1.3 Financial liabilities measured at amortised cost: breakdown of outstanding securities by type
Section 3 – Financial liabilities designated at fair value – Item 30 No financial liabilities are held in portfolio designated at fair value through profit or loss (the “fair value option”).
4.2 Hedging derivatives: breakdown by hedged portfolio and type of hedge
Micro Macro Micro Macro debt securities and interest rates equity instruments and equity indexes currencies and gold credit commodities other 1.
Section 6 – Tax liabilities – Item 60 Please refer to Assets, Section 10.
Section 7 – Liabilities associated with non-current assets held for sale and discontinued operations – Item 70
Items in process 599 844 - amounts to be credited to Postal Savings Books 104 212
Amounts payable to Poste Italiane outside the ring-fence: 490 441 - for services rendered by Poste Italiane SpA 455 441
The sub-item “Due to suppliers” primarily includes €349 million in trade payables due to PostePay for collection and payment services under the service contract.
“Contract liabilities” are mainly due to the placement of loan products, as shown in the following table: Description (€m) Balance at 31/12/2019 Increases / (Decreases)
account for the current year 57 21 78 192 38 230 balance payable for the previous year - - - 14 14
Amount recognised in Profit or loss (147) (28) (175) (145) (31) (176)
Current tax assets, totalling €15 million, refer to receivables recognised following the signing of the agreement on the Patent Box187 in respect of the 2015-2016 financial years (€7 million) and the responses received to two requests on the correct application of IFRS 9 and 15 (€8 million). These assets will become compensable after the submission of the relevant supplementary tax returns.
187. On 21 December 2020, an agreement was entered into with the Revenue Agency to adhere to the “Patent Box” regime for the recognition of the economic contribution, referring to the 2015-2019 financial years with a positive effect in terms of tax benefit amounting to a total of €23 million, of which €16 million referring to the 2017, 2018 and 2019 financial years, used to offset taxes for the year.
Rate of employee turnover Specific table with rates differentiated by length of service. The average length of service for participants corresponds to an annual rate of 0.19%
Section 10 – Provisions for risks and charges – Item 100 10.1 Provisions for risks and charges: breakdown
B.2 Changes due to passage of time - - - -
Provisions for disputes with third parties regard the present value of expected liabilities deriving from different types of legal and out-of-court disputes with suppliers and third parties, the related legal expenses, penalties and indemnities payable to customers. During the year, net provisions of €9 million regard an update of the estimate of the liabilities and the related legal expenses, taking account of both the overall value of negative outcomes in terms of litigation.
Provisions for operational risks 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 foreclosures suffered by BancoPosta, primarily in its capacity as a third party in foreclosure, and fraud.
In 2020, a total of €24 million was allocated to provision, mainly due to 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 for €88 million 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.
Other information 3. Assets pledged as collateral for liabilities and commitments
Portfolios (€m) Total at 31/12/2020 Total at 31/12/2019 1. Financial assets measured at fair value through profit or loss - 2. Financial assets measured at fair value through other comprehensive income 9,060 7,329 3. Financial assets measured at amortised cost 6,969 5,707 4. Property, plant and equipment - of which: property, plant and equipment qualifying as inventories - -
“Other transactions” include the principal of postal savings deposits accepted for and on behalf of Cassa Depositi e Prestiti and the MEF.
In particular, the tables show: z the carrying amounts, before and after the effects of accounting offsetting, relating to repurchase agreements that meet the conditions necessary for the recognition of such effects; z the carrying amounts relating to derivative transactions and repurchase agreements that do not meet these conditions but are governed by standardised bilateral netting agreements that allow, in the event of counterparty default, the offsetting of credit and debit positions (ISDA and GMRA agreements); z the value of the collateral attached to them.
In order to present the tables and in compliance with the requirements of IFRS 7 and Bank of Italy Circular no. 262, repurchase agreements are shown at amortised cost, whilst derivative transactions are shown at fair value; the relevant financial guarantees are measured at fair value.
Section 1 – Interest – Items 10 and 20 1.1 Interest and similar income: breakdown
3 Other financial assets mandatorily measured at fair value - - - - 2. Financial assets measured at fair value through other comprehensive income 898 - x 898 1,012 3. Financial assets measured at amortised cost 649 32 - 681 600 of which: interest income on impaired financial assets - - - - of which: interest income on finance leases - - - - -
Other transactions FY 2020 FY 2019 1. Financial liabilities measured at amortised cost (77) - - (77) (60)
2. Financial liabilities held for trading - - - - 3. Financial liabilities measured at fair value - - - - of which: interest expense on lease payables - - - - -
BancoPosta RFC Separate report for the year ended 31 December 2020 Notes – Part C – Information on Profit or Loss
Section 2 – Fees and commissions – Items 40 and 50 2.1 Commission income: breakdown
Type of services/Amounts (€m) FY 2020 FY 2019 c) management, brokerage and advisory services: 2,740 2,837 4. securities custody and administration 2 3 7. order receipt and transmission 5 4 8.2 relating to financial structuring - 9. arrangement of third-party services: 2,731 2,828 d) collection and payment services 589 703 h) multilateral trading services - i ) current account maintenance and management 241 242
The decrease compared to 2019 was primarily caused by the health emergency that affected our country starting in March 2020 and significantly affected normal operations. The largest decreases relate to commissions for collection and payment services, following the decline in volumes of payment slips, and commissions for the placement of financing products.
Services/Amounts (€m) FY 2020 FY 2019 c) management and brokerage services: (3) (2)
Section 4 – Profits/(Losses) on trading – Item 80 4.1 Profits/(Losses) on trading: breakdown
1. Financial assets held for trading - 6 - - 6 2. Financial liabilities held for trading - - - - 3. Financial assets and liabilities: exchange differences x x x x (5)
- On foreign exchange and gold x x x x of which: natural hedges connected with the fair value option x x x x -
Section 6 – Profits/(Losses) on disposal or repurchase – Item 100 6.1 Profits/(Losses) on disposal or repurchase: breakdown
Section 8 – Net losses/recoveries due to credit risk – Item 130 8.1 Net losses/recoveries due to credit risk related to financial assets measured at amortised cost: breakdown
Write-off Other of which: purchased or originated impaired loans - - - - - - of which: purchased or originated impaired loans - - - - - - -
8.2 Net losses/recoveries due to credit risk related to financial assets measured at fair value through other comprehensive income: breakdown
Section 9 – Profits/(Losses) from contract amendments without termination – Item 140 Not applicable
Section 10 – Administrative expenses – Item 160 10.1 Personnel expenses: breakdown
3) Directors and Statutory Auditors - 5 ) Recovery of employment costs of staff seconded to other companies - 6 ) Refund of costs of third-party employees seconded to the company - -
Type of expenses/Amounts (€m) FY 2020 FY 2019 1) Cost of services provided by Poste Italiane SpA (4,380) (4,476)
The main provisions and releases are discussed in Part B – Section 10 of Liabilities.
Section 14 – Other operating income/(expenses) – Item 200 14.1 Other operating expenses: breakdown
Profit components/Amounts (€m) FY 2020 FY 2019 1. Other revenue from contracts with customers 2 2
The sub-items “Other expenses” and “Other operating income” mainly include the total net effects of €75 million related to the settlement of items previously recognised under “Other liabilities” resulting from a comprehensive review of estimates completed during the year.
The sub-item “Other revenue from contracts with customers” includes income recognised at point time for copying documents and prescription of certified cheques.
Section 16 – Profits/(Losses) on fair value measurement of property, plant and equipment and intangible assets – Item 230
Section 18 – Profits/(Losses) on disposal of investments – Item 250 Nothing to report.
Profit components/Amounts (€m) FY 2020 FY 2019 2. Increase/(decrease) in current taxes of prior period taxation (+/-) 30 (1)
Net provisions for risks and charges and impairments of receivables (10) -1.2% 3 0.4%
Effective tax (before recognition of the Patent Box tax effect) 186 22.4% 196 23.3%
Effective tax (before recognition of the Patent Box tax effect) 38 4.6% 38 4.5%
Other components of comprehensive income not reclassified to Profit or loss 20. Equity instruments measured at fair value through other comprehensive income: - a ) changes in fair value - b ) transfers to other Equity - 30.
Hedges of Equity instruments measured at fair value through other comprehensive income: - a ) changes in fair value (hedged instrument) - b ) changes in fair value (hedging instrument) - 50.
of which: result of net positions - 140. Hedges (elements not designated): - a ) changes in value - b ) reclassified to Profit or loss - 150.
Financial assets (other than Equity instruments) measured at fair value through other comprehensive income: 1,693 1,457 a) changes in fair value 1,947 1,702 b) reclassified to Profit or loss (254) (245)
160. Non-current assets and disposal groups held for sale: - a ) changes in fair value - b ) reclassified to Profit or loss - 170.
Financial risk management Balanced financial management and monitoring of the main risk/return profiles are carried out and ensured by dedicated organisational structures, both within and without the BancoPosta ring-fence, that operate separately and independently. In addition, specific processes are in place governing the assumption and management of and control over financial risks, including through the progressive implementation of adequate IT tools. In this regard, on 19 February 2018, Poste Italiane SpA’s Board of Directors adopted a revised version of the Guidelines for Internal Control and Risk Management System (SCIGR), which contains integrated guidelines for Poste Italiane SpA’s Internal Control and Risk Management System. From an organisational viewpoint, the model consists of: z the Control and Risk Committee, established in 2015, whose role, based on adequate research activity, is to act in an advisory capacity and make recommendations to support the Board of Directors in assessing and making decisions regarding the internal control and risk management system and regarding the approval of financial and non-financial periodic reports; z the Financial and Insurance Services Committee, established on 19 March 2018 to replace the previous Finance, Savings and Investment Committee, with the aim of overseeing the process of developing the products and services distributed by BancoPosta, in order to take a uniform, integrated view of the entire offering and to monitor the performance of the financial investments in which private customer deposits are invested; z the BancoPosta’s Risk Management function, responsible for measuring and controlling risk and duly observing the independence of control functions from management.
Section 1 – Credit risk Credit risk regards the types of risk described below.
Monitoring credit risk is particularly focused on the following exposures: z Eurozone government bonds or other securities backed by the Italian State for the use of liquidity collected through current accounts from private customers; z deposits at the MEF in which Public Administration account and private customer deposits are invested; z any eventual amounts due from the Treasury as a result of depositing funds gathered less payables for advances disbursed; z items in progress: cheque clearing, use of electronic cards, collections; z temporarily overdrawn postal current accounts caused by debiting fees: limited to those which were not classified as impaired since the accounts were in funds in early 2021; z cash collateral for outstanding transactions with banks and customers, in accordance with agreements intended to mitigate counterparty risk (CSA - Credit Support Annexes and GMRA – Global Master Repurchase Agreements); z cash collateral provided to the guarantee fund of the Central Counterparty “Cassa di Compensazione e Garanzia” for repurchase agreement transactions; z securities provided as collateral in accordance with agreements intended to mitigate counterparty risk (CSAs and GMRAs); z trade receivables payable by partners in relation to financial/insurance product placement.
With reference to the monitoring thresholds of concentration risk, the limits set by prudential regulations are applied190.
189. On 24 March 2021, in the same meeting for approval of these draft financial statements, Poste Italiane SpA’s Board of Directors approved the updated version of the Guidelines on Poste Italiane SpA’s financial management, upon proposal of the CEO and with the consent of the Audit and Risk Committee.
In terms of prudential oversight, the following methods are used to estimate the exposure to counterparty risk inherent in each of the following types of transaction: z the “Market Value” method192, is used for interest rate swaps and forward purchases of government bonds; z Credit Risk Mitigation (CRM) techniques, the Full Method193, are used for repurchase transactions.
BancoPosta RFC elected not to adopt the low risk credit exemption and to proceed instead with the staging of the financial instruments concerned.
BancoPosta RFC defines a default on the basis of ad hoc assessments that take into consideration: z any payment delays; z market information such as a default rating by the rating agencies; z internal analyses of specific exposures.
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 information196.
Such approach is implemented through the following process: z based on total revenue or the historical credit exposure, a credit threshold is identified beyond which the single receivables or the single exposure is evaluated. The analytical evaluation of the exposures entails an analysis of the borrower’s credit quality and solvency, as determined on the basis of internal and external supporting evidence; z for receivables falling below the threshold set, through the preparation of a matrix with the different impairment percentages determined on the basis of historical losses, or on the historical pattern of collections. In constructing the impairment matrix, receivables are grouped by homogeneous categories, based on their characteristics, to take into account the historical loss experience.
For the purposes of determining the forward-looking information to be included in the calculation of expected losses on financial instruments pursuant to IFRS 9, considering the effects of the Covid-19 pandemic, the Group, with reference to BancoPosta RFC, deemed it appropriate to continue to use the forecast scenarios, updated during preparation of the Interim Report, to take into account new elements based on the EU Commission’s estimates for the year 2020, which led to a change in the PD of Italy and the other Sovereign counterparties compared to what was used in the assessments of the Separate Report at 31 December 2019. With regard to Corporate and Banking counterparties, the methodology used for this purpose is to increase PD in line with the increase in sectoral risk recorded by the rating agencies in the first eleven months of 2020 for each rating level.
With regard to trade receivables, in order to reflect the effects of the Covid-19 pandemic, the following steps were taken: z for receivables subject to analytical impairment, the level of PD was increased in line with the increase in sectoral risk recorded by the rating agencies in 2020; z for receivables subject to on a flat-rate basis impairment, on the other hand, in order to calculate expected losses, homogeneous customer clusters representing the composition of the receivable portfolio were identified. Each cluster was associated with different on a flat-rate basis impairment percentages, broken down by past due age bands, which varied on the basis of the increase in risk historically recorded during phases of acute stress.
At 31 December 2020, BancoPosta RFC does not hold financial assets secured by guarantees or other credit risk mitigating instruments for which no loss provisions have been made (except for the temporary use of liquidity in reverse repurchase agreements).
In addition, in order to mitigate counterparty risk and gain readier access to the market, from December 2017, BancoPosta RFC has begun to enter into repurchase agreements with the Central Counterparty, the Cassa di Compensazione e Garanzia.
BancoPosta RFC accepts mainly guarantees issued by primary banks or insurance companies. Alternatively, upon request of the customer and after a risk analysis, it accepts sureties issued by other institutions, security deposits or the opening of postal escrow account.
Considering the limited risk of insolvency of government customers, BancoPosta RFC as a rule exempts the Public Administration from the provision of guarantees to secure trade receivables arising from transactions with it, save for the cases when such guarantees are mandatory by law or due to implementing rules of specific services.
A.1 Non-performing and performing credit exposures: balance, impairment, trends and business distribution
A.1.1 Distribution of financial assets by portfolio and credit quality (carrying amounts)
A.1.2 Distribution of credit exposure by portfolio and credit quality (gross and net amounts)
Net exposure 1. Financial assets measured at amortised cost 13 13 - - 52,110 82 52,028 52,028 2. Financial assets measured at fair value through other comprehensive income 3. Financial assets designated at fair value - - - - X X - 4. Other financial assets mandatorily measured at fair value 5. Financial assets held for sale - - - - - - - - * Amount reported for disclosure purposes.
C.6 Transfers to other categories of non-performing exposures - - -
A.2 Classification of financial assets, commitments to disburse funds and financial guarantees given based on external and internal ratings
C. Financial assets held for sale - - - - - - - of which: purchased or originated impaired financial assets
D. Commitments to disburse funds and financial guarantees given - - - - - - - -
The rating agency equivalents of credit rating classes are shown below: Credit rating class Fitch Moody’s S&P DBRS
1 from AAA to AA- from Aaa to Aa3 from AAA to AA- from AAA to AAL
Fully guaranteed on-balance sheet credit exposures refer to repurchase agreements managed through the Central Counterparty that meet the requirements of IAS 32, and are therefore offset in the financial statements by €363 million.
Partly guaranteed on-balance sheet credit exposures refer to fixed-rate securities for a nominal amount of €3,000 million issued by Cassa Depositi e Prestiti and guaranteed by the Italian State.
A.3 Non-performing past-due exposures - - - - - - - 13 - -
A.3 Non-performing past-due exposures - - - - - - - - - -
Large exposures a) Carrying amount (€m) 104,192 b) Weighted amount (€m) 9,230
E.1 Financial assets sold recognised in full and related financial liabilities: carrying amounts
199. Duration is the indicator used to estimate the percentage change in price in response to a shift in market returns.
Interest rate risk is measured internally using the economic value method. This results in a need to develop an amortisation schedule for the funding consistent with its nature and to select a time horizon and confidence levels for the estimates. A maximum time horizon (cut-off point) of 20 years is used for retail customer deposits, 10 years for business customer deposits and Postepay cards200, and 5 years for Public Administration deposits, based on a 99% confidence level. This approach entails the computation of an ALM rate risk through the determination of asset/liability.
Interest rate risk management and mitigation is based on the conclusions of the measurement of risk exposure and compliance - in line with the risk appetite and thresholds and limits established in the RAF - with financial operations guidelines as approved from time to time by Poste Italiane SpA’s Board of Directors.
200. Since 1 October 2018, prepaid cards are the responsibility of Postepay SpA. The liquidity raised through these cards is transferred to BancoPosta, which invests the funds raised in Eurozone government bonds or other securities guaranteed by the Italian State. As such, for the purposes of specific risk analyses, the rationales related to each model underlying the different types of deposit inflow continue to apply.
1. Banking Book: Time-to-maturity (repricing date) of financial assets and financial liabilities
2. Banking portfolio: internal models and other methods of sensitivity analysis
BancoPosta’s financial assets measured at fair value through other comprehensive income at 31 December 2020 had a duration of 5.65 (31 December 2019: 5.30). The sensitivity analysis is shown in the table.
Financial assets measured at fair value through other comprehensive income * The settlement price of derivatives involving the exchange of principal (securities or other assets) has been indicated, as required by Bank of Italy Circular 262/2005.
Fair value Change in value Net interest and other banking income Equity reserves before taxation
It is worthy of note that any change in the spread would not entail any accounting effect on financial assets measured at amortised cost but would affect solely unrealised gains/losses. In other words, fixed income instruments measured at amortised cost, which at 31 December 2020 amounted to €33,255 million (nominal value of €26,157 million) and have a fair value of €34,760 million, would be reduced in fair value by approximately €4.3 billion following an increase in the spread of 100 bps, with the change not reflected in the accounts.
Cash - Deposits with Bank of Italy 3,362 34 (34) 814 8 (8)
Due from customers - Deposits at MEF (PA deposits) 7,340 73 (73) 7,066 71 (71)
- Due from Poste Italiane SpA outside the ring-fence 898 9 (9) 647 6 (6)
Cash flow interest rate risk at 31 December 2020 was primarily due to: z the placement of Public Administration and private customer deposits with the MEF; z deposits with the Bank of Italy of temporary excess of liquidity deriving from private customer deposits; z fixed-rate securities issued by the Italian State swapped in floating-rate bonds through fair value hedge derivatives for a total nominal amount of €10,099 million mainly including: (i) Italian government securities for €5,740 million, whose fair value hedge will start to take effect in the 12 months following the period under review; (ii) inflation-linked bonds issued by the Italian Republic with a nominal amount of €100 million; z receivables for a total amount of €7,494 million for security deposits provided as collateral for derivative liabilities and repurchase agreements.
Exposure Change in value Net interest and other banking income Equity reserves before taxation
+ Vol - Vol + Vol - Vol + Vol - Vol 2020 effects
Financial liabilities held for trading (20) (31) 31 (31) 31 - 2019 effects
The preference Visa Incorporated shares (Series C Convertible Participating Preferred Stock and Series A Preferred Stock) held in portfolio were sensitivity tested using similar Class A shares, after adjusting for the volatility of the shares traded on the NYSE. This volatility was mitigated by the partial forward sale of approximately 90% of Visa Incorporated Series C ordinary shares in 2019. The shares’ price risk is also monitored through the computation of VaR.
Foreign exchange risk is controlled by the Risk Management unit using the measurement of exposure to the risk in accordance with financial operations guidelines which restrict currency trading to the foreign exchange service and international bank transfers.
Foreign exchange risk is measured using the Bank of Italy prudential methodology currently recommended for banks (see EU Regulation 575/2013). Furthermore, sensitivity stress tests are regularly conducted for the most important exposures with reference to hypothetical levels of exchange rate volatility for each currency position. Movements in exchange rates equal to the historical volatility are assumed to emulate market fluctuations.
202. The exchange rate risk relating to VISA shares was mitigated through a forward sale transaction carried out during 2019.
Quantitative information 1. Distribution of assets, liabilities and derivatives by currency
“Other assets” relate to foreign currencies held in post offices for the foreign exchange service.
Application of the foreign exchange rate volatility during the period to the most important equity instruments held by BancoPosta are shown in the following table.
Financial assets measured at fair value through Profit or loss 2019 effects
A.3 OTC trading financial derivatives: notional amounts, gross positive and negative fair value by counterparty
A.2 Financial derivatives on equity instruments and equity indexes 51 - - 51
BancoPosta RFC has financial instruments indexed to EURIBOR, which continues to be quoted daily and the related cash flows continue to be exchanged with counterparties as usual. There is therefore no uncertainty regarding this parameter resulting from the IBOR reform at 31 December 2020. These instruments are subject to daily collateralisation remunerated to EONIA which, as mentioned above, will be replaced from next year by ESTR.
To limit the effects of interest rates on cash flows, BancoPosta RFC enters into OTC interest rate swaps to hedge the cash flows of the bonds held in portfolio. The objective of these transactions is to stabilise until maturity the return of the instrument, regardless of movements of the variable parameter.
As to cash flow hedge instruments, the main source of ineffectiveness is the use of the fixed income component used in determining the fair value of the hypothetical derivative and the actual derivative. In particular, to evaluate the effectiveness of the hedge relationship use is made, for the hypothetical derivative, the fixed rate that makes the present value at the settlement date equal to zero while for the actual derivative the calculation is performed with the interest rate agreed upon with the counterparty.
Regarding fair value hedges, BancoPosta RFC evaluates the effectiveness of every hedging relationship in offsetting movements in fair value through a retrospective effectiveness test and a prospective effectiveness test204, using the approaches illustrated in the following notes.
The hypothetical derivative and the actual hedging instrument have a settlement date consistent with the hedge inception (spot or forward start - for government securities only) and differ solely in their spread/fixed rate which is considered, as already indicated, the main source of ineffectiveness. The partial ineffectiveness of the hedge, equal to the difference between the changes in value of the two derivatives (hypothetical and actual) represents the net effect of the hedge recognised separately in profit or loss.
205. The dollar offset approach is a quantitative method that involves a comparison between movements in the fair value or cash flow of the hedging instrument and the movements in the fair value or cash flow of the hedged instrument attributable to the risk hedged. Depending on the policy selected, this approach can be used: • on a cumulative basis, by observing the performance of the hedge since inception; • on a periodic basis, by comparing the hedge performance with that of the last test. The dollar offset approach can be implemented through a hypothetical derivative, that is by constructing a theoretical derivative to compare the relevant theoretical movements in far value or cash flow with those of the hedged instrument (actual derivative).
For the purposes of the prospective effectiveness test, the critical terms approach is applied, considering at inception the consistency between the hedging instrument and the hedged item on the basis of the qualitative characteristics of the contracts208.
For the purposes of the prospective effectiveness test, different approaches have been applied, depending on the characteristics of the hedging swap. Specifically: z the “Critical terms” approach for derivatives for which it has been determined at inception that the characteristics of the indexed leg of the swap make it possible to replicate exactly the variable cash flows generated by the hedged item; z the “Dollar offset through the hypothetical derivative” approach for derivative contracts with a fixed rate applicable to a nominal amount growing constantly at six-month intervals until the derivative expires. For these contracts the prospective effectiveness test is performed by calculating the hedge ratio between the change in fair value of the hypothetical derivative and the change in fair value of the actual derivative209. The hedge is considered effective if the hedge ratio falls in the interval between 80% and 125%.
209. Calculated by assuming a parallel shift of + / - 100 bps of the yield curves.
A.2 Hedging financial derivatives: gross positive and negative fair value – breakdown by product
Positive and negative fair value Change in value used to recognise ineffective portion of hedge
Underlyings/Residual life (€m) 1 year or less 1 - 5 years
A.1 Financial derivatives on debt securities and interest rates 2,649 1,165 31,389 35,203
A.3 Financial derivatives on currencies and gold - - - -
Micro-hedges - net positions: balance sheet value of assets or liabilities (before netting)
B. Liabilities 1. Financial liabilities measured at amortised cost - hedging: 1.1 Debt securities and interest rates 901 - - - - X
A. Cash flow hedges 1.1 Debt securities and interest rates 50 137 1. 2 Equity instruments and equity indexes - - 2. Liabilities 1.1 Debt securities and interest rates - - -
A.1 OTC financial and credit derivatives: net fair value by counterparty
At 31 December 2020 Banco Posta RFC had no master netting or similar agreements in place that meet the requirements of IAS 32, paragraph 42, regarding offsetting financial assets and liabilities.
210. Since 1 October 2018, prepaid cards are the responsibility of PostPpay SpA. The liquidity raised through these cards is transferred to BancoPosta, which invests the funds raised in Eurozone government bonds or other securities guaranteed by the Italian State. As such, for the purposes of specific risk analyses, the rationales related to each model underlying the different types of deposit inflow continue to apply.
It is policy to minimise liquidity risk through: z diversification of the various forms of short-term and long-term loans and counterparties; z gradual and consistent distribution of the maturities of medium/long-term borrowings; z use of dedicated analytical models to monitor the maturities of assets and liabilities; z the availability of the interbank markets as a source of repurchase agreement finance, with collateral in the form of securities held in portfolio, due to the fact that such assets consist of financial instruments deemed to be highly liquid assets by current standards.
In order to mitigate liquidity and market risk in the event of extreme market scenarios, from 26 June 2020 BancoPosta RFC may access a 3-year committed facility granted by Cassa Depositi e Prestiti for repurchase agreements up to a maximum of €4.25 billion.
In terms of BancoPosta RFC’s specific operations, liquidity risk regards the investment of current account and prepaid card210 deposits in Eurozone government bonds and/or other securities backed by guarantee of the Italian Republic, 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 loan and deposit maturities, using 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 20 years for retail customers, 10 years for business customers and PostePay cards and 5 years for Public Administration customers. BancoPosta RFC closely monitors the behaviour of deposits taken in order to assure the model’s validity.
The liquidity risk resulting from contract terms requiring the provision of additional collateral in the event of a downgrade of Poste Italiane SpA is negligible. Such contracts include those for margin lending of derivatives, which require the threshold amount211 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.
Quantitative information 1. Distribution of residual terms to maturity of financial assets and liabilities
The activities carried out in 2020 also included assessments of the risk profile associated with the outsourcing of BP RFC and the ex-ante assessments of the risk profile associated with innovation in the BP offering and/or specific project initiatives.
With reference to the impacts of the Covid-19 emergency, it should be noted that no operational losses related to the health emergency were detected. In addition, in order to ensure greater control over operational risks deriving from the new working methods implemented (agile working), in addition to the normal persistence of all security measures already in place, Poste Italiane has undertaken additional initiatives aimed at further mitigating risks (for example, security tools for “Bring Your Own Device” stations; specific monitoring of VPNs with the production of daily/weekly reports; increased controls on VPN access and cyber posture in order to combat possible attacks/threats).
At 31 December 2020, the risk map prepared in accordance with the aforementioned framework shows the type of operational risks BancoPosta RFC’s products are exposed to. In particular: Operational risk
Section 1 – BancoPosta RFC’S equity 212. Amended with Update no. 34 of 22 September 2020. 213. With effect from 1 January 2018, EU Regulation no. 2017/2395 came into force, which amends the so-called “CRR” and introduces, inter alia, transitional provisions to mitigate the impact of the introduction of IFRS 9 on own funds. BancoPosta RFC has availed itself of the possibility, recognised by these regulations, to adopt a “transitional approach” (so-called (phase-in) of recording the effects of adjustments for expected losses over a transitional period of 5 years, sterilising the impact in CET1 by applying decreasing percentages over time.
214. A definition of the RAF is provided in the “Introduction” to Part E.
BancoPosta RFC Separate report for the year ended 31 December 2020 Notes – Part F – Information on Equity
“Reserves, other” consists of: i) the initial reserve of €1 billion provided to BancoPosta RFC on its creation, through the attribution of Poste Italiane SpA’s retained earnings increased by the €210 million equity injection, resolved by the Extraordinary Shareholders’ Meeting of 29 May 2018, through the allocation of Poste Italiane SpA’s available reserves; ii) €1 million profit reserves for incentive plans, described in Part I.
3 Reclassification to profit or loss of negative reserve for realised losses 113 x 2. 4 Transfers to other equity (equity instruments) - - 3. 2 Recoveries due to credit risk (2) - 3. 3 Reclassification to profit or loss of positive reserve for realised gains (293) x 3. 4 Transfers to other equity (equity instruments) - - -
215. Contributions from non-controlling shareholders to BancoPosta RFC are excluded, as they are not provided for in the special regulations governing the ring-fence. 216. Of which €12 million relating to 2020 and calculated in accordance with the methods set out in EU Regulation 2020/873 (“Quick fix” CRR). 217. Risk weighted assets, or RWAs, are calculated by applying a risk weighting to the assets exposed to credit, counterparty, market and operational risks.
At 31 December 2020, BancoPosta RFC complies with the prudential requirements, with a CET1 ratio of 17.8%.
For more details, reference is made, as provided for by Bank of Italy Circular no. 262, to the information on own funds and capital adequacy contained in the public disclosure (“Pillar 3”).
No business combinations took place either during or subsequent to the period under review.
Poste Tributi ScpA (in liquidation) - - - - - - -
Other related parties external to the Group - - - - - - 1
Provision for doubtful debts due from external related parties (2) (6) - - - - -
Provision for doubtful debts due from external related parties (1) (5) - - - - -
BancoPosta RFC Separate report for the year ended 31 December 2020 Notes – Part H – Related party transactions
Other related parties external to the Group - - - - - - - -
The “ILT Phantom Stock 2016-2018” Plan provides for the assignment to the Beneficiaries of rights to receive units representing the value of the Poste Italiane share (the so-called Phantom Stock), and the related bonus in cash, at the end of a vesting period. The number of phantom stocks awarded to each Beneficiary is dependent on achieving the Performance Hurdle and meeting the Qualifying Conditions and the related Performance Targets over a three-year period. The Plan covers a medium- to long-term period. In particular, the plan includes three award cycles, corresponding to the financial years 2016, 2017 and 2018, each with a duration of three years.
The Performance Targets, to which receipt of the cash bonus is subject, are as follows: z an indicator of earnings over a three-year period, based on the 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; z an indicator of shareholder value creation, based on the Total Shareholder Return, used to measure performance based on the value created for Poste Italiane’s shareholders compared with other FTSE MIB-listed companies.
Vesting of the phantom stocks is subject to achievement of the Performance Hurdle, designed to ensure sustainability of the Plan. The Performance Hurdle corresponds with achievement of a certain target for the Group’s cumulative EBIT over a threeyear period at the end of each Performance Period. In addition, vesting, awarding and delivery of the Rights are also subject to achievement of Qualifying Conditions, designed to ensure the stability of BancoPosta RFC’s capital and liquidity position, as follows: z Indicator of capital adequacy, based on CET 1 at the end of the period; z Indicator of short-term liquidity, based on LCR at the end of the period.
The total cost for 3 cycles recognised for 2020 is approximately €0.1 million, whilst the liability recognised in amounts due to staff is approximately €0.9 million, and payments were made for approximately €0.4 million.
Long-term incentive scheme: Performance Share Plan the Annual General Meeting of Poste Italiane SpA’s shareholders held on 28 May 2019 approved the information circular for the “Equity-based incentive plan (ILT) – Performance Share Plan”, prepared in accordance with art 84-bis of the Regulations for Issuers. This incentive scheme, set up in line with market practices, aims to link a portion of the variable component of remuneration to the achievement of earnings targets and the creation of sustainable shareholder value over the long term.
The “ILT Performance Share” Plan, as described in the relevant Information Circular, provides for the assignment of Rights to the ordinary shares of Poste Italiane. The number of Rights to be granted to Beneficiaries is subject to the achievement of Performance Targets over a three-year period, following confirmation of achievement of the Hurdle, the Qualifying Conditions and compliance with the Malus Provisions. The Plan covers a medium- to long-term period. In particular, the Plan includes two award cycles, corresponding to the financial years 2019 and 2020, each with a duration of three years. Shares are awarded if performance targets are met or after a Retention Period. The key characteristics of the Plan are described below.
BancoPosta RFC Separate report for the year ended 31 December 2020 Notes – Part I – Share-based payment arrangements
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 2020 was approximately €0.1 million, whilst the specific equity reserve was approximately €0.2 million. The unit fair value of each Right at the valuation date is equal to its nominal value at the grant date (determined on the basis of stock market prices), discounted by the expected dividend rate and the risk-free interest rate and updated taking into account the best estimate of service conditions and performance (non-market based performance conditions).
The total number of Rights to receive Shares assigned for the First Cycle of the Plan concerns 10 Beneficiaries and was 61,663 units, whose unit fair value at the grant date (12 November 2020) was €3.91. The cost recognised for 2020 is approximately €0.1 million, equivalent to the equity reserve specifically created for this case. The unit fair value of each Right at the valuation date is equal to its nominal value at the grant date (determined on the basis of stock market prices), discounted by the expected dividend rate and the risk-free interest rate and updated taking into account the best estimate of service conditions and performance (non-market based performance conditions).
With regard to the management incentive schemes adopted for BancoPosta RFC MBO for 2017 and 2018, where the incentive is above a certain materiality threshold, the MBO management incentive scheme envisages the award of 50% of the incentive in the form of phantom stocks, representing the value of Poste Italiane’s shares, and application of the following deferral mechanisms: z 60% of the award to be deferred for a 5-year period on a pro-rata basis, in the case of Material Risk Takers who are beneficiaries of both the short-term incentive scheme and the third cycle 2018-2020 of the “LTI Phantom Stock Plan”; z 40% of the award to be deferred for a 3-year period on a pro-rata basis for the remaining Material Risk Takers.
At 31 December 2020, the number of Rights to receive Shares, deriving from the short-term MBO 2019 and 2020 incentive plans (the latter estimated on the basis of the best information available, pending the actual finalisation of the system in order to record the cost of the service received), was 51,881. During the year, a cost of approximately €0.1 million was recognised and at 31 December 2020, a specific Equity reserve of approximately €0.3 million and a liability of approximately €0.1 million were recognised.
3. It is also attested that: 3.1 The Consolidated Financial Statements of the Poste Italiane Group for the year ended 31 December 2020: a) have been prepared in compliance with the International Financial Reporting Standards endorsed by the European Union through EC Regulation 1606/2002, issued by the European Parliament and by the Council on 19 July 2002; b) are consistent with the underlying accounting books and records; c) give a true and fair view of the financial position and results of operations of the issuer and the companies included in the scope of consolidation.
2. In this regard, please note that: - the adequacy of the administrative and accounting procedures for the formation of the Financial Statements of Poste Italiane S.p.A. was verified by evaluating the internal control system on financial reporting. This evaluation was performed by taking as a reference the criteria laid out in the Internal Control – Integrated Framework model issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO); - no significant aspects emerged from the evaluation of the internal control system on financial reporting.
3. It is also attested that: 3.1 The Financial Statements for the year ended 31 December 2020: a) have been prepared in compliance with the International Financial Reporting Standards endorsed by the European Union through EC Regulation 1606/2002, issued by the European Parliament and by the Council on 19 July 2002; b) are consistent with the underlying accounting books and records; c) give a true and fair view of the financial position and results of operations of the issuer.
During the year ended 31 December 2020, the Board of Statutory Auditors of Poste Italiane
Legislative Decree 135/2016, Legislative Decree 58/1998 (Testo Unico della Finanza, the
(national association of chartered accountants) in April 2018 ("Code of Conduct").
Auditor Deloitte & Touche S.p.A. ("Deloitte" or "Auditor") appointed to audit the annual and consolidated financial statements for the nine-year period 2020-2028.
On the above basis, the following information is provided in accordance with the provisions of
Since the beginning of 2020 and up to the present date, the Board of Statutory Auditors has been carrying out a series of checks and monitoring activities to assess the effects of the crisis resulting from the Covid-19 health emergency on all sensitive areas and, in particular, workplaces and the impact on the Company's production system, financial structure and statement of profit or loss.
Statutory Auditors has supervised the adoption of all the safety measures introduced from time to time by the emergency regulations, carefully checking the procedures and protocols used to safeguard the health of workers and, more generally, of all potential users of the Company's areas and premises. With regard to the organisation of work, the Board of Statutory Auditors verified that the Company promptly resorted to the application of innovative formulas in the
organisation of work aimed at protecting the health of workers, and at the same time ensuring the continuity of business and corporate action.
Company, at Group level, has intended to guarantee the protection of health and of employees, adopting flexible forms of work (smart working) and providing staff with the tools and equipment (e.g. PPE, plexiglass panels, etc.) needed to carry out their activities safely in cases of activities that are incompatible with the remote working model (such as in the postal and logistics sectors). For all the initiatives implemented by the Group to mitigate the effects of the
The Board of Statutory Auditors verified compliance with the law and the By-laws, periodically receiving information from the Directors during meetings and from the responsible functions, on the overall operating performance, the outlook for the Company and on the most significant transactions having an impact on the results of operations and financial position decided on and carried out by the Company and by companies of the Poste Italiane Group (also "Group”) during the year.
Disclosure regarding these transactions is provided in the Report on Operations, to which reference should be made.
In this regard, the Board declares that: ü based on the assessments conducted, we are not aware of exceptional or unusual transactions with Group Companies, third parties or other related parties; ü the procedures applied by the Company in conducting related party transactions comply with the principles contained in Consob Regulation 17221 of 12 March 2010, as amended by Consob Resolution 19974 of 27 April 2017 and by the provisions of Bank of Italy Circular 285/2013 (Part III, Chapter 11), with reference to transactions between
ü with regard to transactions conducted by relevant persons and by persons closely associated with them (provisions relating to “Internal Dealing”), the Board verified that the Company has adopted specific internal regulations and procedures for such disclosures following the revised interpretation provided by ESMA and the changes introduced by Consob Resolution 19925 of 22 March 2017.
In perspective, also in view of the provisions of the new Consob regulation, the Board of
Statutory Auditors has suggested strengthening the documentation supporting the occurrence of the conditions for exclusion in the case of "excluded transactions" and the system of ex post controls to verify correspondence between related party transactions reported in an annex to the financial statements and transactions brought to the attention of the CP Committee.
The Board of Statutory Auditors, identified by art. 19, par. 2 of the Consolidated Law as the
“Manager responsible for financial reporting”, appointed pursuant to Law 262/2005, and the
On 23 March 2021, the Board of Statutory Auditors held a specific meeting with the Manager responsible for financial reporting to examine the Poste Group's Internal Control System on
The Group Self Assessment performed on the Platform of the Manager responsible for financial reporting allowed 100% coverage of the planned Process Level Controls or PLC (total of 2,490), all of which are certified. The certifications showed positive results for 99% with regard to design and 95% with regard to operation (4% was n.a.). Independent monitoring carried out by Internal Control, which allowed 100% coverage of the planned Process Key Controls or
The various project initiatives completed during 2020 include: - the definition of the evolutions of the 262 Model (process approach, Internal Control
Poste Vita, in order to standardise the 262 organisational governance structure.
methodology for the harmonisation of the 262 Model to the Integrated Compliance process, also in relation to the synergies expected with the Tax Risk Model, as well as the roll out of the new organisational model.
The Board of Statutory Auditors analysed the methodological framework and the audit plan adopted by the new Independent Auditor and acquired the necessary information during the course of its work, with information on the audit approach used for the various significant reporting areas, as well as receiving updates on the progress of the audit assignment and on the main aspects for the attention of the Independent Auditor.
The Independent Auditor, with which we also periodically met in compliance with the provisions of art. 150, paragraph 3, of Legislative Decree no. 58/1998 (Consolidated Law on
Finance) for the mutual exchange of information, has not informed the Board of Statutory
The Independent Auditor issued its reports on the separate and consolidated financial statements for the year ended 31 December 2020, prepared pursuant to art. 14 of Legislative Decree 39/2010 and art. 10 of Regulation (EU) 537/2014, on 1 April 2021. Details of the opinions and statements are provided in the reports issued by the Independent Auditor.
In its audit reports on the financial statements, the Independent Auditor has: Annual Report 2020 Poste Italiane Group
ü issued an opinion stating that Poste Italiane's separate and consolidated financial statements provide a true and fair view of the financial position of the Company and the
Operations and specific information included in the Report on Corporate Governance and the Ownership Structure are consistent with Poste Italiane's separate and consolidated financial statements for the year ended 31 December 2020 and have been prepared in compliance with the law.
537/2014, include information on key matters covered by the audit and the related audit procedures applied. As referred to in the reports on the separate and consolidated financial statements, these key matters (estimate of the recoverable amount of the “Mail, Parcels and
Distribution” segment, Measurement of the mathematical provisions), and the opinions on the separate and consolidated financial statements are in line with the contents of the supplementary report for the Board of Statutory Auditors in its role as committee responsible for internal and statutory auditing, prepared pursuant to article 11 of the above Regulation.
In addition to the above issues, the Board of Statutory Auditors requested further information from the AFC Function, the Manager responsible for financial reporting, the Legal Function
estimates of the provisions for risks and charges and the nature and risks associated with contingent liabilities in relation to legal disputes, (iii) provisions deriving from the Covid-19 health emergency, (iv) financial and non-financial disclosures on the Covid-19 emergency
(focus on ESMA's Priorities analysis), (v) impairment test on trade receivables, financial instruments and investments held in Anima Holding S.p.A. and FSIA S.p.A., (vi) review of useful lives of assets and residual value, (vii) tax assets-Aid to Economic Growth (ACE) and
Patent Box, (viii) amounts due from the MEF and the Public Administration (ix) operating losses on interest-bearing postal certificates, (x) accounting treatment of items associated with
BancoPosta RFC relating to current postal accounts, provisions for savings books risks, provisions for certificates risks (2001/2004 issues) and savings books transitory accounts and certificates (prior to 2005), (xi) measurement of unlisted financial instruments (xii) Progetto
Among the above issues, given the greater importance of the effect on the income statement, the Board of Statutory Auditors consulted the Independent Auditors and discussed in detail the accounting treatment and related presentation in the financial statements of i) the review of the residual useful lives and residual value of assets and ii) the processing of BancoPosta's accounting items.
With particular reference to the review of the residual useful lives and residual value of the
Auditors has been informed of the analysis and processing of a number of separate accounting items that have had a significant positive impact on the result for the year.
Impairment testing of the MP&D CGU took account of IAS 36 - Impairment of Assets and best market practice. Reference was also made to the provisions of IAS 36 when determining the scope of the MP&D CGU and to the methods used to control and monitor Poste Italiane's operating and financial performance, in order to support the decision-making activities of the
Company's management. The radical transformation of the MP&D CGU in recent years, also deriving from the transformation of the Subsidiaries SDA Express Courier and Poste Air Cargo into operational companies, the acquisition of Sennder Italia and MLK Deliveries, and the centralisation of the main personnel functions at the Parent Company, has led to a revision of the methodological approach used to carry out the impairment tests. This was done also with the support of an external advisor, in order to ensure that the methodological approach followed was consistent with the reference standards, with current practice and with as represented to the market. The Discounted Cash Flow (DCF) method was used to determine the enterprise value, using financial projections derived from the 2021-2024 Sustain & Innovate Business Plan. The
36 - constitutes, in the opinion of the Independent Auditor, a cautionary factor in the procedure adopted by the Company. The impairment test showed that the Enterprise Value was higher
March 2021, in compliance with Attention notice no. 1/21 issued by Consob on 16 February 2021 in which the Authority reiterated that, when preparing the 2020 financial statements, issuers must consider the provisions of the ESMA's document on "European common enforcement priorities for 2020 annual financial reports" dated 28 October 2020. In light of the consequences of the Covid-19 pandemic, it highlights the subject areas of particular importance for the purposes of preparing the financial statements: "application of IAS 36 - Impairment of
Assets, in relation to the methods for determining the recoverable amount of goodwill and of intangible and tangible assets that may be impacted by a deterioration in the economic outlook".
On 1 April 2021, the Independent Auditor also issued its report on the non-financial statement prepared pursuant to article 3, paragraph 10 of Legislative Decree 254/2016 and article 5 of
The Board of Statutory Auditors, having taken note of Legislative Decree 254/2016 on the disclosure of non-financial information and the implementing Regulation issued by CONSOB
With regard to the effects deriving from the Covid-19 emergency, both current and prospective, information is provided in the report on operations on the impacts on the Group's economic performance, including through a comparison with the final figures for the period of comparison, in line with the recommendations of ESMA (Public Statement 32-63-972 of 20
Cassa Depositi e Prestiti regarding the collection of postal savings. The Board of Statutory
Board of Statutory Auditors carried out its preliminary investigation, acquiring an in-depth note prepared by the CA/Institutional Relations Function on the facts that were the subject of the complaint and thoroughly assessing the legal aspects of the matter. Having
Board of Statutory Auditors decided that the reprehensible fact was invalid.
ii. Complaint of 24 August 2020, by means of which shareholder Marco Bava complained about the failure to adequately respond to question 7 submitted before the General Meeting of Poste Shareholders on 15 May 2020, pursuant to article 127-ter of Legislative Decree no.
58 of 24 February 1998. In particular, the shareholder "urged that the possibility of giving newsagents the right to manage postal services on a decentralised basis and with extended opening hours be carefully examined" and invited the Board of Statutory Auditors to report on this request at the next General Meeting. The Board of Statutory Auditors began its investigation and, having verified that the reported event did not include reprehensible events but concerned management actions that fall within the evaluations of merit of the
Board of Directors, and having ascertained that the Company provided an adequate, detailed and exhaustive reply to the question posed by the shareholder prior to the General Meeting of 15 May 2020, concluded the investigation, ascertaining the invalidity of the objective requirement, i.e., the reprehensible fact.
iii. Complaint of 16 September 2020, by means of which shareholder Tommaso Marino asked the Board "to ascertain the truth of the allegations made by the Antitrust Authority, which claims that Poste Italiane has failed to comply with its obligations regarding mail delivery", reporting to the General Meeting and referring to an extract from the AGCM press release of 15 September 2020. The Board of Statutory Auditors began its investigation by acquiring the extract from the minutes of the Poste Board of Directors' meeting of 24 September 2020 regarding the information provided by the Company's Joint General Manager on the investigative proceedings initiated by the Italian Competition Authority against Poste, which ended with the imposition of a fine, and on the commitments and activities implemented by Poste. Subsequently, the Board of Statutory Auditors examined the appeal to the Lazio Regional Administrative Court filed by the Company to annul the above sanction measure, in which the Company contested all the objections raised by the
Statutory Auditors thus concluded its investigation without finding any reprehensible facts, while reserving the right to monitor the progress of the litigation and its outcome.
Code of Conduct, the procedures for receiving, handling and concluding the handling of
complaints submitted to Poste Italiane SpA's Board of Statutory Auditors by shareholders pursuant to art. 2408 of the Italian Civil Code.
“Guidelines for the assignment of engagements to the Independent Auditor”, approved by the
Board of Directors on 15 March 2017, the Board of Statutory Auditors has, during 2020 and through to the date of issue of this report, issued favourable opinions on the following additional engagements of the Independent Auditor, or of companies within its network, by the Parent
With the support of the AFC 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.
10. Disclosure of the frequency and number of meetings of the Board of Directors, the Executive
Appointment to carry out the role of validator to monitor the "Undertaking Specific Parameters" data of the insurance company Poste Assicura for the years 2020 and 2021 €90,000 (plus reimbursements for out-ofpocket and administrative expenses for a maximum of 5% of the fees and VAT)
During the year, the Board of Statutory Auditors took part in a total of 83 meetings. The Board met on 37 occasions as the Board of Statutory Auditors (including 12 held jointly with the
Risk Committee (all held jointly with the Board of Statutory Auditors), 5 meetings of the
11. and 12. Observations on compliance with correct corporate governance principles and the adequacy of the organisational structure.
The Board of Statutory Auditors oversaw, within the scope of our responsibilities, the adequacy of the Company's organisational structure and, more generally, that of the Poste Group as a whole, based on the information and constant updates provided by the Company on its organisational arrangements, as well as by dedicating a specific meeting to this issue. On this occasion it emerged how Poste's organisational structure is evolving towards a "Platform
With regard to the Internal Control and Risk Management System, the Board has noted the information on the system provided in the Report on Corporate Governance and the Ownership
Control and Risk Management System (“SCIGR”), drawn up by Poste Italiane's Internal
Control Function, certifying that "at the date of this report and for the relevant reporting period, the internal control and risk management system, taken as a whole, is fit for the purpose of mitigating the risks that threaten the successful pursuit of the Company’s objectives". In making this assessment, the Internal Control Function, in addition to integrating the results of the activities carried out by the control functions involved on the basis of their respective Audit
Plans or at the request of top management, considered the general context, which was inevitably affected by the effects of the emergency and its impact on the Group's SCIGR, the organisational interventions and the developments that took place.
and the Joint General Manager; (ii) updating, between February and May, of the Risk
Assessment Documents (DVR) for each Production Unit following the identification and assessment of the Coronavirus risk, as provided for by art. 271 of Legislative Decree no. 81/08; (iii) publication, between March and May, of instructions and operating procedures needed to counter the epidemiological emergency caused by the spread of Covid-19, as well as guidelines concerning corporate safety for smart working.
The Board of Statutory Auditors, following the meetings held with the Supervisory Bodies of the most important Group Companies and on the basis of the results that emerged - which confirmed the physiological downsizing of the risk areas present in the Subsidiaries as a result of some reviews of the Group's organisational structure and, in particular, following the centralisation of purchases at the Parent Company - appreciated the implementation of the
Board's recommendation to carry out transversal audits, involving/including a number of Group companies, such as the audit of the procurement process conducted in 2020, which also examined the centralisation of activities and revealed an overall high level of consolidation, with room for improvement for certain Subsidiaries (SDA Express Courier and Poste Air
processes, for which there are areas of inadequacy, with the need to clarify, by integrating the procedural structure, the manner in which the Consortium intends to carry out its role in relations with Consortium members, in accordance with the mandate granted to it under the bylaws.
The Corporate Affairs (CA) Function has always played an important role in guiding, controlling and coordinating the corporate structure. By coordinating and integrating its skills, this function ensures the unified management of the Poste Group's legal, corporate and corporate governance issues and guarantees efficiency, economies of scale, quality and effective support for the various business functions. In addition, as part of the gradual strengthening of unified and integrated governance, during 2020, the Group's Corporate Affairs function was brought together with the corporate secretarial services of all the Group's companies, excluding the Poste Vita Group.
Affairs (CA) Function, has consolidated the strengthening of both the Internal Control System and the role of Poste in providing guidance, coordination and control, also through a number of important initiatives highlighted below.
Group's key principles; in addition, as part of the activities aimed at developing governance structures, Poste has defined an integrated process at Group level that makes it possible to strengthen or create operational synergies between the various specialist structures and to ensure unified governance, thanks, in part, to a clear definition of the roles and responsibilities of the players involved.
Code), the Company's new organisational structure, as well as the initiatives undertaken in the ESG area, in line with regulatory and corporate governance requirements and the
Plan and the process of reinforcing the principles of integrity, transparency and legality, including through the adoption of a Competition and Consumer Protection Compliance
Programme, as well as admission to the Collaborative Compliance regime pursuant to
Directors with pursuing sustainable success. The Committee provides input during assessments and decisions relating to ESG issues, and strives to continually integrate national and international best practices into the company’s sustainability strategy; - assignment to the Head of the CA Function, of the position of Joint General Manager with the responsibility of supporting the CEO and GM in the general and transversal corporate supervision, playing a role of guidance and cohesion of the corporate structure, and, in particular, guaranteeing the unified governance of issues associated with the SCIGR and supporting top management in the effective implementation and management of Risk
Management and Integrated Compliance processes at group level, with reference to all types of risks; - inclusion of the Group's Sustainable Development, Risk and Compliance Function within
Integrated Compliance, the single point of reference for the governance and management of all risks from a Group perspective; - due to the admission to the Collaborative Compliance regime, granted to the Company, the role of Tax Manager has been created, assigned to the Head of the AFC/Tax Function, who will ensure, among other things, the preparation of the Annual Report; - continuation of the operational phase of the One ERP programme, which will enable the
Poste Italiane Group to adopt a single administrative-accounting and control model with the migration to a single integrated IT platform; the programme is expected to be completed by 2022 with the integration of all Subsidiaries onto a single IT System; Annual Report 2020 Poste Italiane Group
- continuation of the process of streamlining and standardising ICT processes at Group level, which envisages centralisation of the IT systems of the various Group companies, in line with the business model adopted, based on strong integration of assets, processes, resources and controls; in this context, the following transactions were completed in 2020: (i) the sale of the ICT business units of Poste Vita, Poste Assicura and Poste Welfare Servizi to Poste
Systems, Chief Operating Office and Customer Experience Transformation Functions were brought together within DTO and, during the year, also the IT resources applied to the IT
Model pursuant to Legislative Decree 231/2001 ("OM231"); - on 27 January 2021, it approved updates to the (i) Guideline on the Application of Legislative
Decree 231/2001 in the Poste Italiane Group and (ii) Guideline on the System for Reporting
In the course of the various meetings held with the Board of Statutory Auditors, the Head of the Group CA/Anti-Money Laundering Function clarified the controls that support the qualitative and quantitative adequacy of the Group Anti-Money Laundering Function and reported on the consolidation of the organisational structure of the anti-money laundering structures at central and territorial level. With reference to the "Plan of Activities of the Group
Anti-Money Laundering Function year 2019", at 31 December 2020, 29% of the interventions identified in the 2019 Annual Report had been completed. The rescheduling of those not completed, all of which are IT-related (7), to which the Board of Statutory Auditors draws the attention of the Board of Directors is mainly due to the activation of initiatives for the management of the Covid-19 health emergency and the complexity of the IT implementations to be carried out. In any case, the re-planned interventions concern the efficiency of the
oversights, which are in any case guaranteed by existing procedures that already comply with current regulations.
The results of the consolidated assessment conducted for 2020 by the Group's Anti-Money
Laundering Function, indicate that the level of "residual risk" to which the Group is exposed is classified as "low". This level is determined by the weighted average of the residual risk assessments assigned to each Obliged Entity (BancoPosta, PostePay, BancoPosta Fondi SGR
Financial Intelligence Unit (UIF) amounted to 24,933 (an increase of 15% compared to 2019), of which 162 SOS of financing of terrorism (+42% compared to 2019) and 127,872 initiative reports of the POs. The average time to submit reports to the UIF was about 18 days, compared to an average of 28 days in the reference category. In addition, training of the target population continued. Furthermore, there were 89.6 thousand requests for judicial assessments (+9% from 2019). The anti-money laundering objections notified in 2020 by the Ministry of Economy and
231/2007 for omitted/delayed communication to the MEF - violations on cheque negotiation mainly related to the new cheque dematerialisation process (CIT procedure) and to a lesser extent concern violations of article 35 of Legislative Decree no. 231/2007 (no Suspicious
On the subject of risk management, the Board of Statutory Auditors acknowledges that the Company, in line with the indications of the Corporate Governance Code, has defined its risk propensity for 2021, in such a way as to guarantee the compatibility of the risks assumed with
areas (tax, physical security, integrated compliance, privacy, IT security, corruption) thus becoming the tool for maximum integration of the Group Risk Management process, capable of ensuring the sharing of risk analysis methodologies between all specialist functions operating at the 2nd level of control, improving communication with Top Management and Corporate Bodies and between control functions, as well as minimising the risk of missing or redundant information.
With reference to risk management, the Board of Statutory Auditors reiterates the recommendation that the Strategic Supervisory Board should periodically monitor above all financial risk, also on a forward-looking, multi-year basis, periodically updating the assessment of such risks and verifying investment and hedging policies via periodic investigation by the competent Control, Risk and Sustainability Committee. In this connection, in view of the composition of the Group’s securities portfolio, which has a high concentration of government securities, persistently low interest rates, spread risk and the resulting impact on capital gains and on unrealised gains, the Board recommended and oversaw that the Board of Directors constantly monitored the key drivers in the business plan and the relative sensitivity, verifying the necessary controls and assessing the level of residual risk, with a specific focus on a longterm, multi-year basis.
As far as the Special Part is concerned, on the other hand, the updating/integration of the crimes in relations with the Public Administration (also "PA"), computer crimes and tax crimes and the inclusion of smuggling crimes should be noted.
Group, in October 2020, the Subsidiaries completed the updating of their OM 231 on the basis of the changes introduced following the updating of Poste's OM 231 (June 2020), whilst analyses are underway to verify the appropriateness of adopting the OM 231 at newly acquired companies such as Sennder Italia S.r.l. and MLK Deliveries S.p.A. In the second half of 2020, a project was launched to further adapt Poste's OM 231 with a view to incorporating further regulatory amendments, which concluded with the approval, on 27 January 2021, of the new
Risk Assessment and Gap Analysis activities; at the end of 2020, 387 231 risks had been identified, in addition to a further 99 risks relating to the specific area of Occupational Health and Safety and Environmental Protection. In addition, about 800 control tools that are relevant for the purposes of OM 231, such as Policies, Guidelines, Procedures, etc., identified by the corporate functions to monitor the risks identified during the Risk Assessment process, have been included and enhanced in the system.
ü the existing set of procedures and their continuous updating; ü the results of the verification and evaluation activities received by the Board of Statutory
and, in particular, the initiatives to strengthen it; ü the compensatory controls and improvement measures implemented and/or in progress in relation to the activities carried out and the findings relating to the SCIGR highlighted by the Poste Italiane's Internal Control Function; ü the compensatory controls and improvement measures implemented and/or underway in relation to the findings relating to the SCIGR highlighted by BancoPosta's Internal
Auditing functions and the Audit functions of Group companies; ü further events with potential impacts on the SCIGR, including corporate project initiatives in specific operational areas, implemented or in the process of progressive implementation; ü the evidence acquired from management of the Whistleblowing reporting system; the Board of Statutory Auditors is not aware of critical situations or events that might suggest shortcomings in the Internal Control System of Poste Italiane overall and of BancoPosta RFC
The Board of Statutory Auditors examined and oversaw, within the scope of our responsibilities, the adequacy of the Company’s administrative/accounting system in reliably representing operating activities, the effectiveness of the Internal Control and Risk
Management system and the financial reporting process, by: (i) gathering information from the heads of the various functions, from the Independent Auditor and from the Manager responsible for financial reporting; (ii) examining the annual report of the Manager responsible for the
Auditing Function; (vi) examining reports prepared by Poste Italiane's Internal Control
The Chief Executive Officer and the Manager responsible for financial reporting also declare that the Report on Operations includes a reliable analysis of the operating and financial performance and situation of the issuer and the companies included in the scope of consolidation, as well as a description of the main risks and uncertainties to which they are exposed.
Publication of Confidential Information, and Maintenance and Updating of the Related
Regulation (EU) 596/2014 of the European Parliament and Council of 16 April 2014 relating to market abuse, as well as the indications contained in the Consob Guidelines on the subject.
In addition, the Board of Statutory Auditors met periodically with the Boards of Statutory
The Board of Statutory Auditors has promoted effective and timely communication with the
Independent Auditor, for the purpose of the mutual exchange of information useful for the performance of their respective duties, pursuant to art. 150, paragraph 3, of Legislative Decree no. 58/1998 (Consolidated Law on Finance) and in line with Attention Notice no. 1 issued by
CONSOB on 16 February 2021. The Independent Auditor did not find any acts or facts
On 1 April 2021, the Independent Auditor issued the Additional Report pursuant to article 11 of Regulation (EU) 537/2014, of which the annual confirmation of independence is an integral part. The Auditor has not deemed it necessary to issue any letter of suggestions to the
"Mail, Parcels and Distribution" business segment (ii) the valuation of the mathematical provisions.
The Auditor does not express a separate opinion on these key issues, for which the Auditor's
Reports explain in detail the relevant audit procedures adopted, since they have been addressed in the audit and in the preparation of an opinion on the financial statements as a whole. The above key aspects were the subject of detailed analysis and updating during the periodic meetings that the Board of Statutory Auditors held with the Independent Auditor. The Board of
ü With regard to the activities provided for in the Corporate Governance Code, the Board of Statutory Auditors not only held 37 of its own meetings during the year, but also ensured its participation in all the meetings of the Board of Directors and Board
ü The Board positively acknowledged the update in December 2020 of the "Guideline on the application criteria and procedure for assessing the independence of Poste Italiane
regulations, regulations of the Board Committees, etc.) were also aligned with the recommendations of the aforementioned new Corporate Governance Code.
Committee. The Board of Statutory Auditors, considering the activities in progress for updating the Guideline concerning related party transactions, also given the provisions of the new Consob regulation, which will come into force from 1 July 2021, as indicated above, has suggested strengthening the documentation supporting the occurrence of the conditions for exclusion in the case of "excluded transactions" and the system of ex post controls to verify correspondence between related party transactions reported in an annex to the financial statements and transactions brought to the attention of the CP Committee.
Borsa Italiana S.p.A.’s Market Regulations and in the Consolidated Law on Finance. With regard to Section II, the Board of Statutory Auditors met with the Independent Auditors for the activities falling within its competence, as well as with the relevant Remuneration
ü The Board of Statutory Auditors verified the correct application of the assessment criteria and procedures adopted by the Board of Directors to evaluate the independence of the
Directors both in June 2020, after the appointment of the members of the Board of
S.p.A.'s Directors (pursuant to art. 2, Recommendation 7 of the Corporate Governance
relations and/or relationships between Poste's Group companies, the Directors and any of their related parties, in accordance with the independence requirements of art. 2,
ü The Board of Directors conducted an assessment of the functionality, size and composition of the Board itself and of Board Committees with the support of a leading consulting firm, reporting on its findings in the "Report on Corporate Governance and the
Ownership Structure”. With regard to assessment of the independence of the Board’s members, the Board of Statutory Auditors verified that all its members meet the related requirements provided for in the Consolidated Law on Finance and the Corporate
Appetite Framework; - appointment by the Board of Directors - effective 30 July 2020 - of a new Group Manager of Suspicious Transaction Reports; - impairment test on the CGU Mail Parcel & Distribution.
Lastly, in compliance with the Bank of Italy's Supervisory Provisions and the rule Q.1.1. "Self-
Assessment of the Board of Statutory Auditors" included in May 2019 in the Code of Conduct, as well as in line with article 25.1 of the Company's By-laws and the "Regulation on the selfassessment process of the Poste Italiane S.p.A.'s Board of Statutory Auditors", approved by the same Board on 30 January 2020, in January, February and March 2021, the Board of Statutory
Auditors carried out a self-assessment of its adequacy in terms of powers, functioning and composition, with reference to the 2020 financial year. Unlike last year, the Self-Assessment process was conducted without the aid of an external consultant.
The results of the replies to the questionnaires confirm, also for the second year of its mandate, a fully positive Self-Assessment of the Board of Statutory Auditors, in terms of qualitativequantitative profiles and effective functioning, thanks to clear operational balances and coherence in the methods of dialogue/interaction between members that, in some cases, offer recommendations for further improvements.
The Self-Assessment process provides a very positive overall picture of the Board in terms of adequacy of composition, independence, functioning, exercise of powers, internal climate, role of the Chair of the Board, minutes, support of the competent secretariat. In addition, a fully positive assessment has emerged regarding the detail of supervisory activities, expressly referred to for the purposes of the Self-Assessment pursuant to Bank of Italy Circular no.
Moreover, the joint assessment of the members of the Board of Statutory Auditors has revealed a very positive picture of relations between the Board of Statutory Auditors and BancoPosta's main control functions (compliance, risk management, internal control, internal auditing), as well as those with the Head of Anti-Money Laundering, the Manager responsible for financial reporting, the Independent Auditor and the Supervisory Board.
RFC Regulation approved by the General Meeting of shareholders held on 14 April 2011 and amended by the Extraordinary General Meeting of 31 July 2015 and subsequently
revised by the Board of Directors’ resolution of 25 January 2018. As required by the
With regard to BancoPosta RFC, the Board of Statutory Auditors oversaw the transaction regarding the removal of the restriction on the allocation of BancoPosta RFC regarding assets, goods and legal relations constituting the "Debit Business", approved by Poste's Board of
Directors on 27 January 2021, which will be submitted for final approval by the extraordinary
General Meeting , after obtaining all the authorisations required by the regulations, and which is aimed at also making the debit cards linked to the BancoPosta's account a PostePay product.
In line with the objectives of the Poste Group's Plan and as part of the process of centralising
ICT services relating to telecommunications activities and the Electronic Postman platform, and signed a service contract for the outsourcing of ICT services relating to telecommunications activities. The business unit involved in the transaction comprises 43 resources, hardware and software assets and related contracts. The aim of this centralisation is to ensure stricter levels of security and service quality, in line with the requirements of current legislation, by reinforcing operational and security controls and achieving expected savings in terms of costs and investments to the benefit of PostePay and customers.
With regard to outsourced activities, the Board of Statutory Auditors acknowledged the renewal of the Service Agreement for payment products issued by BancoPosta to PostePay, which expired on 31 December 2019. The Agreement defines the IMEL's operating procedures, KPIs and responsibilities, including financial responsibility, in relation to the correct performance of activities, as well as the related fees, and has a duration of three years.
The Board was informed of the letter received from the Bank of Italy on 31 December 2019 regarding the request for further investigation following the communication sent by Poste regarding the operational incidents impacting BancoPosta's and PostePay's mobile apps.
Also on the subject of operational incidents, the Board of Statutory Auditors continuously monitored those that occurred in 2020, urging the Company to prioritise preventive measures to avoid the occurrence of such events. Recently, the Board, at a joint meeting with the Control and Risk Committee in March 2021, discussed the issue of IT operational incidents and noted that approximately 70 communications of anomalies/disruptions were analysed in 2020. Most of them required coordination by the Financial Services Operational Continuity Committee
("CCOSF") and the Assessment Team to properly classify the incident and manage its impact on customers. The Board of Statutory Auditors noted that, in compliance with the requirements of the Supervisory Authority, 7 incidents were classified as serious. However, only one, which occurred on 15 December 2020 - causing 570 minutes of inefficiency due to the unavailability of the BP's and PP's App Digital Channels and related web - was reported to the Bank of Italy.
Group's BCM project and the release of the related implementation procedures, (ii) the updating of all Business Impact Analyses (in "end-to-end" mode) in relation to all relevant processes,
(iii) the possibility of adopting a secondary recovery site by 2021 if the current recovery site is not available, (iv) the continuation of the adaptation of the technological infrastructure to support the continuity of financial services and the inclusion of additional applications in the
BancoPosta RFC are recognised separately from those relating to the Company's operations, for the purposes of application of the Bank of Italy's prudential supervisory authorities provided for by Law 10 of 26 February 2011.
The Board of Statutory Auditors verified, at least every six months, the adequacy of the criteria adopted and, within the scope of our responsibilities as an oversight body, without responsibility for accounting controls, compliance with the applicable statutory and regulatory requirements. Based on the available data and information, the Board of Statutory Auditors believes that the level of control over management of BancoPosta RFC’s accounts is adequate; In this regard, the Board of Statutory Auditors notes that, with effect from 2020, the Auditor has been engaged to issue a "limited opinion" of BancoPosta RFC's Separate Report at 31
December 2020 - consisting of the balance sheet, statement of profit or loss, statement of comprehensive income, statement of changes in equity, statement of cash flows for the year ended on said date and the notes (the "BancoPosta's Report"), annexed to the Company's financial statements in accordance with the provisions of section 8 of the BancoPosta RFC
Regulation - in order to check the consistency of the data contained in the Report with as reported in the Company's financial statements for the year ended 31 December 2020.
In view of the content and purpose of the engagement, the Auditor carried out a limited review of BancoPosta's Report in accordance with ISAE 3000 revised Assurance Engagements Other than Audits or Reviews of Historical Financial Information ("ISAE 3000 Revised") and planned and performed procedures to obtain a limited level of assurance that BancoPosta's Report does not contain material misstatements. On 1 April 2021, Deloitte issued an unqualified audit report on BancoPosta's Report.
With regard to the supervision of the financial reporting process of BancoPosta RFC, reference should be made to the observations and recommendations set out in paragraph 4 of this Report to the extent that they relate to said separate capital.
2. Supervisory activities of BancoPosta's Supervisory body and Inspections by the
During the year, the Board oversaw, partly with reference to compliance with the Supervisory
Standards contained in Bank of Italy Circular 285/2013, and in close conjunction with the
Peer-Group of Italian banks and insurance companies. At the end of the meeting, the Board of
Statutory Auditors acknowledged that BancoPosta's Control Functions are generally below the market median for all the remuneration levels in the packages analysed, as well as the initiatives that the Company intends to implement to enhance BancoPosta's Control Functions, in line with the market median.
The Board of Statutory Auditors also periodically reviewed the structure of the Guidelines governing the relations concerning functions outsourced by BancoPosta to Poste Italiane in order to oversee the criteria applied for the allocation of costs associated with Poste's activities
for the management of RFC, since such costs must be allocated in accordance with criteria that reflect the real contribution of the various management activities to BancoPosta RFC's results and to those of the company as a whole. As part of the half-yearly audits, the Board of Statutory
Auditors also carried out a further in-depth analysis in order to verify the validity of the methodological framework and the reasonableness of the remuneration criteria applied, supervised by the external consultant appointed by the Company to prepare an analysis document of the new 2021-2022 Operating Guidelines.
Statutory Auditors, in line with the relevant Supervisory Standards applied to BancoPosta RFC
- Circular 285/2013, Chapter 1 BancoPosta, Section II, Par. 5, assessed the costs, risks and benefits of the contract on an annual basis. In addition, during a meeting with the Head of
S.p.A. in relation to the various areas (business, operations, reputation, etc.). At the end of the meeting, the Board of Statutory Auditors acknowledged the management roles of the activities assigned by BancoPosta to other Poste Italiane's Functions via the Operating Guidelines, and the controls designed to mitigate the operating risks deriving from these assignments, and deemed the entire set of Operating Guidelines to be adequate. In particular, the Board was informed of the strengthening of the Operating Guidelines structure for the two-year period 2021-22 through (i) the extension to all assignments of the tool of the Operational Management
Committees, (ii) the revisiting of the benchmarks for measuring the performance of each KPI
(escalation process), (iii) the evolution of the algorithm for calculating the penalties of the main
Statutory Auditors, based on the indications of the Human Resources and Organisation
Incentive Scheme (MBO), as well as the Risk Attribution procedure, defined and formalised by the competent BancoPosta's Function, adopted in the event of operational losses generated by the negative event implemented by the responsible function entrusted with the task.
With reference to the "Outsourcing Project" to the Customer to Business Interaction ("CBI")
The Compliance and Risk Management Functions have periodically prepared their respective reports on compliance risk and significant risk exposures for BancoPosta, and on the state of progress of the initiatives undertaken as a result of the commitments given to the Bank of Italy
(following the inspection conducted in 2017 with the aim of assessing the governance, control and operational and IT risk management systems in relation to BancoPosta's operations) and to the Consob (regarding the provision of investment services). In this regard, the Board of
The Board of Statutory Auditors noted that according to the Plan, the work is scheduled to be completed by April 2021.
During the various meetings, the Board monitored the audit launched by CONSOB on 16
In December 2020, Consob also launched an investigation into the actions taken by Poste in the area of Environmental, Social, Governance (ESG), i.e., all those activities linked to
On 2 March 2021, the Board of Statutory Auditors received a report on the start of targeted inspections by IVASS, pursuant to art. 189 of Legislative Decree 209/2005, on anti-money laundering at Poste Vita and at Poste Italiane in its capacity as insurance intermediary and outsourcer of the Anti-Money Laundering function, and subsequently, during a meeting, was informed of the development of the audit by the Head of the Group's CA/Anti-Money
Finally, the Board of Statutory Auditors has noted a communication from the Bank of Italy dated 31 March 2021 sent to Poste Italiane and PostePay regarding further areas for improvement in certain aspects of IT risk management, in respect of which the Company is in the process of defining its response with the related action plan.
With reference to the granting of the mandate to manage the liquidity held in BancoPosta's current accounts to BancoPosta Fondi SGR ("BP Fondi SGR"), which took place on 1 January 2019, the Board of Statutory Auditors, during a meeting with the Subsidiary's Supervisory Body held in 2020, was informed that the system of controls of the AMC was, on the whole, adequate and gradually being consolidated, in line with the developments that have affected and are affecting the Subsidiary. The Board of Statutory Auditors also acknowledged that the effects of the Covid-19 health emergency on the AMC were monitored, which impacted not only the organisational area, but also the following: (i) business continuity operations, (ii) financial market trends and (iii) funding trends. With particular reference to the operational impact in the area of business continuity, the monitoring concerned the provision of IT tools for managers who, in smart working mode, must be able to continue to operate on the markets in a timely manner, real time operations being of fundamental importance in this context. In this regard,
assurances have been given that there will be no impact on business continuity, thanks to the
The Board of Statutory Auditors, as part of the ongoing dialogue with the Head of the Internal
Control Function acknowledged that the audits carried out during 2020, also taking into account the various strengthening initiatives adopted during the year in terms of business, organisation and control, have confirmed an assessment of the overall adequacy of the AMC control system, which is progressively being consolidated.
These audits mainly concerned the areas relating to the management of investment services, the management of Anti-Money Laundering Compliance, the management ofInformation
The system of internal controls of BancoPosta is based on: Annual Report 2020 Poste Italiane Group
- Control Bodies and Functions, involving, each for their respective competencies, the Board of Directors, the Control and Risk Committee, the Sustainability Committee, the Head of
Risk Appetite Framework of the Poste Italiane Group" Guidelines for the definition of the
BancoPosta RFC"; - Update of the “Guideline for the Identification of BancoPosta RFC Material Risk Takers”; - Update of the “ICT Strategy Paper” - “Vision 2022 IT Strategy”; - "ICT Strategic Guidance Document" - Digital, Technology & Operation; - approval of the Group Crisis Management and Business Continuity Policy: "Group Event and Incident Management Guidelines" and "Group Crisis Management and Business
Continuity Guidelines"; - update of the "Guidelines for the Governance and Management of Interest Rate Risk in the
Ø The Board of Statutory Auditors met periodically and on a systematic basis with the internal control function BancoPosta "Internal Auditing", which carried out 23 audits during 2020, compared with the 22 planned in the annual Audit Plan, in addition to the audits assigned to the Internal Auditing department and those relating to administrative and accounting processes pursuant to Law 262/05. The Internal Auditing department of
BancoPosta, on the basis of the activities carried out in the business and support areas, has confirmed, in summary, that in 2020 the Internal Control System is overall adequate and reliable, with some areas for improvement identified.
Administration Function; − strengthening of the composition of the "Products" and "Financial Investments" sections of the Financial Services and Insurance Committee ("SFA"); − establishment of the Post Offices Network Committee with the aim of ensuring utmost integration on issues related to the evolution of the Post Offices plan with a view to enhancing territorial capillarity and optimising commercial presence; − strengthening of corporate governance policies by means of approval by the Board of
Directors of new Product Governance Guidelines for investment, insurance and banking products, the Regulations governing the process of entrusting and outsourcing BancoPosta
RFC, the Competition and Consumer Protection Compliance Guidelines, the Guidelines for the application of Legislative Decree 231/2001 within the Poste Italiane Group, the Group'
Guidelines and important documents regarding the governance of information systems; − completion of the process of centralising HR units in the Human Resources and Organisation
Function, which becomes the Group's single point of reference; Annual Report 2020 Poste Italiane Group
− adoption, as of March 2020, of a new "smart working" work model, activated as part of the initiatives taken by the Company to ensure the prevention and containment of the spread of
Operating Guidelines, which expired on 31 December 2020, were updated during the year. At the time of renewal, for the two-year period 2021-2022, the observations received from the
In 2020, work continued on (i) consolidating oversight and monitoring of assigned and outsourced functions, with particular regard to the service contract with PostePay, and (ii)
strengthening the flow of information between BancoPosta, the outsourced functions and Group companies.
As previously illustrated, the Board of Statutory Auditors has been informed of (i) the corrective action taken by BancoPosta following the Bank of Italy's 2017 audit, (ii) the Consob Plan of
The Board of Statutory Auditors was also updated on IT/IT security activities, on the sales channels (remote and door-to-door offerings), on the mobile channel (BancoPosta and PostePay mobile apps), and on actions taken to reinforce online fraud and illicit events in the sales network, which have resulted in a reduction in said phenomena. During 2020, the Board was also informed of the territorial audits carried out at the Post Offices, which had overall positive results: this outcome, which is also the result of the numerous initiatives implemented by the
Company as part of the Digitalisation Project, will, in any event, be verified during 2021 with further actions aimed at monitoring this trend over the long term, given, among other things, the special nature of the year 2020. The Board of Statutory Auditors has also taken note of the results of the audits carried out on the territorial sales network, which have been assigned to the
These audits have revealed an overall positive system of controls, with positive or adequate
of territorial branches and anti-money laundering units and 60% of Contact Centers.
Poste Italiane Financial Management Guidelines) and the further update, still in progress of the
Regulations governing the process of entrusting and outsourcing BancoPosta RFC, and that from 1 January 2021, the Trading on Line - TOL service was discontinued and the online trading service and platform provided by Banca Sella was made available to customers, at 30
September activated for the BancoPosta On Line (BPOL) service and holders of an active deposit, on the basis of a contract entered into with Poste Italiane.
Operating Manual, and (ii) updated the Anti-Money Laundering Operating Guidelines, incorporating new and specific KPIs in the areas of Due diligence, the S.AR.A. flow and objective communications, and finally judicial assessments. The BancoPosta Anti-Money
Laundering Procedure is expected to be published in 2021, with the aim of regulating antimoney laundering and anti-terrorism processes and defining in detail the responsibilities, tasks and operating procedures for managing the risk of money laundering, while at the same time incorporating the decisions contained in the BancoPosta Anti-Money Laundering Guidelines.
"Low" residual risk value emerged. It is noted that, as described in the annual report prepared by the Group’s relevant anti-money laundering function, despite the “medium to low” degree of inherent risk exposure deriving primarily from qualitative and quantitative elements linked to the large size and complexity of BancoPosta operations, the vulnerability of the BancoPosta organisational structure and business processes was judged by the function to be of “little significance”, thus resulting in a “low” level of residual risk. The Board of Statutory Auditors acknowledged that the volume of "initiative reports" submitted in 2020 by the network of Post
With regard to the risk of money laundering, the BancoPosta Internal Internal Auditing function confirmed the consolidation, in 2020, of the organisational model for the unified management of the risk of money laundering and the funding of terrorism at Group level, thanks to specific
Guidelines/Contracts for the outsourcing of these activities to the Group's Anti-Money
With regard to the Group Anti-Money Laundering Platform (ATAT), audits on the reliability and security of the IT control systems governing the ARAT platform, which supports the antimoney laundering and anti-terrorism management processes, were generally adequate, although there were some areas for improvement.
Bank of Italy 2019 audit and (vi) in the area of BCM and Information System, to the security of the cloud solutions adopted.
The Compliance department gave an overall positive assessment of the activities carried out in 2020, also taking into account the special situation resulting from the Covid-19 health emergency.
It should be noted that the results that emerged following the audits and actions carried out in 2020 were reported in the Function's Tableau de Bord on a timely basis and did not reveal any critical issues that needed to be highlighted to the Board of Directors and Statutory Auditors separately from the aforementioned document.
Compliance department took part in activities designed to strengthen the governance structure between BancoPosta, the Private Market and Group companies, and the development of service models and supporting partnerships.
The Board, in recalling that the supervisory body had recommended implementation, in 2020, of all the corrective measures identified in relation to the investment services covered by MiFID
2, to insurance brokerage in connection with the IDD Directive, to banking services and postal savings (above all with regard to efforts to strengthen and improve the management of complaints), to the payment services regulated by the PSD2 Directive, to action on crossfunctional areas with an indirect impact, especially those aimed at strengthening the information system (with particular regard to the definition of Data Governance standards and the management of business continuity and the IT security aspects of financial services), cash management and occupational health and safety, acknowledged that: - in the Investment Services area: (i) interventions were completed related to the development of the functionalities of the advisory platform (strengthening of existing oversights, strengthening of specific aspects of the product governance process and consolidation of the governance model and management of communications with the network); (ii) oversights of the customer profiling process were strengthened; (iii) ESMA platform made fully
the offer in the insurance field was enriched (offer of modular protection and Car civil liability policies), (ii) the evolution was started of digital processes (telephone proposition of protection products) and (iii) the specific aspects were addressed that emerged from regulatory in-depth analysis; - in the Banking Services and Postal Savings area: (i) the oversights were strengthened of the correctness and completeness of customer documentation; (ii) the creation was completed of the Statement of Fees document in implementation of the Payment Account Directive; (iii) consolidation and further strengthening of the oversights of the complaints management process and, in particular, the integration, in the disputes application, of the information of the related complaint was completed; (iv) issuance, on 22 December 2020, of the
"Commercial and Group Incentive Systems" procedure and finally (v) conclusion of the initiatives envisaged in the Bank of Italy's Plan of Actions, related to the 2019 audit in the area of Transparency; - in the Payment Services area, the transition was completed to the adoption of Strong
operating processes and information assets enabling the adoption of cloud computingwas carried out; (ii) the strengthening of outsourcing governance processes was carried out, and
(iii) the integration of the Privacy Organisational Model for the management of processing was carried out.
In 2020, in line with the entry into force of the obligation deriving from the PSD2 directive, the activities were completed for the introduction, from 14 September, of the SCA solution (a)
“primary” for transactions carried out through Poste Italiane websites and apps and (b)
cards on third-party circuits ("not-on-us") were outsourced to SIA S.p.A. and, in 2021, the project phases linked to monitoring and fraud prevention systems will be completed through the roll out of the new platform.
With reference to Business Continuity Management ("BCM"), in 2020, the Board verified the timely implementation of the interventions of the Activity Plan defined following the 2017
Disaster Recovery ("DR") solutions to mobile applications; (ii) the implementation of DR
architecture in active-active mode for all digital services with allocation in the Rome Hub and
Turin Hub; and (iii) studies and test designs to ensure that BancoPosta is able to carry out, in collaboration with DTO, checks on the DR environment of mobile/app, cloud and active-active and active-standby solutions. In general, the Compliance Function assessed the level of adequacy of the business continuity procedural arrangements as adequate overall, pointing out that the activities planned in 2021 represent a natural continuation of the actions concluded in the 2020 plan, aimed at ensuring the operational resilience of financial services. In addition, on 24 September 2020, the Board of Directors approved the "Group Event and Incident
"Summary report on the IT risk situation for 2020 - BancoPosta perimeter", prepared by the
In summary, with respect to the 20 areas of BancoPosta analysed, the updated analysis showed actual risk in line with the risk appetite threshold for 17 areas and exceedance of the threshold
Financing): these were analysed for the first time in 2019 and the Treatment Plan, launched during 2020, is still in progress. For these areas, the propensity threshold is expected to be reached by the end of 2021.
The areas of attention identified through "Cyber Risk" checks are the subject of a specific Plan that supplements the one resulting from the Cyber Risk Analysis. The issue of IT risk was illustrated by the Head of the Information Security function as part of Corporate Protection at a specific meeting held in March 2021, during which the Board of Statutory Auditors acknowledged that the results from the viewpoint of the risk profile are adequate and in line with the risk thresholds defined for BancoPosta under the RAF, although there are some peculiarities regarding the digital world and Apps that have specific characteristics relating to the development model, together with a higher frequency of updates, and consequently have return plans that need to be constantly monitored.
Ø Lastly, the Board of Statutory Auditors met on several occasions the Risk Management function, which reported periodically on the monitoring and development of BancoPosta significant risks. In keeping with the Group’s new money laundering risk management model, as already mentioned above, from 2018, the Head of Risk Management has assumed the role of BancoPosta Head of Anti-money Laundering, and within the Risk Management function, the
The Board of Statutory Auditors, in agreement with the relative function of BancoPosta, assessed the performance of the RAF indicators during 2020, on a quarterly basis through the
(NII) to movements in interest rates, which stood at 16.9%, above the tolerance threshold of 15% but within the limit of 19%.
disputes with customers relating to returns on BFP and non-compliance with the Transparency of Investment Services/MiFID regulations.
Company's position, pending verification of the orientation that will be consolidated at the
Ordinary Judicial Authority, which is currently more favourable to Poste (favourable to Poste around 43% of decisions from 2017 to 31 December 2020, a percentage that rises to around 52% if the Courts and Courts of Appeal are taken into account, excluding Justices of the Peace).
BancoPosta, whilst the new risk tolerance threshold has been set at 2.7% and the risk capacity at 2.5%; • adjusts the triggers for the funding gap (the portion of the securities portfolio structurally financed through repurchase agreements), in line with the new version of the Financial
Management Guidelines, approved by the Board of Directors on 24 March 2021, in order to make alternative funding levers possible in the event of a sudden (and unexpected) fall in current account funding volumes, after the sharp rise thereof recorded in 2020.
The outcomes of the 2020 ICAAP process show that: - the Minimum Capital Requirements were easily met both at the end of 2020 and in the 2021-2022 forecasts: the CET 1 Ratio is well above the minimum limit of 10.5% and above the RAF risk tolerance threshold of 15%, both in expected and stressed conditions; - BancoPosta RFC is adequate to cover the absorption of all relevant risks, calculated for operational and interest rate risks using internal models, ensuring a free capital buffer of more than 40%, well above the RAF risk tolerance threshold of 19%, even under stress conditions; - the leverage ratio, which amounted to 2.7% as at 31 December 2020 following the allocation of profits of €50 million, upon completion of the capital strengthening programme (a further €250 million), is estimated to reach 3.1% at the end of 2021, and then remain stable in 2022, with expected levels consistent with the objective of maintaining the indicator at least at 3%.
The results of the ILAAP 2020 process confirm that BancoPosta's liquidity is robust and broadly consistent with requirements under expected and adverse scenarios; in particular, it should be noted that: - a high level of minimum liquidity reserves, mainly represented by a portfolio of government securities that can be considered as first line reserves (Counterbalancing Capacity); - liquidity Coverage Ratio (short term) and Net Stable Funding Ratio (structural) indicators well above the regulatory minimums of 100%. In particular, the LCR and NSFR, even in adverse scenarios, remain at levels greater than 3 times the regulatory minimums; - on the basis of ILAAP stress tests, the thresholds of the Early Warning Indicator (EWI) - a management metric similar to the regulatory LCR - were updated in line with the RAF for the activation of remediation plans set out in the Contingency Funding and Recovery Plan.
Financial Leverage, the Company has authorised capital strengthening actions to ensure that the benchmark level identified by the regulators is reached throughout the duration of the plan.
During 2020, the new model for estimating interest rate risk in the banking book (IRRBB), consistent with the regulatory requirements for intermediaries of greater size and high complexity, became fully operational.
Depositi e Prestiti has been renewed and is available in case of need.
System as a whole is inadequate, although certain situations emerged that required the planning and management of specific corrective action. Finally, the Board of Statutory Auditors acknowledges Management's constant reactive and proactive behaviour with regard to the
In accordance with CONSOB requirements, we declare that in the performance of our duties we have not been made aware of omissions, instances of negligence, irregularities or evidence of inadequacies in the organisational structure, Internal Control System or administrative and accounting system considered relevant for the purposes of this report.
Auditors, considering the content of the reports prepared by the Independent Auditor and having noted the attestations issued jointly by the Chief Executive Officer and the Manager responsible for financial reporting, is not aware, to the extent of the scope of its activities, of any reasons preventing the approval of the financial statements of Poste Italiane and the consolidated financial statements of the Poste Group for the year ended 31 December 2020, as well as the proposal for allocation of the profit for the year, including the dividend distribution by the Board of Directors.
(This report has been translated from the original issued in accordance with Italian legislation)
In our opinion, the accompanying consolidated financial statements give a true and fair view of the financial position of the Group as at December 31, 2020, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of national regulations issued pursuant to art. 9 of Italian Legislative Decree no. 38/05.
The Group's assets are partially allocated to the "Cash Generating Unit" ("CGU"), represented by the "Mail, Parcels and Distribution" business segment characterized by the persistence of negative economic results and the decline of the postal market in which the Poste Italiane Group operates, further aggravated by the current macroeconomic scenario and the effects of the COVID-19 health emergency. In compliance with accounting policy IAS 36 "Impairment of assets", based on the economic forecasts of the Group Business Plan "2024 Sustain & Innovate" for the period 2021 - 2024 (the "Business Plan"), approved by the Board of Directors on March 18, 2021, the “Mail, Parcels and Distribution” CGU was subject to impairment test by comparing the carrying amount of it’s assets with the recoverable amount of the CGU to ensure that the book value is justifiable (“impairment test”). In particular, the recoverable amount was determined by estimating the "value in use" of the CGU, representative of the estimate of the future cash flows expected from the use of the assets included in the CGU, including, in particular, the properties used as post offices and mechanization and sorting centers, as part of the ordinary company production process and taking into account the obligation to fulfill the Universal Postal Service and the economic conditions envisaged for the services rendered to BancoPosta’s ringfenced capital. These flows were discounted at an appropriate rate.
Considering the relevance of the amount of the carrying amount of the Group’s assets allocated to the CGU "Mail, Parcels and Distribution", the subjectivity of the estimates related to the determination of the cash flows expected of the CGU, taking into account also the uncertainties related to the current macroeconomic environment characterized by, among other things, the pandemic events, and the key variables of the impairment model, we considered the determination of the recoverable amount of the business segment "Mail, Parcels and Distribution", a key audit matter of the Group's consolidated financial statements as at December 31, 2020.
The application of these estimates and assumptions influences the values indicated in the financial statements and in the disclosure provided.
In Notes 2.3 "Summary of significant accounting policies and measurement criteria - Insurance contracts", 2.5 "Use of estimates", paragraph "Technical provisions for insurance business", B5 "Total Consolidated liabilities and equity - Technical provisions for insurance business" and C4 "Consolidated statement of profit or loss - Revenue from insurance services after changes in technical provisions and other claim expenses”, disclosure on the aspects described above is provided.
The main procedures carried out as part of our audit work, also with the support of Deloitte network experts, have included the following:  understanding of the process of evaluation of the mathematical provisions which included the knowledge of general and underwriting strategies and any possible changes in the legal and regulatory framework of the sector;  recognition and test of the relevant controls performed by the Group on the process of preparing financial information in the area of mathematical provisions;  performing procedures on the completeness and appropriateness of the portfolios and the key data used;  reading and analyzing the Actuarial reports prepared by the competent corporate departments;  verification of the evaluation of the mathematical provisions through the application of simplified methods (so-called "recurring accounting method") in order to assess the reasonableness of the provision determined by the Management;  recalculating, on a sample basis, the value of the mathematical provision as at December 31 2020, using the calculation formulas contained in the technical documentation and analyzing the compliance of the calculation with the corporate procedures and the applicable legislation; Reports and Attestations
RReessppoonnssiibbiilliittiieess ooff tthhee DDiirreeccttoorrss aanndd tthhee BBooaarrdd ooff SSttaattuuttoorryy AAuuddiittoorrss ffoorr tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
The Directors are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of national regulations issued pursuant to art. 9 of Italian Legislative Decree no. 38/05 and, within the terms established by law, for such internal control as the Directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they have identified the existence of the conditions for the liquidation of the parent company Poste Italiane S.p.A. or the termination of the operations or have no realistic alternatives to such choices.
The Board of Statutory Auditors is responsible for overseeing, within the terms established by law, the Group’s financial reporting process.
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (ISA Italia) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
 Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
 Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
The Shareholders' Meeting of Poste Italiane S.p.A. has appointed us on May 28, 2019 as auditors of the Company for the years from December 31, 2020 to December 31, 2028.
We confirm that the opinion on the consolidated financial statements expressed in this report is consistent with the additional report to the Board of Statutory Auditors, in it’s role of Audit Committee, referred to in art. 11 of the said Regulation.
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The Directors of Poste Italiane S.p.A. are responsible for the preparation of the report on operations and the report on corporate governance and the ownership structure of the Poste Italiane Group as at December 31, 2020, including their consistency with the related consolidated financial statements and their compliance with the law.
We verified the approval by the Directors of the non-financial statement.
Pursuant to art. 3, paragraph 10 of Legislative Decree 30 December 2016, no. 254, this statement is subject of a separate attestation issued by us.
Sede Legale: Via Tortona, 25 - 20144 Milano | Capitale Sociale: Euro 10.328.220,00 i.v. Codice Fiscale/Registro delle Imprese di Milano Monza Brianza Lodi n. 03049560166 - R.E.A. n. MI-1720239 | Partita IVA: IT 03049560166
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In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at December 31, 2020, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of national regulations issued pursuant to art. 9 of Italian Legislative Decree no. 38/05.
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The impairment test carried out by the Company confirmed the recoverability of the value of the assets attributed to the CGU.
In the Appendix to Chapter 8 "Proposed shareholder resolutions and other information" of the Report on Operations and in Notes 2.3 "Summary of significant accounting policies and measurement criteria - Impairment of assets", 2.5 "Use of estimates", paragraphs "Impairment tests of goodwill, cash generating units and equity investments" and "Mail, Parcels and Distribution CGU", and 4.4 "Operating Segments" disclosure on the aspects described above is provided.
The main procedures carried out as part of our audit work, also with the support of Deloitte network experts, have included the following: Reports and Attestations
RReessppoonnssiibbiilliittiieess ooff tthhee DDiirreeccttoorrss aanndd tthhee BBooaarrdd ooff SSttaattuuttoorryy AAuuddiittoorrss ffoorr tthhee FFiinnaanncciiaall SSttaatteemmeennttss
The Directors are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of national regulations issued pursuant to art. 9 of Italian Legislative Decree no. 38/05 and, within the terms established by law, for such internal control as the Directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they have identified the existence of the conditions for the liquidation of the Company or the termination of the operations or have no realistic alternatives to such choices.
The Board of Statutory Auditors is responsible for overseeing, within the terms established by law, the Company’s financial reporting process.
As part of an audit in accordance with International Standards on Auditing (ISA Italia), we exercise professional judgment and maintain professional skepticism throughout the audit. We also:  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control;  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors;  Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern;  Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
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We declare that we have not provided prohibited non-audit services referred to in art. 5 (1) of EU Regulation 537/2014 and that we have remained independent of the Company in conducting the audit.
We have carried out the procedures set forth in the Auditing Standard (SA Italia) n. 720B in order to express an opinion on the consistency of the report on operations and some specific information contained in the report on corporate governance and ownership structure set forth in art. 123-bis, n. 4 of Legislative Decree 58/98 with the financial statements of Poste Italiane S.p.A. as at December 31, 2020 and on their compliance with the law, as well as to make a statement about any material misstatement.
In our opinion, the above-mentioned report on operations and some specific information contained in the report on corporate governance and ownership structure are consistent with the financial statements of Poste Italiane S.p.A. as at December 31, 2020 and are prepared in accordance with the law.
Il nome Deloitte si riferisce a una o più delle seguenti entità: Deloitte Touche Tohmatsu Limited, una società inglese a responsabilità limitata (“DTTL”), le member firm aderenti al suo network e le entità a esse correlate. DTTL e ciascuna delle sue member firm sono entità giuridicamente separate e indipendenti tra loro. DTTL (denominata anche “Deloitte Global”) non fornisce servizi ai clienti. Si invita a leggere l’informativa completa relativa alla descrizione della struttura legale di Deloitte Touche Tohmatsu Limited e delle sue member firm all’indirizzo www.deloitte.com/about. © Deloitte & Touche S.p.A.
We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.
Our responsibility is to express a conclusion on the Separate Report based on the procedures performed. We conducted our engagement in accordance with International Standards on Assurance Engagements - Assurance Engagements other than Audits or Reviews of Historical Information (“ISAE 3000 revised”) issued by International Auditing and Assurance Standards Board for limited assurance engagements. This standard requires that we plan and perform the review to obtain limited assurance as to whether the Separate Report is free of material misstatements.
In accordance with the above criteria, we have performed the necessary procedures in order to achieve the objectives of the mandate pointed out in the first paragraph. In detail, we have performed the following procedures:  understanding, through interviews with the Management, of the criteria adopted by the Company for the preparation of the Separate Report and verification of their consistency with the provisions of the Bank of Italy Circular no. 262 of 22 December 2005 and the provisions of art. 2447-septies paragraph 2 of the Civil Code;  obtaining the reconciliation arranged by the Company between the data reported in the Company’s financial statements and the data reported in the Separate Report;  understanding of the methodology used by the Company for sharing common costs;  verification that the data included in the Separate Report comply with the accounting records and the criteria adopted by the Company for the preparation of the Separate Report;  verification that the data included in the Separate Report are consistent with the reconciliation prepared by the Company and with the methodology applied for sharing common costs;  verification of the application of the accounting policies described by the Directors in the notes to the financial statements of the Separate Report;  obtaining the representation letter, signed by the legal representative of the Company, with reference to the correctness and completeness of the information contained in the Separate Report and those provided to us for the purpose of carrying out our statutory audit.
Based on the procedures performed and evidence obtained, nothing has come to our attention that causes us to believe that the data contained in the Separate Report are not consistent, in all material respects, with those reported in the Company’s financial statements for the year ended December 31, 2020.
Il nome Deloitte si riferisce a una o più delle seguenti entità: Deloitte Touche Tohmatsu Limited, una società inglese a responsabilità limitata (“DTTL”), le member firm aderenti al suo network e le entità a esse correlate. DTTL e ciascuna delle sue member firm sono entità giuridicamente separate e indipendenti tra loro. DTTL (denominata anche “Deloitte Global”) non fornisce servizi ai clienti. Si invita a leggere l’informativa completa relativa alla descrizione della struttura legale di Deloitte Touche Tohmatsu Limited e delle sue member firm all’indirizzo www.deloitte.com/about.
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The Directors are also responsible, within the terms established by Law, for such internal control as they determine is necessary to enable the preparation of NFS that is free from material misstatement, whether due to fraud or error.
The Directors are moreover responsible for defining the contents of the NFS, within the topics specified in article 3, paragraph 1, of the Decree, taking into account the activities and characteristics of the Group, and to the extent necessary in order to ensure the understanding of the Group’s activities, its trends, performance and the related impacts.
Finally, the Directors are responsible for defining the business management model and the organisation of the Group’s activities as well as, with reference to the topics detected and reported in the NFS, for the policies pursued by the Group and for identifying and managing the risks generated or undertaken by the Group.
We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Our auditing firm applies International Standard on Quality Control 1 (ISQC Italia 1) and, accordingly, maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
Our responsibility is to express our conclusion based on the procedures performed about the compliance of the NFS with the Decree and the GRI Standards. We conducted our work in accordance with the criteria established in the “International Standard on Assurance Engagements ISAE 3000 (Revised) – Assurance Engagements Other than Audits or Reviews of Historical Financial Information” (the “ISAE 3000 Revised”), issued by the International Auditing and Assurance Standards Board (IAASB) for limited assurance engagements. The standard requires that we plan and perform the engagement to obtain limited assurance whether the NFS is free from material misstatement. Therefore, the procedures performed in a limited assurance engagement are less than those performed in a reasonable assurance engagement in accordance with ISAE 3000 Revised, and, therefore, do not enable us to obtain assurance that we would become aware of all significant matters and events that might be identified in a reasonable assurance engagement.
The procedures performed on NFS are based on our professional judgement and included inquiries, primarily with company personnel responsible for the preparation of information included in the NFS, analysis of documents, recalculations and other procedures aimed to obtain evidence as appropriate.
In addition, for material information, taking into consideration the Group’s activities and characteristics:  at the parent company’s and subsidiaries’ level: a) with regards to qualitative information included in the NFS, and specifically with reference to the business management model, to the policies applied and to the main risks, we carried out interviews and gathered supporting documentation in order to verify its consistency with the available evidence; b) with regards to quantitative information, we carried out both analytical procedures and limited verifications in order to ensure, on a sample basis, the correct aggregation of data;  for the following companies, Poste Italiane S.p.A. and SDA Express Courier S.p.A., which we selected based on their activities, their contribution to the performance indicators at the consolidated level and their location, we carried out remote meetings, during which we have met their management and have gathered supporting documentation with reference to the correct application of procedures and calculation methods used for the indicators.
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