	+5.9%
Costs vs other sectors	418	390	+28	+7.2%
Total costs	798	749	+49	+6.6%
EBIT	241	203	+38	+18.6%
*EBIT Margin* %**	23.2%	21.4%
NET PROFIT	272	153	+119	+77.4%

Main KPIs	2019	2018	Change
E-Money
Total value of card transactions (€m)*	33,062	27,032	6,030	22.3%
Number of cards (m)**	28.7	26.2	2.5	9.5%
of which Postepay cards (m)	21.5	19.0	2.5	13.1%
of which Postepay Evolution cards (m)***	7.2	6.3	1.0	15.3%
Number of card transactions (m)*	1,439	1,101	338	30.7%
of which number of e-commerce transactions (m)*	250	202	48	23.9%
TLC
SIM PosteMobile landlines and mobile telephones (stock in thousands)	4,416	4,082	333.4	8.2%
Digital
Customers registered on Poste Italiane's digital channels (websites and apps) (m)	20.8	17.6	3.2	18.1%
Daily users (website and apps) (m)****	2.0	1.5	0.5	36.5%
Number of digital - consumer transactions (m)	57.1	47.9	9.2	19.1%
App downloads (m)	30.8	21.6	9.2	42.5%
Postepay Digital e-Wallets (m)	5.4	2.8	2.6	91.2%
Digital identities (number in m)	4.1	2.6	1.5	59.9%

* Transactions relative to payments made by Postamat and PostePay.
** Includes Postepay cards and debit cards.
*** Including business customers.
**** Average monthly values during reference period.

Financial Services

(€m)	2019	2018	Change
External revenue	5,213	5,221	(8)	-0.2%
Revenue from other sectors	712	649	+63	+9.7%
Total revenue	5,926	5,871	+55	+0.9%
*Total adjusted revenue*	*5,547*	*5,338*	*+209*	*+3.9%*
Costs	229	294	(64)	-21.9%
Costs vs other sectors	4,822	4,718	+105	+2.2%
Total costs	5,052	5,011	+40	+0.8%
Adjusted total costs	4,757	4,640	+117	+2.5%
EBIT	874	859	+15	+1.7%
Adjusted EBIT	790	698	+92	+13.1%
*EBIT Margin* %**	14.8%	14.6%
NET PROFIT	640	617	+23	+3.7%

Main KPIs	2019	2018	Change
Total financial assets (€bn)	536	514	22	4.3%
Net inflows (€m)	2,950	1,568	1,381	88.1%
Latent capital gains/losses (€m)	1,115	(1,687)	2,802	166.1%
Net capital gains (€m)	339	379	(40)	-10.5%
Current accounts (average deposits for the period in €bn)	61.9	58.7	3.2	5.4%
Investment portfolio return	2.57%	2.62%
Postal savings (average deposits in €bn)	310.4	307.6	2.8	0.9%
Borrowings (disbursed in €m)	3,583	3,143	440.0	14.0%

Insurance services

(€m)	2019	2018	Change
External revenue	1,669	1,470	199	+13.5%
Revenue from other sectors	1	2	(1)	-63.7%
Total revenue	1,670	1,472	197	+13.4%
Costs	165	139	+26	+18.6%
Costs vs other sectors	499	467	+32	+6.8%
Total costs	664	606	58	+9.5%
EBIT	1,006	866	140	+16.1%
*EBIT Margin* %**	60.2%	58.8%
Net profit	737	1,001	(264)	-26.4%

Main KPIs	31 December 2019	31 December 2018	Change
Net technical provisions Poste Vita Group (€m)	140.2	125.1	15.2	12.1%
Life	2019	2018	Change
Gross premium revenue - Life (€m)*	17,732	16,610	1,122.2	6.8%
of which: Classes I-IV-V	15,793	15,870	76.6	-0.5%
of which: Class III	1,939	740	1,199	162.0%
P&C	2019	2018	Change
Gross premium revenue - P&C (€m)*	240	187	53.0	28.3%
Loss ratio**	32.7%	23.8%
Expenses ratio (ANIA)***	28.9%	28.8%
Combined ratio (ANIA)****	61.6%	52.5%

* Includes gross premium revenue before the premium reserve and outward reinsurance premiums.
** Corresponds to the ratio of the expenses from claim liquidation and gross premiums.
*** Corresponds to the ratio of operating costs + commission and gross premium revenue.
**** Equal to the sum of the Loss and Expenses ratio.

Group financial position and cash flow

(€m)	31 December 2019	31 December 2018	Change
NON-CURRENT ASSETS	4,578	3,035	+1,543	+51%
NET WORKING CAPITAL	1,494	1,737	(243)	-14%
GROSS INVESTED CAPITAL	6,072	4,772	+1,300	+27%
SUNDRY PROVISIONS AND OTHER ASSETS/LIABILITIES	(2,041)	(2,040)	(1)	+0%
NET INVESTED CAPITAL	4,031	2,732	+1,299	+48%
EQUITY	9,698	8,105	+1,593	+20%
NET DEBT/(FUNDS)	(5,667)	(5,372)	(295)	+5%
Net cash position of the Mail, Parcels and Distribution SBU	815	(1,131)	+1,946	-172%

The Poste Italiane Group’s non-current assets amounted to €4,578 million at 31 December 2019, an increase of €1,543 million compared with the end of 2018. This primarily reflects first-time adoption, from 1 January 2019, of the new accounting standard, IFRS 16, resulting in the recognition of right-of-use assets of €1,254 million (which take into account €1,374 million of Assets, €102 million of acquisitions for new contracts and €222 million of amortisation). Investments of €734 million also contributed to the formation of non-current assets, partly offset by amortisation of €552 million.

Finally, the balance of the item includes investments accounted for using the equity method for a total of €617 million, up €120 million compared to 31 December 2018, mainly due to the adjustment of the carrying amount of FSIA Investimenti², which at the end of 2019 was classified as an associate investment, in place of the previous joint control.
The Group’s investment amounted to €734 million in 2019, an increase of 36% compared with 2018 (+€195 million).

Provisions and other assets and liabilities at 31 December 2019 amounted to €2,041 million, substantially in line with 31 December 2018. This item also includes the balance of Provisions for risks and charges of €1,218 million (€1,519 million at the end of December 2018) and includes provisions for early retirement incentives of €421 million (€447 million at 31 December 2018); this reflects the estimate of liabilities that Poste Italiane will incur, under the current arrangements agreed with the unions, as a result of a certain number of staff taking voluntary early retirement by 31 December 2021. The balance also includes the provision for operational risks relating primarily to liabilities arising from BancoPosta’s operations amounting to €241 million (€423 million at 31 December 2018) and the provision for disputes with third parties amounting to €313 million (€335 million at 31 December 2018).

Equity amounts to €9,698 million at 31 December 2019, an increase of €1,593 million compared with 31 December 2018. This change reflects primarily the net profit for the period of €1,342 million and an increase of €1,087 million in the fair value reserve, which reflects changes in the value of investments classified as FVTOCI. These changes were partially offset by the distribution of dividends totalling €774 million, including €574 million from 2018 profit and €200 million as an interim dividend scheduled for 2019, actuarial losses on the provision for employee termination benefits net of the tax effect of €50 million and the purchase of 5,257,965 treasury shares (equal to 0.4026% of the share capital) for a total of €40 million.

² Further information is provided in the Notes to Poste Italiane Financial Statements for the year ended 31 December 2019.

Net (funds)/debt

Performance

The total Net debt/(funds) at 31 December 2019 showed a surplus of €5,667 million, or €295 million compared to the figures at 31 December 2018 (when there was a surplus of €5,372 million); this change primarily reflects the increase in the fair value of investments classified as FVTOCI, the recognition of financial liabilities required by the adoption from 1 January 2019 of the new IFRS 16 accounting standard (€1,279 million at 31 December 2019), the distribution of dividends totalling €774 million and a decrease in net working capital.

With regard to financial instruments held by the Financial Services SBU, the overall fair value fluctuation during the period was positive by approximately €5.7 billion and was recognised in a specific equity reserve of €1.7 billion for the portion not hedged by fair value hedges, and through profit or loss for €4 billion for the portion hedged, which speculatively increased the negative balance of fair value hedging derivatives. At 31 December 2019, the balance of these instruments was negative by €5.4 billion (€1.6 billion at 31 December 2018). In addition, as part of these hedging transactions, the Parent Company has increased its Receivables for Guarantee Deposits by approximately €4 billion for amounts paid to counterparties with which Asset Swap transactions are in place.

Consolidated financial statements

Performance

Consolidated statement of financial position

Assets (€m)	31 december 2019	*of which, related party transactions*	31 december 2018	*of which, related party transactions*
Non-current assets
Property, plant and equipment	2,015	-	1,945	-
Investment property	44	-	48	-
Intangible assets	648	-	545	-
Right-of-use assets	1,254		-
Investments accounted for using the equity method	617	617	497	497
Financial assets	194,207	4,522	170,922	5,101
Trade receivables	5	-	7	-
Deferred tax assets	1,199	-	1,368	-
Other receivables and assets	3,729	1	3,469	1
Technical provisions attributable to reinsurers	58	-	71	-
Total	203,776		178,872
Current assets
Inventories	140	-	136	-
Trade receivables	2,166	664	2,192	661
Current tax assets	52	-	117	-
Other receivables and assets	938	2	1,111	7
Financial assets	24,727	7,220	19,942	6,004
Cash and deposits attributable to BancoPosta	4,303	-	3,318	-
Cash and cash equivalents	2,149	495	3,195	1,306
Total	34,475		30,011
Total assets	238,251		208,883

Liabilities and equity (€m)	31 December 2019	*of which, related party transactions*	31 December 2018	*of which, related party transactions*
Equity
Share capital	1,306	-	1,306	-
Reserves	2,646	-	1,531	-
Treasury shares	(40)		-
Retained earnings	5,786	-	5,268	-
Total equity attributable to owners of the Parent	9,698		8,105
Equity attributable to non-controlling interests	-	-	-	-
Total	9,698		8,105
Non-current liabilities
Technical provisions for insurance business	140,261	-	125,149	-
Provisions for risks and charges	501	58	656	58
Employee termination benefits	1,135	-	1,187	-
Financial liabilities	13,964	132	7,453	20
Deferred tax liabilities	887	-	701	-
Other liabilities	1,525	-	1,379	-
Total	158,273		136,525
Current liabilities
Provisions for risks and charges	717	12	863	12
Trade payables	1,627	98	1,583	150
Current tax liabilities	274	-	12	-
Other liabilities	2,110	74	2,319	75
Financial liabilities	65,552	4,820	59,476	3,970
Total	70,280		64,253
Total equity and liabilities	238,251		208,883

Consolidated statement of profit or loss

(€m)	2019	*of which, related party transactions*	2018	*of which, related party transactions*
Revenue from Mail, Parcels & other	3,492	498	3,579	249
Revenue from Payments, Mobile & Digital	664	59	628	30
Revenue from Financial Services	5,213	1,998	5,186	979
of which, non-recurring income	-		120
Revenue from Insurance Services after movements in technical provisions and other claims expenses	1,669	16	1,471	8
Insurance premium revenue	17,913	-	16,720	-
Income from insurance activities	5,478	16	3,604	8
Net change in technical provisions for insurance business and other claims expenses	(21,463)	-	(17,111)	-
Expenses from insurance activities	(259)	-	(1,742)	-
Net operating revenue	11,038		10,864
Cost of goods and services	2,287	169	2,343	206
Expenses from financial activities	79	5	46	3
Personnel expenses	5,896	50	6,137	43
Depreciation, amortisation and impairments	774	-	570	-
of which, non-recurring costs/(income)	-		33
Capitalised costs and expenses	(31)	-	(17)	-
Other operating costs	200	3	239	6
Impairment loss/(reversal) on debt instruments, receivables and other assets	59	-	47	-
Operating profit/(loss)	1,774		1,499
Finance costs	73	2	71	-
Finance income	105	-	106	-
Impairment loss/(reversal) on financial instruments	46	-	20	-
of which, non-recurring expense/(income)	46		-
Profit/(Loss) on investments accounted for using the equity method	112	-	(24)	-
of which, non-recurring income/(expense)	88		-
Profit/(Loss) before tax	1,872		1,490
Income tax expense	530	-	91	-
of which, non-recurring expense/(income)	-		(351)
NET PROFIT FOR THE PERIOD	1,342		1,399
of which, attributable to owners of the Parent	1,342		1,399
of which, attributable to non-controlling interests	-		-
Earnings per share	1,032		1,071
DiNet profit/(loss) for the period	1,032		1,071

Consolidated statement of comprehensive income

(€m)	2019	2018
Net profit/(loss) for the period	1,342	1,399
Items to be reclassified in the Statement of profit or loss for the year
FVOCI debt instruments
Increase/(decrease) in fair value during the year	1,767	(1,946)
Transfers to profit or loss	(244)	(396)
Increase/(Decrease) for expected credit loss	(2)	(1)
Cash flow hedges
Increase/(decrease) in fair value during the year	95	191
Transfers to profit or loss	(59)	19
Taxation of items recognised directly in, or transferred from, equity to be reclassified in the Statement of profit or loss for the year	(445)	609
Share of after-tax comprehensive income/(loss) of investees accounted for using equity method	(1)	-
After-tax increase/(decrease) in reserves related to group of assets and liabilites held for sale	-	-
Items not to be reclassified in the Statement of profit or loss for the year
FVOCI equity instruments
Increase/(decrease) in fair value during the period	1	-
Transfers to equity	-	-
Actuarial gains/(losses) on provisions for employee termination benefits	(70)	16
Taxation of items recognised directly in, or transferred from, equity not to be reclassified in the Statement of profit or loss for the year	20	(4)
Share of after-tax comprehensive income/(loss) of investees accounted for using equity method	-	-
Total other comprehensive income	1,062	(1,511)
Total comprehensive income for the year	2,404	(112)
of which, attributable to owners of the Parent	2,404	(112)
of which, attributable to non-controlling interests	-	-

Consolidated statement of changes in equity

(€m)	Equity
	Share capital	Own shares	Reserves						Retained earnings / (Accumulated losses)	Total equity attributable to owners of the Parent	Equity attributable to noncontrolling interests	Total equity
	Share capital	Own shares	reserve	BancoPosta RFC reserve	Fair value reservee	Cash flow hedge reserve	Reserve for investees accounted for using equity method	Reserve for incentive plans	Retained earnings / (Accumulated losses)	Total equity attributable to owners of the Parent	Equity attributable to noncontrolling interests	Total equity
Balance at 1 January 2018	1,306	-	299	1,000	1,604	(61)	2	-	4,616	8,766	-	8,766
Total comprehensive income for the year	-	-	-	-	(1,673)	150	-	-	1,411*	(112)	-	(112)
Dividends paid	-	-	-	-	-	-	-	-	(549)	(549)	-	(549)
Other changes	-	-	-	210	-	-	-	-	(210)	-	-	-
Balance at 31 December 2018	1,306	-	299	1,210	(69)	89	2	-	5,268	8,105	-	8,105
Total comprehensive income for the year	-	-	-	-	1,087	26	(1)	-	1,292 *	2,404	-	2,404
Incentive plans	-	-	-	-	-	-	-	2		2	-	2
Dividends paid	-	-	-	-	-	-	-	-	(574)	(574)	-	(574)
Dividend advance	-	-	-	-	-	-	-	-	(200)	(200)	-	(200)
Other changes	-	(40)	-		-	-	1	-		(39)	-	(39)
Balance at 31 December 2019	1,306	(40)	299	1,210	1,018	115	2	2	5,786	9,698	-	9,698

* This item includes profit for the period of €1,342 million and actuarial losses on provisions for employee termination benefits of €50 million, after the related current and deferred taxation.

Consolidated statement of cash flow

(€m)	FY 2019	FY 2018
Cash and cash equivalents at beginning of year	3,195	2,428
Profit/(Loss) before tax	1,872	1,490
Depreciation, amortisation and impairments	774	537
Goodwill impairment	-	33
Net provisions for risks and charges	394	579
Use of provisions for risks and charges	(696)	(656)
Provisions for employee termination benefits	1	1
Employee termination benefits	(140)	(92)
(Gains)/Losses on disposals	1	(120)
Impairment loss/(reversal) on financial instruments	46	20
(Dividends)	-	-
Dividends received	-	-
(Finance income realised)	(7)	(7)
(Finance income in form of interest)	(94)	(95)
Interest received	95	94
Interest expense and other finance costs	68	66
Interest paid	(23)	(59)
Losses and impairment losses/(Reversals of impairment losses) on receivables	62	46
Income tax paid	(252)	(351)
Other changes	(104)	42
Cash flow generated by operating activities before movements in working capital	1,997	1,528
Movements in working capital:
(Increase)/decrease in Inventories	(4)	(2)
(Increase)/decrease in Trade receivables	(40)	(201)
(Increase)/decrease in Other receivables and assets	(16)	(428)
Increase/(decrease) in Trade payables	43	222
Increase/(decrease) in Other liabilities	(197)	104
Cash flow generated by /(used in) movements in working capital	(214)	(305)
Increase/(decrease) in liabilities attributable to financial activities, payments, cards and acquiring and insurance	7,980	4,513
Net cash generated by/(used for) financial assets attributable to financial activities, payments, cards and acquiring and insurance	(10,904)	(8,445)
(Increase)/decrease in cash and deposits attributable to BancoPosta	(984)	(122)
Increase/(decrease) in net technical provisions for insurance business	7,456	6,369
(Income)/Expense and other non-cash components	(4,211)	(941)
Cash generated by/(used for) financial assets/liabilities attributable to financial activities, payments, cards and acquiring and insurance	(663)	1,374
Net cash flow from /(for) operating activities	1,120	2,597
- of which related party transactions	248	(1,484)
Investing activities:
Property, plant and equipment	(391)	(260)
Investment property	(1)	-
Intangible assets	(342)	(278)
Investments	(15)	(30)
Other financial assets	(17)	-
Disposals:
Property, plant and equipment, investment property, intangible assets and assets held for sale	4	2
Investments	1	120
Other financial assets	29	165
Net cash flow from /(for) investing activities	(732)	(281)
- of which related party transactions	3	254
Proceeds from/(Repayments of) long-term borrowings	573	-
(Increase)/decrease in loans and receivables	-	-
Increase/(decrease) in short-term borrowings	(1,193)	(1,000)
(Purchase)/Sale of treasury shares	(40)	-
Dividends paid	(774)	(549)
Net cash flow from/(for) financing activities and shareholder transactions	(1,434)	(1,549)
- of which related party transactions	(492)	(405)
Net increase/(decrease) in cash	(1,046)	767
Cash and cash equivalents at end of year	2,149	3,195
Cash and cash equivalents at end of year	2,149	3,195
Restricted cash and cash equivalents at end of year	(884)	(1,556)
Unrestricted cash and cash equivalents at end of year	1,265	1,639