Poste Italiane: growth in revenue and operating profit. Board of Directors approves Half Year results

Transcription

1 Poste Italiane: growth in revenue and operating profit Board of Directors approves Half Year results Approves filing of regulatory files for a listing and the adoption of a new governance code Total revenues: 16 billion, +7% ( 15 billion as of June 30, 2014) Operating profit: 638 million, +26% ( 506 million as of June 30, 2014) Net profit: 435 million ( 222 million as of June 30, 2014) Client assets: 469 billion, +1.5% ( 462 billion at the end of 2014) 1 Bancoposta direct revenues: 45 billion, +2.7% ( 44 billion as of June 30, 2014) 2 Poste Vita premium revenues: 9.4 billion, +15% ( 8.2 billion as of June 30, 2014) Mail revenues: -6.5%, slowing pace of decline (-9% as of June 30, 2014) Roma, 31 July 2015 Poste Italiane s Board of Directors, chaired by Luisa Todini, has approved the Half Year financial results to 30 June 2015, the presentation of regulatory filings to list the shares on the Italian Stock Exchange and the proposal to the shareholder assembly for the adoption of a new governance code. Francesco Caio, CEO, commented: This is an important step in the development of Poste Italiane. On the one hand, the Industrial Plan has begun to have a positive impact on the financial performance of the Company, which recorded growth in both revenues and operating profit in the first six months, of 7% and 26% respectively; on the other hand, today s resolution marks the beginningof the execution phase for the listing process which the Group is preparing in close collaboration with the Government. The first half results are encouraging for all business units: the Insurance business saw significant growth in revenues and margins; Financial Services closed the first half with the margin increasing; Postal Services, for the first time in years, saw a slowing rate of decline in mail revenues, while continuing to grow volumes and revenues in parcels. Investments in innovation, quality and digital platforms will allow a significant improvement in the quality of customer experience. The performance in the first six months, the launch of management initiatives, as well as progress in innovation and development, give us confidence for the second half of the year. The second half results, as with those in 2014, might be however impacted by restructuring charges associated to the transformation process defined in the business plan. 1 Consists of: postal savings stock; mutual fund managed stock and technical insurance reserves; average deposits of Bancoposta accounts, inclusive of the long-term repo. 2 Average deposits inclusive of the long-term repo.

2 On the back of these positive results Poste Italiane will continue towork towards its Initial Public Offer, in the time frameagreed with the shareholder. ** * In the first half, total revenues, including insurance premiums, grew to 16 billion, up 7% on the previous year. The positive performance of the Insurance Services which saw a 10.9% increase in revenues on 2014 to 11.2 billion and the resilient performance of Financial Services which generated revenues of 2.9 billion more than offset the expected decline in mail revenues (-6.5% to 1,9 billion). This was principally driven by the reduction in mail volumes (-11.8%), but the pace of decline slowed compared to the first half of last year (-9%). However, the growth in parcels revenues, which increased by 4.4% compared to 2014 to 280 million, is significant. Operating profit recorded relevant growth, to 638 million, up 26% compared to the same period in 2014 ( 506 million). The increase was driven by the rise in revenues, set against a decline in operating costs, which amounted to 4.2 billion ( 4.3 billion in 2014). Net profit reached 435 million, almost doubling compared to the 222 million in the previous year. The increase relates to positive trendsin operating profitability, and is also the result of improvements of net financial interests, which grew by around 16 million compared to 2014, and the optimization of the tax rate, linked to the introduction of the new legislation on the income tax on manufacturing activities (IRAP). The consolidated net financial position shows a surplus of 4.6 billion, maintaining the strong levels already registered at the end of December Investments for the period total 346 million, of which 210 million related to the acquisition of a 10.3% stake in Anima.The remainder primarily relates to the digitization of the telecommunication network, as well as the modernization and restructuring of property assets. At the end of June 2015, total client assets increased by a further 1.5%, from 462 billion at the end of 2014 to 469 billion. The amount benefits from general growth across all sectors: postal savings, average deposits of BancoPostaaccounts and technical reserves in the life insurance business. Moreover, during the first half, a new recruitment process was launched in line with the Industrial Plan,involving the hiring of 650 new employees.the total headcount of the Group was reduced by 1,348. The Company also provided 1.7 million hours of staff training. In regard to the distribution network, it is notable that the total volume of made by customers in branches grew by 1% on the previous year to a total of 848 million. During the period, the process of renewal and digitization of post offices was launched; the rollout of wi-fi and the trial of new queue management; all these projects aim at

3 continuing the improvements to the customer offering, as well as opening nine multilingual branches to simplify the customer experience for new Italians. The breakdown per business unit, is as follows: FINANCIAL SERVICES Strong growth in operating profit,up 49% to 468 million. Average BancoPosta current account deposits up 2.7% to 45 billion. One million Postepay Evolution cards already issued since the launch (July 2014). Total revenues amounted to 2.9 billion, maintaining the strong levels already achieved in The increase in income, stemming from the active management of BancoPosta s asset portfolio, offset lower revenues and income, largely attributable to reduced returns as a result of the current interest rate environment. Operating profit increased significantly to 468 million, up 49% on 2014 ( 315 million). Given the stable revenues, the improvement in operating profitability is primarily attributable to a general reduction in operating costs. More specifically, there was an increase in average deposits of BancoPostaaccounts in the first half of the year to 45 billion, before the long-term repo,up 2.7% from 44 billion in Moreover, Postepay Evolution, the rechargeable prepaid card linked to IBAN, reached the significant milestone of one million cards issued since its launch (July 2014). Thanks to the United Nations World Food Programme (WFP), the scheme has helped provide one million school meals, with customers given the chance to make a donation to the WFP each time they use the card. Finally, through BancoPosta, Poste Italiane has continued to strengthen its role in supporting Italian families, expanding the product range on consumer credit and mortgages, with varying options in terms of duration, amount and repayment flexibility, as well as offering transfer and additional liquidity on mortgages. INSURANCE SERVICES Gross written premiums up 15% to 9.4 billion. Strong growth in operating profit, up 7% to 236 million. Successful launch of new products for health and home insurance. Total revenueswere 11.2 billion, up 10.9% on the previous year ( 10.1 billion). The increase is wholly attributable to the growth in premiums. Specifically, Poste Vita, market leader in the Italian insurance sector, with technical reserves of 91.9 billion (up from 87.1 billion at the end of 2014) gatheredpremiums of approximately 9.4 billion ( 8.2 billion in the first six months of 2014), principally due to the marketing of investment and savings products of RamoI and V (traditional products with separate management).

4 Operating profitwas 236 million, up 7% on 2014 ( 220 million). This increase in revenueswasoffset by organic growth in insurance technical reserves. COMMERCIAL AND POSTAL SERVICES Slowing decline of mailrevenues, down 6.5% compared to a 9% decline in Parcel revenues increasing strongly: + 4.4% to 280 million. Revenueswere 1.9 billion, down 6.5% on 2014 ( 2.1 billion). This decline relates to a reduction of traditional non-digital postal volumes (-11.8%), albeit the decline has slowed compared to the previous year. This was partially offset by the impact of last December s tariff increases,which included some of the services covered by the Universal Postal Service. Moreover, the slowdown in the rate ofdeclinehas been driven by the launch of managerial initiatives aimed at improving the quality of traditional postal services and the efficiency of related industrial processes. The parcels sector has seen a 4% growth in revenues to 280 million, while volumes are up 9% in 2014, with a total of 40 million parcels delivered in the period. This has been driven by the development of e-commerce in Italy.In this sector, Poste Italiane offers an extensive logistical network and integrated secure payment system to customers. The operating loss was 89 million, compared to 36 million in the first six months of 2014 and, along with the aforementioned drop in revenues, is mitigated by actions to contain costs, which were principally carried out in this sector. RECENT EVENTS AND EXPECTED EVOLUTION2015 On 20 July 2015, AGCOM, the Italian regulator on communication and postal services, approved a measure governing the new framework for the Universal Postal Service, in place for the next five years. This measure provides a basis for more flexible and efficient postal distribution model, in line with evolving citizen needs. In particular, two new types of product have been introduced: an ordinary product, J+4 (delivery within 4 days), where the regulated unit price will be increased from 0.80 to 0.95; and a priority quality product, J+1, at free market prices. Moreover, there has been a gradual introduction of alternate delivery days, which will cover a maximum of 25% of the population living in specific parts of Italy. Through this measure, Poste Italiane will benefit from greater opportunities for the diversification of its postal revenues, while offering customers a new and efficient priority delivery service, as well as significant potential for greater efficiency through the gradual introduction of alternate delivery days and through important processes to automate the logistical chain. On 30 July, a commercial agreement was signed with Anima Holding for industrial collaboration in the retail fund management sector.

5 The agreement lasts 10 years, until 31 July 2025, when it can be renewed. The purchase of the stake in Anima, and today s announcement of the commercial agreement, represent a strategic accelerator for the growth of the Group in the fund management sector. In this context, the strength of the Poste Italiane brand, synonymous with trust and security, and its extensive distribution network, complement Anima s establishedtrack record in training and supporting its sales force. The agreement allows Poste Italiane to develop and offer simple products which meet the needs of its clients. Finally, as has occurred in previous reporting periods, the results for the second half might be impacted by higher exceptional charges relating tothe ongoing process of business transformation,as defined in the Industrial Plan, and in view of the imminent privatisation.

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7 THE POSTE ITALIANE GROUP S FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION (thousands of Euro) ASSETS 30 June December 2014 Non-current assets Property, plant and equipment 2,180,970-2,295,901 - Investment property 64,050-66,765 - Intangible assets 491, ,394 - Investments accounted for using the equity method 211, ,583 1,098 1,098 Financial assets 128,974,412 2,313, ,675,939 2,304,949 Trade receivables 61,887-58,747 - Deferred tax assets 777, ,190 - Other receivables and assets 2,229,553 1,477 2,013,351 1,466 Total 134,991, ,343,385 Current assets Inventories 139, ,585 - Trade receivables 3,308,796 1,849,719 3,701,555 2,246,081 Current tax assets 703, ,290 - Other receivables and assets 1,286,264 2,615 1,530, ,494 Financial assets 19,050,530 7,443,108 21,010,553 6,806,805 Cash and deposits attributable to BancoPosta 2,568,273-2,873,042 - Casha nd cash equivalents 1,384, ,595 1,703, ,566 Total 28,441,767 31,615,963 Non-current assets held for sale TOTAL ASSETS 163,432, ,959,348 LIABILITIES AND EQUITY 30 June December 2014 Equity Share capital 1,306,110-1,306,110 - Reserves 2,720,919-3,159,927 - Retained earnings 4,195,444-3,951,961 - Equity attributable to owners of the Parent 8,222,473 8,417,998 Equity attributable to non-controlling interests Total 8,222,767 8,418,289 Non-current liabilities Technical provisions for insurance business 91,999,532-87,219,223 - Provisions for risks and charges 634,300 55, ,934 53,451 Employee termination benefits and pension plans 1,369,211-1,478,486 - Financial liabilities 7,826,846 91,975 5,781,832 95,874 Deferred tax liabilities 895,996-1,047,401 - Other liabilities 737, , Total 103,463,113 96,891,630 Current liabilities Provisions for risks and charges 799,030 10, ,949 12,009 Trade payables 1,296, ,887 1,421, ,158 Current tax liabilities 264,158-23,748 - Other liabilities 1,790,657 27,422 1,894,750 71,310 Financial liabilities 47,597,178 23,272 49,576, ,018 Total 51,747,052 53,649,429 TOTAL EQUITY AND LIABILITIES 163,432, ,959,348

8 CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE PERIOD for the six months ended 30 June (thousands of Euro) Revenue from sales and services 4,389,482 1,157,481 4,593,215 1,197,901 Insurance premium revenue 9,474,018-8,248,669 - Other income from financial and insurance activities 2,055,422 30,450 2,062,512 73,200 Other operating income 31,386 2,945 53,987 3,929 Total revenue 15,950,308 14,958,383 Cost of goods and services 1,233,023 78,824 1,277,627 69,067 Net change in technical provisions for insurance business and other claims expenses 10,384,545-9,584,169 - Other expenses from financial and insurance activities 311,506-54,132 - Personnel expenses 2,982,745 20,130 3,031,045 19,952 non-recurring costs/(income) - - Depreciation, amortisation and impairments 288, ,413 - Capitalised costs and expenses (11,547) - (10,286) - Other operating costs 123,592 (2,826) 173,687 14,598 Operating profit/(loss) 637, ,596 Finance costs 60, ,530 2,313 non-recurring costs ,000 - Finance income 88,141 2, ,580 3,241 non-recurring income - - Profit/(Loss) on investments accounted for using the equity method (32) (537) Profit/(Loss) before tax 665, ,109 Income tax expense 230, ,591 - non-recurring costs/(income) (17,174) - PROFIT FOR THE PERIOD 435, ,518 attributable to owners of the Parent 435, ,514 attributable to non-controlling interests - 4 Earnings per share Diluted earnings per share

9 CONSOLIDATED INCOME STATEMENT For the six months ended 30 June 2015 For the year ended 31 December 2014 (thousands of Euro) For the six months ended 30 June 2014 Profit/(Loss) for the period 435, , ,518 Items to be reclassified in the Statement of profit or loss for the period Available for sale financial assets Increase/(decrease) in fair value during the period (222,218) 1,965,733 1,658,792 Transfers to profit or loss (349,503) (288,920) (175,438) Cash flow hedges Increase/(decrease) in fair value during the period (39,040) 143,870 27,583 Transfers to profit or loss (40,329) (46,483) (36,659) Taxation of items recognised directly in, or transferred from, equity to be reclassified in the Statement of profit or loss for the period 212,082 (566,161) (465,344) Items not to be reclassified in the Statement of profit or loss for the period Actuarial gains/(losses) on provisions for employee termination benefits and pension plans 85,772 (176,631) (111,880) Taxation of items recognised directly in, or transferred from, equity not to be reclassified in the Statement of profit or loss for the period (27,290) 48,544 30,277 Total other components of comprehensive income (380,526) 1,079, ,331 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 54,478 1,291,927 1,148,849 attributable to owners of the Parent 54,475 1,291,933 1,148,849 attributable to non-controlling interests 3 (6) -

10 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (thousands of Euro) Share capital Legal reserve BancoPosta RFC reserve Reserves Fair value reserve Equity Cash flow hedge reserve Retained earnings/ (Accumulated losses) Total equity attributable to owners of the Parent Noncontrolling interests Total equity Balance at 1 January ,306, ,234 1,000, ,848 (18,194) 3,858,306 7,116,304-7,116,304 Total comprehensive income for the period ,015,244 (6,310) 139,915 1,148,849-1,148,849 Attribution of profit to reserves Dividends paid (500,000) (500,000) - (500,000) Change in scope of consolidation Other shareholder Balance at 30 June ,306, ,234 1,000,000 1,686,092 (24,504) 3,498,221 7,765, ,765,427 Total comprehensive income for the period ,584 72,521 (56,021) 143,084 (6) 143,078 Attribution of profit to reserves Dividends paid Change in scope of consolidation Other shareholder , , ,761 Balance at 31 December ,306, ,234 1,000,000 1,812,676 48,017 3,951,961 8,417, ,418,289 Total comprehensive income for the period (385,050) (53,958) 493,483 (*) 54, ,478 Attribution of profit to reserves Dividends paid (250,000) (250,000) - (250,000) Change in scope of consolidation Other shareholder Balance at 30 June ,306, ,234 1,000,000 1,427,626 (5,941) 4,195,444 8,222, ,222,767 * The item includes profit for the period, amounting to Euro 435,004 thousand, and actuarial gains on employee benefits of Euro 85,772 thousand, net of related current and deferred taxes totalling Euro 27,290; (actuarial gains net of related taxation amounting to Euro 3 thousand relate to third party reserves).

11 CONSOLIDATED STATEMENT OF CASH FLOWS For the six months ended 30 June 2015 (thousands of Euro) For the six months ended 30 June 2014 Unrestricted net cash and cash equivalents at beginning of period 747, ,827 Cash subject to investment restrictions 511, ,157 Cash attributable to technical provisions for insurance business 414, ,625 Amounts that cannot be drawn on due to court rulings 15,849 17,036 Current account overdrafts 7,964 4,925 Cash received on delivery (restricted) 6,769 6,764 Cash and cash equivalents at beginning of period 1,703,765 1,445,334 Cash and cash equivalents at beginning of period 1,703,765 1,445,334 Profit/(loss) for the period 435, ,518 Depreciation, amortisation and impairments 288, ,413 Losses and impairments/(recoveries) on receivables (173) 39,180 (Gains)/Losses on disposals 178 1,143 Impairment of avalable for sale investments 37 75,000 (Increase)/decrease in inventories (847) (2,584) (Increase)/decrease in receivables and Other assets (149,185) (569,987) Increase/(decrease) in Payables and Other liabilities (53,655) 27,458 Movement in provisions for risks and charges 98,633 (36,863) Movement in provisions for employee termination benefits and pension plans (23,503) (21,810) Defferences in accrued finance costs and income (cash correction) (28,243) (2,294) Other changes (14,841) 8,353 Net cash flow generated by/(used in) non-financial operating activities [a] 552,028 81,527 Increase/(decrease) in liabilities attributable to financial activities 621,492 90,681 Net cash generated by/(used for) held for trading financial assets attributable to financial activities (287) - Net cash generated by/(used for) available for sale financial assets attributable to financial activities (677,709) (51,997) Net cash generated by/(used for) held to maturity financial assets attributable to financial activities 805, ,513 (Increase)/decrease in cash and deposits attributable to BancoPosta 304, ,233 (Increase)/decrease in other assets attributable to financial activities (1,217,004) (822,752) (Income)/expenses from financial activities (851,562) (702,640) Cash generated by/(used for) assets and liabilities attributable to financial activities [b] (1,014,788) (672,962) Net cash generated by/(used for) financial assets at fair value through profit or loss attributable to insurance activities (3,752,209) (83,309) Increase/(decrease) in net technical provisions for insurance business 6,629,575 6,979,293 Net cash generated by/(used for) available for sale financial assets attributable to insurance activities (1,502,611) (4,746,931) (increase)/decrease in other assets attributable to insurance activities (122,450) (3,072) (Gains)/losees on financial assets/liabilities measured at fair value 64,703 (1,090,750) (Income)/expenses from insurance activities (1,066,941) (454,981) Cash generated by/(used for) assets and liabilities attributable to insurance activities [c] 250, ,250 Net cash flow from/(for) operating activities [d]=[a+b+c] (212,693) 8,815 - (803,985) (132,106) Investing activities Property, plant and equipment, investment property and intangible assets (135,244) (156,491) Investments (210,517) (99) Other financial assets - (12,687) Disposals - Property, plant and equipment, investment property and intangible assets and assets held for sale 1,901 1,760 Investments - - Other financial assets 3,197 5,484 Change in scope of consolidation - 2,865 Net cash flow from/(for) investing activities [e] (340,663) (159,168) - (212,216) 5,829 Proceeds from/(repayments of) borrowings (164,233) 943,683 (Increase)/decrease in loans and receivables 113, ,862 Dividends paid (250,000) (500,000) Receivable authorised by 2015 Stability Law in implementation of Sentence of the European Court 535,000 - Net cash flow from/(for)financing activities and shareholder [f] 234, , ,488 (382,633) Net increase/(decrease) in cash [g]=[d+e+f] (318,995) 405,192 Cash and cash equivalents at end of period 1,384,770 1,850,526 Cash and cash equivalents at end of period 1,384,770 1,850,526 Cash attributable to technical provisions for insurance business (998,500) (1,375,957) Amounts that cannot be drawn on due to court rulings (17,341) (16,131) Current account overdrafts (5,605) (15,120) Cash received on delivery (restricted) (20,235) (16,385) Unrestricted net cash and cash equivalents at end of period 343, ,933