Fsia Investimenti Srl Investment SPV that purchases, subscribes, holds, administers, sells and otherwise disposes of shares in SIA SpA, bonds or participating financial instruments issued by SIA.
Poste Insurance Broker Srl On 12 April 2019, Poste Assicura established Poste Insurance Broker Srl, an insurance brokerage company set up to oversee relations with partner insurance companies in order to launch a pilot project for the offer of vehicle insurance policies to employees.
The Group’s Organisation and Operating Segments In line with the strategic guidelines set out in the Deliver 2022 Strategic Plan, the Group’s activities are divided into four Strategic Business Units (also referred to as operating segments in Poste Italiane’s financial statements): Mail, Parcels and Distribution; Payments, Mobile and Digital; Financial Services; Insurance Services.
T he organisational model for the postal logistics network consists of 6 Logistics Macro Areas, which handle all stages of the value chain: acceptance and collection, outbound sorting, transport, inbound sorting and delivery. This model makes it possible to simplify the decision-making chain.
Parcels network activities Parcels and express courier products that are larger than those delivered by letter carriers are delivered via the network operated by the subsidiary, SDA Express Courier.
A significant indicator of the Company’s impact on the Italian economy is the so-called multiplier, a factor that shows the “leverage effect” generated by spending on purchases from local suppliers. According to estimates, €1 million spent by Poste Italiane is able to generate an impact on the economy of €5 million in terms of GDP, €1 million in tax revenues and €3 million in earned income, creating over 70 jobs in the production system.
The impacts relating to the material topics identified are entirely generated by the organisation, with the exception of the “Environmental impacts of logistics” and “Occupational health and safety” topics, which also derive from the activities of suppliers who work on a significant portion of the Group’s operations on behalf of Poste Italiane.
Procurement processes based on pre-contractual and contractual behaviours aimed at achieving complete respect of legality and transparency, and adoption of selection, assessment and monitoring criteria to measure the social and environmental performance of suppliers, in order to guarantee high levels of functionality and quality for supplies and mitigate ESG risks.
� Health and safety � Analysis and optimisation of occupational health and safety organisational models � Extension of production models to operational sites (e.g. lean manufacturing) � Support for the implementation and certification of OSMSs in the production units of Poste Italiane SpA and other Group companies
In order to encourage the development of a business culture based on respect for and appreciation of diversity and with the intention of outlining a clear and structured focus on this issue, Poste Italiane, in line with what has been outlined in the Code of Ethics and the Group policy for the protection of human rights, has adopted a specific Diversity and inclusion Policy. The objective is to promote diversity in all its aspects in order to generate value within the workplace, allowing better assessment and monitoring of the risk associated with the occurrence of discrimination in the Company.
Finally, the correct identification and assessment of climate-related risks and opportunities is also ensured by listening to stakeholders. They are periodically involved in the Multi-stakeholder Forums organised by Poste Italiane and have a reporting system that allows them to bring any perceived risks to the attention of the Company.
Tr an si tio n ris ks 1. Regulatory developments Medium-term � Constant preventive monitoring of possible changes to regulations
� Products and services offering that incorporates high ethical standards and environmental criteria (e.g. development of insurance solutions that, on the one hand, encourage the adoption of sustainable and responsible behaviours by policyholders and, on the other, help to mitigate ESG risks)
� Communication with the responsible organisations and with international protection and defence bodies (e.g. participation in drills or other initiatives, etc.)
With this in mind, Poste Italiane has been listening to the Top Management of Poste Italiane since January 2020, with the aim of understanding the Company’s strategic vision, so as to use - in a data-driven logic - the data to make its reputation active as an incentive for continuous development and progress for the entire Group.
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.
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.
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. As a result, analyses in the ESG sector are used by investors as a useful tool to assess business strategy and identify possible opportunities and risks in terms of sustainability with respect to their investments. In addition, careful analysis contributes to the development of sustainable investment plans for the Group.
CSR Exhibition: is the most important event in Italy dedicated to sustainability. It is an opportunity to share ideas and find common paths through dozens of meetings, hundreds of speakers and thousands of visitors. The exhibition allows getting to know the companies that have made sustainability a strategic driver, meeting young people, helping build the future of CSR. The exhibition takes place for two days, which are intense thanks to a rich cultural programme, many stimulating appointments, many opportunities for networking.
The Company’s value creation process over time is based on a characteristic business model, typical of an integrated industrial group, organised into Strategic Business Units specialised by industry that share the Group’s multi-channel distribution network and unitary governance.
INPUT: � Suppliers with an ISO 14001 or EMAS certified environmental management system
The ordinary component of the personnel expenses, which rose from €5,524 million in 2018 to €5,561 million (+0.7%), reflects the reduction in the average number of staff employed (more than 5 thousand FTE less than 2018), which almost entirely offset the increase in the cost per capita linked to the effect of the latest contract renewal (2016-2018 National Collective Labour Contract), as well as the recognition of an all-inclusive amount to cover the entire year 2019 established by an agreement with the labour unions signed on 18 February 2020. The evolution of the workforce is consistent with the provisions of the Deliver 2022 strategic plan and is the result of efficiency initiatives implemented by the Company mainly with regard to the Mail, Parcels and Distribution Business Unit.
C2C: acronym for Consumer to Consumer. Services for shipments from private user to private user. Basic offer focused on ease of access (Post Office network and website).
With reference to sorting activities and the automation of production processes, in July, the largest parcel sorting plant currently installed in Italy was inaugurated at the Bologna freight terminal. The hub is equipped with three integrated automation systems for sorting the different types of parcels, with a total daily processing capacity of 250,000 units, equal to about 40% of Poste’s production capacity, as well as advanced technologies for safety and energy saving.
Lastly, a partnership has been developed with the Municipality of Genoa and with a local start-up to find new solutions for more eco-friendly deliveries within the city centre (the Metropolitan Logistics project).
Personnel leaving central and local staff departments involved over 650 FTEs in 2019 on a voluntary basis in the form of voluntary retirement schemes, redeployment initiatives and the conversion of full-time to part-time contracts.
21. In order to ensure that subscribers to different fixed and mobile network operators are able to communicate with each other, networks must be interconnected and operators must therefore enter into interconnection contracts regarding the provision of one or more services.
This trend reflected a significant increase in deposits from resident customers (in current accounts, certificates of deposit and repurchase agreements), amounting to approximately €121 billion (+5.6% year-on-year), accompanied by the substantial stability of bond deposits, which fell by approximately €34 billion. In December 2019, the average cost of bank funding (which includes deposits, bonds and repos from households and non-financial corporations) was around 0.58%. Bank loans remained stable during 2019: at the end of December 2019, total loans to residents (Private Sector and Public Administration) in Italy - excluding interbank lending - amounted to around €1,681 billion, with the marginal contribution of loans to households (+0.3% on an annual basis).
Gross Gains: Gains from the sale of securities in the BancoPosta Portfolio.
In detail, operations for the year showed an increase in Interest income, which rose from €1,555 million in 2018 to €1,636 million in 2019 (+5.2%) in relation to current accounts deposits, as well as the Distribution of third-party products, which increased by €51 million (+19.3%) due to higher volumes disbursed and higher up front on retail loans, in particular on Personal loans and Salary loans.
During 2019, the range of products was expanded through the placement of certain types of interest-bearing postal certificates (BFP) and the distribution of products dedicated to new liquidity. With the aim of facilitating the digital evolution of customers through a multi-channel approach, the development of online services continued and the “BancoPosta Digital Moneybox” was released.
Later, on 18 April 2019, the CONSOB requested further clarification regarding the notes submitted by BancoPosta between September 2018 and February 2019 and the “Report on the conduct of investment services and activities” relating to: (i) concerns regarding compliance with the above legislation; (ii) aspects where there is a need for precise clarification in order assess compliance with industry regulations; (iii) updates on matters for which information on initiatives in progress was previously provided. The above information was provided in a specific response submitted to the regulator on 03 June 2019.
With regard to the representation of the information relating to the Obelisco real estate fund in the statement of account of the Customer Securities Dossier and the comments made by Sagitta SGR on 5 August 2019, CONSOB informally requested some clarification from Poste Italiane. The reply was sent on 17 October 2019.
Net technical provisions Poste Vita Group (€m) 140.2 125.1 15.2 12.1%
The borrowings shown in the above analysis primary regard the following: � an EIB loan of €173 million maturing in March 2026; � an EIB loan of €400 million maturing in October 2026; � a private placement of approximately €50 million.
** The CET 1 Ratio represents the adequacy of Tier 1 capital in terms of Pillar 1 capital requirements (operational, credit, counterparty and market risks). *** Return On Assets. Represents the ratio of profit for the period and total assets. **** Return On Equity. Represents the ratio of profit for the period and equity after deducting profit for the period and the valuation reserves. ***** Represents the contribution from net interest income as a ratio of net interest and other banking income. ****** Cost/income ratio. This is the ratio between Operating expenses and Net interest and other banking income.
At 31 December 2019, the BancoPosta function has 11 second-level functions, including 3 Marketing functions: Affluent, Business and Public Administration, Mass Market; 1 function dedicated to classroom training of the sales network for the offer of financial and insurance services: Territorial Marketing; 4 Staff functions: Administration and Separate Reporting, BancoPosta HR Business Partner, Planning, Control and Data Analysis, Governance Outsourcing and Business Support; 3 Control functions: Compliance, Internal Auditing and Risk Management.
Statement of financial position Assets (€m) 31 December 2019 31 December 2018 Changes
Financial assets measured at fair value through profit or loss 71 58 13 22.4%
Financial assets measured at fair value through profit or loss of €71 million are attributable to 32,059 Visa Incorporated (C series) shares not listed on regulated markets.
With the objective of strengthening and improving its internal control and risk management system, in 2019, as part of the activities aimed at evolving and improving the efficiency of governance and the continuous strengthening of the internal control and risk management system in accordance with the principles of integrity, transparency and legality, Poste Italiane defined an integrated compliance model at Group level to create and strengthen operational synergies between the various specialist compliance risk controls. The integrated compliance model makes it possible to intercept any areas of compliance that are not fully supervised and to ensure uniform governance in the management of non-compliance risks also thanks to a clear definition of the roles and responsibilities of the players involved in the process activities.
• In order to rationalise the processes involved, the Qualification System is also used by Group companies
• Supply of goods and services by the selected suppliers under contractually agreed terms and conditions
For postmen’s uniforms, it is required that the fabric used for the packaging has the Oeko-tex or Ecolabel certificate. This certification guarantees that the packaging process of the same does not contain or give off substances that are harmful to human health, and certifies products with a reduced environmental impact.
Increase employee satisfaction By 2022 % of employees who declare to be satisfied
In 2019, the online platform was implemented for the initiative, via which employees will be able to convert their performance -related bonus with welfare goods and services. The initiative allowed staff to access a wide range of customisable goods and services and to take advantage of tax and contribution opportunities provided by law, together with an additional bonus recognised by the Company on the converted value.
The organisational evolution, which aims to increase the effectiveness of the sales force dedicated to the Small Business customer segment, includes the specialisation of consultants in the Financial, Mail and Parcel sectors. As a result, in the Post Office Network, the current professional figures of the Business Consultant Specialist and the Business Financial Consultant Specialist and the Small Business Specialist, dedicated to the Financial sector, have been surpassed. The implementation of the project will be monitored through national and territorial labour union verification tables.
For more details on the new additions to the company fleet, please refer to the Decarbonisation Pillar.
The Group’s primary objective is to encourage the development of a business culture based on respect for and appreciation of diversity. In affirming the “social” dimension of corporate sustainability, the promotion of diversity in all its forms and expressions is considered one of the greatest resources that gives value to the company system. For this reason, with the intention of outlining a clear and structured focus on this issue, Poste Italiane, also given the outcome of the materiality analysis and the results of the Multi-stakeholder Forum, has decided to address it within the new pillar Diversity and inclusion, giving it exclusive attention.
Supporting maternity and paternity The “MAAM” initiative continued, consiting of a digital programme aimed at strengthening the skills relating to the experience of parenting, which may also be useful at the time of returning to work.
Mani Bianche Roma Onlus Association. The project also envisages activation of a multidisciplinary training course aimed at counter staff who wish to acquire basic skills to communicate with deaf customers, consisting of classroom sessions and a workshop.
In the sign of a further approach to the needs of small local realities and in light of the achievement of the objectives set in 2018, during the second meeting with the Mayors of Italy, organised in October 2019 in Rome, the top management announced the provision of new services dedicated to local realities with less than 5,000 inhabitants, renewing the direct and permanent dialogue on the specific needs of the territory. In this regard, in 2019, Poste Italiane undertook to implement 7 new lines of intervention.
The new model aims to make assistance a competitive lever to support the business and the development of relationships with customers with the aim of addressing all customer expectations through an ecosystem of services developed on customers’ needs and offering customised solutions. The multi-year project aims to develop the customer journey of assistance by business segment. Customer management is made more efficient through the use of smart and innovative management tools. The new model, in fact, provides several assistance journeys by gradually introducing Artificial Intelligence (AI) that allows optimisation of managed volumes and an increase in selfcare. The main areas of improvement in terms of customer satisfaction concern Average Waiting Time in Queue (TMA) and Average Management Time (TMG). The interventions of the Transformation Plan allow a reduction in waiting times and management of requests with a consequent improvement in customer satisfaction levels. Moreover, in line with the “customer centric” approach adopted by the Company, an SMS notification system has been implemented to remind Affluent customers of Poste Italiane of the appointment with their dedicated manager at the Post Office. The SMS thus becomes another immediate channel of contact and helps to consolidate the company’s caring system towards the Affluent customer.
In order to provide complete information on its products and services, the Group makes available “The Postal Services Charter”. The document offers all the information necessary for the best use of the products of the universal postal service (Legislative Decree 261/99) and describes the quality objectives that the Company is committed to achieving.
Poste Italiane has also adopted the Consolidated Security Act with the aim of providing a concise description of the methodological and operational approach adopted by the Poste Italiane Group for the management of IT Security, a fundamental element for achieving the objectives set out in the five-year Deliver 2022 Strategic Plan.
In order to achieve its objectives, the Group has set up an IT Security Committee to oversee the effectiveness of the security governance model and the implementation of the Permanent Security Plan, aimed at defining and managing the implementation programme for IT security initiatives and projects, structured to ensure the protection of the Poste Italiane Group’s strategic information assets and core services. The Plan is managed in the following activities: � definition of the Plan: census of IT security initiatives and collection of all the information useful for their description (scope, activities, contacts, time planning) in a Permanent Security Plan; � plan Progress Monitoring: Periodical collection of the progress of the initiatives in the Permanent Security Plan; � communications and Reporting: representation of the progress of the initiatives in the Permanent Security Plan.
In 2019, Poste Italiane, which has always been sensitive to cybersecurity, made available to all Group employees a section on the NoidiPoste Intranet dedicated to these issues. The new section promotes awareness-raising and literacy activities towards a less specialised audience, through educational tools characterised by a simpler language, such as themed workshops, IT security videos already posted on the Intranet, as well as a series of useful guides and links to be always safe when surfing the Internet. In addition, the section is enriched with the web series “The Investigations of a Cyber Investigator” in which they are reconstructed in television real cases of hacker attacks.
In parallel, the historic collaborative relationship between the Postal and Communications Police and Poste Italiane has enabled achievement of excellent results over the years. However, it has also required adaptation to the rapid evolution of the activities and services offered by Poste Italiane, especially regarding e-commerce payment systems, as well as financial and insurance services, which has entailed stepping up the control and upgrading of both physical and IT security structures. The agreement particularly regards the prevention and repression of offences involving products and production processes relating to the services offered by the Poste Italiane Group, surveillance activities at Post Offices during scheduled payment periods, and the creation of task forces to study new computer fraud scenarios, as well as new cybersecurity tools.
In particular, the fundamental value of this protection is expressed in the Poste Italiane Group’s privacy policy.
In order to ensure effective fulfilment of the obligations provided by the GDPR and guarantee continuous improvement of the management system, a Privacy Framework has been drawn up that identifies the main relevant thematic areas and the organisational and technical controls implemented. The Framework enables continuous assessment and verification of the levels of maturity achieved to be carried out.
The company management is directly involved in the supervision and management of IT issues and the transformation process undertaken by the Company. In this regard, in November 2019, the Board of Directors attended a specific induction session in which the role of information systems to support the implementation of the Business Strategy was illustrated.
At a time when digital evolution is rapidly providing new services, data security is becoming increasingly important. In this context, blockchain is able to provide an effective response to the issues of security, transparency, interoperability and privacy, and Poste Italiane is committed to making it user-friendly, and having it serve Italy’s economic system.
While in the past the scouting activity focused primarily on start-ups with solutions already available on the market and tending to be consolidated, with a view to potential collaboration in the short term, recently research has also expanded to early stage start-ups, in order to promote and accelerate their development, in line with Poste’s plans.
Innovation and digitisation of products and services Poste Italiane contributes to the constant creation of positive externalities on society, through continuous technological evolution, affecting the reduction of environmental impacts and promoting social inclusion, thanks to the definition of products and services accessible to all customers.
In order to have a wider spread throughout the country, marketing will take place in the second half of 2020 with a new innovative sales model, characterised by an open, multi-channel and integrated approach formed by the commercial networks of Poste Italiane and thus Post Offices, commercial resources that will be able to operate off-site and digital channels such as APPs and of course the website.
By 2022 GWh less electricity from nonrenewable sources consumed by buildings
In 2019, Poste Italiane obtained a loan of 400 million from the European Investment Bank to support the Group’s multi-year Deliver 2022 Strategic Plan. The loan is intended for the implementation of 80 projects in different sectors.
The agreement confirms the Company’s attention to the protection of the environment as a primary asset, assuming, within its facilities, a rational use of resources and seeking innovative solutions to ensure energy savings.
Specifically, Poste Italiane has decided to radically overhaul its delivery network and operating model through implementation of the new delivery model, which provides for a transition from a single network (operating only in the morning from Monday to Friday) to a structure with two networks that differ in terms of delivery, frequency and type of product.
The assessment, carried out in accordance with universally accepted standards and conventions issued by international bodies regarding human rights, workers’ rights and environmental protection (such as the UN, the OECD and the ILO), covered corporate issuers of both equity instruments and bonds, and ultimately measured their ability to manage stakeholder relations. The assessment process ended with the assignment of a final ESG score (between 0 and 100) to each company.
Total number of Group companies assessed for risks related to corruption 18 18 16
Number of Group companies subject to human rights reviews 25 25 25
[GRI 102-8] Number of personnel by contract type and gender, by Strategic Business Unit *
Satisfied customers following Customer Experience surveys (%) 79.1 81.4 82.7 * The customer experience for the various Business Units is measured twice a year (June and November) by an external research company using Net Promoter Score (NPS) surveys to measure the degree to which customers would recommend Poste Italiane’s products and services.
Total number of complaints received regarding violations of privacy 6 22 50
Of which: from renewable sources (GJ) 1,812,423 1,742,370 1,697,666 from non-renewable sources (GJ) 2,923,211 2,057,249 2,228,705 * Includes energy consumed by real estate and in road transport logistics and passenger transportation (only for 2017) and airmail. Source of factors used in conversion to GJ: GHG Protocol and DEFRA 2012 Guidelines.
In terms of Acquiring, with respect to the partnership for the remote distribution of Postepay acquiring services in the network of designated Lottomatica tobacconists, in the course of 2020 the physical acquiring service as well as the Postepay Code will begin to be marketed. In addition, it will be possible to make payment slip payments using the Postepay Code in authorised outlets. Furthermore, in 2020 the partnership with ENI will continue for the provision of a number of services in its network of service stations, with the possibility to accept payment transactions in the traditional manner, through physical POSs, and digitally, through the Paga con Postepay solution, available in the ENI app. The agreement also covers the management of “cashback”, an innovative service not yet launched in Italy by any operator or financial intermediary, which is basically a transaction that enables the cardholder to obtain cash from a merchant when making a payment with a debit/prepaid card, through a single payment transaction made at the POS.
Report on Operations: Risk management and risk assessment; Integrity and transparency
Report on Corporate Governance and the Ownership Structure: 7.2 Audit, Risk and Sustainability Committee 102-31 Frequency of the highest governance body’s review of economic, environmental, and social topics and their impacts, risks, and opportunities 102-33 Process for communicating critical concerns to the highest governance body
Statement of reconciliation of profit and equity The statement of reconciliation of the Parent Company’s profit/(loss) for the period and Equity with the consolidated amounts at 31 December 2019, compared with the statement at 31 December 2018, is included in Poste Italiane Financial Statements for the year ended 31 December 2019 (Notes to the Poste Italiane Group’s financial statements – Equity).
NON-CURRENT ASSETS - this indicator represents the sum of property, plant and equipment, intangible assets and investments measured using the equity method. This indicator is also shown separately for each Strategic Business Unit.
Trade receivables, Other receivables and assets and Inventories 6,978 6,914 64 0.9%
Provisions for risks and charges (980) (16) (512) (11) (1) (1,519)
This section of the Annual Report for the year ended 31 December 2019 includes the consolidated financial statements of the Poste Italiane Group, the separate financial statements of Poste Italiane SpA and BancoPosta RFC’s Separate Report. The Report has been prepared in euros, the currency of the economy in which the Group operates.
47. A contractual right of investors to receive returns on the separately managed account.
Receivables due from Ministries and Public Administration entities: Chair of the Board of Ministers for editorial benefits
50. In the test carried out at 31 December 2019, use was made of an assumed long-term growth rate of between 1.14% and 1.32%, while the WACCs, determined in accordance with best market practices and for each operating segment, ranged from a minimum of 5.21% to 7.28%. The cost of equity (Ke) is estimated as 7.18% for banking activities and 7.54% for asset management activities.
Impairment test of the Mail, Parcels and Distribution segment The current environment - which has resulted in highly volatile markets and great uncertainty with regard to economic projections - and the decline of the postal market in which the Group operates, make it difficult to produce forecasts that can, with certainty, be defined as reliable. In this context, at 31 December 2019, in part in view of the content of the Group’s Strategic Plan for 2018-2022, approved by the Parent Company’s Board of Directors on 26 February 2018, and the ongoing decline of the postal sector, the Parent Company’s Mail, Parcels and Distribution CGU was tested for impairment in order to determine a value in use to compare with the total carrying amount of net invested capital. In estimating the CGU’s value in use, reference was made to revenue and cost projections in the Strategic Plan for 2018-2022, updated to take into account the actual results for 2019 and best estimates for 202051. The terminal value, on the other hand, which was determined on the basis of data for the latest explicit projection period, was based on normalised earnings, taking into account the existence of potential positive elements whose value was not reflected in the explicit projections over the life of the plan. Reference was also made to the transfer prices that BancoPosta RFC is expected to pay for the services provided by Poste Italiane’s distribution network. A WACC of 5.21% was used. The impairment test determined that the related carrying amounts are fair.
– IFRS 11 - Joint Arrangements: an entity does not remeasure its previous interest in a Joint Operation when it obtains joint control of the business.
Right-of-use assets are presented as a separate line item in the statement of financial position.
Poste Italiane Group At 1 January 2019, the Group recognised right-of-use assets of €1,374 million, in relation to leases previously classified as operating leases under IAS 17, and financial liabilities totalling €1,373 million, equal to the present value of remaining payments discounted; the difference regards adjustments to right-of-use assets due to prepayments or accrued liabilities at 31 December 2018 on leases recognised under IAS 17 immediately prior to first-time adoption of IFRS 16.
Poste Italiane SpA The following table shows the statement of financial position and profit and loss effects generated by lease contracts at 31 December 2019 for the Parent Company.
The advance of €0.154 per share, gross of any withholding taxes, was made with effect from 20 November 2019. Based on the number of shares outstanding of 1,300,852,035, the total amount of the advance payment was €200 million.
Increase/(decrease) in fair value during the year [tab. B4] 95 191
Cash flow generated by /(used in) movements in working capital [b] (214) (305)
Accumulated impairments at 31 December 2019 amount to €11 million (€13 million at 31 December 2018).
At 31 December 2019, fixed income instruments of €1,499 million consist of €57 million in coupon stripped and Zero Coupon bonds, while the balance of €1,442 million is primarily made up of corporate bonds issued by blue-chip companies. Financial instruments totalling €1,098 million are linked to separately managed accounts, €348 million covers contractual obligations arising on Class III insurance policies and the remaining €53 million relates to securities in which the company’s free capital has been invested.
In the year under review, the Group received €262 million in accrued compensation for the period. With reference to the amount receivable for 2012, AGCom has recognised a net cost incurred by the Company of €327 million, compared with compensation of €350 million originally recognised. Provision has not been made in the state budget for the remaining €23 million. The Company appealed AGCom’s decision on 13 November 2014 before the Regional Administrative Court (TAR). The outstanding receivable relating to compensation for 2005 was subject to cuts in the budget laws for 2007 and 2008. Provisions for doubtful debts have been made for the full amount of the above receivables.
Provisions for doubtful debts due from others (1) (145) (146) - (96) (96)
Other provisions 11,641 2,115 for operating costs 79 108 for deferred liabilities to policyholders 11,562 2,007
The main actuarial assumptions applied in calculating provisions for employee termination benefits, are as follows: B7.1 - Economic and financial assumptions 31/12/2019
Balance of cash flows from management of postal savings - (47) (47) - (89) (89)
Other amounts due to staff - 153 153 - 63 63
Specifically: � Stamp duty represents the amount payable to the tax authorities for stamp duty in virtual form, before the adjustment applied in 2020 pursuant to note 3-bis to art. 13 of the Tariff introduced by Presidential Decree 642/1972. The non-current portion of the stamp duty mainly relates to the amount accrued at 31 December 2019 on Interest-bearing Postal Certificates outstanding and on Class III and V insurance policies pursuant to the new law referred to in note A9 – Other receivables and assets.
– Payment services relating to revenue from the processing of tax payments using forms F23/F24 are recognised over time based on the level of service rendered.
Revenue from financial services regard services provided mainly within the Parent Company’s BancoPosta RFC and the subsidiary BancoPosta Fondi SGR.
Other income from financial activities decreased by €34 million compared to 2018, mainly due to lower profits from the sale of financial assets to FVTOCI (-€47 million), partly offset by the increase in the fair value of the preferred shares of Visa Incorporated (+€16 million).
C4 – Revenue from insurance services after movements in technical provisions and other claims expenses (€1,669 million) This item breaks down as follows: tab. C4 - Revenue from Insurance Services after movements in technical provisions and other claims expenses
The reduction of €39 million in other operating costs is primarily due to a reduction in provisions for operational risk events and the charges and operating losses incurred by BancoPosta RFC, partially offset by higher costs for non-deductible VAT on lease agreements, reclassified by nature at 31 December 2019, due to the application of IFRS 16.
Realignment of tax bases and carrying amounts and taxation for previous years (19) -1.01% (9) -0.58%
The following table shows movements in deferred tax assets and liabilities, broken down according to the events that generated such movements: tab. C14.6 - Movements in deferred tax assets
Net profit/(loss) for the year (306) 271 640 737 - 1,342
Other related parties external to the Group 69 20 - - - 22 66
No loans were granted to key management personnel during the period and, at 31 December 2019, Group companies do not report receivables in respect of loans granted to key management personnel.
6. Poste Italiane SpA Financial statements for the year ended 31 December 2019 6.1 Financial statements
(figures in €) Note FY 2019 of which, related party transactions FY 2018 of which, related party transactions
In compliance with the 2007 Budget Law, from 2007 the Company is required to invest the funds raised from deposits paid into postal current accounts by private customers in euro area government securities80. Funds deposited by Public Administration entities are, instead, deposited with the Ministry of the Economy and Finance and earn a variable rate of return linked to a basket of government securities, in accordance with a specific agreement with the MEF regarding treasury services, renewed on 6 May 2019 and covering the two-year period 2019-2020. In addition, under the agreement with the MEF, expired on 31 December 2019 and being renewed, a percentage of the funds deriving from private customer deposits may be placed in a special “Buffer” account at the MEF, with the objective of ensuring flexibility with regard to investments in view of daily movements in amounts payable to current account holders. These deposits are remunerated at a variable rate calculated on the basis of the Euro OverNight Index Average (EONIA)81 rate.
Changes in fair value through profit or loss - (10) - (10)
� Receivables arising from Unfranked mail delivered include €58 million in amounts due from customers who use the service on their own behalf and €92 million for amounts due from agents who provide the service for third parties, primarily regarding bulk mail. Collection of these receivables is delegated to the authorised agents who provide the service.
Provisions for doubtful debts due from others (1) (107) (108) - (63) (63)
of which attributable to BancoPosta RFC 1,357 544 1,901 1,198 544 1,742
Provisions for disputes with third parties 302 22 1 (26) (25) 274
B5 – Employee termination benefits (€1,107 million) Movements in employee termination benefits are as follows: tab. B5 - Movements in provisions for employee termination benefits
100. A commitment given to creditors by which a borrower undertakes not to give senior security or other restrictions on assets to other lenders ranking pari passu with creditors, unless the same degree of protection is also offered to them.
Other amounts payable to third parties - 164 164 - 145 145
Net cash flow from/(for) financing activities Non-cash flows Balance at 31/12/2019
Contract liabilities 299 329 of which attributable to BancoPosta RFC 129 159
Prepayments and advances from customers This item refers to amounts received from customers as prepayment for the following services to be rendered: tab. B8.3.1 - Prepayments and advances from customers
Specifically: � Sundry payables attributable to BancoPosta’s operations primarily relate to prior period balances currently being verified.
BancoPosta services 5,435 5,419 of which Revenue from contracts with customers 3,796 3,863 recognised at a point in time 412 505 recognised over time 3,384 3,358
The following table shows the Company’s average and year-end headcounts by category: tab. C6.1 - Number of employees
The decrease of €11 million compared with 2018 is due mainly to lower charges on bond issues following the redemption in June 2018 of a bond issue with nominal value of €750 million (-€12 million), the absence of impairment of investments in associates (-€27 million), offset in part by higher charges on lease obligations (+€25 million).
Impairment of the receivable for interest income on IRES 45 -
Individual provisions are considered only following the review of trade receivables for amounts in excess of a given threshold and only in relation to single receivables.
Reversal of securities / receivables held at the beginning of the period - (3) (3)
114. Paragraph 42 of IAS 32 provides that “A financial asset and a financial liability can be offset and the net amount presented in the statement of financial position when, and only when, an entity: a. currently has a legally enforceable right to set off the recognised amounts; and b. intends either to settle on a net basis or to realise the asset and settle the liability simultaneously”.
In terms of BancoPosta RFC’s specific operations, the liquidity risk regards current account deposits and prepaid cards115, the related investment of the deposits in Eurozone government securities and /or securities guaranteed by the Italian government, and the margins on derivative transactions. The potential risk derives from a mismatch between the maturities of investments in securities and those of liabilities, represented by current accounts where the funds are available on demand, thus compromising the ability to meet its obligations to current account holders. This potential mismatch between assets and liabilities is monitored via comparison of the maturity schedule for assets with the statistical model of the performance of current account deposits, in accordance with the various likely maturity schedules and assuming the progressive total withdrawal of deposits over a period of twenty years for retail customers, ten years for business customers and PostePay cards and five years for Public Administration customers.
Fair value through profit or loss 45 8 (8) 8 (8) - - - -
The table below analyses the sensitivity of future cash flows for the Poste Italiane Group’s financial assets at 31 December 2019.
� Repurchase agreements: are valued using discounted cash flow techniques involving the computation of future contractual cash flows. Repos may also be used for collateral and in such cases fair value need not be adjusted for the counterparty ’s credit risk.
Financial assets at FVTOCI Financial assets at FVTPL Financial derivatives Total
To limit the exposure to interest rate risk deriving from the need to reinvest the cash generated by maturing bonds held in portfolio, BancoPosta RFC enters, if necessary, into forward purchases. In addition, to pursue the stabilisation of returns, forward sales are entered into. These derivatives qualify as cash flow hedges of forecast transactions.
In addition, the Group has a portfolio of inflation-linked BTPs subject to cash flow variability in relation to inflation.
In November 2018, Consorzio Postemotori received notice of an order issued by the Criminal Court in Rome and of a precautionary seizure regarding the consortium, amounting to €4.6 million. This was accompanied by precautionary measures concerning both the people under investigation and real property. On 8 March 2019, the consortium was notified of the Court of Rome decree regarding the scheduling of the preliminary hearing and the corresponding indictment request issued by the Public Prosecutor on 27 February 2019. On 13 May 2019, the Court, having reviewed the evidence, ruled that there was insufficient evidence to proceed against the current Executive Director and revoked the precautionary seizure previously ordered; this judgement became irrevocable on 17 July 2019.
Receivables used as collateral provided by GMRAs 208 208 185 185
Investment in real estate assets, real property rights, including those resulting from property leasetranslational arrangements, concessions and other similar rights in accordance with the legislation from time to time in effect
The table below shows the types of financial instrument in which the funds invest and the main markets of reference at 31 December 2019.
The phantom stocks are awarded if the performance targets are achieved, and converted into a cash bonus based on the market value of the shares in the thirty stock exchange trading days prior to the grant date for the phantom stocks or at the end of a retention period. The key characteristics of the Plan are described below.
Plan terms and conditions The Performance Targets, to which receipt of the cash bonus is subject, are as follows: � for the General Manager and other beneficiaries of the Plan employed by Poste Italiane, other than Bancoposta personnel, an indicator of earnings based on the Group’s cumulative EBIT over a three-year period, used to account for the continuity and sustainability of earnings over the long term; � for Beneficiaries included among BancoPosta RFC’s Risk Takers, the three-year RORAC (Return On Risk Adjusted Capital), used for the LTIP with the aim of taking into account the continuity and sustainability of the long-term performance after appropriately adjusting for risk; � for Beneficiaries including personnel belonging to the Poste Vita insurance Group, the RORAC registered by the Poste Vita insurance Group over a three-year period, used for the LTIP with the aim of taking into account the continuity and sustainability of the long-term performance after appropriately adjusting for risk.
Description (€m) 31/12/2019 related to Group companies 31/12/2018 related to Group companies
Financial liabilities held for trading 14,701,804 30. Financial liabilities designated at fair value - 50. Adjustments for changes in hedged financial liabilities portfolio (+/-) - 70. Liabilities associated with non-current assets held for sale and discontinued operations 100. Provisions for risks and charges: 327,258,828 511,255,914 a) commitment and guarantees given - b ) pensions and similar obligations - 180.
Comprehensive income for 2019 * This item represents the Reserve for BancoPosta RFC of €1,210 million and also includes the Reserve for Incentive Plans of €0.1 million among the changes during the year.
3. Cash flow from/(used for) financial liabilities 7,215,992,681 4,258,506,041 - financial liabilities measured at amortised cost 7,337,199,419 4,565,926,545 - financial liabilities held for trading - - - financial liabilities designated at fair value - -
In addition to debt securities that meet the aforementioned characteristics, this item comprises also equity instruments that would otherwise be measured at fair value through profit or loss, for which the election was made to report any subsequent changes in fair value through other comprehensive income (FVTOCI option).
132. Where, following entry into effect of the new legislation, the employee has not exercised any option regarding the investment of vested employee termination benefits, the Company has remained liable to pay the benefits until 30 June 2007, or until the date, between 1 January 2007 and 30 June 2007, on which the employee exercised a specific option. Where no option was exercised, from 1 July 2007 vested employee termination benefits have been paid into a supplementary pension fund.
Level 1 Level 2 Level 3 Stage 1 and 2 1.1 Current accounts and demand deposits - Reverse repurchase agreements
In addition, “Other loans, Other” includes trade receivables for €70 million arising from contracts with customers, accounted for in accordance with IFRS 15 (€46 million at 31 December 2018) mainly relating to financial services and personal loan distribution.
135. The rate in question is calculated as follows: 50% is based on the return on 6-month BOTs, with the remaining 50% based on the ten-year BTP return. 136. A guarantee fund established with payments from participants in the derivative, equity and bond markets, as a further guarantee for the transactions carried out. The fund can be used to meet the charges arising from any participant default.
� €493 million, €2 million of which being accrued net interest expense, in deposits at the MEF (the “Buffer account”), remunerated at the EONIA rate137; � €451 million in fees receivable from Cassa Depositi e Prestiti during the year in connection with postal savings; � €12 million in amounts due for the payment of pensions and vouchers on behalf of INPS (the National Institute of Social Security). Moreover, in February 2019, having conducted a joint assessment, Poste Italiane and INPS signed an agreement that, among other things, has settled the respective past outstanding trade receivables (Section 10 of Liabilities). These positions were settled in April 2019.
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 of which: Instruments with low credit risk of which: purchased or originated credit impaired financial assets * Amount reported for disclosure purposes.
Section 10 – Tax assets and liabilities – assets Item 100 and liabilities Item 60 Current tax assets and liabilities form part of intersegment relations and are shown in “Other assets” (Item 120 in Assets) and “Other liabilities” (Item 80 in Liabilities), as they are settled with Poste Italiane SpA’s functions outside the ring-fence, within the scope of internal relations with Poste Italiane SpA, as the sole taxable entity.
Deferred tax assets through profit or loss - 1 - - 14 - 54 10 68 11
Deferred tax assets through equity 167 31 30 5 - - - - 197 36
BancoPosta RFC has uncommitted overnight lines of credit amounting to €1,009 million, overdraft facilities for €173 million and arrangements for the issue of personal guarantees for €675 million granted to Poste Italiane SpA, undrawn at 31 December 2019.
1.3 Financial liabilities measured at amortised cost: breakdown of outstanding securities by type There are no securities in issue.
19.2 Reconciliation between theoretical tax charge at statutory rate and effective tax charge
144. The full CRM method entails reducing risk exposure by the value of the guarantee. Specific rules are applied to take into account market price volatility of the guaranteed asset as well as the collateral received.
The approach followed involves inclusion of forward-looking information in the estimation of the PD. In particular, the internal approach adopted allows completion of the input dataset necessary to calculate PD starting from a number of scenario values related to the approach. The objective of the approach is to estimate the unknown variables by using the historical correlation of the available information147.
A.1.3 Distribution of financial assets by past due categories (carrying amount)
A.1.4 Financial assets, commitments to disburse funds and financial guarantees given: overall impairment losses/reversals and overall provisions
Large exposures a) Carrying amount (€m) 82,307 b) Weighted amount (€m) 5,410
Cash flow inflation rate risk at 31 December 2019 relates to government inflation indexed bonds which were not hedged through the arrangement of cash flow hedges or fair value hedges entered into by BancoPosta RFC, having a nominal value of €1,875 million and a fair value of €2,381 million. The effects of sensitivity analysis are immaterial.
BancoPosta RFC has a government bond portfolio – made up of fixed income BTPs and inflation-linked BTPs – subject to movements in fair value due to changes in interest rates and in the inflation rate.
Regarding fair value hedge instruments, the main source of ineffectiveness is the use of different spreads in determining the fair value of the hypothetical derivative and the derivative actually entered into. In particular, to evaluate the effectiveness of the hedge relationship, for the hypothetical derivative use is made of the mid-market spread, which makes the present value at the settlement date equal to zero, and for the actual derivative the interest rate agreed upon with the counterparty.
BancoPosta RFC designates as hedged items: � fixed income and index-linked bonds, in connection the fair value hedge policy; � inflation-linked bonds and forecast transactions, in connection with cash flow hedge policies.
In order to mitigate liquidity and market risk in the event of extreme market scenarios, during 2019 BancoPosta RFC entered into a contract that provides for the granting by Cassa Depositi e Prestiti of a short-term committed facility for repurchase agreements up to a maximum of €5 billion and a 12-month extension period.
amount161 to be reduced to zero in the event that Poste Italiane SpA’s rating is downgraded to below BBB-. The threshold amounts relating to margin lending contracts included in repurchase agreements are equal to zero, meaning that these transactions are not subject to liquidity risk.
161. The threshold amount is the amount of collateral that is not required to be provided under the contract; it therefore represents the residual counterparty risk to be borne by a counterparty.
Provision for doubtful debts owing from external related parties (2) (5) - - - - - * On 26 September 2018, PosteMobile was entered in the Register of electronic money institutions (article 114–quater of the Consolidated Banking Act) and, as of 1 October 2018, changed its name to PostePay SpA.
Vesting of the Rights and the therefore the awarding of the Shares is subject to achievement of the Performance Hurdle, designed to ensure sustainability of the Plan at Group level. The Performance Hurdle corresponds with achievement of a certain target for the Group’s cumulative EBIT over a three-year period at the end of each Performance Period. In addition, vesting of the phantom stocks is also subject to achievement of Qualifying Conditions, designed to ensure the stability of BancoPosta RFC’s capital and liquidity position, as follows: � Indicator of capital adequacy, (CET 1) at the end of the period; � Indicator of short-term liquidity, (LCR) at the end of the period; � RORAC risk-adjusted earnings at the end of the period.
The total number of Rights to receive Shares assigned for the First Cycle of the Plan concerns 9 Beneficiaries and was 35,671 units, whose unit fair value at the grant date (7 October 2019) was €8.29. The cost recognised for 2019 is approximately €0.1 million, equivalent to the equity reserve specifically created for this case. Finally, the unit fair value of each right is equal to its nominal value at the grant date (determined on the basis of stock exchange prices), discounted by the expected dividend rate and the risk-free interest rate.
The economic flows and performance of the operations are reported internally on a regular basis to executives without identifying segments. BancoPosta RFC’s results are consequently evaluated by senior management as one business division.
Board of Statutory Auditors presented its assessment and recommendations regarding the proposed changes, which mainly refer to transactions involving BancoPosta RFC and are summarised below: i) in all cases where the opinion, although not relating to a transaction of major importance, regards a transaction that must be approved by the Management Body, the
The financial statements contain detailed information on any liabilities and costs that may arise from pending legal proceedings. The Board of Statutory Auditors, together with the relevant Company functions, examined in detail the methodology and process adopted in the analysis of litigation and in the analysis and evaluation of provisions for risks and charges, and it requested to be periodically and promptly updated on the evolution of the main situations.
With the support of the FTA Function, the Board of Statutory Auditors periodically monitored respect of the caps on the value of non-audit engagements - which, as established by art. 4 par. 2 of Regulation (EU) 537/2014, must be capped at 70% of the average fees paid in the previous consecutive three years for the audit of the accounts of the audited entity.
Control function, the adequacy of internal controls over the Poste Italiane Group’s Corporate
Governance process, with specific reference to transmission and implementation by subsidiaries of the Policies/Lines approved by the Parent Company, taking account of the specific characteristics of the subsidiaries themselves. The audit of the degree to which the
(Deliver 2022), outlines the Group’s sustainability strategy, providing for concrete results to be achieved within the established time frame; the document is based on six fundamental pillars, namely: integrity and transparency, people development, support for the territory, customer care, environmental sustainability, sustainable finance; - start of the operational phase of the One ERP programme, which will enable the Poste
business unit and the simultaneous establishment, in the IT Systems area of Poste Italiane, of a function dedicated to IT solutions for the Express Courier service; - continuation of the process of centralisation of purchasing activities of a negotiation nature carried out in the territory, with consequent revision to the structure of the Territorial
- continuation of the process of centralisation of back office activities, launched by the
With regard to revision of the procurement model, a process that began in 2017 and proceeded in 2018, the Board was kept up-to-date on the progress made in centralising procurement in the CA/Procurement function, which is now the competence centre for the
Decree 231/2001 (OM 231), in line with the Parent Company’s approach, taking account of their specific organisational and operational characteristics. In addition, in the 231 area, the
In the above context, the Archer platform, recently implemented to support the management of risk monitoring and control activities, is a central tool in the area of 231 efficiency and allows ongoing verification of the evolution of risks and control procedures; on the platform, about 400 regulatory instruments have been surveyed and evaluated for the purposes of OM
Consolidated Law on Finance, following revision of the “Guidelines for Management and
Given the large number and the complexity of such meetings, the Board notes that
ü The Board reiterates, also in light of the new Corporate Governance Code (January 2020) and aware of its future entry into force, the previous suggestion to proceed, before the end of the term of office of the Board of Directors (and therefore during the first few months of 2020), with a review of the “Guidelines on the application criteria and procedure for assessing the independence of directors of Poste Italiane S.p.A.”,
Connected Parties of Poste Italiane S.p.A.”; - Strategic Risk Assessment 2019; - Group Risk Appetite Framework for 2019.
BancoPosta RFC Regulation approved by the General Meeting of shareholders held on 14
Independent Auditor, management of BancoPosta and the heads of BancoPosta’s control functions, and the Board’s examination of the annual report of the Manager responsible for the internal control system relating to financial reporting, it should be noted that BancoPosta
Remuneration Committee, correct application of the regulations governing the remuneration of the heads of the Company’s control functions. In this regard, the Board of Statutory
In addition, in April 2019, the project for outsourcing to the Customer to Business Interaction
The Board also obtained information on the Bank of Italy’s inspection of specific Post
procedures for assessing the adequacy of transactions carried out on behalf of customers, (iii)
Audit function on the basis of the “2019 Audit Plan”, approved by the Board of Directors on 28 February 2019, were promptly carried out and completed in compliance with the above
Guidelines for the management of Transactions with Related and Connected Parties and the
operations on Poste Italiane circuits to the e-money sector, including operations on third-party sites, is to be completed in 2020. Further project initiatives were carried out to mitigate the illegal events committed by the sales network, which were further reduced compared to 2018.
Auditors on its monitoring activities and developments affecting BancoPosta’s significant risk exposures. Consistently with the new money laundering risk management model adopted by the Group, as mentioned above, the Head of Risk Management has also taken on the role of
Appetite Framework metrics are in line with the predetermined targets, thresholds and limits for the year, with the sole exception of the credit and counterparty risk capital requirement, which stands at 8.8%, above the risk appetite (8%) but well within the level of tolerance
Note 2.5 to the consolidated financial statements as of 31 December 2019 “Use of estimates – Technical provisions for insurance business”
We have verified that the directors approved the non-financial disclosure statement.
Level 2 of the fair value hierarchy comprises the measurement of financial instruments based on inputs other than quoted prices in organised and regulated markets (“level 1”), and directly and
Responsibilities of the Directors and the Board of Statutory Auditors for the Financial Statements
Opinion in accordance with Article 14, paragraph 2, letter e), of Legislative Decree No. 39/2010 and Article 123-bis, paragraph 4, of Legislative Decree No. 58/1998
Decree, actual results and related key performance indicators; • main risks generated and/or faced by the Group with reference to the matters specified in article 3 of the Decree.
Based on the work performed, nothing has come to our attention that causes us to believe that the NFS of the Poste Italiane Group for the year ended 31 December 2019, is not prepared, in all material respects, in compliance with articles 3 and 4 of the Decree and with the GRI Standards.
Fully paid-up share capital: €1,306,110,000.00 Tax Code and Rome Companies’ Register no. 97103880585/1996