Summary of the resolutions of the ordinary and extraordinary Shareholders’ Meeting 337
Compared to what happened in 2020, due to the Covid -19 pandemic, the country found itself facing completely unexpected situations and in this particularly challenging scenario, with flexibility, responsibility and resilience, the Group renewed its support for the territory and the community, guaranteeing continuity of services and making its logistics network available to the entire national fabric. Despite the health emergency, in 2020 Poste Italiane confirmed its leadership position in the financial, insurance and payment services sectors, as well as being the largest Italian company in the logistics sector.
OUTCOME: y Number of digital services offered y Number of contacts handled y GRI 305 Emissions y GRI 306 Waste y GRI 305-4 Intensity of GHG emissions related to real estate facilities y Wastewater reporting y Dematerialisation of procedures and corresponding transactions y Environmental impacts of real estate facilities y Environmental impacts of logistics y Innovation and digitisation of products, services and processes y Indicators tables
OUTCOME: y GRI 305 Emissions y GRI 306 Waste y GRI 305-4 Intensity of GHG emissions related to real estate facilities y Wastewater reporting y Weight of electricity consumption relating to real estate facilities by type of business y Legality and incorporation of ESG criteria within the procurement process y Environmental impacts of real estate facilities y Environmental impacts of logistics y Indicators tables
Insurance company that provides personal protection (health and accident), property protection (home and assets) and credit protection (insurance of loans and mortgages from unforeseen events).
Nexive is a postal operator active in Italy with a market share of around 12% in mail, equal to around 350 million volumes per year (of which around 5% recorded mail), and a market share of around 1% in parcels, equal to around 8 million items delivered in 2019. In 2019, Nexive reported pro-forma sales of around €200 million and employs 1,300 people and more than 5,000 people in external partner companies.
From a strategic point of view, as has happened in other European countries, the structural contraction of the postal market, which has been exacerbated by the effects of the restrictions adopted in response to the health emergency, makes it urgent to consolidate the mail business and the related logistical infrastructure in order to safeguard its sustainability, employment levels and the availability of services to customers. The transaction will contribute to the sustainability of the postal sector to the benefit of shareholders, employees in the sector, citizens, businesses, the Public Administration and the country as a whole.
Other transactions On 10 February 2021, Nexi SpA, SIA SpA and their respective principal shareholders signed binding agreements relating to the potential merger by incorporation of SIA into Nexi. The signing of the binding agreements follows the signing of a memorandum of understanding announced on 5 October 2020.
12,765 Post Offices throughout the country and around 7,000 Post Offices open during the lockdown 575 million Post Office transations in 2020
Key logistics player for a sustainable business, accelerating the transition to the growing parcel market.
PostePay SpA participated in the public consultation organised by AGCom which ended on 30 July 2020 concerning “the definition of the regulatory provisions regarding IP interconnection and interoperability for the provision of VoIP services on mobile networks”. The purpose was to collect comments and observations from the Operators to define, in relation to the interconnection between mobile networks or between fixed and mobile networks with reference to traffic terminated on the mobile network, the measures necessary to regulate the migration process towards the IP interconnection for the exchange of voice traffic in VoIP/IP technology.
Continued partnership with ENI through the activation of Postepay acquiring services
In the summer months, the European stock markets remained stable, while in the American and Chinese markets, the recovery continued, leading the indices to exceed the values recorded at the beginning of the 2020. The third quarter of 2020 saw equity prices continuing to rise, albeit at a more moderate pace than the previous quarter, thanks to confirmation of signs of economic recovery. The trend in the markets changed last autumn due to fears of a second wave of contagion that was stronger than the first and ahead of expectations. The phase of risk aversion also involved the USA, mainly due to the lack of agreement on new measures to support the economy before the presidential elections, although prices nevertheless remained above the levels of the beginning of 2020, thanks to the strong rise in technology stocks recorded during the previous months.
16. Period from 30/12/2019 to 30/12/2020. 17. Quantitative easing is an unconventional monetary policy measure consisting of asset purchases to support economic growth and deflation. 18. LIBOR (London Interbank Offered Rate) is the short-term interest rate for the major eurocurrencies on the London interbank market. 19. The Overnight Index Swap (OIS) is a swap, in which the buyer pays the pre-determined fixed rate and collects the weighted average variable rate E.O.N.I.A. (European
With reference to the obligation for Payment Service Providers to adopt strong authentication systems to allow customers to make card payments, BancoPosta completed the activities, as previously communicated by the Company to the Bank of Italy.
On 30 December 2020, MEF Decree no. 169 of 23 November 2020 came into force, containing the Regulation on the requirements and eligibility criteria for the performance of the office of corporate officers of banks and financial intermediaries. It introduced new criteria of correctness, competence, independence and adequate collective composition of the corporate bodies. Poste Italiane has started a work table to identify the implementations to be made regarding the new criteria.
IVASS announced that banks, financial intermediaries and insurance companies that intend to offer products combined with loans, will have to apply and adopt specific organisational and internal control procedures that ensure continuous risk assessment and compliance with a set of rules, in order to ensure compliance with the relevant regulations and preserve the integrity of the relationship of trust with customers. Failure to comply with the rules in force, in addition to entailing the application of the sanctions provided for the violation of the obligations of conduct towards customers, may expose operators to significant legal and reputational risks, with the eventual possibility of an increase in the capital requirements of the competent Supervisory Authorities.
4. Strategy 25. Mglobale.it – OECD December 2020 Forecasts. 26. Il Sole 24 Ore – Brent Oil Price – December 2020. 27. Eurostat – GDP up by 12.5% and employment up by 1.0% in the Eurozone. 28. Eurostat – GDP up by 12.5% and employment up by 1.0% in the Eurozone.
32. ISTAT – 3rd Quarter 2020 – Quarterly economic accounts – GDP, value added, consumption, investments, foreign demand. 33. ISTAT – 3rd Quarter 2020 – Quarterly economic accounts – GDP, value added, consumption, investments, foreign demand. 34. ISTAT – 3rd Quarter 2020 – AP quarterly account of household income and savings and company profits. 35. ISTAT – Monthly report on the performance of the Italian economy – November/December 2020. 36. Mglobale.it – OECD December 2020 Forecasts. 37. ISTAT – Monthly report on the performance of the Italian economy – November/December 2020.
The strategic objective of the Mail, Parcels and Distribution segment is to accelerate its transformation from a pure mail operator to a full logistics operator, ensuring the economic and environmental sustainability of its operations. Implementation of the strategy is based on streamlining of the distribution networks, including the integration of Nexive, acquired at the end of 2020, consolidation of leadership in the B2C market and growth in the C2X and B2B segments through the introduction of specific offers and initiatives aimed at improving the customer experience. Through the implementation of these strategic directions, the segment aims to achieve operational break-even by 2024 and an operating profit in 2025.
The Policy sets out the general principles, objectives and methods for managing the Group’s environmental impact and confirms Poste Italiane’s commitment to promoting efficient use of natural resources and focusing on seeking innovative solutions to protect the environment in its value chain.
The Policy sets out a clear approach to the issue of human rights, which is broader than legal requirements and enables monitoring and management of risks and opportunities relating to all forms of human rights, and also confirms the Group’s commitment to pursuing socially responsible investment and management activities.
• Alignment of long-term shareholder interests as an essential prerequisite for management • LTI time horizon up to 9 years, including performance, deferral and retention periods
On the one hand, in fact, sustainability indices are studied by shareholders and stakeholders in general, to compare the company ’s performance with regard to ESG issues compared to companies on the market; on the other hand, they are analysed internally by company management to develop sustainable investment plans for the Group.
Daniela Favrin (Chair) Davide Iacovoni Roberto Rossi 4. The Supervisory Board was appointed by the Board of Directors’ meeting of 30 July 2019 for a three-year term and will remain in office until 30 July 2022. 5. The only internal member, Head of Poste Italiane SpA’s Internal Auditing. 6. Assigned by the Court of Auditors with effect from 1 January 2020. 7. Company appointed to audit the accounts for the financial years 2020 - 2028 by resolution of the Ordinary General Meeting of 28 May 2019. Deloitte&Touche has been appointed for the entire Group.
As of 1 January 2021, the new Corporate Governance Code came into force, replacing the aforementioned Corporate Governance Code. In this regard, the Board of Directors, at its meeting held on 17 December 2020, approved certain measures to align the Company’s governance structure with the new Corporate Governance Code.
In line with statutory requirements and the related best practices, the SCIGR consists of three levels of control and involves a range of actors within the company organisation. The second-level control units, whose role consists primarily of defining risk management models and carrying out monitoring activities, play a key role in the integration and overall functioning of the Internal Control and Risk Management System.
Risks arising from factors related to environmental, social and governance issues (in particular, linked to human rights, climate change and sustainable finance).
21 February 2020 | Establishment of the Coronavirus Risk Management Committee, a body aimed at the unified and coordinated national governance of containment and prevention actions
Establishment of a dual communication channel to facilitate the flow of information 18 December 2020 | Signing of an Agreement with the Labour Unions to extend and regulate remote working activities 14 April 2020 | Signing Agreement with Assidipost-Federmanager for solidarity initiatives for executives
Communication activities to online and offline customers in order to make them adopt security measures to contain the spread of the virus
Introduction of the possibility of opening a BancoPosta account via app as well
Certification of its environmental management system according to the international standard UNI EN ISO 14001:2015, issued by IMQ-CSQ
Each material issue identified has an impact that is directly generated by the organisation, with the exception of the “environmental impacts of logistics” and “occupational health and safety” issues, the impacts of which also derive from suppliers that work on a significant portion of the Group’s operations on behalf of Poste Italiane.
Guarantee the privacy of customers' data, protect intellectual property and provide an effective management system for IT security and cyber security in order to ensure business continuity, protect the information assets of the Company, customers and other stakeholders, and the security of transactions.
Spread a culture of respect for the environment and adopt concrete solutions for the efficient management of energy resources, water resources and waste, from a circular economy standpoint. For example, procurement of renewable energy, installation of renewable energy production plants, building efficiency projects, organisation of separate waste collection, etc..
Consider dialogue with personnel and labour union representatives as essential in finding shared solutions relating to issues that can have significant impacts on the organisation, the business and above all human capital, a vital corporate asset for the Company.
y Human rights y Specific organisational responsibility for diversity and inclusion y Identification of possible training initiatives to create “culture” for all personnel y Introduction of control mechanisms for the protection of human rights, equal opportunities, diversity and inclusion
Poste Italiane people; the media; Customers y Economic y Strategic y Operational y Reputational y Quality of service y Economic y Personal data protection, cyber security and business continuity actions y Investments in IT infrastructure modernisation
y Health and safety y Specific organisational responsibility for the management of real estate facilities y Adoption of energy efficiency solutions for real estate assets and use of renewables y Implementation of the Environmental Management System for Group companies
Among the actions aimed at reducing the digital divide, in recent years, Poste Italiane has undertaken a path of digital education of citizens, carried out through the organisation of several training sessions with the aim of providing a valuable contribution to the digitisation of Italy. Through the programme, the Group has adopted a highly inclusive approach to facilitate and simplify the use of new technologies to all its customers and beyond.
In order to provide new payment solutions and respond to the changing needs of its customers, Poste Italiane is developing new digital payment services, intercepting and driving customer habits in the context of digital transformation, through the creation of innovative products and services that simplify everyday life, such as: y Postepay Connect, first integrated payment and mobile product that allows managing, through a single app, telephony and payment services in an intuitive and secure way; y Postepay app, the e-wallet that allows paying for purchases directly with a smartphone in all stores that accept contactless payments, thanks to the recent introduction of the Google Pay service in the app; y Codice Postepay, an app that allows buying in stores using a QR Code and getting discounts and benefits at affiliated partners. The proposal of a fully digital acquiring offer, using QR codes, will help accelerate Italy’s transformation from using cash in payments to digital solutions, using a technology well known in major Asian markets; y Collaboration agreements with start-ups for the development of innovative solutions in the financial services and payments area.
Net of dividend payments to the Parent Company, the Solvency Ratio at 31 December 2020 was 279%.
44. A five-year tax benefit introduced into Italian law in 2015 that consists in the exclusion from the formation of total taxable income of a portion of income deriving from the use of certain intangible assets.
In 2020, the segment benefited, as previously mentioned, from the strong impetus that the restrictive measures imposed have given to the development of e-commerce and the Group’s activities in the B2C segment, which has developed thanks to the growing propensity to shop online of the population. In particular, the B2C sector generated revenue of €603 million, up 57.3% on 2019, compared with 149 million items (+59.7%), a further acceleration compared to the first nine months of the year. The performance of B2C revenue made it possible to offset the reduction in revenue recorded during the year in the B2B segment (-€6 million in revenue compared to 2019), the segment most impacted by the lockdown due to the closure of production activities and which, during the fourth quarter of 2020, showed an acceleration of the recovery trend initiated during the previous quarter.
External revenue in the Telecommunications segment amounted to €284 million, up from €240 million in 2019 (+18.6%). The positive result was due to the increase in both Mobile and Fixed Telephony revenue, with an increased customer base active in both segments.
Net interest income: Income from investment of liquidity revenue via postal current account deposits, net of interest expense and other financial transaction costs.
Net capital gains: Gains from the sale of securities in the BancoPosta Portfolio, net of losses.
At the end of the paragraph, the table showing the values of the main KPIs in 2020 compared to 2019.
With regard to the parcels business, on the other hand, November saw the inauguration of the new central Italy sorting centre at Passo Corese near Rome, equipped with advanced technology and designed in compliance with the Group’s ESG standards and capable of automatically processing more than 140 thousand parcels a day. The new facility, which was partially started and used in late 2020 to support parcel volumes during the “Peak period57”, will be fully operational by the first quarter of 2021.
Further details of the Poste Group’s credit lines and available liquidity at 31 December 2020 are provided in note 6 - Risk management - Financial risks - Liquidity risk.
Poste Italiane SpA’s net invested capital amounted to €3,779 million at 31 December 2020 (€3,719 million at 31 December 2019).
* CET 1 Capital includes the initial equity reserve and non-distributable profit reserves (Tier 1 capital), taking into account the transitional regime (Regulation 2017/2395 EU). ** 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.
Profits/(losses) on financial assets and liabilities measured at fair value through profit or loss 2 26 (24) -92.3%
Net fee and commission income amounted to €3,290 million and showed a decrease of 4.9% (-€169 million) compared to 2019 mainly attributable to the decrease in Fee income of €3,582 million, down 5.6% compared to €3,794 million in the previous year (-€212 million). Whilst Postal Savings performed well, with revenue up approximately 3% on the previous year, revenue in 2020 was down, primarily in relation to loan products, as a result of lower volumes of personal loans disbursed and a reduction in unit distribution commissions, and collection and payment services due to a reduction in volumes of payment slips. The performance of fee income was partially offset by the lower fee expenses recorded in the year compared to the 2019 amount (-€43 million) mainly attributable to lower costs related to the service contract signed with PostePay SpA.
Internal Auditing has also drawn up the Annual (2021) and Multi-year (2021-2023) Audit Plan, based on a risk assessment process designed to ensure adequate coverage of BancoPosta’s Business Process Model, including risks, changing aspects of the business, regulatory issues and BancoPosta RFC’s organisational structures. This Plan has been presented to the Board of Statutory Auditors and submitted for the attention of the Board of Directors.
The 231 Model is a point of reference for Poste Italiane Group’s path towards integrity and transparency
To confirm the attention that Poste Italiane Group pays to transparency and risk control issues and in line with its strategic ESG objectives, the ISO 37001 anti-corruption certification has been extended to BancoPosta Fondi SGR, the first asset management company obtaining such recognition. The certification was obtained following an analysis and verification of processes and of the integrated management system and concerns the activities of setting up and managing Undertakings for Collective Investment in Transferable Securities (UCITS) and the portfolio management and investment advisory service.
Tax Risk Assessment During 2020, an update of the Tax Risk Assessment was carried out, which entailed a review of the universe of Poste Italiane’s tax risks, both in terms of existing risks and their assessment, as well as a revamping of activities and the related controls, partly in order to exploit potential synergies with other control systems within the Company. In general, the review of the Tax Risk Assessment covered the following points: z introduction, elimination and modification of the tax risk map due to changes in tax legislation, the review of risks with a view to continuous improvement and changes in Poste Italiane’s corporate structure; z update of the qualitative/quantitative assessment of all fiscal risks. In particular, the use of the new risk assessment methodology developed in 2020 was envisaged for the performance of this activity; z update of the activities and related controls identified to mitigate tax risks in response to changes in tax legislation, any shortcomings in the design of controls identified during testing or with a view to continuously improve in order to ensure the efficiency and harmonisation of Poste Italiane’s existing control systems, while increasing the awareness of control owners regarding the methods of carrying out controls.
Continuous performance improvement Poste Italiane constantly monitors the following main indicators: quality (using questionnaires to investigate employee satisfaction with the various aspects of the service), effectiveness (using learning tests at the end of training activities ) and efficiency (calculated as the ability to achieve the above objectives through consistent use of available economic and organisational resources and the quality perceived by employees).
The Human Resources function is increasingly customer-oriented, with the aim of enabling the evolution of processes, systems and operational tools to meet new challenges. In
The main financial benefits due to non-executive personnel are listed below.
On 29 July 2020, the levers of active policies and related numbers valid for the year 2020 were defined in an agreement with all Labour Unions. The agreement provides, for the Post Office Network, 500 part-time counter operators (250 FTEs), 440 proposed conversions from part-time to full-time (220 FTEs), 220 proposed national voluntary redundancies, 480 new counters and 650 new hires of specialists.
Together with the Labour Unions, Poste Italiane has set up joint bilateral bodies at national level regarding issues that are also relevant in terms of sustainability, including: z Comitato per l’Attuazione dei Principi di Parità di Trattamento e Uguaglianza di Opportunità (The Committee for Implementation of the Principles of Equal Treatment and Equal Opportunities), with the objective of “implementing and strengthening a culture that pays attention to diversity, including gender diversity, through positive actions aimed at creating examples of good practice within the Group and removing obstacles that actually prevent achievement of equal opportunities”. In this context, the Committee will address issues relating to the integration and inclusion of disabled people, as well as those regarding other factors of discrimination.
Poste Italiane is focused on a safety culture in the Company, to reduce injuries and promote continuous improvement of the management systems adopted
z File Maker (share for the management of real estate works impacting health and safety)
The performance and objectives set in the audits are constantly monitored and reviewed during the Management Review provided for in the health and safety management systems adopted. The activities carried out by the Company to achieve the objectives of its management system include continuous training of workers, awareness campaigns and personnel involvement, plant-structural site improvements, continuous improvement and certification of management systems, monitoring of risks in relation to processes and workplaces, implementation of improvement plans and periodic checks on compliance with current legislation.
Poste Italiane signs a Memorandum of Understanding with the Automobile Club of Italy
All of the Company’s properties, and in particular the entire network of Post Offices and mail distribution centres, were completely cleaned and disinfected using chlorine and alcohol-based sanitising agents, and specialist sanitising companies were engaged for sanitation, through a tight schedule that involved hundreds of different locations every day. In accordance with company protocol, in the offices where cases of infection with the virus were found, before reopening to the public, a thorough sanitisation process was carried out to the highest standards using products containing sodium hypochlorite, ozone or hydrogen peroxide. The devices for sanitising the company fleet have also been activated, which, through micro-nebulisation of disinfected solutions, are able to thoroughly sanitise the internal surfaces of the work vehicles. The Company ensured the purchase and installation in every logistics site of chemical toilets for exclusive use of external couriers and installation of thermal cameras to detect body temperature at the headquarters (temperature control for all areas of forced access at the Rome EUR management offices, which houses over 6,000 employees), in the entire network of Post Offices, in logistics offices open to the public and in all other work environments with more than 150 employees, including logistics HUBs. With an extraordinary commitment both in terms of production and organisation, built and assembled in record time were sustainable plexiglass barriers (polymethylmethacrylate - PMMA), protective panels installed at all Post Offices that did not have them and protective screens for consultants and Postepay corners, to protect personnel and customers, as well as an additional 300 barriers in acceptance centres dedicated to business customers. In addition, all counter operators in service, as well as letter carriers and couriers, have been provided with all the necessary security equipment.
In the space of a few weeks, Poste Italiane was the protagonist of an extraordinary reorganisation that led to the adoption of agile work by about 16,500 employees, about 81% of the resources working in central and territorial personnel functions. In order to ensure accurate management of the new working methods, a special task force was set up within the Human Resources department to coordinate the reorganisation process. Poste Italiane’s commitment to facilitating remote working has translated into a real technological and training
In addition, in order to ensure alignment with market trends and best practices, the HR Research Centre was set up to share and socialise experiences and introduce innovative approaches to support an inclusive culture. The Study Centre dialogues with other companies, associations and institutions to verify the evolution of best practices.
In 2020, Poste Italiane’s attention to the community and the territory focused on the fight against the spread of the SARS-COV-2 virus, on aid to the territory to reduce the negative impact of the measures imposed by the global health emergency, on proximity to Small Municipalities and to the new generations.
Cresco Awards sustainable cities 2020 With a view to being close to the more peripheral realities, in 2020 the Group participated in the “Cresco Awards Sustainable Cities 2020”, promoted by Fondazione Sodalitas in collaboration with ANCI (National Association of Italian Municipalities) and with the patronage of the
The P.A.I.N.T. project Consistent with the initiatives to support Small Municipalities, in November 2020 the project P.A.I.N.T. (Poste e Artisti Insieme Nel Territorio), started over after a period of interruption due to the health emergency. The project, launched in 2018, involves the redevelopment and decoration of the external walls of post offices by street artists from all over Italy. The aim of the initiative is to promote the creativity of artists, to educate people about beauty and, at the same time, to make Post Offices more welcoming and closer to the areas that host them. Moreover, through P.A.I.N.T. the Group confirms its sensitivity towards environmental protection by adopting, for the realisation of the murals, technologies based on natural materials that help to reduce polluting emissions.
The synergy between the Group’s mission and the authorities makes it possible to establish strategic agreements and partnerships in the interests of the community, which allow for realisation of investment and initiatives aimed at the offer of integrated services, promotion of the postal network’s nationwide presence that facilitates prompt sharing of planning schemes, and preparation of local teams focused on specific issues64. Meetings are formalised in the reports collected on a monthly basis.
Promoting dialogue with local institutions enables Poste Italiane to have an active role within the community and encourages the sharing of local development projects. The objective is, therefore, to contribute to providing an efficient service to citizens, to meet the social needs of customers and, at the same time, to increase the competitiveness and continuity of the Group’s business. To this end, dialogue with representatives of local institutions was promoted in 2020 in order to increase awareness of and trust in the Company.
In its Policy for the protection of human rights, the Group expresses its support for the protection of the rights of local communities, guaranteeing: accessibility and inclusion, committing to reaching with its products and services those areas and categories that may not have access to them. At the same time, it intends to engage in initiatives aimed at the dissemination and support of the right to study, economic sustainability and social connection, addressing, thanks to its network of resources, needs arising from forms of disadvantage.
The launch of the service was accompanied by a promotion that provides, for customers who open a BancoPosta account up to 31 December 2021 and make the transfer, zero account fees for 6 months from the month of credit.
Poste Italiane places customer satisfaction as the central objective of its quality policies, reserving a fundamental role in the process of listening to all its customers. The Group constantly strives to improve the quality of its products and services, with the aim of guaranteeing a unique and distinctive experience for its customers and, at the same time, fully satisfying their expectations. In a constantly evolving scenario, permeated by mobile devices, social networking platforms, e-commerce and multi-channel, it is necessary for companies to establish relationships of trust and complicity with their customers, in order to intercept any change in their needs and behaviours.
Poste Italiane considers the satisfaction of its customers as a fundamental point for the creation of value in the long term. For this reason, the Company has identified a structure dedicated to “abnormal parcels”, i.e. those parcels that are damaged or returned because they do not conform to the original order. The Bologna Return Hub, inaugurated in July 2020, was therefore created with the aim of satisfying in a faster and more organised way all the requests for replacement or refund, quantified by Poste Italiane as about 40,000 shipments per day, contributing to the increase of the value provided by the Group’s services.
Steps taken to support customers in dealing with the Covid-19 emergency
Computer Emergency Response Team (CERT) In order to guarantee Group-wide supervision of cybersecurity and data protection activities, and to actively combat cybercrime, in 2013, Poste Italiane set up an ad hoc organisation called CERT (Computer Emergency Response Team). The team, which includes a number of IT security experts, carries out its functions by operating in real time, 24 hours a day, for risk prevention, the management of IT incidents affecting company systems and the development of actions in response to cyber events, thus strengthening the defence capacity of the entire Group. In addition, in order to create a widespread culture throughout the country with reference to IT security issues, the CERT takes on the task of creating moments of awareness, both inside and outside the Company. The organisation is part of a wider network of similar structures, of national and international scope, with which it constantly interacts to share information, indicators of compromise and attack models in general. In this context, Poste Italiane collaborates with CNAIPIC (National Centre Against Cybercrime for the Protection of Critical Infrastructure) of the Postal Police.
In order to comply with these obligations and ensure the continuous improvement of the management system, Poste Italiane has defined a Privacy Framework capable of highlighting the main areas of interest on which to focus, the related organisational and technical measures developed, and to provide continuous monitoring of the progress achieved.
With regard to collections, Poste Italiane’s role within the PagoPA system has been consolidated, with the extension of the range of services offered to central and local government bodies via digital channels (web and app).
Again with particular attention to the business world, in the acquiring area, with reference to the collaboration started by the Group with Lottomatica Italia Servizi, the service for accepting bill payments made at the approximately 54 thousand points of sale in the network has been fully operational since the beginning of 2020. In addition, since January 2020, the channel has been active for remote sale by Cartalis IMEL SpA of the physical Postepay POS acquiring service on the entire network of affiliated tobacconists. In December 2020, Lottomatica points of sale were also enabled to accept bill payments through Code, as well as the placement by Cartalis of Code on the network of affiliated tobacconists for the management of other payments.
In 2020, the partnership with ENI continued through the activation at service stations participating in the offer, of Postepay acquiring services also in digital mode, through the Paga con Postepay solution, included in the Eni Station APP. Moreover, in the transport area, in September 2020, the payment card acceptance service was launched through the PostePay acquiring service at Trenitalia’s physical POS and as part of the virtual POS Corporate e-commerce acquiring service, the
Mobile With the aim of improving and consolidating mobile services, during 2020 Poste Italiane, through its subsidiary PostePay SpA, signed agreements with Open Fiber and TIM to enable it to bring advanced internet connectivity solutions to individuals and businesses. Thanks to these agreements, the Group will provide the country with fiber optic services using ultra-broadband technologies, with the aim of increasingly reducing the digital divide between the various areas of the country. In addition to the agreements with Open Fiber and TIM, a series of further innovations have enabled Poste Italiane to confirm its position as a leading operator in the telecommunications sector: z Postepay Connect Back, a mobile service with an exclusive cashback feature. Customers who sign up to the offer receive a monthly cashback discount for the Giga of their tariff plan not used up, credited directly to their Postepay Evolution card and usable for any type of expenditure; z PosteMobile Casa WEB, the innovative home internet connection solution based on 4G wireless technology. The new service can be purchased exclusively online and installation does not require the intervention of a technician, guaranteeing unlimited data traffic with high performance (speeds of up to 300 Mbps) and a free Wi-Fi modem included on loan; z Mobile Phone Services in Postepay App, so that customers can easily consult and manage all the information on their PosteMobile SIM directly from the app.
At the basis of this path are a series of objectives that the Group has set itself in order to play a leading role in the country’s digital transition: z enhance the Post Office network, integrating it with B2B2C partner networks, in synergy with the strengthening of digital channels; z optimise digital solutions, fostering inclusion and development of the digital economy, in order to meet the diverse needs of customers of all age groups; z expand the addressable market to smart customers with data connectivity needs; z consolidate the Company’s role as a key interlocutor for the Public Administration.
In line with the provisions of the standard, Postel SpA and SDA, the two companies primarily involved in the certification process, have also defined specific environmental policies.
The Poste Italiane Group has joined the celebration of the Earth Day, the most important international event on sustainability and environmental protection, established by the United Nations in 1970. In 2020, the event celebrated its 50th anniversary and saw Poste Italiane confirm its commitment to the combat against climate change, promoting the constant development of innovative solutions capable of protecting natural capital. The Group integrates environmental issues into its business strategy, investments, risk and opportunity analyses and, with a view to transparency and accountability, reports its environmental performance in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TFCD), with the aim of monitoring its impacts and reducing its environmental footprint in favour of a sustainable use of natural resources.
• Assessment of the degree of social responsibility and the carbon footprint of the portfolios of BancoPosta Fondi SGR and Poste Vita
Within the insurance industry, there is a growing interest in managing risks related to environmental, social and governance aspects. The reasons are attributable to the importance given to the correct and effective implementation of risk management processes also by operators in the sector, who through their work have the opportunity to protect the community and contribute to the sustainable development of society, providing their contribution to the progress of the country. Poste Vita is aware of this potential and has decided to integrate it into its business through a series of principles, objectives and processes contained within its Responsible Insurance Policy. This Policy describes the Company’s approach to the management of risks and opportunities relating to ESG factors within traditional insurance processes. As proof of this commitment, since 2019, the Poste Vita Group has been a signatory to the Principles for Sustainable Insurance promoted by the United Nations, the signing of which formally commits the Company to including sustainability criteria relevant to the insurance sector in its decision -making processes, also initiating paths of collaboration with customers and partners to increase awareness on the scope and promoting synergies with bodies and institutions with the aim of determining widespread and cohesive action on ESG issues. This approach enables Poste Vita to gain a competitive advantage in operational and reputational terms, leading to the creation and dissemination of value for its stakeholders and the country as a whole.
Number of employees covered by the system 61,320 72,394 133,714 58,571 70,145 128,716 57,328 68,410 125,738
[GRI 306-3] Waste generated [GRI 306-4] Waste recovered [GRI 306-5] Waste disposed of*
[GRI 302-1] Internal energy consumption relating to real estate facilities by source
Jet Fuel 16.15 21.74 * The emission factors used to convert fuels into NOx are as follows: natural gas 0.0273 t NOx/TJ. LPG 0.0311 t NOx/TJ. Diesel for cars 0.2360 t NOx/TJ, for light commercial vehicles 0.32 t NOx/TJ, for heavy trucks 0.3455 t NOx/TJ. Petrol for cars 0.0658 t NOx/TJ, for light commercial vehicles 0.0742 t NOx/TJ, for motorcycles 0.1283 t NOx/TJ. Source: ISPRA, Database of average emission factors of road transport in Italy. Jet fuel 40 g NOx/GJ. source: ISPRA, Emission factors for stationary combustion sources in Italy.
Events after 31 December 2020 Events after the end of the reporting period to which the 2020 Annual Report refers are described in other sections of this document. Further information is provided in Poste Italiane Financial Statements for the year ended 31 December 2020.
y GRI 401 Employment Poste Italiane Group y Entities and Institutions y Shareholders and Investors
Occupational health and safety y GRI 403 Occupational Health and Safety
Cybersecurity, IT Security and Privacy y GRI 418 Customer Privacy Poste Italiane Group y Customers y Suppliers and Business partners y Entities and Institutions y Shareholders and Investors
Report on Operations: Performance of Poste Italiane SpA and Report on Operations of BancoPosta RFC (p. 176-179); Tables of indicators (p.306)
102-20 Executive-level responsibility for economic, environmental, and social topics 102-21 Consulting stakeholders on economic, environmental, and social topics 102-22 Composition of the highest governance body and its committees
Systemic Risk Management FN-AC-550a y Risk Management and Risk Assessment model
74. Under the indirect method, net cash from operating activities is determined by adjusting profit/(loss) for the year to reflect the impact of non-cash items, any deferment or provisions for previous or future operating inflows or outflows, and revenue or cost items linked to cash flows from investing or financing activities.
The term IFRS includes all the International Financial Reporting Standards, International Accounting Standards (“IAS”) and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”, previously known as the Standing Interpretations Committee or “SIC”), adopted by the European Union and contained in the EU Regulations in force at 31 December 2020, regarding which no derogations were made.
Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance, which is controllable and capable of generating future economic benefits. The initial carrying amount is adjusted for accumulated amortisation, where an amortisation process is envisaged, and for any impairment losses.
In determining whether credit risk has increased significantly, it is necessary to compare the risk of default of the financial instrument as at the reporting date with the risk of default of the financial instrument on initial recognition. However, there is a rebuttable default presumption if the financial instrument is more than 90 days past due, unless there is reasonable and supportable information to demonstrate that a default criterion with greater lag is more appropriate. Regarding trade receivables, a simplified approach is applied to measure the expected credit loss, if these receivables do not contain a significant financing component pursuant to IFRS 15. The simplified approach is based on a matrix of observed historical losses.
Financial liabilities, including loans, trade payables and other payment obligations, are carried at amortised cost using the effective interest method. If there is a change in the expected cash flows and they can be reliably estimated, the value of borrowings is recalculated to reflect the change on the basis of the present value of estimated future cash flows and the internal rate of return initially applied. Financial liabilities are classified as current liabilities, unless there is an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting period.
When it is highly probable that the carrying amount of a non-current asset, or a disposal group, will be recovered, in its present condition, principally through a sale transaction or other form of disposal, rather than through continuing use, and the transaction is likely to take place in the short term, the asset or disposal group is classified as held for sale or as a discontinuing operation in the statement of financial position. The transaction is deemed to be highly probable, when the Parent Company’s Board of Directors, or, when so authorised, the board of directors of a subsidiary, has committed to a plan to sell the asset (or disposal group), and an active programme to locate a buyer and complete the plan has been initiated. Sale transactions include exchanges of non-current assets for other non-current assets when the exchange has commercial substance.
Provisions for risks and charges Provisions for risks and charges are recorded to cover losses that are either probable or certain to be incurred, for which, however, there is an uncertainty as to the amount or as to the date on which they will occur. Provisions for risks and charges are made when the Group has a present (legal or constructive) obligation as a result of a past event, and it is probable that an outflow of resources will be required to settle the obligation. Provisions are measured on the basis of management’s best estimate of the use of resources required to settle the obligation. The value of the liability is discounted, where the time effect of money is relevant, at a rate that reflects current market values and takes into account the risks specific to the liability. Provisions are reviewed at each reporting date and are adjusted to reflect the best estimate of the expected charge to meet existing obligations at the reporting date. Any effect of the passage of time and the effect of changes in interest rates are shown in the statement of profit or loss. With regard to the risks for which the occurrence of a liability is only possible, specific information is provided without making any provision. In those rare cases in which disclosure of some or all of the information regarding the risks in question could seriously prejudice the Group’s position in a dispute or in ongoing negotiations with third parties, the Group exercises the option granted by the relevant accounting standards to provide limited disclosure.
Share-based payments Share-based payment transactions may be settled in cash, with equity instruments, or with other financial instruments. Goods or services received or acquired through a share-based payment transaction are recognised at their fair value.
As a result of this acquisition, the following were recognised in the consolidated financial statements: z portions of equity attributable to non-controlling interests; z the financial liability estimated to take account of the possible exercise of the options, as a balancing entry to Group shareholders ’ equity. Subsequent changes in the value of the financial liability are reflected in the Group’s PL statement.
A list of companies consolidated on a line-by-line basis and using the equity method is provided in Note 13 - Additional information – Key information on investments.
Shareholder transactions: Due from the MEF following cancellation of Decision EC 16/07/2008 39 39
The current environment - which has resulted in highly volatile markets and great uncertainty with regard to economic projections, further aggravated by the ongoing pandemic, and the decline of the postal market in which the Group operates, make it complex to produce reliable economic/financial forecasts.
z Amendments to IAS 1 - Presentation of Financial Statements and IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors aimed at clarifying the definition of “material” in order to make it easier for companies to express opinions about materiality of information in the notes to the financial statements. The concept of “obscured information” has also been introduced, clarifying that information is “obscured” if it has been described in such a way as to produce an effect similar to that which would have been produced if said information had been omitted or incorrect.
It should also be noted that on 12 October 2020 an amendment to IFRS 16 - Leases - Covid-19-Related Rent Concessions was published in the Official Journal of the European Union. The document provides lessees with the right to account for the reductions in fees related to Covid-19 without having to evaluate, through contract analysis, whether the definition of lease modification of IFRS 16 is respected. Therefore, lessees that apply this option may account for the effects of the reductions in the lease fees directly in the statement of profit or loss on the effective date of the reduction. The application of this amendment, which was introduced with effect from 1 June 2020 for years beginning on or after 1 January 2020, has not been reflected in this Annual Report nor are significant effects expected from its future application.
Partnership with Tink AB During the first quarter of 2020, as part of the agreements signed in December 2019 with the Swedish company Tink AB, one of the leading Open Banking platforms95 in Europe, the Poste Group, through its subsidiary Postepay SpA and other investors, subscribed to a capital increase in TINK with an investment of approximately €20 million, acquiring an investment of 5.1% in the share capital issued, or 4.8% on a fully diluted basis in Tink capital. The subscription of the capital increase was completed on 10 March 2020.
Subsequently, on 18 June 2020, PostePay participated in a new capital increase with an investment of €0.63 million, keeping the investment of 4.8% unchanged. This capital increase by Tink was carried out to partially finance the acquisition of the Spanish company Eurobits Technologies S.L, Tink competitor in the open banking technology solutions market, which includes among its customers the main financial institutions in its reference market.
Increase/(decrease) in fair value during the year [tab. B4] (28) 95
At 31 December 2020, property, plant and equipment includes assets belonging to the Parent Company located on land held under concession or sub-concession, which are to be handed over free of charge at the end of the concession term. These assets have a total carrying amount of €44 million.
The fair value of investment property at 31 December 2020 includes €64 million representing the sale price applicable to the Parent Company’s former service accommodation in accordance with Law 560 of 24 December 1993, while the remaining balance reflects market price estimates computed internally by the Company96.
Loans and receivables This item breaks down as follows: tab. A6.1.1 - Loans and receivables at amortised cost
The change in fair value in profit or loss for the positive amount of €1,708 million refers to changes in the value of the securities subject to fair value hedge during the year.
In the year under review, the Parent Company carried out the following transactions: z forward and settlement purchases with a nominal amount of €100 million; z forward sales for a nominal amount of €2,645 million and settlement for €1,857 million, of which €1,280 million outstanding at 1 January 2020; z new interest rate swaps designated as cash flow hedges with a nominal value of €50 million; z new fair value hedge interest rate swaps with a nominal amount of €9,214 million, including €900 million in hedges for repurchase agreement transactions; z settlement of fair value hedge interest rate swaps on securities sold, whose fair value changes were hedged, for a notional amount of €3,870 million.
At 31 December 2020, Poste Vita had forward sales of fair value hedges on BTPs for a notional amount of €1,260 million. The value of the derivative at 31 December 2020 was negative for €10 million, entirely transferred to policyholders through the shadow accounting method, as it refers to financial instruments included in separately managed accounts.
z Receivables arising from electoral subsidies refer to compensation for previous years, for which no provision has been made in the state budget.
At 31 December 2020, the Parent Company holds 5,257,965 of its treasury shares (equal to 0.4026% of the share capital). All the shares in issue are fully subscribed and paid up. No preference shares have been issued.
Increase/(decrease) for expected losses - - 7 - - - 7
z the cash flow hedge reserve, attributable to the Parent Company, reflects changes in the fair value of the effective portion of cash flow hedges. In 2020, the fair value loss of €28 million was primarily attributable to the value of BancoPosta RFC’s derivative financial instruments.
B6 - Provisions for risks and charges (€1,396 million) Movements in provisions for risks and charges are as follows: tab. B6 - Movements in provisions for risks and charges for FY 2020
Provisions for disputes with staff* 54 12 - - (16) 50
Specifically: z Provisions for operational risks, which primarily regard liabilities deriving from transactions carried out by BancoPosta, primarily reflect risks linked to the distribution of postal savings products issued in previous years, adjustments and settlements of income for previous years, estimated risks for charges and expenses to be incurred as a result of seizures suffered by BancoPosta, primarily in its capacity as a third party in foreclosure, and fraud. Provisions for the year totalling €26 million mainly reflect risks associated with the distribution of postal savings products issued in previous years and expenses to be incurred as a result of seizures suffered by BancoPosta mainly as a third party. Transfers to profit or loss are due to the elimination of liabilities identified in the past and refer mainly to the revised estimate of certain risks associated with the distribution of postal savings products and the conclusion of voluntary protection initiatives undertaken for the Europa Immobiliare I and Obelisco funds. Uses are primarily attributable to risks linked to the distribution of postal savings products and to liabilities defined in favour of customers subscribing to the Obelisco fund who have taken part in the above initiative.
The decrease in income from insurance activities (-€1,413 million compared with 2019) primarily reflects a decrease in income from financial assets at FVTPL, reflecting the negative performance of the financial markets at 31 December 2020, compared with 31 December 2019 impacted by the known health emergency. These valuation gains, which are almost exclusively related to investments included in separately managed accounts, were almost entirely transferred to policyholders through shadow accounting.
tab. C10 - Impairment losses/(Reversals of impairment losses) on debt instruments, receivables and other assets
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 Eurozone government securities122. 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, expired on 31 December 2020 and being renewed. In addition, under the agreement with the MEF, renewed on 22 May 2020 for the three-year period 2020-2022, 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)123 rate.
BancoPosta RFC may therefore both outsource operating activities, entering into agreements with third parties, and contract out certain operating or control activities to Poste Italiane functions, agreeing “Specific Operating Guidelines” with the heads of the various functions. The Operating Guidelines establish, among other things, the applicable levels of service and transfer prices and are effective following an authorisation process involving the relevant functions, the Chief Executive Officer and, where required, the Company’s Board of Directors. The transfer prices set out in the Operating Guidelines are determined according to objective criteria that reflect the real contribution of the various functions to BancoPosta RFC’s results. The transfer prices paid, inclusive of commissions and any other form of remuneration due, are determined on the basis of market prices and tariffs for the same or similar services, identified, where possible, following a benchmarking process. When the specifics and/or the particular nature of a service provided by one of the Issuer’s functions do not allow the use of a comparable market price, a cost-based method is used, again with the support of benchmarking to ensure that the price charged is adequate for the service provided. In such a case, an adequate mark-up, defined on the basis of appropriate analyses of comparable subjects, shall be applied. The prices set in each Operating Guidelines can be reduced in the presence of operating losses of the activities outsourced or in case of penalties due to the failure to achieve pre-established service levels, as measured by specific performance indicators. The Guidelines, which expired on 31 December 2020 and are being renewed for the two-year period 2021-2022, were notified to the Bank of Italy pursuant to the Supervisory Provisions and the 60-day period within which the authority could initiate the administrative prohibition procedure has elapsed.
Extraordinary transactions, totalling €50 million, regard the acquisition of application software and licences already in use (€43 million) and application software that has not yet been integrated into the production process (€7 million) deriving from the IT businesses sold by Poste Vita SpA, Poste Assicura SpA, Poste Welfare Servizi Srl and PostePay SpA.
Financial assets at amortised cost 31,597 17,067 48,664 23,638 14,657 38,295
Net fair value gains in the year under review, amounting to €2 million, have been recognised in profit or loss in the items Income and Expenses from financial activities.
Total assets at fair value 42,324 431 34 42,789 36,506 366 71 36,943
Financial assets at fair value through other comprehensive income Movements in financial assets at fair value through other comprehensive income (FVTOCI) are shown below: tab. A7.2 - Movements in financial assets at FVTOCI
Derivative financial instruments tab. A7.3 - Movements in derivative financial instruments
z Receivables for parcel delivery services refer to amounts due from customers using the “national and international express courier” service.
134. At 31 December 2020, the balance of trade receivables includes €22 million, net of the related provisions for doubtful accounts, relating to rental income falling within the scope of IFRS 15 – Revenue from Contracts with Customers.
Provisions for doubtful debts due from others (1) (117) (118) (1) (107) (108)
This item breaks down as follows: z the fair value reserve regards changes in the value of financial assets at fair value through other comprehensive income. The increase of €1,948 million during 2020 reflects: – a net increase of €1,947 million in financial assets measured at fair value through other comprehensive income and attributable to BancoPosta RFC; – a net increase of €1 million in financial assets measured at fair value through other comprehensive income held outside the ring-fence; z the cash flow hedge reserve represents changes in the fair value of the effective portion of cash flow hedges outstanding. In 2020, the fair value loss of €28 million reflects a net loss of €27 million on derivative financial instruments attributable to BancoPosta RFC and a net loss of €1 million on the value of financial instruments held outside the ring-fence; z the Incentive Plans reserve includes the estimate of the valuations for the year relating to the long-term “ILT Performance Share” incentive plans and the MBO short-term incentive plan, carried out on the basis of the provisions of IFRS 2.
At 31 December 2020, the fair value139 of the above payables amounts to €14,743 million.
MEF postal current accounts and other payables - 671 671 - 670 670 139. In terms of fair value hierarchy, which reflects the relevance of the sources used to measure assets, this amount qualifies for level 2.
C2 - Other income from financial activities (€516 million) tab. C2 - Other income from financial activities
Raw, ancillary and consumable materials and goods for resale 142 102
tab. C9 - Impairment losses/(Reversals of impairment losses) on debt instruments, receivables and other assets
Impairment losses/(reversals of impairment losses) debt instruments at amortised cost 7 (1)
The increase of €14 million compared to 2019 is attributable to higher impairment on debt instruments at FVTOCI and at amortised cost (+€15 million). The estimates were partly influenced by the effect of the crisis triggered by the current health emergency. For further details, reference should be made to Note 6 - Risk management.
At 31 December 2020, current tax assets/(liabilities) include: z a tax asset totalling €58 million relating to all the companies participating in the tax consolidation arrangement and reflecting payments of IRES and IRAP on account and refundable IRAP from the previous year and the positive effect deriving from the tax benefit of the Patent Box for the years 2017-2019 (€15 million), after provisions for IRES and IRAP for the year 2020; z assets totalling €39 million, including €23 million related to the tax benefit recognised to the Company in respect of the Patent Box and ACE for 2015-2016 and €16 million in respect of the Patent Box receivable transferred from the subsidiary, Poste Vita SpA, to Poste Italiane. These assets will become compensable after the submission of the relevant supplementary tax returns; z the residual substitute tax credit of €27 million relating to the redemption carried out by the Company during 2018, pursuant to art. 15, paragraph 10-ter of Law Decree no. 185 of 29 November 2008, of the higher values resulting from the notes to the consolidated financial statements at 31 December 2017, of goodwill and other intangible assets relating to the acquisition of the investment in FSIA Investimenti Srl; z assets totalling €9 million recognised as a result of the responses received to two petitions filed with the Revenue Agency concerning the correct implementation of IFRS 9 and 15. These assets will become compensable after the submission of the relevant supplementary tax returns; z the remaining IRES receivable of €4 million to be recovered on the failure to deduct IRAP resulting from the requests filed pursuant to art. 6 of Law Decree no. 185 of 29 November 2008 and art. 2 of Law Decree no. 201 of 6 December 2011, which provided for a partial deductibility of IRAP for IRES purposes (in this regard, see as reported on receivables for related interest in Note A10).
Monte dei Paschi di Siena Group 143 - 8 - - 400 - - -
Financial liabilities attributable to BancoPosta 94,946 12,258 12.9 77,937 10,518 13.5
Poste Italiane SpA’s financial activities, related to treasury management, medium-term funding transactions, including capital market transactions, and extraordinary and subsidised finance are the responsibility of the Parent Company’s Administration, Finance and Control function.
Management of the Group’s financial transactions and of the associated risks relates mainly to the operations of Poste Italiane SpA and the Poste Vita insurance group.
In relation to cash and cash equivalents, cash flow interest rate risk primarily relates to the bank deposits of Poste Italiane SpA and Poste Vita SpA, in addition to amounts deposited by the Parent Company with the MEF and held in the so-called buffer account”.
Carrying amount - Fair value at 31 December 2020 1,823 - 152,914 - 1,813 85 - 156,635 2019 effects
Provision to cover expected losses - OCI - - (11) - - - - (11)
Provision to cover expected losses - - (20) - - - - - - (20)
Impairment of securities / receivables purchased/paid in the period - - - -
Fair value through profit or loss (24) (20) (1) 1 (1) 1 - -
Level 2: this level is comprised of fair values based on inputs other than Level 1 quoted market prices that are either directly or indirectly observable for the asset or liability161. For the Poste Italiane Group the following categories of financial instrument apply: 161. Given the nature of Poste Italiane Group’s operations, the observable data used as input to determine the fair value of the various instruments include, for example, quoted prices provided by third parties (pricing or brokerage services), yield and inflation curves, exchange rates provided by the European Central Bank, ranges of rate volatility, inflation option premiums, interest rate swap spreads or credit default spreads which represent the creditworthiness of specific counterparties and any liquidity adjustments quoted by primary market counterparties.
z Warrants: considering the features of the securities held, measurement is based on the local volatility model. In particular, considering that buyback agreements have been entered into with the counterparties that structured these warrants, and that such counterparties use valuation models consistent with those used by the Group, these instruments are measured on the basis of the bid price quoted by the counterparties.
Hedging transactions on repurchase agreements The Poste Italiane Group engages in repurchase agreements, in euro government bonds or securities guaranteed by the Italian government, for a variety of purposes, including investing in government securities, meeting liquidity requirements deriving from the funding of current accounts, actively managing treasury positions and managing deposits as collateral in collateralisation transactions. These transactions are mainly at fixed rates and are therefore exposed to changes in fair value due to fluctuations in interest rates.
With respect to inflation-linked bonds, the retrospective effectiveness test considers the hedge ratio between the change in fair value of the actual derivative to the change in fair value of the hypothetical derivative occurred between the date of inception and the valuation date. The hedge is considered effective if the hedge ratio falls in the interval between 80% and 125%.
172. Calculated by assuming a parallel shift of + / - 100 bps of the curves.
In November 2018, Consorzio Postemotori received notice of an order issued by the Criminal Court in Rome containing a precautionary seizure regarding the consortium, amounting to €4.6 million. On 13 May 2019, the G.U.P. of the Ordinary Court of Rome downsized the original charges establishing the committal for trial only in relation to part of the charges relating to the liability invoicing transactions of a subcontractor and a tax consultant of one of the partners. The Consortium mandated an external criminal lawyer to file a petition for release from seizure with respect to the criminal seizure ordered against the Consortium.
Autorità per le Garanzie nelle Comunicazioni (AGCOM – the Italian Communications Authority) Law Decree 201 of 6 December 2011, converted into Law 214 of 22 December 2011, transferred responsibility for regulation and supervision of the postal sector to the Italian Communications Authority (AGCom).
ii. AGCom Resolution 214/19/CONS regarding “Assessment of the net cost of the universal postal service for 2015 and 2016” was published on 2 July 2019. In addition to acknowledging that the cost is unfair, the Resolution quantified the cost of providing the Universal Postal Service in 2015 and 2016, respectively, as €389 million and €356 million, compared with compensation of €329 million and €262 million provided for in the Contratto di Programma. AGCom did not establish a Compensation Fund for 2015 and 2016, so it has not been possible to recover the difference between compensation provided by the state and the costs quantified by AGCom. On 2 October 2019, Poste Italiane challenged this resolution by filing an appeal before the Lazio Regional Administrative Court (still pending).
Bank of Italy On 26 February 2020, the Bank of Italy launched an ordinary and general inspection of BancoPosta Fondi SpA SGR, in accordance with article 6-ter of Legislative Decree no. 58 of 24 February 1998. Subsequently, on 22 May 2020, the Authority communicated the interruption of the inspection, in relation to the impossibility - due to the health emergency in progress - to remotely complete some verification activities and that for the above reasons, the delivery of an ordinary inspection report is not expected.
Under the definition provided by the Consob ruling of 28 July 2006, the Poste Italiane Group did not conduct any exceptional and/or unusual transactions175 in 2020.
This paragraph provides information on the nominal value and carrying amount of financial assets delivered to counterparties as collateral for repurchase agreements and interest rate swaps, and financial assets delivered to the Bank of Italy as collateral for intraday credit granted to the Parent Company and as collateral for SEPA Direct Debits.
Financial assets at amortised cost 24,929 31,791 33,459 19,100 22,825 22,637
Financial assets at FVTPL 312 31 281 Annual VaR 99.5% over a 5-year time horizon and 1-year half life
Poste Italiane SpA The effects on profit or loss of the above Performance Share Long-Term Incentive scheme at 31 December 2020 for Poste Italiane SpA are shown below.
Address Software Srl (Rome) Subsidiary 372 51.00% 1,272 542 730 1,161 154
c) measurement and recognition of gains and losses These financial assets are recognised at fair value with any changes in fair value recognised in profit or loss in line “Item 80 - Profits/(Losses) on trading” and in line “Item 110 – Profits/(Losses) on other financial assets/liabilities measured at fair value through profit or loss”.
c) measurement and recognition of gains and losses These assets are measured at amortised cost, that is the value assigned to the financial asset on initial recognition, net of any principal reimbursement, plus or minus the cumulative amortisation by using the effective interest rate method on the difference between the initial value and the value at maturity, after deducting any impairment. Any gains or losses are recognised in profit or loss in line “Item 10 - Interest and similar income”.
When the hedge is related to recognised assets or liabilities, or an unrecognised firm commitment, the changes in fair value of both the hedging instrument and the hedged item are recognised in profit or loss. Any difference represents the ineffective portion of the hedge and is accounted for as a loss or gain, recognised separately in line “Item 90 - Profits/(Losses) on hedging”.
Related parties Related parties within the Poste Italiane Group are Poste Italiane SpA’s functions outside the ring-fence and Poste Italiane SpA’s direct and indirect subsidiaries and associates.
Share-based payments As described in detail in Part I, the valuation of the Poste Italiane Group’s existing share-based payment arrangements at the end of this Separate Report has been carried out using an internal pricing tool that adopts simulation models that meet the requirements of the relevant accounting standards and take account of the specific characteristics of the Plans. The plan terms and conditions link the award of the related options to the occurrence of certain events, such as the achievement of performance targets and performance hurdles and, in certain areas of operation, compliance with certain capital adequacy and liquidity requirements. For these reasons, measurement of the liability, equity reserve and the corresponding economic effects involves the use of estimates based on current knowledge of factors that may change over time, potentially resulting in outcomes that may be significantly different from those taken into account in preparing this Separate Report.
Level 3: this category includes the fair value measurement of assets and liabilities using inputs which cannot be observed, in addition to Level 2 inputs. In BancoPosta RFC’s case, this category includes equity instruments for which no price is observable directly or indirectly in the market. Measurement of these instruments is based on the price of quoted equities of the same issuer as a benchmark. The price inferred in this manner would be adjusted through the application of the discount implicit in the process to align the value of the unquoted shares to the quoted ones.
Investments in debt securities are recognised at fair value, for €42,638 million (of which €292 million in accrued interest).
4.4 Financial assets measured at amortised cost: gross amount and total impairment
186. Introduced by article 19 of Law Decree 201/2011, converted as amended by Law 214/2011, in accordance with the MEF Decree dated 24 May 2012: Manner of implementation of paragraphs from 1 to 3 of article 19 of Law Decree 201 of 6 December 2011, on stamp duty on current accounts and financial products (Official Gazette 127 of 1 June 2012).
Financial assets measured at fair value through other comprehensive income 2. Financial assets measured at amortised cost 4,423 x - - x x x - x x 2. Portfolio of financial assets and liabilities x x x x x x - x - -
Liabilities for fees to be refunded refer to the estimate of the commissions to be relegated to partners in case of the contractually agreed early repayment of loan products placed after 1 January 2018.
BancoPosta RFC Separate report for the year ended 31 December 2020 Notes – Part B – Information on the balance sheet
A. Financial assets 1. Financial assets measured at amortised cost 101 (38) 63 - (10) (10)
Section 21 – Other information All information has been presented above.
Tax expense on other comprehensive income reclassified to Profit or loss (474) (427)
BancoPosta RFC Separate report for the year ended 31 December 2020 Notes – Part D – Comprehensive income
Credit risk is controlled through the following: z minimum rating requirements for issuers/counterparties, based on the type of instrument; z concentration limits per issuer/counterparty; z monitoring of changes in the ratings of counterparties.
The standardised approach191 as defined by EU Regulation 575/2013, is used by BancoPosta to measure credit and counterparty risks. Application of this method entails the use of Standard & Poor’s, Moody’s, Fitch and DBRS for the computation of counterparty credit rating classes.
191. The standardized approach entails risk weightings in accordance with the nature of the exposure and the identity of the counterparty and the counterparty’s external credit rating.
For financial assets other than trade receivables, BancoPosta RFC applies the General deterioration approach, with models to estimate risk parameters depending on the type of counterparty: z Internal risk parameter estimation models for debt securities and deposits with Sovereign, Banking and Corporate counterparties; z risk parameters deriving from agency ratings or average default rates for the sector for Public Administration and Central Counterparties.
3. Credit-impaired financial assets BancoPosta RFC holds a single non-performing financial asset, which relates to items illegally taken away but that are now being recovered for €13 million.
5 from B+ to B- from B1 to B3 from B+ to B- from BH to BL
B.3 Geographical distribution of on- and off-balance sheet credit exposures to banks
The exposure to interest rate risk, as measured internally, is subject to stress tests of the principal risk factors – such as the duration of deposits, the value of investments – that contribute to determining the measurement of exposure. In particular, the stress tests are based on an assumed reduction in the maximum time horizon (cut-off point) for retail and business customer deposits and the revaluation of the asset portfolio in response to adverse market scenarios.
- Deposits at MEF (private customer deposits) 1,991 20 (20) 495 5 (5)
A.2 Trading financial derivatives: gross positive and negative fair value - breakdown by product
BancoPosta RFC has fair value and cash flow hedge policies for which it elected, under IFRS 9, to maintain the accounting treatment provided for by IAS 39.
Moreover, BancoPosta RFC engages in repurchase agreements, in euro government bonds or securities guaranteed by the Italian government, for a variety of purposes, including investing in government securities, meeting liquidity requirements deriving from the funding of current accounts and actively managing treasury positions and deposits as collateral. These transactions are mainly at fixed rates and are therefore exposed to changes in fair value due to fluctuations in interest rates.
With regards to the hedges of forecast transactions, the retrospective effectiveness test involves the calculation of a hedge ratio defined as the ratio of the difference between the fair value of the forward transaction entered into with the counterparty on the test and inception date and the present value of the difference between the theoretical forward price of the BTP calculated as of the test and inception date. Assuming a perfect match between the forward prices of the counterparties and the theoretical forward prices, the hedge ratio is always equal to 100%. As such, there are no sources of ineffectiveness.
208. The notional amount of the forward contract must be set, at the settlement date, as equal to the nominal amount of the instrument in case of purchase, and equal or lower than the nominal amount of the instrument in case of sale. The underlying of the forward contract must coincide with the instrument that must be purchased or sold (in this case it must be an instrument in the portfolio) at the settlement date. The settlement date must be the same as the date on which the cash flow to be hedged is expected, in case of forward purchase, or must be related to the year in which the total return must be stabilised, in case of forward sale.
A. Assets 1. Financial assets measured at fair value through other comprehensive income - hedging: 1.1 Debt securities and interest rates 20,535 - 3,686 - 1,599 X
- Share of valuation reserves relating to equity accounted investments - 7. Profit/(Loss) for the year 629 611
The total number of phantom stocks awarded to the 8 Beneficiaries of the Third Cycle of the Plan amounted to 54,635 units.
The Shares will be awarded by the end of the year following the end of the Performance Period as follows: z 40% up-front; z the remaining 60% in two portions, with deferral periods of 2 and 4 years, respectively.
In compliance with Prime Ministerial Decree (D.P.C.M.) of 8 March 2020, as of 10 March 2020, the meetings of all corporate bodies, including of the Board of Statutory Auditors, were held with all participants connected via audio/video in order to ensure the measures for the counter and containment, throughout the country, of the health emergency from Covid-19.
With reference to the production system, taking into account that the Company's activity has never been interrupted, although in some periods it has been severely limited, the Board of
PostePay, BancoPosta Fondi SGR and Postel; the latter Company re-entered the scope of the
The Board of Statutory Auditors has also examined the reports prepared by the Independent
- update of the Internal Regulations of Board Committees in order to align the content and wording thereof with the Corporate Governance Code; - on 24 September 2020, it approved the Crisis Management Models for the Group, Business
Continuity Management applicable to all Group services and Incident Management for the management of incidents of any nature at Group level; - on 24 September 2020, it approved the Guideline on Competition and Consumer Protection
Compliance; - in May 2020, the Sustainability Committee was set up within the Board of Directors, with the task of assisting it in pursuing sustainable success in relation to ESG factors, through the continuous integration of national and international best practices relating to sustainability in corporate strategies; - formalisation of a monitoring process, on the progress of the Action Plans, by the Technical
It should also be noted that on 27 January 2021, the Board of Directors approved the new version of the Group's 231 Guideline, in order to bring certain provisions of the Guideline into line with the latest developments in the Poste's 231 Model. In addition, with reference to the criteria for identifying the Supervisory Boards of Group companies, the Guideline provides that, of the three members, at least two must be external to the Company, thus introducing the possibility that all three members may be external.
15. Observations on the adequacy of the guidelines communicated by the Company to its subsidiaries pursuant to art. 114, paragraph 2 of Legislative Decree 58/1998.
Pursuant to the Corporate Governance Code, the Board of Statutory Auditors was also consulted by the Control and Risk Committee in 2020 regarding the following: - approval of the MBO plan for the Head of the Internal Auditing function; - definition of the Audit Plan; - assessment of the results described in the Independent Auditor's letter of recommendations and the section of its report on key audit matters in the financial statements for 2020; - assessment of the correct use of accounting standards and their consistency for the purposes of preparation of the consolidated financial statements; - Group Risk Appetite Framework for 2021; - updating of the Guideline for defining and monitoring the Poste Italiane Group's Risk
With reference to the IMEL RFC (Istituto di Moneta Elettronica) of PostePay, the Board of
Company's corporate and control functions. The Board of Statutory Auditors also received extensive information on PostePay during a meeting dedicated to the exchange of information with the Supervisory Body of the Subsidiary, during which the Board of the Subsidiary illustrated the main elements concerning the functioning of the internal control and governance system, administration and organisation, the functioning of IMEL RFC, as well as significant aspects of performance of operations. The outcome of the meeting with the Supervisory Body of PostePay highlighted: (i) positive performance of the economic-financial results, (ii)
The other 6 incidents, although important, had no major impact on production and only marginal impact on customers. The Company has initiated many interventions in this area and the main interventions carried out during 2020 include: (i) the continuation of work on the
With regard to control activities contracted out to Poste Italiane's functions, the Board of
The Board of Statutory Auditors has recommended in the area of IT measures, to i) make an additional effort to speed up the completion of IT remediation plans; ii) complete the plan for
RFC" and the "Product Governance Guidelines for investment, insurance and banking products"; Update of the "Guidelines on Remuneration and Incentive Policies for
Action on Investment Services, prepared following the audits carried out by Consob from
assessments for 98% of sales structures (Post Offices and Mobile Consultant Specialists), 100%
BancoPosta; • participation in working groups engaged in the feasibility study for the implementation of specific anti-money laundering controls on products/services considered to be at higher risk
Banking Services in response to Bank of Italy audit findings; (iv) 2 on the Information System for maturity breakdown; (v) 6 on Privacy following Internal Control audit. The Plan therefore saw the integration of 33 interventions during the year, of which 24 fall within the 2020 baseline, while 4 interventions were suspended due to the reformulation of the budget following the Covid-19 emergency. At 31 December 2020, 78 out of 89 interventions had been carried out, achieving 88% coverage of the Plan.
for 3 areas (Treasury, Management of Security Measures on Cash and Securities and
Committee, in light of the favourable case law of the Court of Cassation, decided to confirm the defence approach; - regulatory risk: following the implementation of the EBA Guidelines on interest rate risk, the new rules established by the CRDV are expected to come into force in 2021, including, with regard to BancoPosta operations, changes in the calculation of exposure to counterparty risk, financial leverage and NSFR. The structural exposure of BancoPosta to changes in the prudential rules governing government securities also remains. Lastly, it should be noted that in-depth studies and developments will be carried out with regard to
At 31 December 2020, all the metrics of the RAF, compared to the target, threshold and limit values set for the 2020 financial year, were in line with the objectives set in the RAF, with the exception of the Leverage Ratio, which stood at the limit level of 2.6% (before the aforementioned provision for profits of €50 million) and the sensitivity of net interest income
The impairment test carried out by the Company confirmed the recoverability of the value of the Group's assets attributed to the CGU.
As at December 31, 2020, the Group recorded in the consolidated financial statements in the item "Technical provisions for insurance business", mathematical provisions for a total amount of Euro 129.8 billion, equal to approximately 48% of the Group’s total liabilities and equity.
With reference to the statement referred to in art. 14, paragraph 2 (e), of Legislative Decree 39/10, made on the basis of the knowledge and understanding of the Group and of the related context acquired during the audit, we have nothing to report.
With reference to the statement referred to in art. 14, paragraph 2 (e), of Legislative Decree 39/10, made on the basis of the knowledge and understanding of the Company and of the related context acquired during the audit, we have nothing to report.
The Directors of Poste Italiane S.p.A. are responsible for the preparation of the Separate Report in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of national regulations issued pursuant to art. 43 of Italian Legislative Decree no. 136/2015 and the provisions of art. 2447-septies paragraph 2 of the Italian Civil Code. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of the Separate Report that is free from material misstatements, whether due to fraud or error.