Roma, 9 Nov 2017 14:12
- Total consolidated revenues: € 26.3 billion, +2.0% (€ 25.7 billion at 30.9.2016)
- Consolidated operating profit: € 1,176 million, -1.7% (€ 1,196 million at 30.9.2016)
- Consolidated net profit: € 724 million, -10.3% (€ 807 million at 30.9.2016)
- Client assets under management/administration: € 505 billion, +2.5% (€ 493 billion at 31.12.2016)
- Net industrial financial position: € 417 million surplus (€ 893 million surplus at 31.12.2016)
Rome, 9 november 2017 – The Board of Directors of Poste Italiane S.p.A. (“Poste Italiane”), chaired by Maria Bianca Farina, reviewed and approved today the Interim Financial Report as of 30 September 2017, drawn up in compliance with international accounting standards (IAS/IFRS).
Consolidated economic and financial highlights (EUR/million):
|First nine months 2017||First nine months 2016||Change|
|Client assets under management/administration||505,237||492,707||2.5%|
|Net (surplus) industrial financial position||(417)||(893)||-53.3%|
Matteo Del Fante, Chief Executive Officer and General Manager, commented on the results as follows:
“Today's results show a continued growth in revenues reaching € 26.3 billion, an increase of 2% compared to the same period the last year. We should also highlight that our Client assets under management/administration now stably exceed € 500 billion, with a growth of 2.5% at € 505 billion.
Meanwhile, operating earnings fell slightly compared with the first half of the year. However please bear in mind that, in the first nine months of last year, the Group benefited from a non recurrent gain from the sale of our stake in Visa Europe.
Furthermore, in the first nine months of 2017 Poste made several provisions and had to forgo the contribution of Mediocredito Centrale Banca del Mezzogiorno, which was sold to Invitalia. Net of these extraordinary items operating profit would have been € 1,237 million, recording a growth of 18% compared with the same period of last year.
Finally, the implementation of our strategic guidelines is proceeding and our focus on the development of the new strategic plan which will be presented to the market in early 2018. To facilitate the relevant activities, in mid-October we set up a new division named “Payments, Mobile and Digital” to provide a unified offering to retail and business clients and the public administration, ensuring maximum development and integration, enhancing Poste Italiane's physical distribution channels at the same time guaranteeing growth in the digital arena”.
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In addition to the standard financial indicators required by IFRS, Poste Italiane also utilises a number of alternative performance indicators, with a view to providing a clearer assessment of the business performance and financial position. The meaning and makeup of such indicators are described in the annex, in line with the ESMA/2015/1415 Guidelines of 5 October 2015.
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In the first nine months of 2017, the Group’s total revenues, inclusive of insurance premiums, registered a 2.0% growth compared with the same period of the previous year, rising to € 26.3 billion. The Insurance Services and Asset Management sector, in a market that has seen a sharp contraction in insurance premiums, contributed € 19.5 billion of total revenues, an increase of 3.9%. Financial Services fell, recording revenues of € 4.0 billion (-3.1%) and Postal and Business Services posted revenues of € 2.7 billion (-2.5%), impacted by the steady fall in mail volumes. Revenues for the Express Delivery, Logistics and Parcels segment however grew to € 502 million, up 8.8% compared with the same period of the previous year.
Operating profit in the first nine months, of € 1,176 million, was slightly down compared with the same period of the previous year (€ 1,196 million). The smaller contribution from Financial Services and Postal and Business Services was partly offset by the positive contribution from Insurance Services and Asset Management.
Net profits, of € 724 million, fell from the € 807 million of the same period of the previous year, due to the higher financial costs linked to the pre-tax loss of € 82 million, borne by the value of the Contingent Convertible Notes subscribed by Poste Italiane in December 2014 and issued by Midco SpA, the company which holds 51% of Alitalia SAI SpA.
The Group's net financial position presents a surplus of € 5.5 billion compared with € 6.2 billion at 31 December 2016. The variation in the first nine months reflects, among other things, contraction of the fair value of the available-for-sale financial instruments in portfolio by € 0.9 billion, payment of € 222 million for the stake in FSIA Investimenti Srl and the distribution of dividends for € 509 million. Cash generated by non-financial operations was € 684 million.
The net industrial financial position shows a surplus of € 417 million.
Capital expenditure for the period, before disposals, comes to € 283 million and is primarily related to activities regarding IT and mail & parcels infrastructures.
In the first nine months of 2017, the client assets under management/administration rose to € 505 billion, up 2.5% from € 493 billion at 31 December 2016. This was attributable mainly to growth in BancoPosta direct deposits to current accounts and in the technical provisions of the Life insurance segment.
As regards the distribution networks, the process of modernisation and digitalisation of post offices continued in the first nine months of 2017 with the roll-out of wi-fi connectivity in 4,119 post offices from the start of the project and the installation of a “new queue management” system, now present in 2,704 post offices. These initiatives continue to further improve the quality of customer services, including the opening of 27 multilingual offices across Italy (4 of which in 2017) to simplify access to the Group’s services for “new Italians".
Information on the main operating segments is reported below.
- Market revenues of € 4.0 billion, down -3.1%
- Operating profit down -14% to € 605 million
- BancoPosta’s average deposits total € 55 billion, up 11% on 31.12.2016
- 4.4 million Postepay Evolution cards active at 30 September 2017
Total revenues of € 4.4 billion fell compared with the corresponding period of the previous year. Income from active management of the BancoPosta securities portfolio, the positive contribution of the PostePay and PostePay Evolution credit and debit cards have partly offset the negative variation due to the non-recurring gain of € 121 million in the first nine months of 2016 from the sale of the stake in Visa Europe Ltd., and the lower interest earned on current account deposits (in line with the market).
The operating profit of € 605 million, after provisions for risks and charges of around € 100 million, mainly for risks associated with the real estate funds placed in the early 2000's, showed a reduction of -14.1% compared with the same period of the previous year (€ 704 million).
BancoPosta’s average current account deposits (including long-term repos) amount to € 55.2 billion, up 11.3% from € 49.6 billion at 31 December 2016.
The number of Postepay Evolution cards – the personal rechargeable prepaid card with IBAN code – issued since the product launch (July 2014) has exceeded 4.8 million, with around 1.2 million cards issued in the first nine months of 2017.
Poste Italiane, through BancoPosta, has continued to strengthen its services for Italian households by expanding the range of consumer loans and mortgages, with different solutions in terms of length, amount and repayment flexibility. Commercial initiatives continued with the aim of enhancing the Postal Savings offering and consolidating Digital Banking activities, as well as reinforcing our position in the Transaction Banking segment. In this area in May we began the distribution of the new Conto BancoPosta which allows current account holders to use all services across multichannel platforms.
The leverage ratio as of 30 September 2017 stands at around 3.04% (3% the regulatory minimum). The CET1 ratio at the same date is 17.1% (15.9% in the first nine months and 16% at the end of FY 2016).
INSURANCE SERVICES AND ASSET MANAGEMENT
- Insurance and asset management revenues up 3.9% to € 19.5 billion
- Operating profit of € 556 million, up 27.5%
Total revenues, inclusive of other income from insurance operations, reached € 19.5 billion, up 3.9% compared with the same period of the previous year (€ 18.7 billion), mainly due to the positive performance of insurance premiums and net inflows from mutual funds (fees +51.2% compared with the same period of the previous year). More specifically, Poste Vita, the leading Italian insurance provider with technical provisions amounting to € 120 billion (€ 114 billion at the end of December 2016) received premiums for € 16.3 billion, posting a growth of 6.4% compared with the same period of 2016, notwithstanding the fall of more than 8% in new production by the Italian insurance market in first eight months of 2017 (ANIA data).
Operating profit is € 556 million, up 27.5% compared with the same period of the previous year (€ 436 million), thanks to the increase in assets under management (mutual funds and technical provisions).
POSTAL AND BUSINESS SERVICES
- Market revenues of € 2.66 billion, down -2.5% (€ 2.73 million)
Total revenues amount to € 6.1 billion (inclusive of € 3.4 billion in captive revenue, mainly due to distribution services), down -2.4% compared with the same period of 2016 (€ 6.3 billion). The fall in market revenues from mail volumes (-5.8% compared with the first nine months of 2016), is linked to the expected drop in the volume of postal products (-10.3%), though smaller than the 2016 trend compared with the same period of 2015 (-10.4%).
Combatting the reduction in revenues, besides the new tariffs and the development of the parcels segment, Poste has taken measures to improve the quality of traditional postal services and the efficiency of the related operating processes.
Parcel services posted a 19% growth compared with the same period of 2016, for a total number of 81 million parcels handled in the first nine months of the year, partly due to the developing growth of e-commerce in Italy.
Operating profit amounts to € -6 million (€ 35 million in the first nine months of 2016). The trend in revenues was only partly offset by a similar reduction in costs, in particular in labour costs due to efficiency measures on the workforce.
As in previous years, a provision is foreseen in the last quarter for pre-retirement plans as part of an increased efficiency in the business unit.
RECENT EVENTS AND BUSINESS OUTLOOK
Key events during the period
On 15 February 2017 Poste Italiane SpA finalised the acquisition from FSI Investimenti SpA (controlled by CDP Equity SpA through a 77% stake) of a 30% quota of FSIA Investimenti Srl, which holds 49.5% of SIA SpA, business leader in e-payments, payments and online services. Following the transaction, Poste Italiane indirectly holds a 14.85% share in the capital of SIA. On completion of the deal, Poste paid 80% of the acquisition price – expected to come to € 278 million. The final price adjusted on the basis of the values established for SIA's net financial position at 31 December 2016 and its business results for financial year 2017. With the closure of the deal, the shareholder agreement between Poste Italiane and CDP Equity takes effect concerning the governance and ownership structure of FSIA and SIA over which the parties exercise joint control.
On 1 April 2017 the partial spin-off from Postecom SpA in favour of Postel SpA of the business unit responsible for activities relating to Postecom's shareholdings in PatentiViaPoste ScpA and Consorzio Poste Motori took legal, accounting and tax effect, as did the merger by incorporation of what remains of the Company in Poste Italiane.
On 7 August 2017, after receiving the necessary authorisations from the Ministry of Economic Development, the European Central Bank and the Bank of Italy, Poste Italiane and Invitalia - the National Agency for the Attraction of Investment and Business Development - today finalised the transfer to Invitalia of the 100% stake in Banca del Mezzogiorno-MedioCredito Centrale held by Poste Italiane. The operation, as a related party transaction (in that Poste and Invitalia are subject to common control by the Ministry of Economy and Finance), in accordance with the law and applicable regulations was approved by the Board of Directors of Poste, after hearing favourable opinions from the Related Parties and Connected Parties Committee within it.
On 20 September 2017 the competent bodies approved the plan for the merger of Poste Tutela (100% Poste Italiane SpA) in Poste Italiane.
As regards Poste Italiane's investments in the Midco SpA Contingent Convertible Notes, subscribed in December 2014 for € 75 million, on 2 May 2017 the Shareholders' Meeting of Alitalia SAI, 51% controlled by Midco SpA, acknowledged the outcome of the referendum of the employees, which failed to back the shareholders' offer to finance the new business plan of March 2017. The Board of Directors of the company decided to apply to be admitted to extraordinary administration proceedings, which was granted by Decree of the Minister for Economic Development. On 11 May 2017 the Court of Civitavecchia declared Alitalia SAI insolvent. On 5 July 2017 the Shareholders' Meeting of MidCo SpA, approved the financial statements for the financial year ended 31 December 2016, in which the shareholding in Alitalia SAI was entirely written off, resulting in a reduction in shareholders’ equity by the amount needed to cover the conversion of the notes held by Poste Italiane into a financial instrument. Taking into account the above events, a non-recurring loss of € 82 million was recognised for the first nine months of 2017, representing the total value of the notes inclusive of interest at 31 December 2016, and posted to financial charges.
Main events subsequent to 30 September 2017
The Annual Market and Competition Act - Law no. 124 of 4 August 2017 - which came into force on 29 August 2017, abolished the post office’s monopoly on delivering notification of judicial documents and traffic violations. Pending the definition of the new regulatory framework, in the interim period Poste Italiane will continue to guarantee universal service across the whole country.
From 10 September to the first half of October SDA Express Courier's business suffered significant interruptions due to trade union unrest. This caused delays in services during the period of disruption. The union unrest ended at the beginning of October with a limited number of parcels involved, thanks to Poste Italiane’s extensive distribution network.
Poste Group will be working in the coming months in drafting a new business plan designed to permit further balanced growth for the business, as well as continuing to pursue the country's path of innovation with particular attention to services for the Public Administration.
In the Logistics-Postal segment the Group will continue the restructuring process already begun in recent years through the use of new automation technologies to support the production process and to further improve our competitive positioning in the Express Delivery and Parcels market.
In addition, we will continue to actively manage our portfolio of financial instruments, with the aim of stabilising overall returns in terms of interest income and capital gains. In Financial Services efforts will proceed in the fourth quarter of 2017 in managing Postal Savings inflows and work will continue to define the conditions of the agreement governing the provision of intermediation services in favour of Cassa Depositi e Prestiti SpA.
The next few months will be focused on our positioning in transaction and digital banking, with particular attention to increasing receipts and payments, aimed at creating a unique offering for retail, business and public administration clients, ensuring maximum growth and integration, and reinforcing a service model to enhance Poste Italiane's physical distribution channels as well as extending its digital reach.
In the Insurance Segment, besides consolidating its leadership position in the Life market, the Group will work to extend the penetration of its Mutual Fund products and Class III policies, guaranteeing transparency and the maximum satisfaction of the needs of our clients. We will also continue to grow the protection and welfare segment, partly by strengthening the integrated social security, health and social care model.
All of the above goals will be pursued reinforcing the Group's cash generation in order to maximise the total return for shareholders.
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Poste Italiane presents its quarterly financial reports on a voluntary basis, with a summary picture of the business focusing on the key highlights in compliance with Consob Resolution no. 19770 of 26 October 2016 which gives listed companies whose Member State of origin is Italy, the faculty to voluntarily publish additional periodic financial information besides their annual and half-yearly reports.
The document containing the Interim Financial Report as of 30 September 2017 will be published by 14 November 2017, made available to the public at the Company’s head office, on the Company's website (www.posteitaliane.it), on the website of the authorised storage system "eMarket Storage" (www.emarketstorage.com), and filed with Borsa Italiana S.p.A. (www.borsaitaliana.it), the Italian stock exchange management company. The disclosure regarding the filing will be issued in due course.
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A conference call will be held at 2.30 pm today, 9 November 2017, in order to present the results for the first nine months of 2017 to financial analysts and institutional investors. Journalists will be able to listen to the call. Supporting material will be made available in the “Investors” section of the website www.posteitaliane.it as the conference call begins.
Tables showing the results of the individual business units (before intersegment eliminations) are provided below, together with the period accounts (consolidated statement of financial position, consolidated statement of profit/loss for the period, consolidated statement of comprehensive income, consolidated statement of changes in equity and condensed consolidated statement of cash flows).
A brief description of the “alternative performance indicators” used is also provided.
The manager responsible for financial reporting, Luciano Loiodice, pursuant to art. 154 bis, paragraph 2 of the Consolidated Law on Finance, declares that the accounting information contained in this release is consistent with the underlying documents, accounting books and records.
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Condensed financial information on the operating segments.
In compliance with the provisions of IFRS 8 – Operating Segments, an operating segment is a component of an entity: a) that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity) and b) whose operating results are reviewed regularly by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. Following is the key financial information on the operating segments of Poste Italiane Group.
|First nine months 2017||First nine months 2016||Var.|
INSURANCE SERVICES AND ASSET MANAGEMENT
|First nine months 2017||First nine months 2016||Var.|
POSTAL AND BUSINESS SERVICES
|First nine months 2017||First nine months 2016||Var.|
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ALTERNATIVE PERFORMANCE INDICATORS
We report below the meaning and content of the “alternative performance indicators”, which are not required by IAS/IFRS but have been used in this release with a view to providing a clearer assessment of the Group’s operating performance and financial position.
GROUP NET FINANCIAL POSITION: the sum of financial liabilities, insurance technical provisions, financial assets, reinsurers’ share of technical provisions, BancoPosta cash and deposits and cash and cash equivalents.
NET INDUSTRIAL FINANCIAL POSITION: the sum of the net financial position of the Postal and Business Services segment and the net financial position of the Other Services segment, before adjusting for intersegment transactions.
Breakdown of Net Financial Position (EUR/million):
|Postal and Business Services||Financial Services||Insurance Services and Asset Management||Other Services||Eliminations||Consolidated|
|Balance at 30 September 2017|
|Technical provisions for insurance business||120,613||120,613|
|Technical provisions attributable to reinsurers||(75)||(75)|
|Cash and deposits attributable to BancoPosta||(3,148)||(3,148)|
|Cash and cash equivalents||(1,821)||(372)||(3,502)||(12)||480||(5,227)|
|Net financial position||(359)||(2,656)||(2,323)||(58)||(62)||(5,458)|
|Net industrial financial position||(359)||(58)||(417)|
|Balance at 31 December 2016|
|Technical provisions for insurance business||113,678||113,678|
|Technical provisions attributable to reinsurers||(66)||(66)|
|Cash and deposits attributable to BancoPosta||(2,494)||(2,494)|
|Cash and cash equivalents||(1,556)||(1,320)||(1,324)||(21)||319||(3,902)|
|Net financial position||(845)||(3,270)||(2,296)||(48)||234||(6,225)|
|Net industrial financial position||(845)||(48)||(893)|
To see the press release in full version download pdf
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For more information:
Poste Italiane S.p.A. – Press Office
Head of Press Office
Tel. +39 0659589008
Poste Italiane S.p.A. – Investor Relations
Alessandro Baj Badino
Head of Investor Relations
Tel. +39 0659584716