Growth together

Growth

together

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.

Sustainability path timeline

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.

     

  • 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.

     

2019 Results

Operating results

Performance

 

  • Consolidated operating results

    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

    Operating results by Strategic Business Unit

    EXTERNAL REVENUE
    EBIT

    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

 

GROUP NET DEBT/(FUNDS)

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
    reserve BancoPosta RFC reserve Fair value reservee Cash flow hedge reserve Reserve for investees accounted for using equity method Reserve for incentive plans
    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